Telkom Network Malawi PLC v Smart Banking Solutions Limited t/a Neramo Limited (Miscellaneous Application E004 of 2023) [2024] KEHC 15778 (KLR) (Commercial and Tax) (13 December 2024) (Judgment)

Key Facts

Issues

• The court assessed the enforceability of the Malawi judgment by evaluating the arbitration clause in the commercial agreement, determining that the judgment was irregular as it bypassed the agreed dispute resolution method.
• The court examined if the judgment debtor was properly served with summons in the Malawi case, considering the service method and address changes, concluding the service was insufficient under Kenyan law.

Holdings

• The judgment debtor was awarded the costs of its application to set aside the foreign judgment, as the court found the judgment creditor's claims lacked sufficient evidence to counter the debtor's arguments.
• The court also set aside the decree issued in Kenya (29th March 2022) as a result of the registration being invalidated. The decree was based on the Malawian judgment, which is now non-enforceable in Kenya.
• The court set aside the registration of the foreign judgment from the High Court of Malawi (case number 411 of 2019) because the judgment debtor was not properly served with summons. The service via courier to an address and name no longer associated with the judgment debtor failed to meet Kenya's service requirements under Order 5 of the Civil Procedure Rules.
• The judgment creditor's application to lift the corporate veil and execute against directors was disallowed, as it became moot after the foreign judgment was invalidated.

Remedies

• This court's order dated 29th March 2022 registering judgment dated 5th March 2020 in the High Court of Malawi Commercial Division cause number 411 of 2019 is hereby set aside.
• Consequent to the registration set aside, this court's decree dated 29th March 2022 and issued in 27th April 2022 is hereby set aside.
• The respondent is awarded costs of the application dated 26th April 2023.
• The applicant's application dated 27th January 2023 is disallowed with no orders as to costs.

Legal Principles

• The court emphasized that the parties' arbitration agreement (clause 24.2 of the commercial contract) required disputes to be resolved through arbitration. The judgment creditor's failure to pursue this method before litigation in Malawi rendered the foreign judgment unsound.
• The judgment debtor argued the Malawian court's decision violated the principle of natural justice by condemning them without proper service or opportunity to respond. The Kenyan court agreed, citing inadequate service as a breach of due process.
• The court applied the Foreign Judgements (Reciprocal Enforcement) Act to assess the validity of a Malawian judgment's registration in Kenya. It found the judgment debtor was not properly served and the dispute should have been resolved via arbitration as per the contract's terms.

Precedent Name

Cited Statute

Judge Name

Passage Text

• In my opinion, an application for setting aside registration of a foreign judgment should not be considered under the same principles established under Order 12 Rule 7 of the Civil Procedure Rule. There is a special and specific regime for considering pleas for setting aside registration of foreign judgments... matters of consideration for setting aside registration of a foreign decree are governed under Foreign Judgments (Reciprocal Enforcement) Act Chapter 43 of the Laws of Kenya and not the Civil Procedure Act and Rules.
• Further examination of the tracking record and the accompanying waybill show that the parcel was addressed to Smart Banking Solutions of Furniture Palace Complex Nairobi. On this date, the said Smart Banking Solutions Limited had changed its name to Purplefire Limited which is evident from certificate of change of names dated 20th July 2018 annexed to the judgment debtor's supporting affidavit as annexure 'FPM1'. The judgment creditor has not addressed me on the judgment debtor's change of address and name and as such the judgment debtor's averments on the same remain uncontroverted.
• The service is said to have been effected with a forwarding letter dated 19-12-2019. The judgment creditor has exhibited what is indicated as a shipment tracking record which shows that a parcel under waybill number 3574810315 was delivered to Vivian Wangoi in Nairobi on 23-12-2019 at 1554 hours. This tracking record does not indicate what was actually delivered to Vivian Wangoi... it has not been shown or indicated in what capacity the said Vivian Wangoi was receiving the parcel and whether she was an employee or authorized agent of the judgment debtor.