advertisement
Ideas & Debate

Court ruling key to future commercial deals and disputes

Courts have the right to exercise limited
Courts have the right to exercise limited judicial intervention whenever required to. FILE PHOTO \ NMG 

The Supreme Court of Kenya delivered a monumental decision on the right of appeal against the decision of the High Court under Section 35 of the Arbitration Act.

For the longest time, it was held that a decision by the High Court on an arbitral award was final thus no party could appeal to the Court of Appeal, thereby insulating a High Court’s decision—even where it wrongly sets aside an otherwise correct arbitral award.

Why is this decision important to future commercial agreements? Well, the Arbitration Act does not explicitly state whether an aggrieved party in an arbitral proceeding can appeal against a decision of the High court under Section 35 of the Arbitration Act.

Therefore, in promoting the sanctity of arbitral process and observing the principle of finality in arbitral process, courts have held that no appeal shall lay to the court of appeal from a decision of the High Court with regards to an arbitral award.

I will not delve into the specifics, but rather give a peripheral view as to why this pronouncement is important to future commercial agreements and disputes.

advertisement

Firstly, it casts attention and provokes an inward reflection in the commercial arbitration circles, with some quarters feeling that the decision has negated important principles in arbitral proceedings such as finality to arbitral process and confidentiality.

Arbitration clauses have come with their fair share of criticism (fairly or not) as cliquey and shadowy; it has become a safe haven for commercial outfits to fight their battles out of the public eye. Through choice of forum provisions in arbitration clauses, contractual parties have the opportunity to determine where and how their disputes should be resolved ex ante.

Secondly, it appears that if parties have an arbitration clause in their commercial agreements, then their outright intention is that they do not want their disputes to end up in court; they simply have relinquished their courtroom rights.

By this decision, an arbitration clause does not relinquish any party’s right to access justice including an appellate justice. This therefore would mean that arbitral proceeding and an arbitral award can be challenged in court by an aggrieved party insofar as a party has demonstrated that there is a manifest legal error, either from the arbitral process or the award itself.

Thirdly, the decision completely changes the ball game by arguably making arbitration a “precursor to litigation”. In gist, most parties especially those engaging in large commercial transactions usually desire expeditious and absolute determinations of their disputes.

However, by dint of this decision and the ingenuity of either party, they should now be aware that the arbitral process may end up being lengthy and costly than intended by the parties.

Finally, the decision sees to it that courts have the right to exercise limited judicial intervention whenever required to. In my opinion, this intervention does not in any way affect the parties’.

advertisement