Royal Ngao Holdings Limited v N.K. Brothers Limited [2020] eKLR Case Summary

Court
High Court of Kenya at Nairobi, Commercial & Tax Division
Category
Civil
Judge(s)
Justice Mary Kasango
Judgment Date
October 13, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Explore the case summary of Royal Ngao Holdings Limited v N.K. Brothers Limited [2020] eKLR, analyzing key legal principles and implications for corporate disputes in Kenyan law.

Case Brief: Royal Ngao Holdings Limited v N.K. Brothers Limited [2020] eKLR

1. Case Information:
- Name of the Case: Royal Ngao Holdings Limited v. N.K. Brothers Limited
- Case Number: Miscellaneous Civil Application No. E 683 of 2020
- Court: High Court of Kenya at Nairobi, Commercial & Tax Division
- Date Delivered: October 13, 2020
- Category of Law: Civil
- Judge(s): Justice Mary Kasango
- Country: Kenya

2. Questions Presented:
The court must resolve two primary legal issues:
1. Whether the action was filed in contravention of the timelines set forth in Section 17(6) of the Arbitration Act.
2. Whether the arbitral tribunal had the jurisdiction to hear and determine the dispute between the parties.

3. Facts of the Case:
The applicant, Royal Ngao Holdings Limited (Royal), entered into a contract with N.K. Brothers Limited (NK) on September 2, 2011, for the construction of a five-storey office block and related structures. A dispute arose in August 2017 regarding the balance owed to NK and allegations of delays and inefficiencies attributed to NK and a third party, Mr. Allan Odhiambo Otieno. Following unsuccessful meetings to resolve the dispute, NK invoked arbitration as per the contract. The Chairman of the Architectural Association of Kenya appointed Mr. Steven Oundo as the sole arbitrator. Royal challenged the arbitrator’s jurisdiction, claiming the Notice of Dispute issued on September 28, 2018, was untimely.

4. Procedural History:
Royal filed an originating summons on April 24, 2020, challenging the arbitrator’s ruling dated December 10, 2019, which found the tribunal had jurisdiction to hear the dispute. NK opposed this action, asserting it was filed outside the 30-day window stipulated by Section 17(6) of the Arbitration Act. The court had to determine whether Royal's application was timely and whether the arbitrator had jurisdiction.

5. Analysis:
- Rules: The relevant statutes include Section 17(6) of the Arbitration Act, which requires parties to apply to the High Court within 30 days of receiving notice of the arbitrator's ruling on jurisdiction. Additionally, Clause 45.3 of the contractual agreement specifies that arbitration proceedings must commence within 90 days of the occurrence of the dispute.

- Case Law: The court referenced previous cases, including *Kenya Ports Authority v. Baseline Architects & 3 Others* (2014) eKLR and *Dewdrop Enterprises Ltd v. Haree Construction Ltd* (2009) eKLR. These cases highlighted the importance of adhering to time limits in arbitration and established that jurisdiction is fundamental and cannot be conferred retroactively.

- Application: The court found that Royal admitted to receiving notice of the arbitrator's ruling in December 2019, thus the application filed on April 24, 2020, was outside the 30-day limit set by Section 17(6). The court also determined that Royal had waived its right to object to the 90-day period for issuing the Notice of Dispute by proceeding with arbitration despite knowing the timeline had lapsed.

6. Conclusion:
The court dismissed Royal's originating summons, concluding that it was filed out of time and that the arbitrator had jurisdiction to hear the dispute. The court emphasized that Royal's failure to seek leave to file out of time was fatal to its application. Costs were awarded to NK Brothers Limited.

7. Dissent:
There were no dissenting opinions noted in the judgment.

8. Summary:
The High Court of Kenya ruled that Royal Ngao Holdings Limited's application was filed out of the statutory time limits, thereby affirming the jurisdiction of the arbitrator, Mr. Steven Oundo. This case underscores the critical importance of adhering to procedural timelines in arbitration and the implications of waiving such rights. The decision emphasizes that parties cannot later dispute jurisdiction if they have engaged in arbitration proceedings without timely objections.

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