Machiri Limited v Kenya Airports Authority
Featured snippet: On 21 March 2024, the High Court refused KAA’s bid to cancel the arbitrator’s award and allowed enforcement for Machiri. The dispute came from a 2014 JKIA demolition contract under the FIDIC Orange Book (1995). Later, on 31 May 2024, the Court directed a partial payout — KSh 300 million plus USD 1,022,022 — while the remaining sums would be pursued separately.
What was this case about?
Simple answer: The contractor (Machiri) finished the demolition works. Payment was delayed. An arbitrator awarded money (including interest for late payment). KAA asked the High Court to cancel that award. The Court said no, and allowed enforcement.
What did KAA argue?
- Wrong contract focus: They said the arbitrator relied too much on the FIDIC Orange Book and ignored tender/other documents.
- Public policy: They claimed the award went against public policy and rules for public bodies.
- Interest complaints: They said interest was computed the wrong way (e.g., monthly/at the wrong reference rate).
What did the Judge check?
Section 35 test: The Court only sets an award aside in rare situations (e.g., no valid arbitration agreement, serious unfairness, issues beyond the reference, illegal composition/procedure, or conflict with public policy). Disagreeing with the arbitrator’s reasons is not enough.
Why did KAA lose?
- Contract interpretation is for the arbitrator: The arbitrator is the “master of the facts” — the Court does not re-try the case.
- Public policy threshold not met: KAA didn’t show any legal rule or national-interest issue that the award violated.
- Interest followed the contract/law: The arbitrator applied the contract’s late-payment mechanism and commercial rates on the evidence provided.
What did the Court order next?
Enforcement went ahead. On 31 May 2024 the Court directed a partial payout (KSh 300m + USD 1,022,022) while the remaining balance would be pursued through the proper process.
Why this matters (practical takeaways)
- For contractors: Keep a clean “interest trail” (due dates, actual payment dates, contract rate). It makes enforcement easier.
- For employers/public bodies: Section 35 is not a back-door appeal. If the arbitrator worked within the contract and law, the award usually stands.
- Cash flow: Courts can order staged recovery (partial payments) to move things along while other issues continue.
Mini example: late-payment interest (plain steps)
- Find the due date (e.g., 21 days after certificate under Cl. 14.7).
- Find the actual payment date. Count the days late.
- Apply the contract rate (e.g., contract rate or CBK rate + 3% depending on your form).
- Show the math, period by period (certificate → award → enforcement).
Quick checklist for enforcement
- Certificates & statements (showing what was due and when).
- Interest schedule (rate + timeline; attach a simple table).
- Notices & correspondence (requests, reminders, bank details).
- Arbitration record (award, any corrections/clarifications).
Tip: A one-page “interest worksheet” often answers most Court questions quickly.
Key Legal Issues — Machiri Limited v KAA
Featured snippet: The Court (Mabeya, J.) held that Section 35 grounds for setting aside are narrow and were not met. Enforcement went ahead despite KAA’s public-policy and “excess of mandate” objections. The interest award was allowed because it followed the contract/tribunal powers and did not offend clear policy or statute.
Setting Aside under Section 35: what the Court will — and won’t — do
Plain English: Section 35 is not a second appeal. The judge does not re-try the case. They only check for rare problems, for example:
- No valid arbitration agreement or the tribunal decided things it wasn’t asked to decide (jurisdiction/ultra petita).
- Serious unfairness (a party couldn’t present their case) or the procedure/tribunal composition was unlawful.
- The award clashes with Kenya’s public policy (e.g., clearly illegal outcome or one that offends justice).
Outcome here: KAA’s complaints were about merits (how the arbitrator read the contract and calculated interest). That’s not enough. The narrow Section 35 test was not met, so the award stood.
- Show the pleadings/reference put the disputed points squarely before the arbitrator.
- Explain why the complaint is a merits disagreement, not a true Section 35 ground.
- Map the award’s reasons to the accepted contract hierarchy (e.g., FIDIC form + tender docs).
Enforcing against a State Corporation: where does the GPA fit?
Plain English: Even if GPA rules affect how you execute (e.g., no direct attachment of certain government assets; give notice to the AG), that doesn’t block the Court from recognising the award and converting it to a judgment.
Practical pattern: Courts often push cash-flow forward with structured or partial payment orders while avoiding disruptive attachments. That’s what happened here — part of the money was ordered released while the balance was pursued separately.
Is the interest “too high”, or simply what the contract/tribunal allows?
KAA’s view: The interest looked excessive (e.g., monthly compounding or a high benchmark) and therefore against public policy.
Court’s approach (simple): If the contract sets the interest method (e.g., delayed-payment clause; CBK rate + margin; compounding rule) or the tribunal is empowered to fix it, courts rarely interfere — unless the result plainly breaks a statute or shocks the conscience.
- Identify the due date (e.g., 14.7 payment period after certificate) and the actual payment date.
- Apply the exact rate and compounding frequency (contract or tribunal’s formula).
- Show a clear timeline: certificate → accrual → award → enforcement (tables help).
Tip: Attach a one-page “interest worksheet” — it answers 90% of court queries fast.
Key Legal Issues — Machiri Limited v KAA
Featured snippet: The Court (Mabeya, J.) said the bar for setting aside an arbitral award under Section 35 is very high. KAA did not reach that bar. The award was recognized and enforced. Debates about “public policy”, contract documents, and the interest rate did not justify undoing the award.
Can a court set aside an arbitral award under Section 35?
Plain meaning: Section 35 is a safety valve, not a second appeal. The court will only set aside an award in rare cases, for example if the arbitrator had no jurisdiction, if a party was not given a fair hearing, or if the award clearly breaks the law or public policy.
What KAA argued: KAA said the arbitrator went beyond his powers, focused too much on the FIDIC 1995 Conditions and ignored other contract documents (like tender terms), and awarded interest that offends public policy.
What the Court looked for:
- Jurisdiction & mandate: Did the arbitration clause and the parties’ submissions allow the arbitrator to decide these issues?
- Due process: Did each side get a fair chance to present documents and arguments?
- Public policy test: Is the result so offensive to Kenya’s legal standards that the court must step in?
Outcome in simple terms: The Court found no exceptional problem. Even if someone disagrees with the arbitrator’s reasoning, that is not enough. Section 35 does not allow the judge to re-try the case. So, the set-aside request failed.
- Show the award stays within the issues referred by the contract and pleadings.
- Point to the hearing steps (filings, witness, documents) to confirm fair process.
- Explain why any alleged error is a merits issue, not a public-policy breach.
Example: If the arbitrator used the contract’s payment clause to grant interest, that is a merits decision. It is not “public policy” just because the losing party dislikes the number.
How do you enforce an award against a state corporation (GPA question)?
Plain meaning: When you win against a state body, you can get the award recognized by the court. But the way you take payment might follow the Government Proceedings Act (GPA). The GPA can limit attachment of government property and may require a notice to the Attorney-General.
What KAA argued: Because KAA is a public entity, Machiri had to use the GPA route for execution.
What courts usually do:
- Step 1 — Recognition: First, the court can recognize and enter judgment on the arbitral award. GPA does not block this.
- Step 2 — Mode of payment: For how you collect, courts often avoid seizing public assets. They may order structured payment (e.g., a partial amount now, the rest later), or require the State body to process payment through its budget system.
Outcome in simple terms: The award was recognized. Practical enforcement used court-managed steps (like partial payment orders) rather than seizing government assets.
Tip: When drafting, make sure your contract names the employer correctly (corporation vs Government) and understand the GPA’s impact in advance.
Is a high interest rate (e.g., CBK rate + 3%, compounded monthly) enforceable?
Plain meaning: If the contract (or the tribunal under the contract) sets an interest formula, a tribunal may apply it. Courts rarely change that number unless it clearly breaks the law or shocks the conscience.
What KAA argued: The interest was too high compared to normal bank loans, so it should be struck out as unconscionable or against public policy.
What the Court asked: Is this interest what the parties agreed in their contract (or allowed by it)? Is there any legal cap or rule that the arbitrator ignored? If not, it usually stands.
- Quote the exact interest clause (e.g., delayed payment clause) and the benchmark (CBK rate) + margin (+3%).
- State the compounding period (monthly/annual) and show a simple timeline: due date → late period → award → enforcement.
- Add a short table (dates, amounts, rate changes) to make the math easy to follow.
Example: If KSh 10,000,000 was due on 1 Jan and paid on 1 Apr, and the clause says “CBK rate + 3%, compounded monthly,” compute month by month using the CBK rate in each month, add 3%, and compound.
Outcome in simple terms: Because the interest method flowed from the contract/award, the court allowed enforcement.
Why this case matters for arbitration & enforcement in Kenya
In one line: The Court backed arbitration. It said: “We won’t undo an award unless the law clearly lets us.” That gives businesses—and contractors working with public bodies—real confidence that awards will be paid.
Courts won’t re-try your case after arbitration
Plain meaning: If you agree to arbitrate, expect the result to stick. A judge won’t second-guess the arbitrator just because the loser is unhappy, or the bill (including interest) is large.
Why it matters: Parties can rely on arbitration to end disputes faster than court litigation. This is true even against powerful, state-linked employers.
You can’t use “public policy” as a shortcut to avoid payment
Plain meaning: Saying an award is expensive or the interest is heavy does not make it against public policy. Public policy is about protecting the legal system and justice—not about cutting a high bill.
- What courts look for: something truly extreme or illegal, not routine contract remedies.
- Result here: No extreme problem—so the award stood.
Winning against a parastatal? You can still enforce
Plain meaning: State corporations like KAA are legal persons. Courts can recognize the award and make them pay. The Government Proceedings Act (GPA) may affect how you collect (e.g., avoid seizing public assets), but it does not erase your win.
Practical outcome used here: The Court ordered immediate part-payment and allowed access to funds in bank accounts, while the balance was to be pursued in an orderly way. That’s real-world enforcement—not delay.
Interest for late payment will be enforced if the contract says so
Plain meaning: If your contract (e.g., FIDIC-based) sets an interest formula—like “CBK rate + 3%, compounded monthly”—the tribunal can use it, and courts will usually uphold it.
- Good practice: Quote the exact clause in your claim. Show a clear, month-by-month calculation from due date → award → enforcement.
- Bottom line: Courts won’t re-price the bargain unless the result breaks the law or truly shocks the conscience.
Investors and contractors can trust the system
Plain meaning: Kenya’s courts are pro-enforcement. If you win an award—even against a big public agency—you can expect meaningful steps to get paid (for example, court-directed part-payments).
Why that’s big: Predictable enforcement lowers risk, improves cash flow on projects, and encourages competitive pricing in bids.