The Court of Appeal has temporarily stopped proceedings in a High Court arbitration case involving Simba Properties Investment Co. Ltd and Vantage Mezzanine Fund II Partnership.
Simba Properies Investment Co. Ltd is owned by businessman, Patrick Bitature.
The decision, made by Justice Oscar Kihika, pauses High Court Arbitration Case until an application for leave to appeal is resolved.
The dispute started with a 2014 Mezzanine Term Facility Agreement, where Vantage Mezzanine Fund II Partnership loaned Simba Properties $ 10 million (Shs 36 billion). The loan was secured by corporate guarantees and mortgages on various properties.
When Simba Properties defaulted on repayment, the matter went to arbitration under the International Chamber of Commerce (ICC) in London. On July 31, 2023, the arbitrator ruled in favour of Vantage, prompting them to seek enforcement of the award in the High Court.
Simba Properties, along with other applicants, challenged a related High Court ruling from November 17, 2023, by Justice Thomas Ocaya.
That ruling issued interim orders preventing actions on the mortgaged properties and changes to Simba Properties’ ownership until the arbitral award’s enforcement was decided.
Dissatisfied, Simba Properties filed for leave to appeal (Civil Application No. 1295 of 2023) and requested a stay of the arbitration proceedings.
In their application, Simba Properties argued that they have “an arguable appeal which is not frivolous and vexatious” and that continuing the High Court case could render their appeal “nugatory,” meaning it would become pointless.
They claimed the arbitration proceedings were “frivolous and vexatious” and brought prematurely, causing them “serious prejudice” if not halted.
Vantage opposed the application, arguing that the Court of Appeal lacked jurisdiction under the Arbitration and Conciliation Act, which limits court intervention in arbitration matters.
They also claimed the application was an “abuse of court process” and that Simba’s Notice of Appeal was filed late, making it invalid.
Justice Kihika overruled Vantage’s objections. He noted that Justice Ocaya’s November 2023 ruling was based on the Civil Procedure Act, not the Arbitration and Conciliation Act, giving the Court of Appeal jurisdiction.
“This Court would have jurisdiction to determine this application given that it arises from proceedings that were determined under the CPA and not the ACA,” Kihika ruled.
On the issue of the Notice of Appeal’s validity, Kihika ruled that only a full bench of three justices could decide its competence, not a single justice. He also dismissed Vantage’s claim that the application cited incorrect legal provisions.
“The quoting of the wrong law does not occasion any prejudice to the Respondents, nor does it occasion any miscarriage of justice,” he said.
Kihika found that Simba Properties raised a valid legal question about whether interim measures could be granted after arbitration ended, stating, “This is an arguable point of law that is not frivolous.”
While Kihika was not convinced that Simba would suffer irreparable damage, as the dispute involved ascertainable monetary losses, he agreed that denying the stay could render the appeal nugatory.
“I am convinced that this is a proper case for the grant of a stay in order that the application for leave to appeal and therefore, the attendant right of appeal is not rendered nugatory,” he concluded.
Kihika’s ruling delays Vantage’s efforts to enforce the $ 10 million arbitral award, giving Simba Properties a chance to pursue their appeal.
