by Vanessa Njihia and Elijah Mwangi Njeru

Consider the following scenario: ‘’A beautiful sea shell is washed ashore after a storm. A man picks it up and puts it in his pocket. A second man comes along and takes it away from him by force. The first man sues to recover the shell, and he is met with the argument that he never owned it at all. How does the legal system respond to this claim? How should it respond? The questions just put can recur in a thousand different forms in any organized legal system. The system itself presupposes that there are rights over given things that are vested in certain individuals within that system.’’ These are some of the questions pondered by American legal scholar, Richard Epstein, whilst musing on possession and the root of title.

In answering the questions raised, it is noted that the courts, when faced with a case of two or more titles over the same land, have adopted the practice of requiring an investigation so that it can be discovered which of the two titles should be upheld. This investigation must start at the root of the title and follow all processes and procedures that brought forth the two titles at hand. It follows that the title that is to be upheld is that which conformed to procedure and can properly trace its root without a break in the chain. In following this line of thought, a burden is therefore placed on purchasers wishing to purchase land to investigate the title they intend to purchase by way of the doctrine of caveat emptor, hence all land transactions in Kenya have to be preceded by rigorous and multifaceted title searches. The burden lies on a purchaser to undertake due diligence to acquire good title.

Currently, the courts are bogged down with a myriad of cases involving multiple parties claiming ownership of disputed property with the concept of a bona fide purchaser being amongst the most commonly cited defenses in cases of fraud.

To combat this, the Supreme Court in Dina Management Limited v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (21 April 2023) considered the question of the level of due diligence that should be undertaken to support a claim that one is a bona fide purchaser of land.

In this case, the dispute arose with respect to the ownership of Property Title Number MN/1/6053 situated in Nyali Beach, Mombasa County. The suit property was allocated and thereafter a freehold Title over the property issued to the first registered owner by the Commissioner of Lands in 1989.The suit property was thereafter sold to a subsequent purchaser and eventually sold to the Appellant In the ensuing period, the County Government of Mombasa entered the suit property, which was adjacent to the beach, demolished the perimeter wall facing the beachfront and flattened the property to the same level of the beach, on the premise that the land was designated as an open space, and thus was not available for alienation to a private party.

The court held that to benefit from the defence of that one is a bona fide purchaser of land, a purchaser shall now be required to take such steps as necessary to investigate the history of the land and “go to the root of the title’’ as opposed to simply concluding that the title held by the seller is evidence of the seller’s absolute and indefeasible title.

The Supreme Court of Kenya reiterated this position, expounding on the concept of a bona fide purchaser without notice, in the case of Torino Enterprises Limited v Attorney General (Petition 5 (E006) of 2022) [2023] KESC 79 (KLR) (22 September 2023) (Judgment) and issued a definitive judgment regarding a contentious 90-acre parcel of land in Embakasi, asserting that neither the Department of Defence nor Torino Enterprises can substantiate valid ownership. Consequently, the court declared Nairobi County, the lawful successor to the now-defunct Nairobi City Council, as the rightful owner of the disputed property. Historically, this land was originally allocated to Kayole Estates Limited on February 21, 1964, before being subsequently transferred to the Nairobi City Council. However, in 2011, Torino Enterprises Ltd laid claim to the property, asserting their acquisition of it from Renton Company for a 99-year term, commencing in 2000, for a sum of Sh 12 million. Torino Enterprises further maintained its position as the registered proprietor, citing a certificate of title issued on April 26, 2001.

In answer to the question of whether Torino Enterprises is an innocent purchaser. The court ruled in the negative. It stated that the buyer must have done their due diligence and even visited the site of the land they were purchasing to check whether the land was as advertised and free from any impediments that may restrict them from enjoying their property.

The requirements set out in the above cases raise doubts on the system of Land Registration adopted in Kenya which is premised on the fact that the register maintained by the Government is conclusive evidence of the title of the person who is registered as the owner of land and that one does not need to “go to the root of the title” to establish such title. Balancing the need for due diligence with the principles of Land Registration, under the Land Registration Act, presents a practical complex challenge and it is an area that calls for very careful consideration by the courts.

Furthermore, if the concept of an innocent purchaser for value becomes less reliable owing to the need for heightened investigation of title obligations, it can have a biting repercussion on the property market. Purchasers are likely to become hesitant and financial institutions may enforce more restrained lending practices which can slow down property transactions and impact market liquidity. An increased burden on purchasers can lead to practical difficulties like determining the extent of their due diligence obligations which could result in unintentional non-compliance.

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by Vanessa Njihia and Elijah Mwangi Njeru

Arbitration is a fast-moving express train, having become popular amongst aggrieved parties, particularly construction and development stakeholders in Kenya. With new awards and court decisions of significance cropping up daily, these new developments tinker with and/or revamp our understanding of arbitration statutes necessitating a more analytical review of any recent developments and evaluating these decisions against the existing court arbitration structure and framework.

In attempting to fill in this niche, this brief article attempts to capture and examine the recent developments in Arbitration proceedings and contextualize them within the broader framework of the arbitration act.

Legal Framework

Currently in force and governing arbitration matters in Kenya is the Arbitration Act 1995 and the Arbitration Rules of 1997. Both were subsequently amended in 2009 by the passing of the Arbitration (Amendment) Act 2009.

The principle of finality and minimal court interference

The principle of finality of an Arbitral Award is a recurrent theme in the Arbitration Act. The Arbitration Act prescribes a limited scope for courts in Kenya to set aside an arbitral award under section 35 of the Act. While there are limited prescribed circumstances in which the courts in Kenya will intervene in matters or disputes that are subject to arbitration proceedings, the practice of the courts has been to limit court interventions to those cases where there has been unfairness or misconduct in the decision-making process or in order to prevent an injustice from occurring and to restore confidence in the process of administration of justice.

In practice, the courts have upheld and promoted this principle and considered the threshold that would warrant intervention and/or setting aside of an Arbitral Award or an appeal to the Court of Appeal in the following cases:

It is evident from the foregoing that there is room for growth in the area of arbitration in Kenya. In spite of the goodwill and commitment of major stakeholders such as the judiciary , parliament and the government to promote arbitration and other forms of ADR mechanisms in Kenya, there remain challenges. While the Arbitration Act 1995 and the Arbitration Rules 1997 attempt to define the scope of arbitration in Kenya, there still exist gaps in the legal framework, in particular, in the very limited means of redress by parties aggrieved by Arbitral Awards. Other challenges include the cost of arbitration which are often exorbitant, a lack of sufficient and/or experienced arbitrators and the mounting perception of corruption by Arbitrators.

These issues will need to be addressed if Kenya is to experience real growth in domestic and even international arbitration.

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