Roko sued Pearl Marina seeking to stop enforcement of a performance and advance payment guarantee worth over $1.7m PHOTO / FILE
Imagine two companies get into a fight over a contract. Instead of going to a regular court, they choose to settle their fight through arbitration, which is like hiring a private judge to sort things.
Now, at the end of the arbitration, there is not just a winner and a loser. There’s also a bill for the arbitrator’s time, admin fees, legal costs, and yes, even refreshments.
The big question is: Who pays for what? That’s where a case (Roko Construction vs Pearl Marina Estates) steps in to say: “Hey, it’s not the High Court’s job to decide who pays how much in arbitration - it’s up to the arbitrators themselves.”
The argument is that it is the arbiter who decides who pays for the costs, explains why, and even does the math.
But if the arbitrator doesn't finish the cost math, then the winning party can still go to the High Court Registrar and ask for a reimbursement of half the arbitration fees, provided they paid the full amount upfront.
That is the law’s way of saying: “Even if the arbiter left the bill halfway done, the winner shouldn’t walk away empty-handed.” Why? Because you can’t have a right without a remedy.
The genesis
It all began when Roko won an arbitration against Pearl Marina Estates.
Roko had sought an injunction to stop Pearl Marina from enforcing a performance guarantee and an advance payment guarantee worth over $1.7m that Pearl Marina had attempted to cash, claiming that Roko had breached the construction contract by failing to complete the work.
However, Roko maintained it had fulfilled its obligations and accused Pearl Marina of trying to wrongfully encash the guarantees.
The dispute led to an arbitration, in which Justice Harriet Grace Magala of the High Court Commercial Division on July 24, 2023, ruled that Roko had established its contractual rights, while Pearl Marina was in breach.
As the successful party, Roko was awarded costs of the arbitration, meaning Pearl Marina was ordered to cover expenses like lawyer fees and arbitration costs.
But there was a problem: while the arbiter granted Roko costs, she did not state exactly how much Pearl Marina should pay.
Under the Arbitration and Conciliation Act, this is required - the arbiter must determine who pays and how much they pay. Without specific amounts, the award is incomplete.
Roko then turned to the High Court Registrar, asking her to assess the costs.
But the Registrar declined, explaining that she lacked jurisdiction to determine or apportion arbitration costs, which, according to the law, is solely the arbiter’s job.
Roko argued that since the High Court had recognised and adopted the arbitration award, the Registrar should be able to assess the costs just as with a normal court judgment.
But court disagreed, arguing that recognition of an arbitral award doesn’t allow the Registrar to alter it - it only makes it enforceable as it stands.
This was a missed opportunity
The law allows a party to request an ‘additional award’ under the Arbitration and Conciliation Act within 30 days of the final decision.
This could have been used to ask the arbiter to fix the missing cost details. But Roko didn’t do this.
Because the arbiter did not specify costs, and Roko missed the chance to request an addition, the law requires each party to pay its legal costs and share arbitration fees equally.
Rejected
Roko’s attempt to shift the cost burden onto Pearl Marina via the Registrar was rejected, with court emphasising that the Registrar’s powers are limited to taxing costs between lawyers and clients, or between parties in court cases, not arbitration matters.
The argument was that even if a tribunal orders one side to pay, it must quantify the amount. If it doesn’t, no one else can fix it.
Furthermore, the Arbitration Act makes it clear that you can only challenge an arbitration award on a point of law, not facts.
Even then, the court has limited options: it can confirm, vary, set aside, or refer the matter back to the tribunal.
But in this case, the court noted that Roko never asked for a correction, nor did it preserve a right of appeal.
In summary, Roko won the arbitration but failed to follow through on the legal process required to have its costs enforced.
The law requires arbitrators to assign responsibility and quantify amounts.
Since this didn’t happen and Roko didn’t ask to fix it, the Registrar and the court couldn’t help.
In interpreting sections of the Arbitration and Conciliation Act, court emphasised the importance of determination and apportionment of costs, which are not optional.
The law deliberately uses the word “and,” meaning the arbiter must not only decide who pays the costs but also how much they pay.
Courts are required to respect every word of the statute, so unless both determination and apportionment are done, courts cannot fill the gap.
Apportionment
Apportioning costs isn't just a box-ticking exercise. It requires the tribunal to weigh several factors, such as who succeeded on key issues, whether either party behaved unreasonably, the overall complexity of the matter, and whether legal fees claimed were reasonable.
For instance, even if one party wins, they might still bear some costs if they caused delays or lost on important points. This is why the tribunal, not the court, is best placed to handle this.
As Stephen Muburu, the judge in the Roko case, put it: “Apportionment is a delicate, discretionary task best handled by the tribunal. Courts should not interfere unless the tribunal completely neglects this obligation or violates clear legal principles.”
Methods
Arbiters use different approaches to determine who owes what. Some may assign percentages based on each party’s success. Others may consider the time spent versus losing arguments.
The outcome could be standard apportionment (each party bears their own legal costs and splits tribunal fees), partial apportionment (based on relative success or failure), or full apportionment (loser pays everything).
Regardless of the method chosen, the tribunal is mandated to go a step further and quantify the costs to meet the legal requirement of apportionment.
A silent tribunal
In this case, the arbiter ruled that Roko should be awarded costs, but didn’t quantify them, which case the law says that if the tribunal fails to determine costs, each party pays its legal fees, while arbitration fees are split 50/50.
This is a default legal rule, not an invitation for courts to step in. Courts can enforce the default, but cannot modify or supplement the award.
The court also rejected the reasoning in an earlier case (Katamba v. Magala) where the Registrar had taxed arbitration-related costs.
In the Roko case, the judge held that enforcing an arbitration award doesn’t give courts or registrars the power to improve or complete it.
The Registrar can’t rewrite or fill in missing parts of an award, even if it’s been adopted as a court decree.
Reclaim arbitration fees?
The Arbitration and Conciliation Act creates a right to reimbursement if the successful party pays all arbitration fees to keep the process alive - they have a legal right to recover half from the losing side.
The problem in this case is that the Registrar did not confirm whether tribunal fees had been paid, so the reimbursement issue was left hanging.
The court found that the Registrar erred by not clarifying this fact and ensuring Roko was compensated accordingly.
The Roko case reminds parties in arbitration to follow legal procedures closely - otherwise, even winning isn’t enough to secure full costs.
