Woman Who Lost Life Savings Wins Ksh41 Million Case Against Cytonn Investments

The legal battle between Cytonn Investments Management PLC and Margaret Mary Njuguna took a pivotal turn at the High Court in Nairobi, with the High Court consolidating the two matters and hearing them together.

The Cytonn Dispute

The case stems from a financial dispute in which Njuguna, a retiree, invested her life savings in a product managed by Cytonn.

Dissatisfied with the outcome of the investment, she pursued arbitration, resulting in an award of Kshs. 41.4 million plus compound interest from October 1, 2021, in her favor.

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The award, issued on January 31, 2023, by sole arbitrator Mercy Nduta Mwangi, was challenged by Cytonn in the High Court. 

Dual Applications

Cytonn’s application (Misc. Arb. No. 030 of 2023), filed on 2 May 2023, sought to set aside the arbitral award under Section 35 of the Arbitration Act.

Njuguna’s application (Misc. Arb. No. E018 of 2023), filed earlier on 1 March 2023, sought to enforce the same award under Section 36 of the Act.

The firm sought to set aside the award, citing:

• Lack of a valid arbitration agreement,
• Arbitrator bias and undue influence,
• Conflict with Kenya’s public policy,
• Denial of a fair hearing.

Njuguna’s application (Misc. Arb. No. E018 of 2023), filed earlier on 1 March 2023, sought to enforce the same award under Section 36 of the Act.

Time Barred Challenge

Justice Mugambi first addressed Cytonn’s application to set aside the award. The court found that the application had been filed outside the 90-day statutory window provided under Section 35(3) of the Arbitration Act. 

As a result, the court held that it lacked jurisdiction to entertain the matter and struck out the application.

“The court found that the applicant’s application dated 1st May 2023 and filed in court on 2nd May 2023 was filed out of time. The court concluded, therefore, that it had no jurisdiction to hear the application, and struck it out,” the judge ruled.

 The court then granted enforcement of the award, adopting it as a judgment of the court.

Appeal to the Court of Appeal

Unhappy with the outcome, Cytonn filed a notice of appeal and moved to the Court of Appeal seeking leave to appeal the High Court’s ruling, and a stay of execution of the award pending appeal.

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The firm argued that the High Court had erred in its interpretation of statutory timelines and failed to consider critical objections under the Arbitration Act.

Respondent’s Reaction

For Margaret Mary Njuguna, the High Court’s decision to enforce the arbitral award was a moment of clarity.

Njuguna firmly opposed Cytonn’s attempt to set aside the award, viewing it as a delaying tactic that lacked legal merit.

She maintained that the arbitral award had been lawfully and fairly obtained, and that Cytonn’s challenge was not only filed out of time but also failed to meet the legal threshold required to overturn such an award.

Her legal team emphasized that the High Court had acted within its jurisdiction and followed the law in striking out Cytonn’s application. 

For Njuguna, the court’s decision to adopt the award as a judgment was a critical step toward recovering her investment and restoring her financial stability.

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