In a covered skillet, heat the oil on high. Brown the lamb pieces, turning to brown each side every couple minutes or so, about 5 minutes total. While browning, season the lamb with salt and black pepper. Place lamb pieces into a bowl. Turn heat to low and add the onions. Cook, stirring occasionally, until the onions just begin to soften, 3-5 minutes. Add the chili pepper, garlic and tomato. Stir mixture under medium heat, scraping up any browned bits from the bottom of the pan with a wooden spoon or spatula. Add the curry powder and lamb and stir to coat everything thoroughly. Add the water, vinegar and bay leaf, and bring mixture to a boil. Turn heat to low, cover and simmer for 30 minutes.
Stir curry and add the potatoes. Simmer covered for another 15 minutes. Leave cover partially opened and cook for 15 minutes more. Taste for seasoning. If curry is still too soupy, cook uncovered over medium heat until the sauce reduces to desired consistency. Add the peas at the last minute of cooking (if using another vegetable that requires a little more softening, add sooner). Serve alongside steamed rice.