Automated Summary
Key Facts
The court ruled on a preliminary objection filed by the 2nd and 3rd defendants in Kamau v Joyroom Heights Limited (Environment & Land Case E245 of 2023) on 31 January 2024. The defendants argued the matter should be referred to arbitration under Clause 9 of the 2018 Project Development Agreement. The plaintiff opposed, claiming the objection was untimely under Section 6 of the Arbitration Act and contesting the agreement's validity. The court found the objection was filed promptly (one week after entering appearance) and determined the arbitration clause is valid and enforceable. The suit was struck out, and the matter referred to arbitration with 90 days for parties to appoint an arbitrator.
Transaction Type
Project Development Agreement
Issues
- Whether the notice of preliminary objection application complies with the procedural requirements of Section 6 of the Arbitration Act?
- Whether the arbitration clause is inoperative due to the presence of a non-party to the dispute?
- Whether the arbitration clause is valid?
- Whether the 2nd and 3rd Defendant have satisfied the grounds to refer the matter to arbitration?
Holdings
- The court found that the preliminary objection is merited under Section 6 of the Arbitration Act, as the application was made promptly after entering appearance. The court emphasized that the mandatory reference to arbitration applies if the application is filed without delay, which was satisfied in this case.
- The court struck out the suit and referred the matter to arbitration, directing the parties to appoint an arbitrator within 90 days. Each party was ordered to bear their own costs of the proceedings.
- The arbitration clause in the Project Development Agreement is valid and not inoperative, as the court affirmed the principle of separability under Kenyan law. The tribunal's jurisdiction to rule on its own competence (kompetenz-kompetenz) was also upheld, allowing the clause to survive potential voidness of the broader agreement.
Remedies
- The suit is struck out.
- Each party shall bear their own costs of these proceedings.
- The matter is referred to arbitration.
- Parties are directed to proceed with the appointment of an arbitrator within 90 days.
Legal Principles
- The court emphasized the requirement for prompt application under Section 6 of the Arbitration Act, holding that a preliminary objection must be filed immediately after entering appearance or acknowledging the claim. This procedural rule ensures timely dispute resolution and prevents unnecessary delays in arbitration referrals.
- The court applied the doctrine of separability of arbitration clauses (Section 4 and 17 of the Arbitration Act) and the principle of kompetenz-kompetenz, which allows arbitral tribunals to determine their own jurisdiction. These principles ensure arbitration clauses remain enforceable even if the main contract is void and empower tribunals to rule on their jurisdiction independently.
Precedent Name
- Kenneth Kinoti Muriuki & 5 Others v Dinara Developers Limited & Another (2020) eKLR
- Mukisa Biscuits Case
- Techno Service Limited v Nokia Corporation & 3 Others [2021] eKLR
- Niazsons (K) Ltd v China Road Bridge [2001] eKLR
- Mt Kenya University v Step Up Holding (K) Ltd [2018] eKLR
- Euromec International Limited v Shandong Taikai Power Engineering Company Limited (Civil Case E527 of 2020) [2021] KEHC 93 (KLR) (Commercial and Tax)
- Nitin Properties Ltd v Singh Kalsi & Another [1995] eKLR
Key Disputed Contract Clauses
Clause 9 of the Project Development Agreement dated 15th August 2018, which provides for arbitration as the preferred dispute resolution method.
Cited Statute
- Arbitration Rules of 1997
- Arbitration Act of 1995
Judge Name
EK WABWOTO
Passage Text
- The Court of Appeal in Nitin Properties Ltd v Singh Kalsi & another [1995] eKLR highlighted the principle when it stated: "A Preliminary Objection raises a pure point of law, which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion"
- Section 6 of the Arbitration Act stipulates: "A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance... stay the proceedings and refer the parties to arbitration unless it finds: (a) That the arbitration agreement is null and void, inoperative or incapable of being performed; or (b) That there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration."
- The Court found that: "I find that the reference was raised in accordance to Section 6 of the Arbitration Act. The Court hereby finds that the preliminary objection dated 15th August 2023 is merited. The suit is struck out and the matter referred to arbitration."