Jane Muthoni Mukuna v Fsi Capital Limited [2015] eKLR

Key Facts

Issues

• The claimant contended that the employment relationship had ended, and thus there was no ongoing dispute to refer to arbitration. The primary remaining issues were the payment of terminal dues and the return of the motor vehicle logbook. The court acknowledged this argument and found that the respondent had not addressed it, further supporting the dismissal of the arbitration application.
• The court examined the timeliness of the respondent's arbitration application under Section 6(1) of the Arbitration Act, which requires such applications to be filed not later than when the party enters appearance. The application was filed on 12th June 2014, a month after the respondent filed its appearance on 13th May 2014. Precedents cited by the court, including TM AM Construction Group V Attorney General and Dr. Kennedy Amuhaya Wanyonyi V African Medical and Research Foundation, indicated that a one-month delay was sufficient reason to dismiss the application. The court concluded that the application was not timely filed, leading to its dismissal.
• The claimant asserted that the Industrial Court has exclusive jurisdiction under the Employment Act to handle matters of unfair termination and order damages. The respondent's attempt to refer the matter to arbitration was challenged on the grounds that the Industrial Court Act does not explicitly include arbitration as an alternative dispute resolution mechanism. The court referenced its own previous ruling in Dr. Kennedy Amuhaya Wanyonyi V African Medical and Research Foundation, where it concluded that the Industrial Court Act excludes arbitration in employment cases.
• The claimant opposed the arbitration referral on the grounds that it is an expensive and time-consuming process, contrary to the objectives of arbitration. The court agreed, stating that referring employment cases to arbitration often takes more time and incurs higher costs than resolving them in court. This consideration further supported the decision to dismiss the application.

Holdings

• The court held that Section 15 of the Industrial Court Act does not include arbitration as an alternative dispute resolution mechanism for employment cases, distinguishing it from Article 159(2)(c) of the Constitution which explicitly mentions arbitration. This excluded arbitration as a valid option for the employment dispute in this case.
• The court determined that referring employment disputes to arbitration is costly and time-consuming, contradicting the primary objectives of arbitration to save costs and expedite resolution. This reasoning further supported dismissing the application as against the interests of justice.
• The court dismissed the application to stay proceedings and refer the dispute to arbitration, finding it was filed late under Section 6(1) of the Arbitration Act (one month after the respondent filed its appearance). Precedents cited by the claimant confirmed that applications for stay must be made at the time of entering appearance, and delays are sufficient grounds for dismissal.

Remedies

Legal Principles

• The court adopted a purposive approach to interpret Article 159(2)(c) of the Constitution, emphasizing that arbitration’s primary purpose is to resolve disputes efficiently and economically. It concluded that referring employment disputes to arbitration in this context would undermine those objectives due to the inherent delays and costs involved, particularly disadvantaging the claimant.
• The Industrial Court applied the mandatory timing requirement under Section 6(1) of the Arbitration Act, finding the respondent’s application for a stay was filed one month after entering appearance, which the court held to be untimely. The court also reviewed the scope of the Industrial Court Act, concluding that arbitration is not a permissible alternative dispute resolution mechanism for employment disputes under its provisions, and emphasized that arbitration in such cases contradicts the purpose of cost and time efficiency.

Precedent Name

• Maru Piling & Geotechnical Contractors Ltd V Zakhem Construction
• Nectel (K) Limited V Eastern & Southern African Trade and Development Bank
• Eunice Soko Mlagui V Suresh Parmar
• Charles Njogu Lofty V Bedouin Enterprises Limited
• Dr. Kennedy Amuhaya Wanyonyi V African Medical and Research Foundation
• TM AM Construction Group V Attorney General

Cited Statute

• Arbitration Act
• Constitution of Kenya
• Industrial Court Act
• Employment Act

Judge Name

Passage Text

• It is also my opinion that reference of employment cases to arbitration is expensive and in many cases takes more time than reference of disputes to this court and that reference to arbitration therefore is against the very objectives of arbitration which is to save cost and time.
• Section 15 of the Industrial Court Act does not refer to arbitration as one of the forms of alternative dispute resolution unlike Article 159 (2)(c) which expressly refers to arbitration. My conclusion in the case was that the Industrial Court Act excludes arbitration in employment cases.
• The application was filed on 12th June 2014, exactly one month after filing appearance. As held by the courts in the precedents cited by the parties which I have referred to herein above, this is sufficient reason to dismiss the respondent's application.