Abok J. Odera v Kenya Posts & Telecommunications Corporation [1996] KECA 204 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that you lose the right to refer a dispute to arbitration if you first file pleadings and argue the case in court.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable, particularly as to the correct construction and effect of section 6 of the new Arbitration Act, 1995
- 2.Whether the intended appeal, if successful, would be rendered nugatory if stay of the superior court's order is not granted
Key legal issues
#Whether the intended appeal was arguable on the construction of section 6 of the Arbitration Act, 1995
The Court found arguable points: that the respondent's application for stay, filed after its defence and after its grounds of objection, was out of time under section 6(1); that the learned Judge failed to consider section 6(1)(a) given the respondent's own plea that the contract was null and void; and that the Judge failed to consider whether conditions precedent to arbitration (clause 218.01 of the Conditions) had been fulfilled.
The Court compared section 6(1) of the old Act with the new provision and drew on Law J.A.'s observations in Maluki v Oriental Fire. Filing a defence joining issue on the merits, and grounds of objection to summary judgment, could constitute pleadings or steps in the proceedings after which a stay application would be incompetent. The Judge also ignored the statutory exceptions in section 6(1)(a) and the unfulfilled conditions precedent to arbitration.
Whether the intended appeal would be rendered nugatory if stay was not granted
The Court held the appeal would be rendered nugatory because, under section 6(2) of the new Act, arbitration proceedings could be commenced and an award made while the matter was pending, depriving the applicant of its suit being determined by a court of law if the appeal succeeded.
Section 6(2) permits arbitral proceedings to continue notwithstanding a pending section 6(1) application. In the absence of evidence to the contrary, arbitration would proceed and an award be given, so the applicant would lose its day in court if the appeal later succeeded. Stay was therefore warranted.
Legal principles established
#- An applicant for stay under Rule 5(2)(b) must satisfy two conditions: that the intended appeal is arguable and that, if successful, it would be rendered nugatory unless stay is granted.
- An application for stay under section 6(1) of the Arbitration Act, 1995 must be made not later than the time the party enters appearance, files any pleadings or takes any other step in the proceedings; filing a defence joining issue on the merits may amount to taking a step in the proceedings or a waiver of the right to seek a stay.
- Even though section 6(1) of the new Arbitration Act is a carte blanche, its application can be subject to abuse of process.
Court orders
#- 1.Stay of execution of the order of the High Court (Ole Keiwua J) of 10th June 1996 staying proceedings and referring the dispute to arbitration, pending the determination of the intended appeal
- 2.Costs to be in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 518 of 1996
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules (application for stay of execution pending intended appeal)
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
the two conditions which the applicant should satisfy in order to obtain the order that it seeks, are that its intended appeal is not a frivolous one; in other words, that it had an arguable ground to canvass during the intended appeal; and secondly, that the intended appeal, if it succeeds, would be rendered nugatory if stay of the order of the superior court, is not granted.
We are not inclined to hold the view that simply because section 6(1) of the new Arbitration Act constitutes a carte blanche, its application cannot therefore, be subject to abuse.
In the result, and for the reasons we have given herein before, the applicant's application for stay succeeds. Costs will be in the appeal. It is so ordered.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Abok J. Odera v Kenya Posts & Telecommunications Corporation [1996] KECA 204 (KLR)", Case Analysis (1996). Civil Application No. Nai. 206 of 1996 (UR.76/96). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1996/204/eng@1996-07-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.