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Court of AppealDismissedCivil Appeal No. 325 of 2000· [2004] KECA 91 (KLR)

China Road and Bridge Corporation (Kenya) v D.M.K. Construction Ltd [2004] KECA 91 (KLR)

Court of Appeal
9 July 2004
2,525 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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If you agree to settle a dispute through arbitration but then sue in court over the same issue, you lose your right to arbitration.

What this practically means

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Executive summary

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This Court of Appeal decision arises from a sub-contract dispute between China Road and Bridge Corporation, a foreign contractor registered in Kenya, and D. M. K. Construction Limited over the construction of a 26-kilometre road towards Hola. On 7th April 1999, Onyango Otieno J stayed H.C.C.C. No. 256 of 1999 and referred the dispute to arbitration under Section 6 of the Arbitration Act, 1995. The appellant then instituted two suits against Stallion Insurance Company Ltd seeking recourse to the Performance Bond and Advance Payment Bond. The respondent applied for review of the reference orders, contending the appellant had waived its right to arbitrate by conduct. The High Court allowed the review and directed that the case proceed in court. The appellant appealed, arguing the judge failed to give effect to the mandatory provisions of Section 6(1)(a) and (b) of the Arbitration Act and that the insurance suits were severable with distinct causes of action. The Court of Appeal dismissed the appeal. It held that the appellant's subsequent filing of suits could be construed as showing it was no longer ready and willing to do all things necessary to the proper conduct of the arbitration, and that maintaining two disparate tribunals concurrently determining multiple suits with the same facts and law is undesirable, adopting Taunton Collins v Cromic. It further held that failure to cite the correct provision in the review application was not fatal under Order L rule 12 of the Civil Procedure Rules. The decision binds lower courts on waiver of arbitration rights by conduct and the undesirability of parallel proceedings.

Key legal issues

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01

Whether the appellant's subsequent filing of suits against the insurers amounted to a renunciation of arbitration warranting review of the order referring the dispute to arbitration

Holding

The filing of the two subsequent suits could properly be construed as showing the appellant was no longer ready and willing to do all things necessary to the proper conduct of the arbitration, justifying review of the reference orders

Reasoning

The Court of Appeal held that the act of lodging suits against the insurer over the Performance Bond and Advance Payment Bond, the very reliefs the respondent sought to protect in H.C.C.C. No. 256 of 1999, demonstrated the appellant was no longer ready and willing to perform its obligations under the arbitration agreement. The learned Judge could not be faulted for reviewing his orders so the suit could proceed in court.

p. 3
02

The undesirability of parallel court and arbitral proceedings on the same facts

Holding

It is undesirable for a court and an arbitrator to concurrently determine multiple suits with the same facts and law, and this supports review of a reference to arbitration

Reasoning

The court adopted the English authority of Taunton Collins v Cromic, holding that the reliefs sought in the two insurance suits included orders to stop recourse to the Performance and Advance Payment Bonds, and a decision by the arbitrator might contradict decisions by the court in those suits and vice versa, which would ridicule judicial process.

p. 3
03

Whether misstatement or omission of the legal basis of the application for review was fatal

Holding

It was not fatal: under Order L rule 12 of the Civil Procedure Rules no application shall be refused merely by reason of failure to state the provision under which it is made

Reasoning

The Notice of Motion cited Order 44 Rules 1 and 2, Order 50 Rule 17 and Section 3A of the Civil Procedure Act. The court held that even if the wrong provisions were cited, Order L rule 12 cures the omission, and since the appellant was generally asking for review, the application was properly made under Order XLIV rule 1(1) on the ground of sufficient reason.

p. 4

Legal principles established

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  • A party who, after obtaining a stay of proceedings pending arbitration, institutes other suits seeking reliefs touching the same subject matter, by conduct waives its right to rely on the arbitration clause and may have the order of reference to arbitration reviewed
  • It is undesirable to maintain two disparate tribunals (the Court and an Arbitrator) concurrently determining multiple suits with the same facts and law; such circumstances constitute special reasons justifying refusal of a stay or review of an order of reference to arbitration
  • Under Order L rule 12 of the Civil Procedure Rules, the failure to state, or to state correctly, the provision under which an application is made is not fatal to the application

Court orders

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  1. 1.The appeal is dismissed with costs

Authorities

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Legislation

  • Arbitration ActSection 6(1)(a) and (b); Section 2
  • Arbitration RulesRule 2
  • Civil Procedure ActSection 3A
  • Civil Procedure RulesOrder 44 Rules 1 and 2; Order XLIV rule 1(1); Order 50 Rule 17; Order L rule 12
  • Companies Act

Cases cited (3)

  • TAUNTON COLLINS VS. CROMIC & ANOTHER
    [1964] 2 All E.R. 332
  • EXPARTE YOUNG IN RE KITCHIN
    CA 669
  • R. D. HARBOTTLE (MERCANTILE) LTD AND ANOTHER VS. NATIONAL WESTMINISTER BANK LTD. & OTHERS
    [1977] 2 All ER 862
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 256 of 1999
Jurisdiction invoked
First appeal from the High Court under the Court of Appeal's appellate jurisdiction (the judgment does not cite the specific constitutional/statutory provision)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "China Road and Bridge Corporation (Kenya) v D.M.K. Construction Ltd [2004] KECA 91 (KLR)", Case Analysis (2004). Civil Appeal No. 325 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2004/91/eng@2004-07-09

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.