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Court of AppealDismissedCivil Appeal 253 of 2003· [2005] KECA 336 (KLR)

Charles Njogu Lofty v Bedouin Enterprises Ltd

Court of Appeal
16 September 2005
ROR.S.C. OmoloPWP.N. WakiWDW.S. Deverell
2,743 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that if you want a dispute sent to arbitration, you must apply when entering appearance - wait, and you lose that right.

What this practically means

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Executive summary

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The Court of Appeal dismissed the appellant's appeal against a High Court ruling by G.B.M. Kariuki, J (17 September 2003) refusing to stay H.C.C.C. No. 634 of 2003 and refer the dispute to arbitration under Clause 6(2) of a registered lease. The appellant, a landlord, had earlier sued and been sued in H.C.C.C. No. 1756 of 2000 over alleged breaches of the same lease; his application there for stay and reference to arbitration, made long after he entered appearance and filed his defence, was dismissed by Githinji, J. In the second suit, brought by the tenant seeking enforcement of a renewal option, the appellant applied for stay at the time of entering appearance. The Court endorsed Githinji, J's construction of section 6(1) of the Arbitration Act, 1995: a stay application must be made not later than entry of appearance, and the court must first satisfy itself on timing before considering the grounds in paragraphs (a) and (b). The Court held that the central issue in both suits - whether the tenant breached the lease - was already pending before the High Court because the appellant had lost his right to arbitrate it, making the arbitration agreement inoperative as to those issues under section 6(1)(a). It also rejected the respondent's argument that issues of law cannot be referred to arbitration, there being no such ground in section 6(1). The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Timing of an application for stay and reference to arbitration under section 6(1) of the Arbitration Act, 1995

Holding

The application must be made not later than the time of entering appearance; the 1995 Act changed the law from the repealed Cap 49 which allowed applications at any time after appearance.

Reasoning

The court adopted Githinji, J's construction that the latest permissible time for a stay application is entry of appearance, holding the object of section 6(1) was to ensure applications are made at the earliest stage. The court expressly agreed that the 1995 Act changed the law from Cap 49, which had allowed stay applications at any time after appearance.

p. 1
02

Whether the arbitration agreement was inoperative under section 6(1)(a)

Holding

Yes, as to the central issue of breach of lease, because that same issue is pending before the High Court in the earlier suit, the appellant having lost his right to refer it to arbitration.

Reasoning

Both suits turn on whether the respondent breached the lease. The appellant's late application in the first suit was rightly refused, so the breach question remains before the High Court. Referring the same issue to arbitration in the second suit would duplicate proceedings in two fora; hence the agreement is inoperative as to those issues.

p. 4
03

Whether issues of law are incapable of referral to arbitration

Holding

Rejected; section 6(1) contains no such ground for refusing reference.

Reasoning

The respondent contended that breach of lease was an issue of law a lay arbitrator could not determine. The court held the only grounds for refusing reference are those in section 6(1)(a) and (b) - nullity of the agreement or absence of dispute - and rejected the contention as having no basis in law and unsupported by authority.

p. 4

Legal principles established

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  • Under section 6(1) of the Arbitration Act, 1995, an application for stay and reference to arbitration must be made not later than the time the party enters appearance; the court must first satisfy itself on timing before considering the grounds in paragraphs (a) and (b).
  • Even if the conditions in section 6(1)(a) and (b) are satisfied, the court may reject a stay application not made at the time of entering appearance (or, if none, at the time of filing a pleading or taking a step).
  • Where the same issue is pending before the High Court because a party lost the right to arbitrate it, the arbitration agreement is inoperative as to those issues under section 6(1)(a).
  • There is no ground under section 6(1) of the Arbitration Act, 1995 for refusing reference to arbitration on the basis that the dispute requires determination of issues of law.

Court orders

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  1. 1.The appeal be and is hereby dismissed with the costs thereof to the respondent

Authorities

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Legislation

  • Arbitration ActSection 6(1)
  • Arbitration Act (Cap 49) (now repealed)Section 6(1)
On appeal from
High Court
H.C.C.C. No. 634 of 2003
Jurisdiction invoked
First appellate jurisdiction over an appeal from the High Court (arbitration/stay application under section 6 of the Arbitration Act, 1995)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Charles Njogu Lofty v Bedouin Enterprises Ltd", Case Analysis (2005). Civil Appeal 253 of 2003. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/336/eng@2005-09-16

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