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Court of AppealDismissedCivil Appeal (Application) E226 of 2020· [2022] KECA 630 (KLR)

Crop Health Technologies Ltd & 2 others v Agritechno East Africa Ltd

Court of Appeal
8 July 2022
4,011 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause an appeal pending arbitration, ruling its own rules don't allow staying an appeal already before it.

What this practically means

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Executive summary

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The applicants (Crop Health Technologies Ltd, Philip King'oo Tonde and Spire Bank Ltd) moved the Court of Appeal under section 6 of the Arbitration Act, Order 51 of the Civil Procedure Rules and sections 3A and 3B of the Appellate Jurisdiction Act seeking a stay of proceedings in the respondent's appeal against a High Court ruling (Okwany, J., 23rd April 2020) which had dismissed the respondent's summary judgment application for want of jurisdiction in light of an ICC arbitration clause. The applicants had lodged a Request for Arbitration with the ICC and sought to stay the appeal pending that reference. The Court framed two decisive questions: whether the appeal was arguable, and whether a case for stay of proceedings was established. It found the appeal arguable, raising jurisdictional questions including whether the arbitration agreement bound non-parties and whether filing an appearance and defence amounted to submission to jurisdiction. However, the Court held that Rule 5(2)(b) of the Court of Appeal Rules does not extend to staying proceedings of an appeal before the Court itself, being restricted to stay of execution or further proceedings in the superior court. Applying the stringent test for stay of proceedings, it held that determining the jurisdictional issue would not prejudice the ICC reference or render it nugatory, since the appeal concerns a question of law, not the merits. The Court abstained from interpreting section 6 of the Arbitration Act to avoid intruding into the merits of the appeal. The Motion was dismissed with costs to the respondent.

Key legal issues

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01

Whether Rule 5(2)(b) of the Court of Appeal Rules supports a stay of proceedings of an appeal pending arbitration

Holding

It does not; the rule is restricted to stay of execution or further proceedings in the superior court, or injunctive relief, pending appeal.

Reasoning

The Court examined the text of Rule 5(2)(b) and held that its orders are preservative of the substratum of an appeal from a superior court. An order staying the hearing of an appeal already before the Court of Appeal is outside the rule's scope, and the Court declined to stretch its rules of practice and procedure to accommodate the applicants' prayer.

p. 5
02

Whether the pending ICC arbitration would be prejudiced or rendered nugatory if the appeal proceeds

Holding

No; the appeal concerns a jurisdictional question of law which does not affect the merits of the rival claims to be determined in arbitration.

Reasoning

The Court applied the definition of 'nugatory' from Reliance Bank Ltd v Norlake Investments Ltd and held that determining whether section 6 of the Arbitration Act clothed the High Court with jurisdiction would not affect the ICC reference. The jurisdictional issue does not threaten the substratum of the intended Reference, so the stay test was not met.

p. 6
03

Whether the Court should pronounce on the effect of section 6 of the Arbitration Act on the application

Holding

The Court abstained from pronouncing on the effect of section 6 to avoid intruding into the merits of the pending appeal.

Reasoning

Although the Motion was anchored on section 6 of the Arbitration Act, the Court declined to interpret its effect on the applicants' Motion, reserving that question for the hearing of the appeal, since the appeal itself turns on whether section 6 took effect so as to clothe the High Court with jurisdiction.

p. 5
04

Whether the appeal is arguable

Holding

Yes; the respondent's appeal is arguable with the possibility of success and is not idle or frivolous.

Reasoning

The Court identified decisive jurisdictional questions raised in the grounds of appeal, including whether the arbitration agreement bound the 2nd and 3rd applicants, whether filing an appearance and defence amounted to submission to jurisdiction, and whether section 6 barred subsequent reference to arbitration, concluding the appeal was arguable.

p. 5

Legal principles established

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  • Rule 5(2)(b) of the Court of Appeal Rules applies only to stay of execution or further proceedings in the superior court from which the appeal is preferred, or injunctive relief pending appeal, and does not extend to staying proceedings of an appeal before the Court of Appeal itself.
  • Stay of proceedings is a grave judicial action with a high and stringent test because it interferes with a litigant's right to conduct litigation and access to justice.
  • A court's determination of a jurisdictional issue on appeal does not prejudice or render nugatory a parallel arbitration reference on the merits.

Court orders

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  1. 1.The applicants' Notice of Motion dated 5th October 2021 is dismissed with costs to the respondent

Authorities

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Legislation

  • Arbitration Actsection 6
  • Civil Procedure Actsection 6
  • Civil Procedure RulesOrder 51
  • Civil Procedure RulesOrder 36
  • Civil Procedure Actsections 1A, 1B, 3A, 3B
  • Court of Appeal RulesRule 5(2)(b)
  • Appellate Jurisdiction Actsections 3A and 3B
  • Constitution of KenyaArticles 25 and 159
  • UNCITRAL Model LawArticles 5 and 17(J)

Cases cited (3)

  • Anne Wanjiku Kibeh vs. Clement Kungu Waibara and IEBC
    [2020] eKLR

    Principles for determining whether an appeal is arguable

  • Reliance Bank Ltd vs. Norlake Investments Ltd
    (2002) 1 EA p.227

    Definition of 'nugatory' - not only worthless, futile or invalid, but also trifling

  • Kenya Wildlife Service vs. James Mutembei
    [2019] eKLR

    Stay of proceedings is a grave judicial action; the test is high and stringent

On appeal from
High Court of Kenya at Nairobi
HCCC No. E299 of 2019
Jurisdiction invoked
Sections 3A and 3B of the Appellate Jurisdiction Act, 1977; Rule 5(2)(b) of the Court of Appeal Rules; section 6 of the Arbitration Act

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Crop Health Technologies Ltd & 2 others v Agritechno East Africa Ltd", Case Analysis (2022). Civil Appeal (Application) E226 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/630/eng@2022-07-08

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