Damaris Wanjiru Nganga v Loise Naisiae Leiyan & another [2015] KEELC 303 (KLR)

Section 6(1) obliges a court to stay proceedings unless the arbitration agreement is null and void, inoperative or incapable of being performed, or there is no dispute. The court found a real dispute as to performance of the contract. However, the plaintiff's ultimate prayers required KCB to discharge the charge and release the title; KCB was not party to the arbitration clause, could not be compelled before the arbitrator and would not be bound by any award. Referring the matter would therefore be futile since a key issue could not be determined in arbitration, rendering the clause inoperative.

Counsel for the plaintiff relied on UAP vs Beckett, where an admitted liability of Kshs 6,000,000 meant nothing remained for arbitration. Here, the vendor's letter made completion conditional on payment of Kshs 520,334 into her loan account, which was not acceded to, and the property remained untransferred. Without knowing what the defendant intended to file in the proceedings, the judge hesitated to find an admission; the unresolved question of contractual performance was itself a dispute within the arbitration clause.

The plaint ambiguously described the sole vendor as 'first defendant' and described KCB both as interested party in the heading and as second defendant in the body, while seeking substantive orders against KCB. The court held that a person against whom orders are sought must be a defendant so they may oppose or concede the claim, and found it impossible to construe KCB as a mere interested party. This ambiguity in turn supported the conclusion that KCB was a necessary party whose presence defeated the reference to arbitration.