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ELCPartially Allowed· [2017] KEELC 1869 (KLR)

Rajinder Kumar Mandal v Anil Kumar Mandal & another [2017] KEELC 1869 (KLR)

Environment and Land Court
15 September 2017
MGMARY M. GITUMBI
2,261 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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If you sign an agreement with an arbitration clause in Kenya, courts will send you to arbitration even if you claim the agreement is time barred.

What this practically means

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Executive summary

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The court was called upon to determine two competing applications in a family property dispute over L.R. No. 209/8569 along Waiyaki Way, Nairobi, a commercial property held by four tenants in common in equal shares following a 1979 transfer by Yash Dev Khosla. The Plaintiff, through his donee of Power of Attorney Shamy Rajinder Kumar Mandal, sought a temporary injunction restraining the 1st Defendant from collecting the Plaintiff's 25% share of rental income, audited accounts for 12 years, and an order directing the 2nd Defendant (the tenant) to remit rent directly to the Plaintiff. The 1st Defendant opposed, revealing that a Deed of Family Settlement executed in 1996 had reallocated the family's six properties, allocating the suit property to him and the Mombasa property to the Plaintiff, and that clause 3.1 of the Deed required disputes to be referred to arbitration. He sought a stay of proceedings and setting aside of the interim injunction. The Plaintiff admitted the Deed's existence but argued it was time barred under section 4(1) of the Limitation of Actions Act and therefore no longer in force. Applying section 10 of the Arbitration Act and the Kenya Airports Parking Services decision, the court held it lacked jurisdiction to rule on the validity of the arbitration agreement, such issues being for the arbitral tribunal under section 17(1). The Second Application was allowed in its entirety, the dispute referred to arbitration, the First Application dismissed, and costs made costs in the cause.

Key legal issues

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01

Whether the court should refer the dispute to arbitration where the Plaintiff contends the Deed of Settlement containing the arbitration clause is time barred under section 4(1) of the Limitation of Actions Act

Holding

Yes; the court cannot rule on the validity or time-bar of the arbitration agreement and must stay proceedings and refer the parties to arbitration.

Reasoning

The court found no contention that an arbitration agreement existed in the Deed of Settlement. Relying on Section 10 of the Arbitration Act and the decision in Kenya Airports Parking Services Ltd v Municipal Council of Mombasa, it held that a court lacks jurisdiction over disputes the parties agreed to arbitrate, even where a party challenges the agreement's validity. Such challenges must be raised before the arbitral tribunal, which under Section 17(1) determines its own jurisdiction.

p. 4
02

Whether the Plaintiff's First Application for injunction and accounts should be granted

Holding

No; it was dismissed following the referral to arbitration.

Reasoning

Since the whole dispute was referred to arbitration in accordance with the Deed of Settlement, the interim relief sought in the First Application could not stand. The Second Application, which also sought setting aside of the interim injunction of 9th July 2015, was allowed in its entirety, necessitating dismissal of the First Application.

p. 4

Legal principles established

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  • Where parties have agreed to refer disputes to arbitration, the court lacks jurisdiction to determine the validity of the agreement, including its time-bar challenge; such issues are for the arbitral tribunal under the competence-competence principle.

Court orders

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  1. 1.Stay of these proceedings pending arbitration in accordance with the Deed of Settlement
  2. 2.Reference of the dispute to arbitration in accordance with the Deed of Settlement
  3. 3.Discharge of the interim injunction orders granted on 9th July 2015 (sought and allowed as part of the Second Application)
  4. 4.Dismissal of the Plaintiff's Notice of Motion dated 1st July 2015
  5. 5.Costs in the cause

Authorities

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Legislation

  • Limitation of Actions Actsection 4(1)
  • Arbitration Actsection 6(1)
  • Arbitration Actsection 10
  • Arbitration Actsection 17(1)

Cases cited (2)

  • Kenya Airports Parking Services Ltd versus Municipal Council of Mombasa
    (2010) eKLR
  • Anne Mumbi Hinga versus Victoria Njoki Gathara
    (2009) eKLR
Jurisdiction invoked
Environment and Land Court jurisdiction (not expressly cited); Arbitration Act sections 6(1), 10 and 17(1); Limitation of Actions Act section 4(1)

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, "Rajinder Kumar Mandal v Anil Kumar Mandal & another [2017] KEELC 1869 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1869/eng@2017-09-15

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