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ELCDismissed· [2018] KEELC 798 (KLR)

Carol Nasimiyu Myendo v Bamboo Development Limited [2018] KEELC 798 (KLR)

Environment and Land Court
15 November 2018
BEB M Eboso
2,287 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A company that waits too long to ask a Kenyan court to send a dispute to arbitration loses that right for good.

What this practically means

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Executive summary

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The defendant, Bamboo Development Limited, applied by notice of motion dated 29/8/2017 for a stay of the plaintiff's proceedings pending reference of the dispute to arbitration under an arbitration clause in an agreement for sale dated 30/4/2012 for Apartment A8 on LR 2/244. The plaintiff opposed, arguing first that under Section 6(1) of the Arbitration Act an application for stay must be made no later than the time of entering appearance, which the defendant had done on 27/6/2017; and secondly that the defendant's advocates' letter of 20/1/2017 admitted receipt of the full purchase price, the existence of a charge in favour of Co-operative Bank Limited, and the failure to register the plaintiff's lease, leaving no dispute capable of arbitration - only the enforcement of the contract through specific performance, discharge of the encumbrance and handover of title documents. The court framed two questions: whether the application was fatally defective for being brought after appearance, and whether there was a dispute capable of referral. Holding that Section 6(1) is mandatory ('shall') and that prevailing jurisprudence denies stay to parties who miss the statutory window, the court found the application filed 68 days late and therefore incompetent. It further found, guided by Section 6(1)(b) and Court of Appeal authority, that no genuine dispute existed on the materials, including the defendant's own admissions. The notice of motion was dismissed with costs to the plaintiff. The main suit seeking specific performance, discharge of the charge, delivery of title documents and damages remains to be determined.

Key legal issues

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01

Timeliness of an application for stay under Section 6(1) of the Arbitration Act

Holding

The application, filed 68 days after entry of appearance, was incompetent as the statutory window had closed

Reasoning

Section 6(1) uses the word 'shall', making the timeline mandatory. Kenyan jurisprudence, including the Court of Appeal authorities relied on, holds that a party who fails to apply by the time of entering appearance loses the right to seek stay and referral. The defendant entered appearance on 27/6/2017 and filed the application on 4/9/2017, 68 days late, so stay and referral orders were unavailable.

p. 2
02

Existence of a dispute capable of referral to arbitration

Holding

No dispute existed; the defendant's advocates' letter of 20/1/2017 admitted receipt of the full purchase price and promised to facilitate discharge of the charge and registration of the lease

Reasoning

Under Section 6(1)(b) the court must ascertain whether there is in fact a genuine dispute. The materials disclosed no dispute as to the parties' obligations; the defendant's letter admitted full payment, acknowledged the charge in favour of Co-operative Bank, and confirmed it was working towards a partial discharge and registration of the lease. What remained was enforcement of the contract, not a dispute for an arbitrator.

p. 3

Legal principles established

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  • A party seeking a stay of proceedings and referral to arbitration under Section 6(1) of the Arbitration Act must apply not later than the time of entering appearance; a party who does not comply loses the right to seek stay and referral orders
  • Section 6(1) of the Arbitration Act is mandatory, as Parliament used the word 'shall'
  • Before a case is stayed and referred to arbitration there must be an actual dispute between the parties with regard to the matters agreed to be referred

Court orders

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  1. 1.The notice of motion dated 29/8/2017 is dismissed for lack of merit
  2. 2.The plaintiff shall have costs of the application

Authorities

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Legislation

  • Constitution of Kenya 2010Article 159, Articles 159(2)(c), 2(5), 2(6)
  • Arbitration Act, No. 4 of 1995Sections 6(1), 6(1)(a), 6(1)(b), 6(2), 6(3), 10
  • Environment and Land Court ActSection 20

Cases cited (5)

  • Nyutu Agrovet Ltd Vs Airtel Networks Limited
    (2015) eKLR
  • Charles Njogu Lofty v Bedouim Enterprises Limited
    CA No 253 of 2003
  • Niaxons (K) Ltd v China Road & Bridges Corporation Kenya
    (2001) KLR 12
  • Eunice Soka Mlagui v Suresh Parmer & 4 others
    (2017) eKLR
  • UAP Provincial Insurance Company Limited v Michael John Beckett
    (2018) eKLR
Jurisdiction invoked
Environment and Land Court Act, Section 20; Article 159 of the Constitution of Kenya 2010

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, "Carol Nasimiyu Myendo v Bamboo Development Limited [2018] KEELC 798 (KLR)", Case Analysis (2018). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/798/eng@2018-11-15

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