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ELCAllowed· [2018] KEELC 3032 (KLR)

Presbeta Investment Ltd & another v National Bank of Kenya Limited & 2 others [2018] KEELC 3032 (KLR)

High Court of Kenya
31 May 2018
CYC. Yano
1,572 words in judgment
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The bottom line

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What this practically means

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Executive summary

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By a Notice of Motion dated 14th March 2017 brought under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 2 Rule 15(1)(c) of the Civil Procedure Rules, the 1st and 3rd defendants sought to strike out the plaintiffs' Plaint dated 30th May 2016 as an abuse of process, on grounds that the 3rd defendant was an agent of a disclosed principal, that the suit's purpose was spent, and that further proceedings would usurp the arbitrator's jurisdiction. The plaintiffs, though served, filed no response and did not attend the hearing. The underlying suit sought conservatory orders restraining interference with suit properties pending arbitration arising from a tripartite Asset Purchase Agreement dated 22nd December 2015; an interim application was heard and dismissed with costs by Omollo J on 30th August 2016. Yano J held that under Section 7 of the Arbitration Act the High Court's role in arbitration matters is confined to granting or refusing interim measures of protection, and that mandate had been discharged. Relying on the Court of Appeal's decision in Safaricom Limited v Ocean View Beach Hotel Limited, the court held that entertaining the suit further would usurp the arbitrator's jurisdiction. With the arbitration never commenced and the plaintiffs having vacated the suit property, the suit's purpose was spent and its continuation would offend the overriding objective. The court, mindful that striking-out power must be sparingly exercised, struck out the plaintiffs' suit with costs to the 1st and 3rd defendants.

Key legal issues

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01

Scope of the High Court's role in support of arbitration under Section 7 of the Arbitration Act

Holding

The Court's role is purely facilitative and confined to interim measures; once the conservatory application was determined, further proceedings were for the arbitrator, not the Court.

Reasoning

Section 7 permits a party to seek an interim measure of protection from the High Court before or during arbitral proceedings. The Court held that its jurisdiction is limited to hearing and determining the application for a conservatory order pending arbitration. The interim application had already been heard and determined on 30th August 2016, so the Court had discharged its mandate; continuing the suit would usurp the arbitrator's jurisdiction.

p. 2
02

Whether the suit, its purpose spent, should be struck out as an abuse of process

Holding

Yes. With the interim measure determined, the arbitration not commenced and the plaintiffs having vacated the suit property, the suit was spent and groundless and was struck out.

Reasoning

The application was unopposed; the averments of the 1st and 3rd defendants stood uncontroverted. The suit's sole purpose was to preserve the position pending arbitration, but the plaintiffs never commenced arbitration and had vacated the property. Sustaining the suit would serve no useful purpose, cause unnecessary anxiety and expense to the defendants, and offend the overriding objective of fair, speedy and cost-effective disposal of cases.

p. 2

Legal principles established

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  • The High Court's jurisdiction in a matter destined for arbitration is limited to granting or refusing interim measures of protection under Section 7 of the Arbitration Act, and it may not delve into the merits of the dispute.
  • The power to strike out pleadings must be exercised sparingly, but a suit that is groundless, fanciful or spent will be struck out.

Court orders

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  1. 1.The Notice of Motion dated 14th March 2017 is allowed
  2. 2.The Plaintiffs' Suit is struck out
  3. 3.Costs of the Suit and the application awarded to the 1st and 3rd defendants

Authorities

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Legislation

  • Civil Procedure ActSections 1A, 1B, 3A
  • Civil Procedure RulesOrder 2 Rule 15(1)(c)
  • Arbitration ActSections 7, 17
  • Arbitration RulesSection 7 (as referred to in the Plaintiffs' Notice of Motion)
  • Constitution of KenyaArticles 40, 50, 159(2)(d)

Cases cited (1)

  • Safaricom Limited –v- Ocean View Beach Hotel Limited and 2 others
    (2010) eKLR
Jurisdiction invoked
Sections 1A, 1B and 3A of the Civil Procedure Act and Order 2 Rule 15(1)(c) of the Civil Procedure Rules

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, "Presbeta Investment Ltd & another v National Bank of Kenya Limited & 2 others [2018] KEELC 3032 (KLR)", Case Analysis (2018). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/3032/eng@2018-05-31

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