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ELCDismissedNot stated in the judgment excerpt· [2019] KEELC 4392 (KLR)

Onsomu Onchonga v Forty Place Limited [2019] KEELC 4392 (KLR)

Environment and Land Court
19 February 2019
BEB M Eboso
1,982 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Environment and Land Court dismissed a late request to move a land dispute to arbitration, showing Kenya's strict filing deadlines matter.

What this practically means

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Executive summary

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This ruling of the Environment and Land Court at Nairobi (B M Eboso J) determined a chamber summons dated 23/11/2017 and filed on 24/11/2017 by the defendant under Section 6(1) of the Arbitration Act, seeking a stay of proceedings and referral of the dispute to arbitration pursuant to the arbitration clause (Clause 4.2) in a standard lease. The plaintiff opposed through a notice of preliminary objection, treated as grounds of opposition, contending first that the application was time-barred under Section 6(1), and secondly that no arbitration agreement existed between the parties in the form required by Section 4 of the Arbitration Act since his own lease was still undergoing registration. The court framed two issues: whether a binding arbitration agreement existed, and whether the application was statute-barred. On the first issue, applying Clause 4.7.1 of the leases, which extends the defined terms to persons deriving title, the court held the plaintiff, as purchaser, was bound by the arbitration clause in his predecessor's lease until his own lease was registered. On the second issue, the court held that although the defendant entered appearance on 9/11/2017, the application was filed 15 days later, outside the Section 6(1) window; Article 159(2)(c) does not override the statutory timelines, which serve to avoid parallel proceedings. The court applied Mt Kenya University v Step Up Holding and Eunice Soko Mlagui and dismissed the application, noting referral could still occur by consent. No costs order was recorded.

Key legal issues

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01

Existence of a binding arbitration agreement

Holding

There is a binding arbitration agreement between the parties; the plaintiff, as a person deriving title under the lessee, is bound by Clause 4.2 of the predecessor's standard lease.

Reasoning

Both leases exhibited (Apartment D7 and D10) contained the same Clause 4.2 arbitration agreement. Clause 4.7.1 defines 'the lessor', 'the manager' and 'the lessee' to include persons deriving title under them. The respondent, a purchaser whose lease was undergoing registration, concealed the predecessor's details and omitted the execution page. Until his own lease is registered, he is bound by the predecessor's lease terms, including the arbitration clause.

p. 2
02

Whether the stay application was statute-barred under Section 6(1) of the Arbitration Act

Holding

The application was belated: it was filed 15 days after entering appearance and could not be allowed absent consent of the parties.

Reasoning

Section 6(1) requires an application for stay and referral to be made not later than the time of entering appearance. The defendant entered appearance on 9/11/2017 but filed the application on 24/11/2017. The court had meanwhile heard an interlocutory application and granted interim injunctive orders pegged on the trial. Article 159(2)(c) does not displace the statutory timelines, which serve to avoid parallel proceedings and to divest the court's jurisdiction.

p. 3

Legal principles established

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  • A party seeking to invoke an arbitration agreement must do so not later than the time of entering appearance; a belated application under Section 6(1) may be rejected.
  • A purchaser who derives title under a lessee is bound by the terms of the predecessor's lease, including the arbitration clause, pending registration of the purchaser's own lease.

Court orders

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  1. 1.The chamber summons application dated 23/11/2017 and filed on 24/11/2017 is dismissed for lack of merit

Authorities

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Legislation

  • Arbitration ActSection 6(1)
  • Arbitration ActSection 4
  • Arbitration ActSection 6
  • Arbitration ActChapter 49 of the Laws of Kenya (as referenced in Clause 4.2 of the lease)
  • Constitution of KenyaArticle 159(2)
  • Constitution of KenyaArticle 159(2)(c)

Cases cited (5)

  • Mills Electrical Company Limited v Mitsubishi Electric Corporation
    (2018)
  • Family Bank Limited v Kennedy Moruri Molena t/a Moco Auctioneers
    (2017) eKLR
  • Mt Kenya University v Step Up Holding (K) Limited
    [2010] eKLR
  • Eunice Soko Mlagui v Sursh Parmar & 4 others
    [2011] eKLR
  • Charles Njogu Lofty v Bedain Enterprises Limited
    CA Number 253 of 2003
Jurisdiction invoked
Section 6(1) of the Arbitration Act; Article 159(2) of the Constitution

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, "Onsomu Onchonga v Forty Place Limited [2019] KEELC 4392 (KLR)", Case Analysis (2019). Not stated in the judgment excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4392/eng@2019-02-19

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