Vijay Kumar Davalji K Gohil v Treo Apartments Limited & 10 others [2020] KEELC 3276 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the dispute should be referred to arbitration under the arbitration clause in the 1st defendant's articles of association
The objection failed because the 10th and 11th defendants were not shareholders and not privy to the arbitration agreement, so the whole suit could not be stayed pending arbitration
The arbitration clause bound only the 1st defendant and its shareholders. Since the plaintiff and the 2nd to 9th defendants were shareholders but the 10th and 11th defendants were not shown to be, the latter could not be compelled to arbitrate. The court could therefore not stay the whole suit on this ground, and the objection failed on this limb.
Whether the suit was sub judice given the pending insolvency petition filed by the plaintiff
The preliminary objection was allowed and the suit stayed pending determination of Nairobi High Court Insolvency Petition No 14 of 2018
The dispute concerned shareholding of the 1st defendant and entitlement of shareholders to the leasehold interest in the suit property registered in the company's name. The insolvency court was the proper forum where each shareholder could ventilate their stake. Allowing the suit to proceed alongside the insolvency petition would offend Sections 6 and 7 of the Civil Procedure Act.
Legal principles established
#- Where questions of jurisdiction are raised, they must be disposed of before any other determination in the suit
- Parties not privy to an arbitration agreement cannot be compelled to submit to arbitration under it
- Proceedings should not continue where a directly related insolvency proceeding is pending on the same subject matter
Court orders
#- 1.The preliminary objection allowed to the extent that the proceedings in this suit are stayed pending the hearing and determination of Nairobi High Court Insolvency Petition No 14 of 2018
- Jurisdiction invoked
- Article 162(2)(b) of the Constitution and Section 13 of the Environment and Land Court Act (jurisdiction contested by the defendants; suit ultimately stayed under Sections 6 and 7 of the Civil Procedure Act)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Vijay Kumar Davalji K Gohil v Treo Apartments Limited & 10 others [2020] KEELC 3276 (KLR)", Case Analysis (2020). Nairobi ELC Case (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3276/eng@2020-03-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.