Geno Sher Shamo & another v Ganza Limited & 3 others [2021] KEELC 426 (KLR)
The bottom line
#A Kenyan court refused to send a land-sale dispute to arbitration because the developers waited two years too long and never signed the sale agreement.
What this practically means
#Executive summary
#Key legal issues
#Timeliness of invocation of an arbitration agreement
The preliminary objection failed on this ground alone because the defendants only raised arbitration long after entering appearance.
Section 6(1) of the Arbitration Act requires a party wishing to rely on an arbitration agreement to apply for a stay not later than when it enters appearance or otherwise acknowledges the claim. The 1st and 2nd defendants entered appearance through a notice of appointment filed on 16/4/2018, which was therefore the last permissible date to invoke arbitration. The preliminary objection was instead filed on 2/3/2020, nearly two years later, and so was out of time on that ground alone.
Existence of an executed arbitration agreement
No executed sale agreement containing the arbitration clause was on the record; the sale agreements and letters of offer were neither signed nor dated.
The court examined the plaintiffs' bundle and found that the two documents titled 'SALE AGREEMENT' at pages 20 and 26 were neither executed nor dated, and the letters of offer were likewise not executed. Contracts for the disposition of land require compliance with section 3 of the Law of Contract Act (signed written contracts). Without a valid, signed land sale contract there can be no enforceable arbitration agreement relating to the disposition. The defendants' assertion that an arbitration agreement existed by common ground was rejected.
Privity of the 3rd defendant (chargee) to the arbitration agreement
The reference to arbitration failed also because the 3rd defendant was not shown to be privy to the transaction or to any arbitration agreement.
The court held that before it can 'down its tools' and refer the dispute to arbitration, the objectors must demonstrate that every party to the suit is bound by the arbitration agreement. There was no evidence that the 3rd defendant, the chargee of the suit property, was privy to the transaction between the plaintiffs and the 1st and 2nd defendants, or to any arbitration agreement covering it. The suit therefore could not wholly be referred to arbitration.
Legal principles established
#- A party intending to invoke an arbitration agreement must do so not later than the time it enters appearance or acknowledges the claim.
- An enforceable arbitration agreement relating to a disposition of an interest in land presupposes a valid contract under section 3 of the Law of Contract Act.
- For a court to refer a dispute to arbitration, all parties to the suit before it must be shown to be bound by the arbitration agreement.
Court orders
#- 1.The preliminary objection dated 3/3/2020 is unmerited and fails wholly; it is rejected
- 2.The 1st and 2nd defendants shall bear the costs of the preliminary objection
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court over the suit; preliminary objection invoking section 6 of the Arbitration Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Geno Sher Shamo & another v Ganza Limited & 3 others [2021] KEELC 426 (KLR)", Case Analysis (2021). Not stated in the ruling (E&L Court at Thika; suit arising from plaint dated 14/2/2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/426/eng@2021-12-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.