Holborn Properties Limited v Davani Group Limited (Environment & Land Case 8 of 2022) [2023] KEELC 577 (KLR)
The bottom line
#The Environment and Land Court at Malindi stopped a hotel sale dispute from proceeding in court, ruling the parties must resolve it through the arbitration process in their agreement.
What this practically means
#Executive summary
#Key legal issues
#Authority to swear the replying affidavit
The board resolution of 9th February 2022 authorised Ms. Chacha; in any event failure to file a board resolution is not fatal and it may be filed any time before the suit is fixed for hearing.
The court noted the resolution was on record in the Plaintiff's list of documents, and relied on Leo Investments Ltd v Trident Insurance Co Ltd quoting Kimaru J that such a resolution may be filed at any time before the suit is fixed for hearing and its absence is not fatal to the suit. The objection was therefore a non-issue.
Jurisdiction of the ELC over a suit founded on a sale agreement containing an arbitration clause
The ELC has jurisdiction because Article 162(2)(d) covers contracts and instruments granting enforceable interests in land; the arbitration clause does not oust that jurisdiction but warrants a stay pending referral to arbitration.
Article 162(2)(b) and Section 13 of the ELC Act confer jurisdiction over disputes relating to land, including contracts and instruments granting enforceable interests in land. The dispute concerns a contract over land and its enforceability, so the court is properly seized. However, where parties have agreed on arbitration and no illegality is alleged, Section 6(1) of the Arbitration Act obliges the court to give effect to that agreement; the Applicant invoked the clause at the earliest opportunity, before filing a defence, so no waiver occurred.
Whether striking out of the suit is available
Rather than striking out the suit, the just course was to stay the proceedings pending arbitration.
Having found the parties bound by the arbitration clause, and the demand for payment premature because the balance was payable by 31st July 2024, the court held that parties cannot escape their chosen dispute resolution mechanism. The Applicant sought striking out, transfer or referral; the court exercised its discretion in favour of a stay pending arbitration, mirroring the approach in Burn Manufacturing.
Legal principles established
#- Where parties to a contract have agreed on arbitration as their dispute resolution forum, the court must give effect to that agreement and cannot rewrite the contract for the parties.
- A party who takes the earliest opportunity, upon entry of appearance and without filing a defence, to invoke an arbitration clause does not waive the right to refer the dispute to arbitration.
- Under the principle of separability, a claim that the main agreement is invalid does not invalidate the arbitration clause.
Court orders
#- 1.Stay of these proceedings pending referral, hearing and determination of the dispute through the structured dispute resolution mechanism envisaged under Clause 9 of the Agreement dated 30th May 2016
- 2.Each party to bear their own costs
- Jurisdiction invoked
- Article 162(2)(b) of the Constitution and Section 13 of the Environment and Land Court Act, No. 19 of 2011
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Holborn Properties Limited v Davani Group Limited (Environment & Land Case 8 of 2022) [2023] KEELC 577 (KLR)", Case Analysis (2023). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/577/eng@2023-02-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.