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ELCPartially Allowednull (not stated in judgment)· [2023] KEELC 774 (KLR)

Njenga v Nyumbani Concepts Limited & another (Environment & Land Case E037 of 2022) [2023] KEELC 774 (KLR)

Environment and Land Court
13 February 2023
3,160 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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A Thika court halted a land sale dispute and sent it to arbitration, but froze the land first so the winning party would still have something to win.

What this practically means

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Executive summary

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The Plaintiff sued the 1st and 2nd Defendants seeking a declaration that Clause 4 and the whole agreement of sale over land parcel Karai/Karai/2840 dated 9/3/2020 was unconscionable, oppressive, unreasonable and illegal; rescission of the agreement; vacant possession; a permanent injunction; nominal damages and costs. She also claimed special damages of Kshs 100,000 for destroyed maize. Simultaneously she moved the Court by Notice of Motion dated 22/3/2022 seeking preservation of the suit property and a temporary injunction, having notified the Defendants of her intention to invoke the arbitration clause in the agreement. The 1st Defendant filed a Chamber Summons dated 20/4/2022 seeking a stay of proceedings and referral of the dispute to arbitration under Clause 22 of the agreement, invoking Section 6 of the Arbitration Act and Article 159(2)(c) of the Constitution. It revealed that it had registered the suit land in its name on 1/4/2022, subdivided it and was selling plots to third parties. The 2nd Defendant opposed, denying any misrepresentation. The Court framed three issues: referral to arbitration, stay of the suit, and interim measures. Holding that the parties were agreed on arbitration, that the arbitration agreement was neither null and void, inoperative nor incapable of performance, and that a genuine dispute existed, the Court referred the dispute to arbitration and stayed the suit. Applying Safaricom v Ocean View, it granted interim measures of protection since sale of the plots would destroy the substratum of the arbitration. The arbitral proceedings were to commence within 45 days failing which the interim orders would lapse, with each party bearing its own costs of the applications.

Key legal issues

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01

Referral of the dispute to arbitration

Holding

The dispute was referred to arbitration since the parties agreed to arbitration under Clause 22 of the agreement of sale and there was a live dispute.

Reasoning

The parties elected arbitration as their dispute resolution mechanism; the Plaintiff had invoked the arbitration clause by letter, and the 1st Defendant filed a Chamber Summons seeking referral. The Court found the arbitration agreement valid and a genuine dispute existed regarding interpretation of the contract, warranting referral under Section 6 of the Arbitration Act.

p. 5
02

Stay of court proceedings

Holding

The suit was stayed pending the conclusion of the arbitral proceedings.

Reasoning

Section 6 of the Arbitration Act mandates a stay where an application is made and the arbitration agreement is not null and void, inoperative or incapable of being performed, and a dispute exists. Both parties were agreeable to arbitration, so the stay followed as a matter of course.

p. 5
03

Interim measures of protection over the suit land

Holding

Interim measures restraining dealings with the suit land were granted because the subject matter was under threat from subdivision and sale.

Reasoning

Applying the Safaricom v Ocean View criteria, the Court noted the existence of an arbitration agreement and that the 1st Defendant had registered the land in its name, subdivided it and was selling plots to third parties, contrary to the housing project contemplated in the agreement. Preserving the substratum pending arbitration justified the interim measures.

p. 7

Legal principles established

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  • Where parties have agreed on arbitration and the arbitration agreement is not null and void, inoperative or incapable of being performed, and a dispute exists, the Court must stay proceedings and refer the parties to arbitration under Section 6 of the Arbitration Act.
  • The Court may grant interim measures of protection under Section 7 of the Arbitration Act where the subject matter of arbitration is under threat, to avoid the arbitral proceedings becoming an academic exercise.

Court orders

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  1. 1.The Applicant's Application dated the 22/3/2022 be and is hereby allowed.
  2. 2.The 1st Respondent's Application dated the 20/4/2022 be and is hereby allowed.
  3. 3.This suit be and is hereby stayed pending the conclusion of arbitral proceedings.
  4. 4.The arbitral proceedings to be commenced in terms of the agreement of sale dated the 9/3/2020 within a period of 45 days from the date of this Ruling, in default the orders with respect to interim measures shall automatically lapse.
  5. 5.Each party to bear the costs of their Applications.

Authorities

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Legislation

  • Arbitration ActSection 6
  • Arbitration ActSection 7
  • Constitution of KenyaArticle 159(2)(c)

Cases cited (1)

  • Safaricom Vs Ocean View Beach Limited & 2 Others
    (2010)
Jurisdiction invoked
Section 6 and Section 7 of the Arbitration Act (stay of legal proceedings and interim measures by Court)

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, "Njenga v Nyumbani Concepts Limited & another (Environment & Land Case E037 of 2022) [2023] KEELC 774 (KLR)", Case Analysis (2023). null (not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/774/eng@2023-02-13

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