NJERI NJAU WAGAKI v ABDIZACK OSMAN MOHAMED ABDI & another
The bottom line
#A Mombasa court stopped a property lawsuit because the joint venture contract required the dispute to go to arbitration instead.
What this practically means
#Executive summary
#Key legal issues
#Timeliness of the application under Section 6(1) of the Arbitration Act
The 1st defendant filed the stay application after entering appearance and within the statutory timeframe, so the court was obliged to consider it
Section 6(1) requires the application to be made not later than the time the party enters appearance or files pleadings or takes any other step. The court found that the 1st defendant, after filing a memorandum of appearance, duly filed the stay application within the time frame set out in Section 6(1), and therefore the court proceeded to consider the application on its merits.
Existence of a valid arbitration agreement
Clause 6 of the Joint Venture Agreement contains a valid arbitration clause capable of being performed; none of the Section 6(1) exceptions apply
The court examined the dispute resolution clause, which required disputes to be notified in writing and referred to a mutually agreed arbitrator, failing which the Chairman of the Kenya Branch of the Chartered Institute of Arbitrators would appoint one. It found the parties clearly intended to oust court jurisdiction in favour of arbitration, and no allegation that the agreement was null and void, inoperative or incapable of being performed was proved.
Constitutional promotion of alternative dispute resolution
Article 159(2)(c) of the Constitution obliges courts to promote arbitration where parties have agreed to it
The court read Article 159(2)(c) together with Section 6(1) of the Arbitration Act and held that where parties consensually choose arbitration, courts must give effect to that choice. It emphasised that courts will promote other forms of dispute resolution where the circumstances allow and the parties have agreed to an alternative mode of resolving their disputes.
Legal principles established
#- Where parties to a contract agree on arbitration as their dispute resolution forum, courts are obliged to give effect to that agreement, and the application to invoke the arbitration agreement must be made not later than the time of entering appearance
- At the stay stage the court only considers whether there is a valid arbitration clause capable of being performed, not the merits or validity of the underlying agreement
Court orders
#- 1.That there be a stay of all proceedings herein pending arbitration
- 2.That the dispute between the parties be referred to arbitration
- 3.Costs to be in the cause
- Jurisdiction invoked
- Section 6 of the Arbitration Act 1995, Rule 2 of the Arbitration Rules 1997, Section 3A of the Civil Procedure Act (Cap 21)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "NJERI NJAU WAGAKI v ABDIZACK OSMAN MOHAMED ABDI & another", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/306/eng@2024-01-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.