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ELCDismissed· [2025] KEELC 8676 (KLR)

Fazel & 2 others v Moru Ridge Limited & 4 others (Environment and Land Case E004 of 2023) [2025] KEELC 8676 (KLR)

High Court of Kenya
8 December 2025
1,658 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's High Court refused to send a property dispute to arbitration and allowed a company's directors to face the lawsuit personally.

What this practically means

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Executive summary

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The Applicants, who are the 1st to 5th Defendants in the main suit, moved the court by Notice of Motion dated 29th September 2025 seeking a stay of proceedings and referral of the dispute to arbitration under the Reservation Letter between the Respondents and the 1st Applicant, striking out of the 3rd, 4th and 5th Defendants for want of capacity, and, in the alternative, deeming their Statement of Defence dated 25th September 2025 as duly filed with extension of time for pre-trial compliance. The court framed two issues: its own jurisdiction, and whether the 3rd, 4th and 5th Defendants could be sued personally. On jurisdiction, the court found that the applicants had misidentified the arbitration clause: clause 13 of the Reservation Letter deals only with the Completion Date, while clause 14's arbitration provision is confined to disputes concerning Plans and Elevations before the Vendor's Architects, and therefore cannot oust the court's jurisdiction over the broader claims. On capacity, the court applied the Salomon principle of separate corporate personality but held that since the plaint pleads specific fraud and breach of fiduciary duty, a triable question exists as to whether the company was used as an instrumentality for improper conduct; personal liability is fact-dependent and cannot be resolved on a preliminary application. The court held that the 3rd, 4th and 5th Defendants remain properly joined, deemed the Statement of Defence filed, and dismissed the application with costs.

Key legal issues

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01

Whether the court has jurisdiction in light of the alleged arbitration clause in the Reservation Letter

Holding

The court has full jurisdiction; the arbitration provisions are limited and do not oust it.

Reasoning

The applicants anchored their argument on clause 13, which merely defines the Completion Date. Clause 14's arbitration reference applies only to disputes on Plans and Elevations before the Vendor's Architects and is not an all-encompassing ouster. The court affirms its jurisdiction over the broader claims.

p. 3
02

Whether the 3rd, 4th and 5th Defendants may be sued personally notwithstanding separate corporate personality

Holding

They remain properly joined; whether they are personally liable is a triable, fact-dependent question.

Reasoning

Applying Salomon, a company ordinarily sues or is sued in its own name, but the plaint pleads specific fraud and breach of fiduciary duty, raising a triable question that the company may have been an instrumentality of improper conduct. Such questions cannot be resolved on a preliminary application.

p. 4

Legal principles established

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  • Jurisdiction flows solely from the Constitution or written law and cannot be assumed or extended by judicial creativity.
  • A company is a separate legal person from its directors and shareholders, and piercing the corporate veil is an exceptional measure.
  • A narrow, subject-specific arbitration clause does not oust the court's jurisdiction over the broader dispute.

Court orders

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  1. 1.The 3rd, 4th and 5th Defendants/Applicants remain properly joined in their personal capacities
  2. 2.Their statement of Defence dated 25.9.25 is deemed as duly filed
  3. 3.The application dated 29th September 2025 is dismissed with costs

Authorities

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Legislation

  • Civil Procedure RulesOrder 11

Cases cited (6)

  • Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd
    [1989] eKLR
  • Macharia & another v Kenya Commercial Bank Ltd & 2 others
    [2012] KESC 8 (KLR)
  • Salomon v Salomon & Co. Ltd
    [1897] A.C. 22
  • Samuel Ojwang Juma v Saphire Collections Limited
    [2021] KEELRC 1729
  • Ukwala Supermarket v Jaideep Shah & another
    [2022] eKLR
  • Multichoice Kenya Limited v Mainkam Limited & Another
    [2013] eKLR
Jurisdiction invoked
Inherent jurisdiction to determine its own jurisdiction; the applicants challenged the court's jurisdiction under the arbitration clause of a Reservation Letter

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, "Fazel & 2 others v Moru Ridge Limited & 4 others (Environment and Land Case E004 of 2023) [2025] KEELC 8676 (KLR)", Case Analysis (2025). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/8676/eng@2025-12-08

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