Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedNot stated on the face of the judgment· [2021] KEELRC 577 (KLR)

Kingdom Bank Limited v Timothy Mwaniki Kabiru [2021] KEELRC 577 (KLR)

Employment and Labour Relations Court
4 October 2021
1,815 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

#

Kenya's Employment Court stopped a former CEO's Ksh.78 million arbitration, ruling that when a separation agreement itself is disputed, the court decides first.

What this practically means

#

Executive summary

#
The claimant, Kingdom Bank Limited (formerly Jamii Bora Bank Limited), filed an application dated 21st January 2021 seeking a stay of arbitration proceedings commenced by the respondent, its former Ag. Chief Executive Officer, pursuant to the arbitration clause in a Mutual Release and Separation Agreement dated 10th June 2020. The claimant alleged the agreement, under which the respondent claimed Ksh.78,036,398.45, was procured unprocedurally without board approval and in breach of fiduciary duty, rendering it null and void ab initio. The respondent in turn filed an application dated 8th February 2021 seeking to stay the suit and refer the dispute to a sole arbitrator; the court noted this application had no supporting affidavit on the record. The court framed a single issue: whether the arbitration proceedings should be stayed pending hearing of the suit. Relying on section 10 of the Arbitration Act and the Court of Appeal decision in Niazsons (K) Ltd v China Road & Bridge Corporation Kenya, the court held it was duty-bound to determine the validity of the arbitration clause where a stay is sought. Applying sections 10(6) and (7) of the Employment Act, 2007, it treated the employer's board minutes as the true employment record, which could not be corrected by the respondent. Since a term of employment, including the very agreement containing the arbitration clause, was under challenge, the court was the primary forum. The claimant's application was allowed, the arbitration proceedings were stayed pending the hearing and determination of the suit, and costs were granted in the cause.

Key legal issues

#
01

Whether the court should stay arbitration proceedings under an arbitration clause in a Mutual Release and Separation Agreement whose validity is challenged

Holding

The arbitration proceedings were stayed; the court held that where a term of employment, including the agreement containing the arbitration clause, is contested, the court is the primary forum

Reasoning

The claimant challenged the validity of the 10th June 2020 agreement, alleging it was never approved by the board and conferred undeserved benefits in breach of fiduciary duty. Applying section 10 of the Arbitration Act as interpreted in Niazsons, the court found a legal impediment to the validity of the arbitration agreement. Relying on sections 10(6) and (7) of the Employment Act, the employer's board minutes were treated as the true record, and the alleged error in their dating could not be corrected by the respondent. A term of employment thus being challenged, the court assumed jurisdiction over the dispute.

p. 3
02

The evidential status of the employer's board minutes under sections 10(6) and (7) of the Employment Act, 2007

Holding

The employer's board minutes and records produced in court are the true and correct records of the employment relationship unless the contrary is proved; any alleged error in dating must be addressed by the employer, not the respondent

Reasoning

The respondent contended the board minutes dated 29th May 2019 were in fact of a 2020 meeting, misdated by error. The court held that under the Companies Act such minutes cannot be altered or left to the respondent to correct; the employer, as custodian of employment records, must address any error. The minutes as produced were therefore treated as the true record.

p. 3

Legal principles established

#
  • Where a term of employment, including the very agreement containing an arbitration clause, is challenged, the court is the primary forum for determining the dispute and the arbitration will be stayed
  • Under sections 10(6) and (7) of the Employment Act, 2007 the employer is the legal custodian of employment records and the records it produces are presumed true unless the contrary is proved
  • An applicant for a stay of proceedings pending arbitration must bring the application promptly, take no other step in the proceedings, and show no legal impediment to the arbitration agreement

Court orders

#
  1. 1.Application dated 20th January, 2021 found with merit and allowed
  2. 2.Arbitration proceedings commenced by the respondent stayed pending the hearing and determination of the suit herein
  3. 3.Costs shall be in the cause
Jurisdiction invoked
Article 162(2) of the Constitution, 2010 read together with section 12 of the Employment and Labour Relations Court Act, 2011

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Kingdom Bank Limited v Timothy Mwaniki Kabiru [2021] KEELRC 577 (KLR)", Case Analysis (2021). Not stated on the face of the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/577/eng@2021-10-04

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