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ELRCDismissedCause No. E439 of 2020 (with identical application in Cause No. E428 of 2020)· [2021] KEELRC 1846 (KLR)

Agnes Waruguru Gaita & another v RSM Eastern Africa LLP & another [2021] KEELRC 1846 (KLR)

Employment and Labour Relations Court
16 April 2021
5,032 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan employment court confirmed that arbitration clauses in employment contracts don't remove its jurisdiction, and refused to refer disputes to arbitration because required pre-arbitration consultation never happened.

What this practically means

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Executive summary

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Two identical applications in Cause No. E439 of 2020 and Cause No. E428 of 2020 were brought by the Respondents seeking a stay of the suits and referral of the disputes to arbitration under Clause 29 of the Claimants' employment contracts dated 15th March 2018, and a preliminary objection by the 2nd Respondent contending that the arbitration clause deprived the court of jurisdiction. The Claimants alleged sexual harassment and discrimination on account of pregnancy arising from termination of employment, and opposed referral, arguing the clause was inoperative because the 2nd Respondent was not a party to the contracts, that constitutional violations were alleged, and that no dispute capable of referral existed. Justice Maureen Onyango held that an arbitration clause does not oust the court's jurisdiction; the court's jurisdiction is conjunctive with arbitration and remains in situ unless a party elects arbitration. The preliminary objection was dismissed. On the applications, the court found the disputes (termination of employment) fell within the arbitration clause, but referral was premature because the clause's condition precedent - written request for consultation in good faith, failing which referral by written notice - had never been invoked by either party. The 1st Respondent, aware of the intended suit from the demand letters, never set the clause in motion, and given the nature of the accusations good-faith consultation was doubtful. The application to refer was dismissed with costs in the cause. The Claimants' withdrawn applications were withdrawn with no orders for costs. Judgment delivered at Nairobi on 16th April 2021.

Key legal issues

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01

Effect of an arbitration clause on the court's jurisdiction

Holding

An arbitration clause does not oust the court's jurisdiction; Section 6 of the Arbitration Act provides for a stay, not dismissal, and the court retains jurisdiction unless a party elects arbitration

Reasoning

Section 6 of the Arbitration Act allows a court to stay proceedings where a party applies, but does not state that an arbitration clause ousts jurisdiction. Section 7 expressly preserves the court's power to hear interim applications. The court's jurisdiction is therefore conjunctive with arbitration and remains in situ absent an objection by the respondent.

p. 2
02

Whether referral to arbitration was ripe

Holding

The application was premature because the contractual conditions precedent - written request for good-faith consultation, failing which written notice of referral to arbitration - were never complied with by either party

Reasoning

The arbitration clause required consultation in good faith commenced by written request, and only after fifteen days of failed consultation could a party refer the dispute to arbitration. Neither party made such a request. The 1st Respondent, aware of the intended suit from the demand letters of 3rd August 2020, never set the clause in motion. Following Nanchang Foreign Engineering and County Government of Kirinyaga, referral was premature.

p. 6
03

Liability of the 2nd Respondent under the arbitration clause

Holding

The 2nd Respondent is sued in his personal capacity, not as agent of the employer, so vicarious liability principles do not attach to him on the sexual harassment and discrimination claims

Reasoning

The 2nd Respondent argued that as an 'employer' under Section 2 of the Employment Act he is bound by the arbitration clause. The court held the context is a personal-capacity suit; the employer would only be vicariously liable where a fellow employee had authority for the acts complained of. The court nonetheless agreed the damages prayers were capable of arbitration.

p. 2
04

Jurat of the replying affidavits

Holding

The defect in the scanned affidavits was not fatal as the Claimants had filed grounds of opposition and the relevant issues were already pleaded

Reasoning

The applicant contended the replying affidavits were unsigned. The court held more evidence would be needed to establish non-compliance with the Oaths and Statutory Declarations Act on a scanned copy, and in any event the grounds of opposition sufficed since the relevant issues were pleaded in the claims and applications.

p. 6

Legal principles established

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  • An arbitration clause does not oust the jurisdiction of the Employment and Labour Relations Court; the court's jurisdiction is conjunctive with arbitration and remains in situ unless a party objects
  • Where an arbitration clause makes consultation a condition precedent, referral to arbitration is premature until that step is taken

Court orders

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  1. 1.The preliminary objection by the 2nd Respondent is dismissed
  2. 2.The applications to stay the suits and refer the disputes to arbitration are dismissed as premature
  3. 3.The Claimants' withdrawn applications are withdrawn with no orders for costs
  4. 4.Costs of the applications shall be in the cause

Authorities

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Legislation

  • Arbitration ActSection 6
  • Arbitration ActSection 7
  • Arbitration ActSection 5
  • Arbitration ActSection 17(1), (2) and (6)
  • Arbitration ActSection 4
  • Employment ActSection 2
  • Constitution of KenyaArticle 159
  • Constitution of KenyaArticles 23(1), 23(10) and 165(3)
  • Constitution of KenyaArticles 48, 159(2)(d)
  • Oaths and Statutory Declarations Actnull
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (12)

  • Carol Adhiambo Olela v Asterisk Limited
    [2014] eKLR
  • James Heather - Hayes v African Medical and Research Foundation (AMREF)
    [2014] eKLR
  • Dock Workers Union Limited v Messina Kenya Limited
    [2019] eKLR
  • Paul Chemunda Nalyanya v I. Messina Kenya Limited
    [2015] eKLR
  • Albert Chaurembo Mumba & 7 others v Maurice Munyao & 148 others
    [2019] eKLR
  • Addock Ingrain East Africa Limited v Surgilinks Limited
    (2010)
  • UAP Provincial Insurance Company Ltd v Michael John Beckett
    (2013) eKLR
  • Diocese of Marsabit Registered Trustees v Technotrade Pavilion Ltd
    [2014] eKLR
  • Miriam Nzilani Mweu v Kiptinness & Odhiambo Associates
    [2019] eKLR
  • Benson L Vioya v George Wasonga & 3 Others
    (2012) eKLR
  • Nanchang Foreign Engineering Company (K) Limited v Easy Properties Kenya Limited
    (2014) eKLR
  • County Government of Kirinyaga v African Banking Corporation Ltd
    (2020) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under Article 162(2) of the Constitution; court seized of applications under Section 6 of the Arbitration Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Agnes Waruguru Gaita & another v RSM Eastern Africa LLP & another [2021] KEELRC 1846 (KLR)", Case Analysis (2021). Cause No. E439 of 2020 (with identical application in Cause No. E428 of 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1846/eng@2021-04-16

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