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ELRCDismissedNot stated in the judgment (Chamber Summons application dated 17th December, 2021)· [2022] KEELRC 1226 (KLR)

Wanguhu v Sustainet Group Ltd (Cause E085 of 2021) [2022] KEELRC 1226 (KLR)

Employment and Labour Relations Court of Kenya
21 July 2022
CBChristine N. Baari
2,006 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan employer's attempt to force an employment dispute into arbitration failed because it had earlier refused to participate in settlement talks.

What this practically means

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Executive summary

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The Respondent, by a Chamber Summons dated 17th December, 2021 under Section 6 of the Arbitration Act, sought a stay of proceedings and referral of the Claimant's employment dispute to arbitration, invoking Clause 11 of the contract of service which provided for arbitration of disputes. The Claimant, formerly employed as a Capacity Building Officer in the Lower Nzoia Project, opposed the application. He admitted the arbitration clause but deponed that after his termination he invoked Clause 11 through the Labour Office in Kisumu, which invited the Respondent to an arbitration meeting on 14th October, 2021; the Respondent ignored the invitation. He further deponed that post-filing settlement negotiations through counsel failed because the Respondent insisted on limiting compensation to two months' salary and equal sharing of arbitration costs. The court framed a single issue: whether the matter should be referred to arbitration pursuant to the arbitration agreement. It found the application promptly lodged and the dispute covered by the clause, but held that a court cannot enforce unconscionable or invalid arbitration agreements. The Respondent's refusal to participate in prior ADR efforts rendered the arbitration agreement incapable of being performed under Section 6(1)(a) of the Arbitration Act, and the stay request was a mere delaying tactic. The court also affirmed its original jurisdiction over employment contracts under Article 162(2) of the Constitution and Section 12 of the ELRC Act, which cannot be ousted by an arbitration clause. The application was dismissed in its entirety, with costs of the application to abide the cause.

Key legal issues

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Whether the court should stay proceedings and refer the employment dispute to arbitration under Section 6 of the Arbitration Act

Holding

The application was dismissed; the arbitration agreement was held incapable of being performed because the Respondent refused to participate in prior ADR efforts

Reasoning

The court accepted the application was lodged promptly and that the dispute fell within the arbitration clause. However, it held that a court cannot enforce unconscionable or invalid arbitration agreements. The Claimant had sought conciliation by the Labour Officer and later negotiation through counsel, both frustrated by the Respondent's inflexibility. This conduct rendered the arbitration agreement incapable of being performed and demonstrated the stay request was a delaying tactic. The court also affirmed its own original jurisdiction over employment disputes under Article 162(2) and Section 12 of the ELRC Act.

p. 5

Legal principles established

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  • A court's jurisdiction flows from the Constitution or legislation and cannot be exceeded
  • The ELRC retains original jurisdiction over employment contracts notwithstanding an arbitration clause, though a stay may be refused where the arbitration agreement is incapable of being performed

Court orders

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  1. 1.The Respondent/Applicant's application dated 17th December, 2021 is found to lack merit and is dismissed in its entirety
  2. 2.The costs of the application shall abide the cause

Authorities

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Legislation

  • Arbitration ActSection 6, Section 6(1), Section 6(1)(a)
  • Arbitration RulesRule 2
  • Civil Procedure ActSection 3A
  • Employment and Labour Relations Court ActSection 12
  • Labour Institutions ActNot specified
  • Constitution of KenyaArticle 162(2)

Cases cited (6)

  • Union Technology Kenya Limited versus County Government of Nakuru
    [2017] eKLR
  • Morowa Fumo v Bamburi Cement Limited
    [2015] eKLR
  • Re Global Tours & Travel Ltd
    HCWC No.43 of 2000
  • Samuel Kamau Macharia & another versus Kenya Commercial Bank & 2 others
    [2012] eKLR
  • Niazsons (K) Ltd v China Road & Bridge Corporation Kenya
    [2000] eKLR
  • James Heather – Hayes v African medical and Research Foundation (AMREF)
    [2014] eKLR
Jurisdiction invoked
Article 162(2) of the Constitution and Section 12 of the Employment and Labour Relations Court Act, 2011

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Wanguhu v Sustainet Group Ltd (Cause E085 of 2021) [2022] KEELRC 1226 (KLR)", Case Analysis (2022). Not stated in the judgment (Chamber Summons application dated 17th December, 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1226/eng@2022-07-21

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