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ELRCPartially AllowedNot stated in the judgment· [2023] KEELRC 338 (KLR)

Chadda v Lake Turkana Wind Power Limited (Cause E702 of 2022) [2023] KEELRC 338 (KLR)

Employment and Labour Relations Court
9 February 2023
LNLinnet Ndolo
2,290 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled a former CFO must honour the arbitration clause in his mutual separation deed and cannot sue in court instead.

What this practically means

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Executive summary

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The Claimant, formerly Chief Finance Officer of the Respondent, filed a claim on October 5, 2022 seeking declarations that the Mutual Separation and Confidentiality Deed dated July 23, 2021 was unconscionable, unlawful and void, that his termination was unfair, that his rights under Articles 41 and 47 of the Constitution were violated, damages, and reinstatement. The Respondent filed a Chamber Summons dated November 1, 2022 seeking a stay of the suit and referral to arbitration under Clause 11 of the Deed, and an order that the Claimant deposit Kshs. 5,000,000 as security for costs, contending that the Claimant had signed the Deed voluntarily with independent legal advice, received Kshs. 20,000,000 in full and final settlement, and was estopped from challenging it. The Claimant opposed, asserting coercion, lack of voluntary signature, and that the Deed was unconscionable and oppressive. The court rejected the Claimant's assertion of involuntariness, reasoning that a senior employee such as a Chief Finance Officer could not claim to have signed an important document blindly; the delay of over a year in challenging the Deed and his failure to respond to the demand to refund the settlement sum showed his complaints were an unjustified afterthought. The court found nothing unconscionable in the Deed and held it was obligated, under Clause 11 and Section 6(1) of the Arbitration Act, to refer the dispute to arbitration. The stay of proceedings was granted, but the security for costs order was declined. No order for costs was made.

Key legal issues

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01

Voluntariness and conscionability of the Mutual Separation and Confidentiality Deed

Holding

The Deed was not unconscionable; the Claimant, a senior employee (Chief Finance Officer), could not have signed such an important document blindly, and his claim of involuntariness was rejected

Reasoning

The court noted the Claimant was a senior employee holding the position of Chief Finance Officer at the time of leaving employment, so he could not claim to have signed blindly. He took over a year to challenge the Deed and did not respond to the demand to refund the Kshs. 20,000,000 paid under it. His complaints were therefore an unjustified afterthought.

p. 5
02

Stay of proceedings and referral to arbitration under Section 6(1) of the Arbitration Act and Clause 11 of the Deed

Holding

Since the Deed was valid and contained an arbitration clause, the court was obligated to stay the proceedings and refer the dispute to arbitration

Reasoning

Clause 11 of the Deed provided a two-tier dispute resolution process ending in arbitration under the Arbitration Act. Having found nothing unconscionable in the Deed, the corollary was that the court was bound to give effect to the parties' agreement to arbitrate and stay the suit.

p. 5
03

Security for costs

Holding

The application for security for costs of Kshs. 5,000,000 was declined

Reasoning

Having found that the dispute should proceed to arbitration, the court saw no reason to burden the Claimant with a security for costs order at that stage.

p. 5

Legal principles established

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  • A senior employee cannot claim to have signed a mutual separation deed blindly; where a valid arbitration clause exists in such a deed, the court is obligated to refer the dispute to arbitration under Section 6(1) of the Arbitration Act

Court orders

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  1. 1.The proceedings are stayed pending the outcome of the arbitration proceedings
  2. 2.No order for costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 41
  • Constitution of Kenya, 2010Article 47
  • Constitution of Kenya, 2010Article 50
  • Arbitration ActSection 6(1)
  • Arbitration ActSection 7(1)
  • Arbitration ActSection 17
  • Employment and Labour Relations Court ActSection 12(3)(viii) and (4)

Cases cited (2)

  • Kenya Pipeline Company Limited v Datalogix Limited & another
    [2007] eKLR
  • Yes Housing Co-operative Society Limited v Kenneth Onsare Maina
    [2020] eKLR
Jurisdiction invoked
Sections 6(1) of the Arbitration Act and 12(3)(viii) and (4) of the Employment and Labour Relations Court Act

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, "Chadda v Lake Turkana Wind Power Limited (Cause E702 of 2022) [2023] KEELRC 338 (KLR)", Case Analysis (2023). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/338/eng@2023-02-09

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