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ELRCDismissedNairobi ELRC Cause No. E750 of 2023· [2023] KEELRC 3193 (KLR)

Lipa Later Limited v Wanini (Cause E750 of 2023) [2023] KEELRC 3193 (KLR)

Employment and Labour Relations Court
4 December 2023
2,570 words in judgment
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The bottom line

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What this practically means

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Executive summary

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This ELRC ruling in Nairobi Cause No. E750 of 2023 determined a preliminary objection dated September 18, 2023 by which the respondent, an employer, sought the striking out of the claimant's application and suit with costs on the ground that the court lacked jurisdiction under section 6(1) of the Arbitration Act, 1995 because no reasonable effort had been made to settle the dispute through the arbitration mechanism in clause 15 of the employment contract dated July 29, 2022. Framing two issues - competence and sustainability of the objection - Dr. Jacob Gakeri held that the objection met the Mukisa Biscuits threshold since jurisdiction and reference to arbitration are pure points of law. On sustainability, however, the court held that arbitration being consensual cannot be an internal dispute resolution mechanism requiring exhaustion, and that section 6(1) of the Arbitration Act does not oust a court's jurisdiction; it merely affords a defence to be exploited by an application for stay made not later than entry of appearance. The respondent had entered appearance, filed a notice of appointment and a preliminary objection, but never applied for a reference to arbitration. Relying on Agip v Kibutu, Mlagui, Mt. Kenya University and Kibunja, the court held a preliminary objection cannot disguise an application for stay. The objection was dismissed with no orders as to costs on December 4, 2023.

Key legal issues

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01

Whether the preliminary objection is competent

Holding

The objection meets the Mukisa Biscuits threshold because jurisdiction and reference to arbitration are recognised examples of pure points of law.

Reasoning

The court applied the classic Mukisa Biscuits definition. Law JA identified objections to jurisdiction and submissions that parties are bound by an arbitration clause as examples of preliminary objections raising points of law. Newbold P added that such an objection is argued on the assumption that all pleaded facts are correct. On that basis the respondent's objection, grounded on section 6(1) of the Arbitration Act, was competent.

p. 3
02

Whether the preliminary objection is sustainable (jurisdiction and exhaustion)

Holding

The objection is unsustainable. Arbitration is consensual and cannot be an internal dispute resolution mechanism that must be exhausted; the respondent, having entered appearance and filed a preliminary objection without applying for stay under section 6(1), submitted to the court's jurisdiction.

Reasoning

Section 6(1) of the Arbitration Act requires a party to apply for a stay of proceedings not later than when entering appearance or acknowledging the claim. The respondent filed a memorandum of appearance, notice of appointment and preliminary objection but no application for reference to arbitration. Citing Agip v Kibutu, Mlagui, Mt. Kenya University and Kibunja, the court held that a stay cannot be disguised as a point of law in a pleading, and that the arbitration agreement is merely a defence, not an ouster of jurisdiction.

p. 6

Legal principles established

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  • An arbitration agreement does not deprive a court of jurisdiction; it is a defence that must be invoked by an application for stay of proceedings made not later than the time of entering appearance or acknowledging the claim.
  • A preliminary objection cannot be used as a device to seek a stay of proceedings under section 6 of the Arbitration Act; an application for stay must be made by notice of motion before taking any steps in the proceedings.

Court orders

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  1. 1.The respondent's notice of preliminary objection dated September 18, 2023 is unsustainable and is dismissed with no orders as to costs.

Authorities

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Legislation

  • Arbitration Act, 1995section 6(1)
  • Constitution of Kenya, 2010Article 162(2)(a)
  • Constitution of Kenya, 2010Article 159(2)(c)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Employment and Labour Relations Court Act, 2011section 12
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (11)

  • William Odhiambo Ramogi & 3 others v Attorney General & others
    (2020) eKLR
  • Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd
    (1989) KLR
  • H.F. International Incorporated & another v Sayed Hossam Mohamed Elshebrawi Mohamed Khalifa & another
    (2017) eKLR
  • Agip (K) Ltd v Kibutu
    (1981) eKLR
  • Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd
    (1969) EA 696
  • Republic v National Environment Management Authority ex parte Sound Equipment Ltd
    (2011) eKLR
  • Eunice Soko Mlagui v Suresh Parmar & 4 others
    (2017) eKLR
  • Charles Njogu Lofty v Bedouin Enterprises Ltd
    CA No 253 of 2003
  • Mt. Kenya University v Step Up Holdings (K) Ltd
    (2018) eKLR
  • Corporate Insurance Company v Wachira
  • Meshack Kibunja & 3 others v Kirubi Kamau & 5 others, Central Highlands Tea Co. Ltd (Interested Party)
    (2021) eKLR
Jurisdiction invoked
Article 162(2)(a) of the Constitution of Kenya, 2010 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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Cite this brief

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Cite this brief

Caselaw, "Lipa Later Limited v Wanini (Cause E750 of 2023) [2023] KEELRC 3193 (KLR)", Case Analysis (2023). Nairobi ELRC Cause No. E750 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3193/eng@2023-12-04

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