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ELRCPartially AllowedChamber Summons dated 17th June 2022 arising from a Statement of Claim (ELRC)· [2023] KEELRC 3414 (KLR)

Zaidi v Lake Turkana Wind Power Limited (Cause E321 of 2022) [2023] KEELRC 3414 (KLR)

Employment and Labour Relations Court
20 December 2023
OKOcharo Kebira
5,508 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~22 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court sent a former CEO's case to arbitration as his separation agreement required, but refused to make him pay Kshs.5 million upfront.

What this practically means

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Executive summary

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The Respondent/Applicant, a company, moved the Employment and Labour Relations Court by Chamber Summons dated 17th June 2022 seeking reference of the dispute to arbitration under Clause 11 of a Revised Mutual Separation and Confidentiality Deed dated 30th July 2021, and an order that the Claimant deposit Kshs.5,000,000/- as security for costs, contending the Claimant, a New Zealand resident, held no known Kenyan assets. The Claimant, a former Chief Executive Officer, opposed, asserting the Deed was procured by coercion, duress, undue influence and threats, was backdated and unconscionable, and that his claim arose from the Employment Contract dated 15th September 2019 and his fundamental rights, not from the Deed. The court identified two issues: referral to arbitration and security for costs. On the first, invoking Section 6(1) of the Arbitration Act and the principle that courts do not rewrite contracts, the court held the matters raised flow from the Separation Agreement and fell within the Clause 11 arbitration mechanism; the Claimant, though entitled to assail the Deed's validity, failed to demonstrate the statutory exceptions, the court noting he was represented by counsel during the process leading to the Agreement. The matter was accordingly referred to arbitration. On security for costs, the court held that foreign residence alone does not establish impossibility of cost recovery and that ordering Kshs.5,000,000/- would impede the Claimant's constitutional right of access to justice; that prayer was declined. Prayer (2) of the application was allowed, with costs in the cause. The ruling was delivered on 20th December 2023 by Ocharo Kebira, J.

Key legal issues

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01

Whether the court should stay proceedings and refer the dispute to arbitration under Section 6(1) of the Arbitration Act

Holding

Yes; the matters raised flow from the Separation Agreement and fall within Clause 11's arbitration clause, and the Claimant did not demonstrate the statutory exceptions apply

Reasoning

The court accepted that mutual separation agreements are contracts whose validity may be assailed, but held the proper forum is the one the parties chose. Clause 11 provided a tiered dispute resolution mechanism culminating in arbitration. Although the court may interrogate the Section 6(1)(b) exception, the Claimant, being represented by counsel when signing the Deed, failed to demonstrate the agreement was null and void or that no dispute existed. Public policy favours enforcing consensual dispute resolution.

p. 10
02

Whether the Claimant's challenge to the Deed's validity ousts the arbitration clause

Holding

No; the challenge does not bring the matter within the Section 6(1) exceptions on the material before the court

Reasoning

The court acknowledged the Deed, being a contract, must possess the ingredients of validity and the Claimant had a right to assail it. However, in assessing the Section 6(1)(b) limitation, the court noted the Claimant was represented by counsel during the process leading to the Agreement and declined to prejudge merits, holding the limitation could not aid the Claimant's opposition.

p. 9
03

Whether security for costs of Kshs.5,000,000 should be deposited by the Claimant

Holding

No; foreign residence does not justify the order, and the amount would impede access to justice

Reasoning

The court held that a foreigner's residence outside Kenya is not proof that costs would be irrecoverable, since decrees can be executed abroad under laid-down procedures. Courts must guard against security for costs becoming an impediment to the constitutional right of access to justice and must strike a balance between litigants pursuing justice and adversaries seeking security.

p. 10

Legal principles established

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  • Where parties consensually agree on arbitration as their dispute resolution forum, courts are obliged to give effect to the agreement unless the arbitration agreement is null and void, inoperative or incapable of being performed, or there is no dispute
  • A party invoking the exceptions to Section 6(1) of the Arbitration Act bears the burden of demonstrating them
  • A litigant's foreign residence is not, by itself, a sufficient ground to order security for costs, as decrees can be executed outside Kenyan jurisdiction

Court orders

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  1. 1.The Claimant's two Affidavits sworn on 12th August 2022 are struck off the record
  2. 2.The dispute is referred to arbitration pursuant to Clause 11 of the Mutual Separation Agreement dated 30th July 2021
  3. 3.Prayer (2) of the Respondent/Applicant's Chamber Summons dated 17th June 2022 is allowed
  4. 4.Prayer for deposit of Kshs.5,000,000/- as security for costs is declined
  5. 5.Costs shall be in the cause

Authorities

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Legislation

  • Constitution of KenyaArticle 159(2)(c)
  • Constitution of KenyaArticle 41
  • Constitution of KenyaArticle 162(2)(a)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Arbitration Act, 1995Sections 6(1), 6(2), 7
  • Arbitration (Amendment) ActSection 5(1)
  • Arbitration RulesRule 3
  • Employment and Labour Relations Act, 2011Sections 12(3)(viii) and (4)
  • Employment Act2007 (generally)
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (14)

  • Meshack Kibunja Kaburi & 5 others; Central Highlands Tea Company Limited [Interested Party]
    [2021] eKLR
  • Iris Properties Limited & Another vs Nairobi City Council
    [2002] eKLR
  • Scotch Whisky Association & 2 Others V Africa Spirits Limited
    [2020] eKLR
  • Kibiwott & 4 Others v Registered Trustees of Monastery Our Lady of Victory
    [2004] eKLR
  • Pauline Wangeci Warui v Safaricom Limited
    [2020] eKLR
  • Sandhu v Jan De Rojik Transport Ltd
    [2007] EWCA Civ 430
  • Niazsons [K] Ltd v China Road & Bridge Corporation Kenya Ltd
    [2020] eKLR
  • County Government of Kirinyaga v African Banking Corporation Ltd
    [2020] eKLR
  • Mt. Kenya University v Step Up Holdings Ltd
    [2018] eKLR
  • Owners of the Motor Vessel "Lilian S'' v Caltex Oil [Kenya] Ltd
    [1989] eKLR
  • Attorney General of Belize et al Vs Belize Telecom Ltd & Another
    (2009), 1 WLR 1980
  • Trollope Colls Ltd Vs Northwest Metropolitan Regional Hospital Board
    (1973) I WLR 601
  • International Consultancy Company Ltd vs Telkom Kenya & Another
    [2019] eKLR
  • Gbenga-Oluwatove v Reckitt Benskiser South Africa (Pty) Limited and Another
    Case CC 41/16
Jurisdiction invoked
Articles 41 and 162(2)(a) of the Constitution and Section 12(3)(viii) and (4) of the Employment and Labour Relations Act, 2011; Section 6 of the Arbitration Act, 1995 invoked on the referral application

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Zaidi v Lake Turkana Wind Power Limited (Cause E321 of 2022) [2023] KEELRC 3414 (KLR)", Case Analysis (2023). Chamber Summons dated 17th June 2022 arising from a Statement of Claim (ELRC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3414/eng@2023-12-20

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