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ELRCOther· [2023] KEELRC 3433 (KLR)

Chunwei v China Railway No. 5 Engineering Group Co. Ltd (Cause E314 of 2023) [2023] KEELRC 3433 (KLR)

Employment and Labour Relations Court
21 November 2023
NMNzioki wa Makau
788 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~3 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court paused an unfair-dismissal-style dispute because the contract required arbitration in China first, so litigate only after exhausting arbitration.

What this practically means

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Executive summary

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This Employment and Labour Relations Court ruling at Nairobi, delivered by Nzioki wa Makau J on 21st November 2023, determines a preliminary objection raised by the Respondent to a claim filed by the Claimant. The Respondent, through Mr. Opondo, argued that Article 8 of the employment contract dated 9th January 2014 chose the law of the People's Republic of China and provided for referral of disputes to the Guiyang Labour Dispute Arbitration Committee, so the Kenyan court lacked jurisdiction, relying on Phoenix of East Africa Assurance v SM Thiga and Owners of Motor Vessel Lilian 'S' v Caltex Oil. The Claimant, through Mr. Oduor, countered that the Respondent filed its notice of appointment, response and even the preliminary objection without protest, and that section 6 of the Arbitration Act and Rule 2 of the Arbitration Act Rules are mandatory preconditions for invoking an arbitration clause, citing Ila P. Haria v Bishop Ikatwa Inanga. The court framed a single issue: whether it had jurisdiction or should down its tools. It reproduced section 6 of the Arbitration Act, noted the contractual clause directing parties to negotiate or arbitrate at Guiyang, and found the suit premature. The suit was stayed pending determination by the Guiyang Labour Dispute Arbitration Committee, with a direction that a decision be made before 17th April 2024 in line with the 365-day rule on claims. No express costs order was made.

Key legal issues

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01

Jurisdiction of the ELRC where the employment contract contains a foreign choice-of-law and arbitration clause

Holding

The court accepted the contractual dispute-resolution mechanism and stayed the suit rather than declining jurisdiction outright

Reasoning

The court held that the choice-of-law and arbitration clauses gave the parties two avenues - negotiation or the Guiyang Labour Dispute Arbitration Committee. Since a dispute had arisen during performance of the contract, the suit filed in Kenya before resort to those avenues was premature. The court invoked section 6 of the Arbitration Act on stay of legal proceedings and stayed the suit pending arbitration.

p. 2
02

Effect of a party entering appearance and filing a response without protest before raising the arbitration clause

Holding

The court did not expressly determine this argument; it proceeded on the arbitration clause itself and stayed the suit

Reasoning

The Claimant argued that by filing a notice of appointment, a response and even the preliminary objection without protest, the Respondent had acceded to the court's jurisdiction and waived the arbitration clause under section 6 of the Arbitration Act. In reply the Respondent asserted it protested the filing through the preliminary objection. The court's ruling did not expressly resolve this waiver argument, instead anchoring its decision on the prematurity of the suit.

p. 2

Legal principles established

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  • Where a contract contains an arbitration clause referring disputes to a specified tribunal, a suit filed without first resorting to that clause is premature and liable to be stayed under section 6 of the Arbitration Act

Court orders

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  1. 1.The suit is stayed pending the determination of the dispute by the Guiyang Labour Dispute Arbitration Committee, with a decision to be made before 17th April 2024

Authorities

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Legislation

  • Arbitration Actsection 6
  • Arbitration Act RulesRule 2

Cases cited (3)

  • Phoenix of East Africa Assurance Company Limited v SM Thiga t/a Newspaper Service
    [2019] eKLR
  • Owners of Motor Vessel Lilian 'S' v Caltex Oil (K) Limited
    [1989] KLR 1
  • Ila P. Haria & another v Bishop Ikatwa Inanga & another
    [2020] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under its establishing statute; suit stayed under section 6(1) of the Arbitration 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, "Chunwei v China Railway No. 5 Engineering Group Co. Ltd (Cause E314 of 2023) [2023] KEELRC 3433 (KLR)", Case Analysis (2023). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3433/eng@2023-11-21

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