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ELRCDismissedCause No E463 of 2023· [2024] KEELRC 1165 (KLR)

Mureu v Ressourcethica Kenya Limited (Cause E463 of 2023) [2024] KEELRC 1165 (KLR)

Employment and Labour Relations Court
3 May 2024
2,583 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employment court refused to pause a lawsuit for arbitration because the employer never tried amicable settlement first and never proved a real dispute existed.

What this practically means

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Executive summary

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The Respondent/Applicant moved the Employment and Labour Relations Court by Notice of Motion dated 10th August 2023 seeking a stay of the Claimant's suit pending arbitration, invoking an arbitration clause in the contract of employment and Sections 11 and 12 of the Arbitration Act. The Claimant opposed, contending that clause 17 made attempted amicable settlement a condition precedent to arbitration, that no such attempts were made after her demand letter of 23rd January 2023, that no referable dispute was identified, and that the clause was unworkable for omitting the mode of arbitrator appointment and governing rules. She also argued the Motion sought a stay without a prayer for referral. Relying chiefly on Nanchang Foreign Engineering Company v Easy Properties and Wanjala v Registrar of Companies, Justice Stella Rutto declined the application. The court held that the condition precedent of amicable reconciliation had not been satisfied, making referral premature; that the Applicant failed to discharge its burden under Section 6(1)(b) of the Arbitration Act to demonstrate a dispute capable of referral; that Section 12 of the Act is only a default mechanism which cannot cure the parties' failure to agree on appointment of an arbitrator, rendering the clause unenforceable; and that the Applicant never expressly sought referral to arbitration, undermining the basis for a stay. The Application was dismissed with costs to the Claimant on 3rd May 2024.

Key legal issues

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01

Whether the suit should be stayed pending arbitration under clause 17 of the employment contract

Holding

The Application was declined because the condition precedent of attempted amicable reconciliation was not met, no referable dispute was demonstrated, the clause is unworkable, and no prayer for referral was made

Reasoning

Clause 17 required parties first to attempt amicable settlement before arbitrating. The record shows the Claimant issued a demand letter on 23rd January 2023 but the Applicant never engaged, instead inviting her to sue. The Applicant also failed to show what dispute existed, the clause omitted essential arbitral mechanics, and the Motion sought a stay without a prayer for referral. Section 6(1)(b) conditions were therefore unmet.

p. 4
02

Whether there is a dispute capable of referral to arbitration

Holding

No; the Applicant neither identified the nature of any dispute nor demonstrated any matter agreed to be referred

Reasoning

The Application did not state the extent to which the Claim was challenged or the nature of the dispute to be referred. Reliance on Nanchang showed it is insufficient merely to invoke a dispute resolution clause. Neither the grounds nor the supporting affidavit disclosed a dispute, and Section 6(1)(b) of the Arbitration Act was not satisfied.

p. 3
03

Whether the arbitration clause is enforceable despite omitting the mode of arbitrator appointment

Holding

The clause is incapable of enforcement as framed

Reasoning

The clause did not specify how arbitration would be administered or the arbitrator appointed, and the Applicant implicitly admitted this by resorting to Section 12. Section 12 is only a default mechanism operative where parties have agreed salient issues such as the number of arbitrators and mode of appointment. Following Wanjala, arbitration is consensual and party-driven.

p. 5

Legal principles established

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  • Where an arbitration clause makes amicable settlement attempts a condition precedent, referral to arbitration is premature absent evidence such attempts were made
  • A party seeking a stay under Section 6(1)(b) of the Arbitration Act bears the burden of demonstrating a dispute capable of referral to arbitration
  • Section 12 of the Arbitration Act provides only a default procedure and does not supplant the parties' obligation to agree on the mode of appointment of an arbitrator

Court orders

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  1. 1.The Application is declined
  2. 2.Costs of the Application to the Claimant

Authorities

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Legislation

  • Arbitration ActSection 6, 6(1), 6(1)(b), 11, 12, 12(3)
  • Civil Procedure Rules, 2010Order 46 Rule 3; Order 21 Rule 1
  • Constitution of Kenya, 2010Article 159(2)(d), 159(3), 48
  • Civil Procedure ActSection 1B

Cases cited (6)

  • Zaidi v Lake Turkana Wind Power Limited
    (2023) KEELRC 3414 (KLR)
  • Salmin v Taz Technologies Ltd
    (2023) KEELRC 3281 (KLR)
  • Danki Ventures Limited v Sinopec International Petroleum Services Limited
    ML HCCC No. 158 of 2014 (2014) eKLR
  • County Government of Kirinyaga v African Banking Corporation Ltd
    (2020) eKLR
  • Nanchang Foreign Engineering Company (K) Limited v Easy Properties Kenya Limited
    [2014] eKLR
  • Wanjala & 2 others v Registrar of Companies & 2 others; Okoa Finance Limited (Interested Party)
    (Petition E001 of 2021) [2022] KEHC 48 (KLR) (Commercial and Tax) (31 January 2022) (Ruling)
Jurisdiction invoked
Original employment and labour relations jurisdiction of the ELRC; application under Section 6 of the Arbitration Act and Order 46 Rule 3 of the Civil Procedure Rules, 2010

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, "Mureu v Ressourcethica Kenya Limited (Cause E463 of 2023) [2024] KEELRC 1165 (KLR)", Case Analysis (2024). Cause No E463 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1165/eng@2024-05-03

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