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High CourtDismissed

Global Geophysical Services Inc v [Defendant] (Sale of 32 Toyota Hilux Double Cab Vehicles)

High Court of Kenya
22 May 2020
MMM.W. Muigai
2,729 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenyan courts can override foreign jurisdiction clauses if the dispute relates to actions taken within Kenya.

What this practically means

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Executive summary

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The Plaintiff sued on a sale agreement of 13th September 2015 for 32 Toyota Hilux double cab vehicles at Ksh 68,800,000, claiming a balance of Ksh 34,300,000 after part payments of Ksh 34,500,000. The Defendant admitted the agreement but pleaded a discount, one undelivered vehicle, a reduced price of Ksh 57,350,000, total payments of Ksh 89,560,000 against Ksh 88,250,000 owed, and counterclaimed for overpayment of Ksh 1,310,000 and non-delivery of logbooks and some vehicles. By chamber summons dated 27th May 2019 under Sections 3A and 11 of the Civil Procedure Act, Order 2 rule 15(d), Order 24 rule 6(2) of the Civil Procedure Rules and Sections 991 and 992 of the Companies Act, the Defendant sought dismissal of the suit, arguing the Plaintiff was in liquidation in the US Bankruptcy Court for the Southern District of Texas and lacked capacity and locus standi, that the suit was an abuse of process, and that Clause 17 of the agreement conferred exclusive jurisdiction on US courts. The Plaintiff opposed, stating it had applied under Chapter 11 (reorganization), not Chapter 7 (liquidation), and produced a certificate of good standing from Delaware. Muigai J treated the application as a preliminary objection on jurisdiction, applied Mukhisa Biscuit and the Valentine Investment and United India Insurance forum non conveniens standards, and held that Kenya was the most appropriate forum: the parties are in Kenya, the vehicles were delivered and remain in Kenya, payments were made in Kenya, and evidence is readily available there. The court found no liquidation order and held Section 991(5) premature. The preliminary objection was dismissed with costs to the Plaintiff, and the matter was directed to be processed within 90 days in light of the Covid-19 pandemic lockdown, with parties thereafter to take a hearing date.

Key legal issues

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Whether the exclusive jurisdiction clause (Clause 17) ousts the Kenyan court's jurisdiction

Holding

The clause does not apply because the dispute concerns performance of the contract in Kenya, not the terms of the agreement, and Kenya is the most appropriate forum on forum non conveniens grounds

Reasoning

The court applied the Valentine Investment and United India Insurance standards, holding that an exclusive jurisdiction clause is subject to forum non conveniens considerations. The parties are in Kenya, the vehicles were delivered and are in Kenya, payments were made in Kenya, evidence is readily available in Kenya, and no evidence showed the Defendant intended to sue in the US. Enforcing the clause would inconvenience both parties.

p. 5
02

Whether the Plaintiff lacks capacity and locus standi due to the US bankruptcy proceedings

Holding

The application fails because the documents do not disclose liquidation; the Plaintiff applied under Chapter 11 (reorganization), not Chapter 7, and no court order liquidating the company or appointing a liquidator was produced

Reasoning

The Defendant relied on the Texas bankruptcy proceedings and Section 991(5) of the Companies Act. The court found the documents availed did not disclose liquidation, there was no order liquidating the company or appointing a liquidator, and Section 991(5) was premature at that stage. The Plaintiff produced a certificate of good standing from the State of Delaware.

p. 5

Legal principles established

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  • A preliminary objection is a point of law pleaded or arising by clear implication out of pleadings which, if argued as a preliminary point, may dispose of the suit
  • Kenyan courts have discretion to assume jurisdiction over an agreement performed in Kenya notwithstanding a clause conferring jurisdiction on a foreign court, subject to forum non conveniens considerations

Court orders

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  1. 1.The Application of 29th May 2019 of Preliminary Objection as to the Court's jurisdiction is dismissed with Costs to the plaintiff
  2. 2.The matter shall be processed in the normal manner under CMC with DR Commercial Division within 90 days in light of ongoing Corvid 19 pandemic lockdown
  3. 3.Thereafter parties to take a hearing date of the substantive dispute
Jurisdiction invoked
Original civil jurisdiction of the High Court; no specific constitutional or statutory provision cited as the basis of jurisdiction

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, "Global Geophysical Services Inc v [Defendant] (Sale of 32 Toyota Hilux Double Cab Vehicles)", Case Analysis (2020). . Source:

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