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Small ClaimsDismissedKitale SCC Claim No. E173 of 2024· [2025] SCC 37 (KLR)

Valere Business Sytems v Cementers Ltd (Commercial Claim E18906 of 2024) [2025] SCC 37 (KLR)

Small Claims Court
18 September 2025
1,450 words in judgment
View original judgmentRead on Kenya Law Watch case
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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 Small Claims Court ruling at Kitale (delivered in open court at Bungoma on 18 September 2025 by T. O. Omono, Adjudicator) determined a preliminary objection raised in the Respondent/Applicant's Response to the Statement of Claim dated 7 March 2025. The Respondent/Applicant argued that paragraph 25 of the Lease Agreement dated 26 February 2022 required disputes to be referred to arbitration, so the claim was improperly before the court. The Claimant/Respondent opposed on the ground that the Respondent/Applicant had already submitted to the court's jurisdiction. The court framed a single issue: whether the preliminary objection was merited. It applied the exhaustion doctrine from Geoffrey Muthiga Kabiru and section 6(1) of the Arbitration Act as construed by the Court of Appeal in Adrec Limited v Nation Media Group Limited and National Irrigation Authority v Satom SA. These authorities require a stay/referral application to be filed not later than the time of entering appearance or otherwise acknowledging the claim, and the right is lost once a defence or other step in the proceedings is taken. The court found that although the Respondent/Applicant gave notice of the objection in its Response, it never filed an application for stay or referral under section 6(1); instead it acknowledged the claim and took steps towards settling it, including in relation to an admitted sum of Kshs. 596,546. Having submitted to the court's jurisdiction, it could not invoke the arbitration provision. The preliminary objection was dismissed with no order as to costs.

Key legal issues

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01

Whether the Preliminary Objection founded on the arbitration clause was merited

Holding

The Preliminary Objection was dismissed because the Respondent/Applicant, by acknowledging the claim and taking steps towards settlement without filing a stay/referral application under section 6(1) of the Arbitration Act, had submitted to the court's jurisdiction.

Reasoning

The court applied the exhaustion doctrine and section 6(1) of the Arbitration Act as construed in Adrec Limited and National Irrigation Authority v Satom SA. A stay application must be made not later than when the party enters appearance or otherwise acknowledges the claim, ideally simultaneously with the notice of appointment of advocates or a protest notice. Here the Respondent/Applicant only gave notice of the objection in its Response to the Statement of Claim dated 7 March 2025, never filed a stay application, acknowledged the claim and took steps towards settlement. Having submitted to jurisdiction, it could not resile and invoke the arbitration clause.

p. 5

Legal principles established

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  • A party seeking referral to arbitration under section 6(1) of the Arbitration Act must apply not later than the time of entering appearance or otherwise acknowledging the claim; the right is lost once a party takes steps in the proceedings.
  • Courts ought to be fora of last resort; where a dispute resolution mechanism exists outside courts it should be exhausted first, but a party who submits to the court's jurisdiction cannot later invoke the arbitration clause.

Court orders

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  1. 1.The Respondent/Applicant's Preliminary Objection is dismissed
  2. 2.No order as to costs

Authorities

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Legislation

  • Arbitration ActSection 6(1)
  • Constitution of KenyaArticle 159

Cases cited (4)

  • Geoffrey Muthiga Kabiru & 2 others v Samuel Munga Henry & 1756 others
    [2015] eKLR
  • Adrec Limited v Nation Media Group Limited
    [2017] KECA 106 (KLR)
  • National Irrigation Authority formerly the National Irrigation Board v Satom SA
    (Civil Appeal E933 of 2023) [2025] KECA 1472 (KLR)
  • Charles Njogu Lofty
Jurisdiction invoked
Small Claims Court jurisdiction under the claim; dispute arises from a Lease Agreement dated 26 February 2022 containing an arbitration clause (paragraph 25)

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, "Valere Business Sytems v Cementers Ltd (Commercial Claim E18906 of 2024) [2025] SCC 37 (KLR)", Case Analysis (2025). Kitale SCC Claim No. E173 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2025/37/eng@2025-09-18

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