https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8579

Chorus Management Public Limited Company v Shilton & 2 others (Commercial Suit E356 of 2026) [2026] KEHC 8579 (KLR) (Commercial and Tax) (19 June 2026) (Ruling) Neutral citation: [2026] KEHC 8579 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Suit E356 of 2026 FG Mugambi, J June 19, 2026 Between Chorus Management Public Limited Company Plaintiff and Andrew Shilton 1st Defendant Palma Sambu 2nd Defendant Renee Kamau 3rd Defendant Ruling Background and introduction 1.This ruling determines the preliminary objection dated 4th June 2026, raised by the 1st respondent in response to the applicant’s Notice of Motion dated 2nd June 2026. The objection is premised on the ground that this Honourable Court lacks jurisdiction to entertain the dispute, in light of Article 63 of the applicant’s Articles of Association, which prescribes arbitration as the preferred mode of dispute resolution. Both parties filed written submissions, which I have carefully considered. Analysis and Determination 2.The threshold issue is whether the preliminary objection has been properly placed before this Court. Having examined the matter, it is evident that the objection goes directly to jurisdiction. Jurisdictional objections are fundamental, as they strike at the very root of the Court’s authority to hear and determine a dispute. They must therefore be resolved before any other issue is engaged. The inquiry here is not discretionary but one of statutory interpretation, to ascertain whether the dispute ought to be referred to arbitration or whether it properly lies within the competence of this Court. Applying the principles in Mukhisa Biscuit Manufacturing Co. Ltd V West End Distributors [1969] EA 696 I am satisfied that the preliminary objection is properly before this Court, as it raises a pure point of law capable of disposing of the suit if upheld. 3.Turning to the substance of the objection, I have reviewed the applicant’s Articles of Association. Article 63 at Part V, under Division 8, provides as follows:“All disputes, differences and questions whatsoever arising between the Members or between the Member(s) and the Company concerning or arising out of anything contained in these Articles of Association or as to the rights, duties or liabilities hereunder of the Member(s) shall be referred to arbitration by a single arbitrator for arbitration in accordance with the provisions of the Arbitration Act No. 4 of 1995 (or any statutory enactment in that behalf for the time being in force) and failing agreement on an arbitrator within fourteen (14) days of the notification by either party to the other of the existence of a dispute or claim, to be appointed by the Chairman for the time being of The Chartered Institute of Arbitrators, Kenya Branch, Nairobi on the application of any party to the claim or dispute.” 4.The existence of an arbitration clause is therefore not in dispute. The question is whether arbitration has been properly invoked. Section 6 of the Arbitration Act sets out the procedure for invoking an arbitration clause. A party seeking to rely on such a clause must apply for stay of proceedings not later than the time of entering appearance or filing any pleadings. This requirement is mandatory and is designed to prevent parties from engaging the judicial process and then belatedly retreating to arbitration when convenient. It preserves the integrity of the arbitral process and protects the judicial process from abuse by discouraging tactical maneuvers that delay proceedings or create uncertainty about the forum for dispute resolution. In short, Section 6(1) demands consistency: a party must either stand by the arbitration clause from the outset or be deemed to have waived its benefit. 5.This principle has been affirmed in numerous judicial pronouncements. In Charles Njogu Lofty V Bedouin Enterprises Ltd, [2005] eKLR, the Court of Appeal held that even where the conditions of Section 6(1) are satisfied, an application for stay may be rejected if not made at the time of entering appearance or before taking any procedural step in the matter. The learned Judges stated as follows:“… Even if the conditions set out in paragraphs (a) and (b) of section 6 (1) are satisfied the court would still be entitled to reject an application for stay of proceedings and referral thereof to arbitration if the application to do so is not made at the time of entering an appearance, or if no appearance is entered, at the time of filing any pleading or at the time of taking any step in the proceedings.” 6.In Adrec Limited V Nation Media Group Limited, [2017] eKLR the Court stated that:“Any party who wishes to take advantage of the arbitration clause in a contract should either at the time of entering appearance or before the entry of appearance make the application for reference to arbitration.” 7.Similarly, in Diocese of Marsabit Registered Trustee V Techno Trade Pavilion Ltd, HCCC No. 204 of 2013, Gikonyo J emphasized that Section 6(1) is clear and mandatory. He made the following observation:“Instead of filing its defence to the suit, the applicant filed the present application on the 24th June 2013. The application was, therefore, filed fourteen (14) days after the filing of the Memorandum of Appearance. Section 6(1) of the Act is clear, unambiguous and unequivocal, in that a party applying for a stay of proceedings, shall apply not later than the time when that party enters appearance or files any pleadings. This application should have been filed on the 10th June 2013 together with the Memorandum of Appearance and not fourteen (14) days later.” 8.In the present case, the record shows that the 1st respondent entered appearance on 4th June 2026. At that moment, he was required under Section 6(1) to file an application for stay of proceedings and referral to arbitration and not a preliminary objection. He did not do so. By filing the Notice of Preliminary Objection, he submitted the dispute to the jurisdiction of this Court and waived his right to rely on the arbitration clause. While the 1st respondent may argue that the objection was itself intended to dispute the jurisdiction of this Court, the law draws a clear distinction between a properly framed application for stay under Section 6(1) and other procedural steps taken in litigation. A preliminary objection, even when couched in terms of jurisdiction, amounts to active engagement with the Court’s processes and is treated as a submission to its authority. 9.It bears emphasis that Section 6(1) is couched in mandatory terms. Compliance is not optional, nor is it subject to judicial discretion. To permit parties to invoke arbitration belatedly would undermine the certainty and predictability that arbitration seeks to achieve, and would defeat the very purpose of the statutory safeguard. Disposition 10.For the reasons set out above, the Notice of Preliminary Objection dated 4th June 2026 is hereby dismissed with costs. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 19TH DAY OF JUNE 2026.F. MUGAMBIJUDGEDelivered in presence of:Simiyu for 1st RespondentMs Nyanchama for ApplicantOlaha for Ms Biwott for 2nd, 3rd RespondentsCourt Assistants: Lillian & Gloria