[2018] KEHC 5291 (KLR)

[2018] KEHC 5291 (KLR)

The court held that the dispute between the parties, though framed as involving constitutional and statutory issues, fundamentally arises from the relationship governed by the Shareholders Agreement (SHA), which contains a broad arbitration clause. By virtue of the alignment clause in the SHA, disputes relating to...

Source-derived case information.

Citation
[2018] KEHC 5291 (KLR)
Parties
Applicant: Jatin Shantilal Malde; Applicant: Mukuntikumar Shantilal Malde; Applicant: Mayur Shantilal Malde; Applicant: Mahul J. Shah; Applicant: Shashikant S. Shah; Applicant: Bhupendra S. Shah; Applicant: Yogeshchandra K. Shah; Applicant: Jayesh J. Shah; Applicant: Palkesh J. Shah; Applicant: Ashish B. Shah; Respondent: Transmara Investment Limited; Respondent: Transmara Sugar Company Limited; Respondent: Sucriere Des Mascareignes Limited
Court
High Court
Court Station
High Court at Nairobi (Milimani Commercial Courts)
Jurisdiction
Kenya
Case Number
Petition 18 of 2018
Procedural Posture
Miscellaneous Application / Ruling on Application for Stay and Referral to Arbitration
Outcome
Application for stay of proceedings and referral to arbitration allowed with costs.
Judges
F Tuiyott
Legal Topics
Arbitration Agreements, Shareholder Disputes, Oppression of Minority Shareholders, Enforcement of Arbitral Awards, Corporate Governance, Constitutional Avoidance
Source Language
en
Commercial and Corporate Alternative Dispute Resolution Arbitration Agreements Shareholder Disputes Oppression of Minority Shareholders Enforcement of Arbitral Awards Corporate Governance Constitutional Avoidance

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Parties

Jatin Shantilal Malde

Applicant

Mukuntikumar Shantilal Malde

Applicant

Mayur Shantilal Malde

Applicant

Mahul J. Shah

Applicant

Shashikant S. Shah

Applicant

Bhupendra S. Shah

Applicant

Yogeshchandra K. Shah

Applicant

Jayesh J. Shah

Applicant

Palkesh J. Shah

Applicant

Ashish B. Shah

Applicant

Transmara Investment Limited

Respondent

Transmara Sugar Company Limited

Respondent

Sucriere Des Mascareignes Limited

Respondent

Procedural Posture

Miscellaneous Application / Ruling on Application for Stay and Referral to Arbitration

Legal Issues

  1. 1 Whether the dispute falls within the scope of the arbitration clause in the Shareholders Agreement.
  2. 2 Whether the arbitration agreement is null, void, inoperative, or incapable of being performed.
  3. 3 Whether the presence of constitutional claims precludes referral to arbitration.

Ratio Decidendi

The court held that the dispute between the parties, though framed as involving constitutional and statutory issues, fundamentally arises from the relationship governed by the Shareholders Agreement (SHA), which contains a broad arbitration clause. By virtue of the alignment clause in the SHA, disputes relating to the Memorandum and Articles of Association are also subject to arbitration. The respondent, as a special purpose vehicle created pursuant to the SHA and having executed a deed of adherence, is entitled to rely on the arbitration clause. The court found that the constitutional issues raised are essentially company law matters for which adequate remedies exist in private law, and...

Court Disposition

Application for stay of proceedings and referral to arbitration allowed with costs.

Orders

  • The application dated 6th June, 2018 is allowed.
  • The proceedings are stayed and the dispute is referred to arbitration in accordance with the Shareholders Agreement.