https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7712

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **CIVIL APPEALLATE DIVISION** **CIVIL APPEAL NO. E090 OF 2025** **JUBILEE INSURANCE OF KENYA LTD..…………………………APPELLANT** **VERSUS** **ISL KENYA LIMITED …………….…………………….……..RESPONDENT** *(Being an Appeal from the ruling of Hon. Becky Cheloti Mulemia (Principal Magistrate), delivered on 31st January 2025 and the Exparte judgment and order of Hon Becky Cheloti Mulemia delivered on 31st October 2024 in CMCC suit no E926 OF 2020)* **JUDGEMENT** 1. The trial court delivered a ruling on two applications dated 26th November 2024 and 29th November 2024. 2. The first application was filed by the Appellant, who had asked the court to set aside an ex-parte judgment and refer the matter to arbitration. 3. The trial court dismissed this application, finding that under Section 6 of the Arbitration Act, a party must apply for a stay of proceedings and referral to arbitration at the time they enter appearance. 4. The trial court said that the Appellant did not file the said application at that time, they lost the opportunity, and the court was therefore required to continue dealing with the case. 5. Regarding the second application, filed by the Respondent seeking a garnishee order, the trial court found that since the Appellant’s jurisdictional challenge had failed and the court was properly seized of the matter, the Respondent’s application was unopposed and was allowed as prayed. 6. Consequently, the court dismissed the Appellant’s application dated 26th November 2024, allowed the Respondent’s application dated 29th November 2024 in its entirety, and ordered the Appellant to bear the costs of both applications. 7. The Appellant has appealed against the said Ruling on the following grounds; 8. *THAT the learned Magistrate erred in law and fact by failing to find that the dispute between the parties was subject to an Arbitration Clause under the subject policy of Insurance.* 9. *THAT the learned Magistrate erred in law and fact by failing to uphold the Notice of Motion application dated 19th November 2024, and particularly the prayer to refer the matter to Arbitration under Section 6 of the Arbitration Act (Cap 49).* 10. *THAT the learned Magistrate erred in law and fact by proceeding to hear the Garnishee Application dated 29th November 2024 without determining the issue of jurisdiction raised by the Appellant on 26th November 2024.* 11. *THAT the learned Magistrate erred in law by failing to find that the court's jurisdiction was ousted by the existence of the Arbitration Clause; therefore, the Garnishee Order Nisi issued on 3rd December 2024 and the Ruling delivered on 31st January 2025 are null and void for want of jurisdiction.* 12. *THAT the learned Magistrate erred in fact and law by not finding that the Respondent moved the court through irregular proceedings by filing a suit yet the policy contract provided for resolution of disputes through Arbitration.* 13. *THAT the learned Magistrate erred in law and fact by failing to find that the service of summons upon the Appellant was irregular and improper for non-compliance with Order 5 Rule 3 of the Civil Procedure Rules.* 14. The parties filed written submissions as follows; The Appellant submitted that the trial magistrate erred in several key respects. 15. First, the Appellant contends that the court lacked jurisdiction to entertain the dispute because the underlying insurance policy contains a mandatory arbitration clause under Clause 14, which requires any difference arising as to the amount of loss or damage to be referred to arbitration. 16. The Appellant submits that the trial court therefore should have stayed proceedings and referred the matter to arbitration under Section 6 of the Arbitration Act (Cap 49), rather than proceeding to enter ex-parte judgment and issue garnishee orders. 17. The Appellant emphasizes that parties are bound by their contract and that the Respondent’s suit was premature. 18. Second, the Appellant argues that it was not properly served with summons to enter appearance, making the default judgment irregular and a nullity. 19. Service was allegedly effected via email to junior legal officers, not to a company secretary or director as required under Order 5 Rule 3 of the Civil Procedure Rules. 20. The Appellant cites case law to show that such irregular service means the judgment must be set aside as a matter of right, without needing to demonstrate a triable defence. 21. The Appellant also points out that its application to set aside the judgment was unopposed, and that the trial magistrate failed to consider that the Appellant only learned of the matter after ex-parte judgment had already been delivered. 22. Finally, the Appellant prays that the ex-parte judgment and the ruling dismissing its application be set aside, that the dispute be referred to arbitration, and that the Respondent bear the costs of the appeal. 23. The Respondent, ISL Kenya Limited, submitted that the trial court had proper jurisdiction to hear the insurance dispute, despite the Appellant’s claim that an arbitration clause should have applied. 24. The Respondent points out that under Section 6 of Kenya’s Arbitration Act, a court may intervene and refuse to stay proceedings if the party seeking arbitration did not apply at the earliest opportunity, specifically, before entering appearance or taking any step in the case. 25. Here, the Appellant did not mention arbitration when the suit was filed in 2020, did not enter appearance, and only raised the issue after judgment was entered against it. 26. The Respondent contends that this delay amounts to a waiver of the right to arbitrate, and that referring the matter to arbitration four years later would undermine finality and offend the overriding objective of just and efficient case management. 27. On the issue of service of summons, the Respondent maintains that service was properly effected during the COVID-19 pandemic via email addresses provided by the Appellant’s own personnel. 28. A process server visited the Appellant’s premises, was directed to those emails, and an officer named Nancy Kasyoka acknowledged receipt and promised to revert, without any protest about lack of authority. 29. The Respondent argues that the Appellant cannot now claim improper service after acknowledging receipt and failing to enter appearance for years. 30. Citing decisions such as **Paulina Wanza Maingi v Diamond Trust Bank**, the Respondent urges the court to reject technical objections that would defeat justice, and to dismiss the appeal with costs. 31. The issues for determination in this appeal are as follows; 32. *Whether service of the summons to enter appearance was lawfully and properly effected upon the Appellant.* 33. *Whether the ex-parte default judgment delivered on 31st October 2024 and the subsequent garnishee orders were regularly obtained.* 34. *Whether the Appellant waived its right to invoke the arbitration clause under Section 6 of the Arbitration Act (Cap 49) due to the lapse of time.* 35. *Whether this Court should set aside the trial court’s orders, and refer the dispute to arbitration pursuant to Clause 14 of the subject insurance policy.* 36. The first issue to be resolved is the validity of the service of the summons. 37. The Respondent asserts that because its process server was directed to certain email addresses by internal staff during the COVID-19 pandemic, and because an officer named Nancy Kasyoka acknowledged receipt, service was substantially and effectively achieved. 38. Corporations are legal entities that can only be brought within the jurisdiction of a court through strict compliance with the statutory channels designed to ensure that the management of the corporation is formally notified. 39. Order 5 Rule 3 of the Civil Procedure Rules strictly prescribes that service upon a body corporate must be made on a company secretary, director, or other principal officer, or by sending it to the registered office of the corporation. 40. While the Civil Procedure (Amendment) Rules of 2020 introduced Order 5 Rules 22B and 22C to permit electronic service by email in response to the pandemic, these provisions do not grant litigants a license to bypass corporate structures. 41. Rule 22B explicitly requires that an electronic summons be sent to the defendant’s "last confirmed and used e-mail address." 42. This means a verified corporate email channel meant for formal communication, not the individual work accounts of junior legal officers. 43. Proper service of summons is the foundational pillar of a court's jurisdiction over a party. Without regular service, a court condemns a party unheard and acts without jurisdictional authority. 44. The administrative acknowledgment by an unauthorized employee cannot validate an otherwise legally defective process. An employee cannot casually waive the statutory protections enacted by Parliament to safeguard the rights of a body corporate. 45. Having established that the service was irregular, we must look at the second and third issues regarding the default judgment and the statutory timelines under Section 6 of the Arbitration Act. 46. The Respondent contends that by waiting four years from the filing of the suit in 2020 until after the ex-parte judgment was entered in October 2024, the Appellant waived its right to arbitrate. 47. Section 6(1) of the Arbitration Act mandates that an application to stay proceedings and refer a matter to arbitration must be made "at the time of entering appearance, or before taking any other step in the proceedings." 48. However, the law does not command the performance of impossible tasks. The threshold requirement for entering an appearance or taking a step in a lawsuit is that the party must be aware that the lawsuit exists. 49. The important question in this appeal is whether a party can be held to have waived its contractual right to arbitration by failing to object to a court process of which it had no lawful or actual knowledge. 50. In answering this question, this court must re-examine the structural relationship between the mandatory rules of corporate service and the strict timelines imposed by the Arbitration Act. 51. If service was never properly effected, the Appellant could not have entered an appearance, nor could it have moved the court to stay the proceedings at an earlier date. 52. The four-year delay was not a product of the Appellant's indolence or a deliberate waiver of its rights; it was the direct consequence of the Respondent's failure to effect lawful service. 53. Where service is defective, any subsequent default judgment is an accumulation of nullities. 54. Consequently, the ex-parte judgment delivered on 31st October 2024 and the subsequent garnishee order nisi issued on 3rd December 2024 are null and void ab initio for want of jurisdiction. 55. Finally, we turn to the question of whether the matter should be referred to arbitration. It is a well-settled principle of Kenyan law that where parties have contractually bound themselves to a specific dispute resolution mechanism, courts must respect the autonomy of that contract and enforce the arbitration clause. 56. Under Clause 14 of the subject insurance policy, the parties expressly agreed that any differences arising out of the policy regarding the amount of loss or damage must be referred to arbitration. 57. This court has made a finding that the Appellant was never properly served, and therefore its right to object was preserved and it timeously asked the trial court in the application dated 26th November 2024 to refer the matter to arbitration immediately upon learning of the irregular judgment. 58. The trial court erred fundamentally in law and fact by treating the Appellant's lack of knowledge as a procedural waiver. 59. For these reasons, this appeal is allowed. The ruling and orders of the trial court delivered on 31st January 2025 dismissing the Appellant’s application and allowing the Respondent's garnishee application are hereby set aside in their entirety. 60. The ex-parte judgment of 31st October 2024 is vacated, and the underlying dispute between the parties is hereby referred to arbitration in terms of Clause 14 of the subject insurance policy. 61. Each party to bear its own costs of the appeal and the costs of the trial court. 62. Orders to issue accordingly. **DATED, SIGNED AND DELIVERED AT NAIROBI THIS 2ND DAY OF JUNE 2026** **ASENATH ONGERI** **JUDGE** **In the presence of** Miss Njuki the Appellant Miss Okemwa for the Respondent Chrispine - Court Assistant