https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8500

Milicons Ltd & 3 others v Insurance Training and Education Trust (Commercial Case E561 of 2025) [2026] KEHC 8500 (KLR) (Commercial and Tax) (11 June 2026) (Ruling) Neutral citation: [2026] KEHC 8500 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Case E561 of 2025 PM Mulwa, J June 11, 2026 Between Milicons Limited 1st Plaintiff Master Power Systems Limited 2nd Plaintiff Sheffield Steel Systems Limited 3rd Plaintiff Raerex EA Limited 4th Plaintiff and Insurance Training and Education Trust Defendant Ruling 1.The Defendant filed the Notice of Motion dated 19th September 2025, brought pursuant to Section 6 of the Arbitration Act, and seeks to stay the proceedings herein and refer the dispute to arbitration pursuant to the arbitration agreement in the parties' contract. 2.The application is supported by the affidavit of Dr. Ben Kajwang and a supplementary affidavit sworn on 23rd February 2026. The Defendant’s case is that the 1st Plaintiff entered into a building and construction contract with the Defendant in November 2015 for the construction of a hotel and conference centre known as the Leadership Centre, while the 2nd, 3rd and 4th Plaintiffs participated in the project as subcontractors. 3.According to the Defendant, the project was financed by KCB Bank, which appointed Aegis Development Solutions Limited as Project Manager and Quantity Surveyor with responsibility for reviewing valuations, assessing variations, auditing costs, monitoring overruns and approving payments. It is deponed that after the Plaintiffs submitted the Final Account, Aegis Development Solutions Limited prepared a Final Account Review Report dated 10th January 2024, which identified several anomalies and disputed items requiring clarification and reconciliation before the project could be closed. 4.The Defendant contends that the dispute extends beyond Final Certificate No. 32 and concerns seven certificates amounting to Kshs. 590,916,433.78. It is its position that the sums claimed remain subject to verification, reconciliation and agreement and therefore do not constitute an admitted or liquidated debt. 5.The Defendant further relies on Clause 45 of the Main Contract, which provides a dispute resolution mechanism requiring disputes to be resolved through negotiations and, if unresolved, by arbitration. It maintains that the issues raised concerning the Final Account, disputed variations, certification, computation of interest, and reconciliation of payments fall squarely within the scope of the arbitration clause. 6.The Plaintiffs oppose the application through the replying affidavit of Hardhik Sai Parchuri, sworn on 27th October 2025. They contend that the suit seeks recovery of Kshs. 590,916,433.78, being certified sums due under Certificates Nos. 8, 21, 22C, 28, 30B, 31, and 32, together with contractual interest. 7.The Plaintiffs argue that the Defendant’s consultants duly issued the certificates in accordance with the contract. That certified sums constitute debts payable immediately under the principle commonly referred to as “pay now, argue later.” They contend that no dispute exists regarding the certificates and that the Defendant seeks to rely on objections raised by KCB Bank and Aegis Development Solutions Limited, who are not parties to the contract. 8.According to the Plaintiffs, the Defendant’s Quantity Surveyor agreed the Final Account on 23rd January 2024, and the Architect subsequently issued Final Certificate No. 32 on 30th January 2024, notwithstanding the report prepared by the financier’s project manager. The Plaintiffs maintain that any contractual period for disputing the certificates lapsed without objection and that the Defendant’s reliance on the financier’s report is merely an attempt to delay payment of an admitted debt. 9.The application was canvassed by way of written submissions. The Defendant filed submissions dated 26th February 2026, while the Plaintiffs filed submissions dated 27th February 2026. Analysis and determination 10.Having considered the application, the affidavits on record and the rival submissions of counsel, the issue that arises for determination is whether the Defendant has satisfied the requirements of Section 6 of the Arbitration Act to warrant a stay of these proceedings and referral of the dispute to arbitration. 11.Section 6(1) of the Arbitration Act provides:“A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it finds—a.that the arbitration agreement is null and void, inoperative or incapable of being performed; orb.that there is not in fact any dispute between the parties about the matters agreed to be referred to arbitration.” 12.In UAP Provincial Insurance Co Ltd v Michael John Beckett, CA No. 26 of 2007, this Court considered that provision and stated as follows:“It is clear from this provision that the enquiry that the court undertakes and is required to undertake under section 6(1)(b) of the Arbitration Act is to ascertain whether there is a dispute between the parties and if so, whether such dispute is about matters agreed to be referred to arbitration. In other words, if as a result of that inquiry the court comes to the conclusion that there is indeed a dispute and that such dispute is within the scope of the arbitration agreement, then the court refers the dispute to arbitration as the agreed forum for resolution of that dispute. If on the other hand the court concludes that the dispute is not within the scope of the arbitration agreement, then the correct forum for resolution of the dispute is the court.” 13.The real contest concerns whether there exists a dispute capable of reference to arbitration. The Plaintiffs contend that the sums claimed are certified, liquidated and undisputed. They argue that the Architect's certification transformed the claim into an admitted debt, thereby rendering it incapable of arbitration. 14.There is no dispute that the parties executed a contract containing an arbitration clause. Clause 45 of the contract provides for dispute resolution. The clause expressly provides that - “in case any dispute or difference shall arise between the employer, or architect on his behalf and the contractors either during the process or after completion, abandonment of the works… shall be referred to arbitration.” 15.There is also no dispute that the instant application was made before the Defendant took any further step in the proceedings. The critical question is whether there exists a dispute capable of reference to arbitration. 16.The Defendant maintains that a dispute exists regarding the Final Account and the seven certificates forming the basis of the Plaintiffs' claim. It relies principally on the Final Account Review Report prepared by Aegis Development Solutions Limited on 10th January 2024 and contends that the sums claimed remain subject to verification, reconciliation and agreement. 17.The material before the Court shows that, notwithstanding the observations contained in the report of 10th January 2024, the Defendant's own Quantity Surveyor subsequently agreed the Final Account on 23rd January 2024, and the Architect thereafter issued the Final Certificate on 30th January 2024. Those actions were undertaken by the contractual consultants charged with certification under the contract. 18.The Defendant has not demonstrated to the court that it took the necessary steps to challenge the certificates or invoke the contractual dispute resolution process within the timelines prescribed by the contract. Clause 34.22 provides that - “unless a written request to concur in the appointment of an arbitrator shall have been given under clause 45 of these conditions by either party before the final certificate has been issued, or within 30 days after such issue, the said certificate shall be conclusive evidence in any proceedings arising out of this contract (whether by arbitration under clause 45 of these conditions or otherwise) that works have been properly carried out and completed in accordance with the terms of this contract which requires an adjustment to be made to the contract price, expect and in so far as any sum mentioned in the said certificate is erroneous by reason of…” 19.At that stage, the Defendant did not send a disagreement notice, engage in amicable settlement procedures, or initiate arbitration. Only after the Plaintiffs initiated the current actions did the Defendant attempt to utilize the arbitration clause. 20.An arbitration clause does not automatically grant a party a stay of proceedings. The Court must be satisfied that there is a real dispute that can be referred to arbitration. 21.The Plaintiffs' claim is based on properly issued certificates under the contract. The Final Account was agreed upon and certified, and no contractual challenge was filed within the 30 days period. In those circumstances, the certified payments became contractually payable. The Defendant cannot now pursue a claim that it failed to raise within the contractual structure and timelines agreed upon by the parties. 22.The Defendant's justification for nonpayment has been inconsistent. Initially, it blamed the delay on concerns expressed by KCB Bank and Aegis Development Solutions Limited. However, when challenged with the fact that the Final Account was still accepted and certified after those issues were expressed, the Defendant switched its stance, claiming carelessness and abdication of responsibility by its own experts. These shifting answers do not indicate a genuine debate. Rather, they support the conclusion that the purported conflict arose after payment was sought. 23.I am not persuaded that there exists a genuine dispute that requires arbitration. As a result, I find the Defendant has failed to meet the threshold for staying proceedings and referring the case to arbitration. 24.Accordingly, I dismiss the Notice of Motion dated 19th September 2025, with costs to the Plaintiff’s It is so ordered. RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 11TH DAY OF JUNE 2026.P.M. MULWAJUDGEIn the presence of:Mr. Karanja for PlaintiffsMr. Kimari for DefendantCourt Assistant: Lispa