[2025] KEHC 3423 (KLR)

Muruthi & 3 others v Thiongo & another (Commercial Case 216 of 2023) [2025] KEHC 3423 (KLR) (Commercial and Tax) (19 March 2025) (Ruling)

Neutral citation: [2025] KEHC 3423 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Case 216 of 2023

AA Visram, J

March 19, 2025

Between

Ndirangu Meshak Muruthi

1st Plaintiff

Jeremiah Olwe Oliech

2nd Plaintiff

Samuel Kiautha M'Nthangi

3rd Plaintiff

James Munene Muigai

4th Plaintiff

and

Christopher Waweru Thiongo

1st Defendant

Waiyaki Way Developers Limited

2nd Defendant

Ruling

1. I have considered the Notice of Preliminary Objection dated 31st July, 2023, the submissions in support and in opposition to the same, and the applicable law.

2. The basis of the objection is that this Court has no jurisdiction to deal with the present matter, for the reason that the agreement between the parties in relation to the subject matter in dispute, contains an arbitration clause.

3. The 2nd Defendant submitted that clause 9 of the special conditions on page 15 on each of the agreements between the parties contain an arbitration agreement (“the Arbitration Agreement”) in the following words:-If any, difference in question shall arise whether during the continuance of this agreement or upon after its determination between the parties hereto touching or concerning this agreement or as to any other matter of this agreement such dispute, difference or question whatsoever shall be referred to one arbitrator under the rules of the chartered Institute of arbitrators of the United Kingdom, Kenya Branch or any statutory modification or re-enactment for the time being in force, such arbitrator to be appointed by agreement both parties and in the absence of agreement within 14 days of the notification of the dispute by either party to the other then on the application of any one party by the chairman of the chartered Institute of arbitrators Kenya branch…

4. None of the other parties have denied the existence of the Arbitration Agreement, or disputed that the parties are bound to the same. Rather, the arguments urged in opposition to the Preliminary Objection centre around questions relating to arbitrability, and further, questions relating to the extent of jurisdiction and the scope of the Arbitration Agreement, more particularly, whether all the disputes between the parties are capable of settlement by way of arbitration.

5. In particular, the 3rd Defendant submitted that it was not a party to the Arbitration Agreement, and urged this Court to find that where third-party claims arise, the Court ought to allow the parties to proceed by way of litigation, or stay the proceedings pending the completion of the arbitration. Cognizant of the same, I do however note, that the 3rd Defendant has not filed a counterclaim, and therefore, I do not think it has a claim as such. The only claim before this Court belongs to the Plaintiffs. The 3rd Defendant, in my view, remains no more than a Defendant in opposition to that claim.

6. Given that the parties have not denied the presence of the Arbitration Agreement as submitted by the 2nd Defendant, it is evident that the Plaintiff and the 2nd Defendant, at least, intended to have their disputes arising under the said agreement to be resolved by way of arbitration and set out the applicable procedure for commencing the same.

7. As regards the arguments urged on behalf of the Plaintiff and 3rd Defendant, that part of the dispute would not fall within the scope of the Arbitration Agreement; I am of the view that it is for the arbitral tribunal to determine the extent and scope of its jurisdiction, once formed, in accordance with the terms of the agreement. This is in line with Section 17 of the Arbitration Act 1995.

8. Further, while the 3rd Defendant submitted that a court is not bound to refer the matter to Arbitration if it finds that the Arbitration Agreement is null, void inoperative or incapable of being performed, I do not think that this was demonstrated sufficiently. Moreover, the 3rd Defendant admitted that it is not a party to the agreement which it seeks to impugn.

9. Given that there is an admission that some of the parties are bound to the Arbitration Agreement, in the absence of compelling reasons, I do not think this Court ought to re-write the contract between the parties, and in doing so, confer upon itself jurisdiction.

10. I take note that the 2nd Defendant filed its Preliminary Objection as the first step in the proceedings at the same time as entering appearance, and to date, has taken no substantive steps to either admit to the jurisdiction of this Court, or to waive its right to Arbitration. This is in accordance with the procedure contemplated under Section 6 of the Arbitration Act. Nothing in my view, therefore, precludes the Plaintiffs or the 2nd Defendant from commencing the arbitral proceedings in accordance with the terms of the agreement.

11. Finally, as regards the issue of whether or not the Objection musters the test in Mukisa Biscuit Manufacturing Co. Ltd -vs- West End Distributors Ltd (1969) EA 696, the same states as follows:-“so far as I am aware, a Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of the pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court, or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to Arbitration ” (Emphasis mine)

12. Further, the court stated that a valid Preliminary Objection must first, raise a point of law based on ascertained facts and not on evidence:-“In the words of Sir Charles Newbold P, at page 701,...A Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.” (Emphasis mine)

13. Therefore, it is clear that a submission that the parties are bound by an arbitration clause falls within the contemplation of Mukisa Biscuits Supra. The said submission was made by the 2nd Defendant, and the Plaintiffs have not denied its existence. In my view, the fact is therefore not disputed and the question is one of law.

14. Additionally, looking at the decision in Mukisa Buscuits supra, I am of the view that our jurisprudence has long accepted the filing of a Preliminary Objection as an alternative to Section 6 of the Act. I am therefore not creating an exception to Section 6 of the Arbitration Act, but rather, recognizing that one exists. Further, my view is that the Preliminary Objection is acceptable so long as the same is raised as a first step in the proceedings, either at the same time as entering appearance, or immediately thereafter; and so long as the party does not waive its rights to arbitration, or admit to the jurisdiction of the court by acknowledging the claim and filing its substantive pleadings. This was not done.

15. Accordingly, guided by the law and based on the reasons set out above, I find that the threshold has been met. I therefore find that this Court ought to down its tools until such time as the arbitral tribunal may determine the scope and extent of its jurisdiction, in relation to the dispute between the parties.

16. I reiterate the pronouncement of the court in OWNERS OF MOTOR VESSEL “LILIAN S” VS CALTEX OIL (K) LTD [1989] KLR:-“Jurisdiction is everything without which a court of law has no power to make one more step where a court of law has no jurisdiction there would be no basis for a continuation of proceedings pending other evidence. A court of law downs its tools in respect of the matter the moment it holds the opinion that it is without jurisdiction.”

17. Finally, I would add that, nothing prevents the parties from either extending the jurisdiction of the tribunal to determine the various issues that may fall beyond the scope of its jurisdiction, or from approaching the Court, in the future, in relation to those matters in which the tribunal does not have jurisdiction. Therefore, in my view, no prejudice will be occasioned by participating in the arbitral proceedings, to which, in any event, the parties are bound.

18. Based on the reasons set out above, the Preliminary Objection is upheld. The Plaint is accordingly struck out with costs.

DATED AND DELIVERED VIRTUALLY VIA MICROSOFT TEAMS THIS 19TH DAY OF MARCH, 2025ALEEM VISRAM, FCIArbJUDGEIn the presence of;………………………… Court Assistant………………………… for 1st Plaintiff………………………… for 2nd Plaintiff………………………… for 3rd Plaintiff……………………… for 4th Plaintiff………………………… for 1st Defendant………………………… for 2nd Defendant