https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7045

Odeny v Momentum Credit Limited; National Transport and Safety Authority (Interested Party) (Civil Case E004 of 2025) [2026] KEHC 7045 (KLR) (21 May 2026) (Ruling) Neutral citation: [2026] KEHC 7045 (KLR) Republic of Kenya In the High Court at Siaya Civil Case E004 of 2025 DK Kemei, J May 21, 2026 Between Salim Odeny Plaintiff and Momentum Credit Limited Defendant and National Transport and Safety Authority Interested Party Ruling 1.The Defendant herein has filed an application dated 28/4/2026 seeking principally for an order of stay of proceedings and that the dispute be referred to arbitration and that the costs be provided for. 2.The application is supported by the grounds set out thereunder and by the supporting affidavit of Sheilla Imali Limisi sworn on event date. The Defendant’s gravamen is inter alia; that the Plaintiff and Defendant entered in logbook loan agreement on 13/8/2022; that the Defendant advanced the Plaintiff a loan of kshs 336,000/= which was secured by motor vehicle registration No. KCE 634 which was jointly registered in the names of both parties; that clause 18.1 of the agreement provided that if any dispute whatsoever arose between the parties, the matter should be referred to arbitration; that the Plaintiff defaulted in the loan repayment forcing the Defendant to repossess the vehicle and sell it trough a public auction; that the parties should allow the parties to go to arbitration; that the Court lacks jurisdiction to handle this matter as it was instituted before exhaustion of the alternative dispute resolution mechanisms agreed upon by the parties; that the matter should go to arbitration pursuant to the agreement vide clause 18.1. thereof. 3.The application was opposed by the Plaintiff who filed a relying affidavit sworn on 29/4/2026 wherein he averred inter -alia; that the motor vehicle was not registered in the joint names of the parties as alleged; that the Plaintiff cleared the loan on 12/11/2020 but the Defendant refused to discharge the logbook; that the dispute herein is outside what had been agreed upon by the parties; that the Defendants action is entering appearance, filing defence and participating in the trial in its end waived its ought to seek for referral of the dispute to arbitration; that the Plaintiff paid the loan completely; that the Applicant cannot probate and reprobate in the matter as it had participated in the matter upto this stage and then seek for arbitration; that the Defendant failed to move the Court in time for arbitration but has participated in it substantially; that the applications meant to delay the proceedings to the prejudice of the Plaintiff; that it in the interest of justice to disallow the application and direct the matter to proceed to defence hearing. 4.The application as canvassed by way of written submissions. 5.Vide submissions dated 7/5/2026 learned Counsel for the Defendant submitted that clause 18.1 of the agreement entered by the parties required that disputes should be referred to arbitration. It was further submitted that under section 6 of the Arbitration Act, the proceedings should be stayed so that the matter is referred to arbitration. It was finally submitted that the Court lacks jurisdiction to entertain the matter. Reliance was placed in the case of Owner of Motor Vese “Lillian S” Vs Caltex Oil Kenya Ltd (1983) KECA 48 KLR where it was held that jurisdiction is everything and that without jurisdiction Court must down its tools.Also, in UAP Provincial insurance Company Ltd vs Michael John Bockett (2013) eKLR where the Court of Appeal held that where parties have agreed to arbitration, Court should give effect to that agreement and refrain from interfering except as provided by statute.Also, in Nyutu Agrovet Ltd vs Airtel networks Kenya Limited (2019) eKLR the Supreme Court Emphasized the prejudice pf minimal Court intervention in arbitral matters. 6.Vide submissions dated 11/5/2026 learned Counsel raised three issues for determination inter alia; whether this Court has jurisdiction to hear and determine the suit herein; whether the Defendant had waived its right to move the Court to stay the proceedings and refer the dispute to arbitration; who should bear the cost of the application?Learned Counsel submitted that his Court has jurisdiction to entertain the matter. It was also submitted that the Defendant who had proceeded with the matter substantially upto defence stage is deemed to have waived its right to arbitration. As regards the aspect of costs, Counsel urged the Court to dismiss the application with costs. 7.I have considered the application, rival affidavits and submissions presented. It is not in dispute that the parties herein had vide clause 18.1 in their agreement had purposed that any disputes would be referred to arbitration. It is also not in dispute that the parties have proceeded with the matter up to defence stage. I find the issues for determination is whether the application has merit. 8.I have perused the court record and note that upon the filing of this suit, the Defendant duly entered appearance on 8th August 2025 and filed a statement of defence, list of witnesses, and witness statement all dated 18th August 2025 as well as a list of documents dated 22nd October 2025 and a further list of documents dated 6th November 2025. The parties duly participated in the pre-trial conference before the matter proceeded for hearing in earnest on 19th February 2026 when the Plaintiff and his witnesses were heard. The Defendant through his counsel participated fully in the hearing and cross-examined all the Plaintiff’s witnesses. Thereafter, the Defence case was fixed for hearing on 4th March 2026. It is now at the stage of the defence case that the present application has been filed seeking referral of the matter to arbitration pursuant to the provisions of clause 18.1 of the agreement entered into by the parties and section 6 of the Arbitration Act. It is the strong view of counsel for the Defendant that this matter ought to have been referred to arbitration in the first place, and that this court lacks the requisite jurisdiction to entertain the suit. Learned counsel sought reliance in the case of Owners of the Motor Vessel “Lillian S” V Caltex Oil (Kenya) Ltd (1989) KECA 48 KLR where it was held that jurisdiction is everything and that without jurisdiction, a court must down its tools.Section 6(1) of the Arbitration Act provides as follows:“A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies, stay the proceedings and refer the parties to arbitration.’’ 9.The issue of jurisdiction is central to all the courts, and the courts are expected to be vested with jurisdiction whenever they adjudicate matters placed before them. In the locus classicus case of Owners of the Motor Vessel “Lillian S" v Caltex Oil (Kenya) Ltd [1989] KECA 48 (KLR) the Court of Appeal held as follows:“Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.”The jurisdiction of this Court is conferred upon it by the Constitution of Kenya at Article 165(3) as follows:“(3)Subject to clause (5), the High Court shall have—a)unlimited original jurisdiction in criminal and civil matters;”Also, the High Court (Organization and Administration) Act (Cap. 8C Laws of Kenya) provides as follows at section 5:“5.Jurisdiction of the CourtThe Court shall exercise—a.the jurisdiction conferred to it by Article 165(3) and (6) of the Constitution; andb.any other jurisdiction, original or appellate, conferred to it by an Act of Parliament.” 10.The Constitution of Kenya gives this Honourable Court unlimited original jurisdiction in all civil matters. The fact that the matter had been filed before this court in the first place, is evidence that the court had jurisdiction and that the provisions of section 6 of the Arbitration Act only comes afterwards. Hence, ipso facto, one cannot deny the fact that the court has jurisdiction to handle such matters before applications are made for referral to arbitration as guided by section 6 of the said Act. In the case of Macharia & another v Kenya Commercial Bank Ltd & 2 others [2012] KESC 8 (KLR), the Supreme Court held as follows on the question of jurisdiction:“68.A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law… Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution.” 11.Clause 18.1 of the agreement provided that all claims and disputes whatsoever under this agreement shall be referred to arbitration in accordance with the provisions of the Arbitration Act by a single arbitrator to be appointed by agreement between the parties or failing agreement within fourteen 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 institute of arbitrators Kenya on application by either party.The Supreme Court in the case of Synergy Industrial Credit Ltd v Cape Holdings Ltd [2019] KESC 12 (KLR) explained the matter as follows:“In addition, arbitration regime was meant to ensure that there was a process, distinct from the courts, of effectively and efficiently solving commercial disputes. The law also recognized that such a process was not absolutely immune from the courts’ intervention. Courts of law remained the ultimate guardians and protectors of justice, and hence, they could not be completely shut off from any process of seeking justice.’’Similarly, in the case of Agnes Waruguru Gaita & another v RSM Eastern Africa LLP & another [2021] KEELRC 1846 (KLR) while dealing with the question of arbitration clause, the court held as follows:“That Section does not state that an arbitration clause ousts the jurisdiction of the court. It states that the court will stay the proceedings only where a party applies to have the proceedings stayed in order to refer the matter to arbitration. It does not state the court does not have jurisdiction in such a matter. It gives the Defendant the freedom to choose to either have the dispute resolved by the court in which the suit has been instituted or to stay (not dismiss or strike out) the suit and refer the matter to arbitration.’Further, in the case of Murage v Lesedi Developers Limited [2024] KEHC 8882 (KLR) it was held as follows:“32.Even in disputes emanating from agreements with arbitration clauses under the Arbitration Act, what courts are expected to do under section 6 of the Act, is to stay the proceedings and refer the same for arbitration. Again, such stay can only be made where it is demonstrated that strictures under section 6 of the Act are met. The court cannot fold its hands and dismiss the claim for want of jurisdiction.” 12.It is my considered view that the said clause does not oust the jurisdiction of this Court. This means that the court has jurisdiction to hear an application for stay of the suit and decline the request thus retaining the right to hear the suit. Further, the fact that the court stays the proceedings means that the court has jurisdiction but only defers to the agreements of the parties to refer it to arbitration. This is the basis of Section 5 of the Act, which provides for waiver of the right, in which event the court would hear the case. This means that the parties can elect to have the matter referred to arbitration or heard by the court. The jurisdiction of the court in the circumstances is thus not ousted but is conjunctive with arbitration. As the Defendant has gone through the motions in the matter and prosecuted the case up to the close of the Plaintiff’s case, it is only natural to deem the Defendant to have waived its right to have the matter referred to arbitration in accordance with clause 18.1 of the agreement. 13.In the case of Eunice Soko Mlagui v Suresh Parmar & 4 others [2017] KECA 736 (KLR), the Court of Appeal held as follows:“The main difference between the position before and after 2009 is that before 2009, a party was required to apply for referral of the dispute to arbitration at the time of entering appearance or before filing any pleadings or taking any other step in the proceeding. After 2009, the provision still requires a party to apply for referral of the dispute to arbitration at the time of entering appearance or before acknowledging the claim in question. In our minds, filing a defence constitutes acknowledgement of a claim within the meaning of the provision.”Again, the Court of Appeal in Charles Njogu Lofty v Bedouin Enterprises Ltd, CA No. 253 of 2003 had the following to say about the same subject:“We respectfully agree with these views so that 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.” 14.Similarly, in the case of Niazsons (K) Ltd v China Road & Bridge Corporation Kenya [2001] KECA 376 (KLR), the Court of Appeal held as follows:"It appears to me that all an applicant is obliged to do is to bring his application promptly. The Court will then be obliged to consider three basic aspects. First, whether the applicant has taken any step in the proceeding other than the steps allowed by the said section. Second, whether there are any legal impediments on the validity, operation or performance of the arbitration agreement. Third, whether the suit indeed concerns a matter agreed to be referred.”Also, in Corporate Insurance Company Vs Loice Wanjiru Wachira [1996] KECA 70 (KLR), the Court of Appeal had this to say:“In the present case, if the appellant wished to take the benefit of the clause, it was obliged to apply for a stay after entering appearance and before delivering any pleading. By filing a defence the appellant lost its right to rely on the clause.” 15.Similarly, the Court of Appeal in the case of Eunice Soko Mlagui v Suresh Parmar & 4 others [2017] KECA 736 (KLR) (supra) held as follows:“As this Court explained in Charles Njogu Lofty v Bedouin Enterprises Ltd (supra) and Niazons (K) Ltd v. China Road & Bridge Corporation Kenya (supra) section 6(1) of the Arbitration Act obliges the party desiring referral of the dispute to arbitration to make the application promptly and at the earliest stage of the proceedings. We are therefore satisfied that the learned judge did not err in any manner when she refused, in the circumstances of this appeal, to stay proceedings and refer the dispute to arbitration.”Again, in the case of Adrec Limited v Nation Media Group Limited [2017] KECA 106 (KLR) the Court of Appeal stated as follows:“It should be emphasized that the right to seek and obtain stay of proceedings under section 6(1) of the Arbitration Act is lost the moment a defence is filed in the proceedings. By dint of the defence, the party filing it subjects itself to jurisdiction of the court and cannot thereafter resile from that position.” 16.An analysis of the application lodged by the Defendant and the rival submissions leads me to come to the inescapable conclusion that the conduct of the Defendant in agreeing to participate in proceeding with this matter right from the pre-trial directions all the way to the closure of the Plaintiff’s case without raising any objection, is clear proof that the Defendant waived its right to have the matter referred to arbitration. Further, the Defendant failed to present the application promptly in time for the court’s consideration. The Defendant, instead, agreed to comply with all the attendant procedures leading to the hearing of the matter and that at no time did it raise such an issue. The Defendant should not be allowed to take the adverse party and the court on a journey full of surprises which are not disclosed and only sprung up at the pleasure of the Defendant. Consequently, I find the Defendant’s application is meant to delay the matter further. The Defendant should proceed with the defence hearing as earlier on directed. 17.In the result, it is my finding that the Defendant’s application dated 28/4/2026 lacks merit. The same is dismissed with costs. DATED AND DELIVERED AT SIAYA, THIS 21ST DAY OF MAY 2026D.KEMEIJUDGEIn the presence of:Idi for Tolo............for Defendant/ApplicantSalim Odeny..........for Plaintiff/RespondentM/s Mourine............Court Assistant