https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10208

One Stop Gift Ltd & 5 others v Gladys Technologies Ltd & another (Commercial Case E174 of 2026) [2026] KEHC 10208 (KLR) (Commercial & Admiralty) (2 July 2026) (Ruling) Neutral citation: [2026] KEHC 10208 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Admiralty Commercial Case E174 of 2026 MO Ado, J July 2, 2026 Between One Stop Gift Limited & 5 others Plaintiff and Gladys Technologies Limited 1st Defendant Uba Kenya Bank Limited 2nd Defendant Ruling 1.The Court is called upon to determine two applications:i.The Plaintiffs’ Notice of Motion dated 24 March 2026 seeking preservatory and injunctive orders in respect of funds allegedly held in Bank Account No. 55010130019803 maintained with the 2nd Defendant.ii.The 1st Defendant’s Chamber Summons dated 7 April 2026 seeking stay of these proceedings and referral of the dispute to arbitration pursuant to Section 6 of the Arbitration Act and Clauses 17.2 and 17.5 of the Technology Services Agreement between the parties. The Plaintiff’s Application 2.By the Notice of Motion dated 24th March 2026, the Plaintiffs sought, inter alia, interim injunctive orders restraining the Defendants from withdrawing or transacting with funds amounting to USD 1,303,253.03 held in Bank Account No. 55010130019803 maintained with the 2nd Defendant (spent), orders directing the 1st Defendant's directors to show cause why they should not furnish security for the said amount, and an order of attachment and preservation of the said funds pending the hearing and determination of the suit. 3.The application was supported by the affidavit of Nelson Osiemo. The Plaintiffs averred that on or about 27th November 2023 they entered into an agreement with the 1st Defendant for the provision of an electronic payment platform, under which the 1st and 2nd Defendants were to receive payments on behalf of the Plaintiffs and remit the proceeds to them while retaining 5% thereof as rolling reserves for a period of 180 days. 4.The Plaintiffs contended that although rolling reserves amounting to USD 185,692.09 for the period between July and September 2024 were duly remitted, the Defendants failed to remit rolling reserve funds amounting to USD 1,303,253.03 allegedly collected between 1st March 2024 and 31st March 2024. 5.The Plaintiffs further averred that the said funds were held in Bank Account No. 55010130019803 and that there existed a risk of dissipation of the funds, thereby rendering the suit nugatory. They maintained that they had established a prima facie case with a probability of success and that preservation of the funds was necessary pending the determination of the dispute. 6.In opposition, the 1st Defendant filed a Replying Affidavit sworn on 7th April 2026 by its Chief Executive Officer, David Maduri. The deponent averred that the dispute arose from a Technology Services Agreement dated 1st December 2023 containing a mandatory dispute resolution clause requiring disputes to be referred to arbitration before the Nairobi Centre for International Arbitration (NCIA). 7.The 1st Defendant denied allegations that it was a foreign entity incorporated in the State of Delaware and averred that it was a Kenyan company with known offices and directors within the jurisdiction. It was further contended that the Plaintiffs had misrepresented material facts in obtaining the ex parte orders. 8.The 1st Defendant further argued that the orders sought were in the nature of Mareva injunctions and attachment before judgment and that no evidence had been produced demonstrating an intention to dissipate assets, transfer funds outside the jurisdiction, or evade satisfaction of any decree that may ultimately be issued. 9.It was also contended that the prayer compelling the directors to furnish security was untenable in law and amounted to an improper attempt to secure a disputed commercial claim before trial. 10.In his Further Affidavit, Nelson Osiemo withdrew the prayer relating to the furnishing of security and maintained that the application sought only preservation of the disputed funds pending determination of the parties' rights. He asserted that the Defendants' role under the agreement was limited to processing payments and holding rolling reserves for onward remittance to the Plaintiffs after the expiry of the agreed holding period. 11.He further averred that the disputed funds constituted identifiable funds held on behalf of the Plaintiffs and therefore formed the subject matter of the dispute requiring preservation. The 1st Defendant's Application 12.By its Chamber Summons application dated 7th April 2026, the 1st Defendant seeks an order staying these proceedings and referring the dispute to arbitration pursuant to Article 159 of the Constitution, Sections 6 and 10 of the Arbitration Act, Rule 2 of the Arbitration Rules and Sections 1A and 3A of the Civil Procedure Act. 13.The application is supported by the affidavit of David Maduri, who deposed that the Technology Services Agreement required disputes to be resolved through negotiations and, failing settlement, by arbitration before a single arbitrator in accordance with the parties' agreement. 14.The 1st Defendant contended that the entire dispute falls within the ambit of the arbitration clause and that this Court's jurisdiction is therefore limited to staying the proceedings and referring the parties to arbitration. 15.In opposing the application, Nelson Osiemo swore a Replying Affidavit on 1st May 2026, contending that the dispute also involved the 2nd Defendant, which was not a signatory to the Technology Services Agreement. He averred that the 2nd Defendant had previously remitted rolling reserve funds directly to the Plaintiffs and was therefore a necessary party to the proceedings. 16.He maintained that the involvement of the 2nd Defendant rendered the arbitration agreement inoperative in the circumstances and that referral to arbitration would occasion injustice because the 2nd Defendant could not be compelled to participate in arbitral proceedings. 17.In a Further Affidavit sworn on 2nd June 2026, David Maduri maintained that the Plaintiffs had not challenged the validity or enforceability of the arbitration agreement and that all issues raised in the suit arose directly from the implementation of the Technology Services Agreement. Analysis and Determination 18.The Plaintiffs and 1st Defendant filed submissions dated 8th June 2026 and 24th June 2026, respectively, addressing both applications. I have duly considered the same together with the application and affidavits filed in support and opposition to it. 19.From the pleadings and submissions, the following two issues arise for determination:i.Whether these proceedings ought to be stayed and the dispute referred to arbitration pursuant to Section 6 of the Arbitration Act and the arbitration clause contained in the Technology Services Agreement.ii.Whether the Court should grant preservation orders in respect of the funds held in Bank Account No. 55010130019803 pending the determination of the dispute through arbitration. Whether the dispute should be referred to arbitration 20.It is common ground that the parties entered into a Technology Services Agreement dated 1st December 2023 for the provision of electronic payment services. 21.Clause 17.2 of the Agreement provides as follows:“In the event of a dispute between Parties with respect to any issue arising out of or relating to this Agreement in any manner, including but not limited to the breach thereof, resolution of which cannot be resolved amicably by the Parties through negotiation within thirty (30) days shall be resolved by arbitration at the Nairobi Centre for International Arbitration (NCIA) before a single arbitrator in accordance with the NCIA Rules." 22.The Plaintiffs contend that the matter should not be referred to arbitration because there is no dispute between the parties. Their case is that the sum of USD 1,303,253.03 represents rolling reserve funds admittedly due and payable and that the correspondence exhibited amounts to an admission of indebtedness. 23.The 1st Defendant takes a contrary position. It argues that questions remain regarding collection, reconciliation, deductions, accounting, custody and ownership of the funds and that the correspondence relied upon by the Plaintiffs merely demonstrates ongoing inquiries rather than an admission of liability. 24.Having reviewed the material before the Court, I am unable to agree with the Plaintiffs that there is no dispute capable of reference to arbitration. 25.Section 6(1) of the Arbitration Act enjoins a court before which proceedings are brought in a matter subject to an arbitration agreement to stay the proceedings and refer the parties to arbitration unless the arbitration agreement is null and void, inoperative or incapable of being performed or unless there exists no dispute between the parties regarding matters agreed to be referred to arbitration. 26.The Court of Appeal in UAP Provincial Insurance Company Ltd v Michael John Beckett [2013] KECA 205 (KLR), while dealing with a dispute involving Section 6 of the Arbitration Act, 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 with regard to matters agreed to be referred to arbitration. In other words, if as a result of that enquiry the court comes to the conclusion that there is indeed a dispute and that such dispute is one that 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 comes to the conclusion that the dispute is not within the scope of the arbitration agreement, then the correct forum for resolution of the dispute is the court.” 27.The Court went on to state that:“The words “that there is not in fact any dispute between the parties” appearing in Section 6(1)(b) of the Arbitration Act are in our view not superfluous and require the court to consider whether there is in fact a genuine dispute when considering an application for stay proceedings….” 28.In the present case, the Plaintiffs seek recovery of a substantial sum allegedly arising from the operation of the rolling reserve mechanism under the parties’ contract. The 1st Defendant disputes liability and disputes the characterization of the funds and the accounting treatment thereof. The parties are also not in agreement as to whether the claimed amount remains outstanding, who presently holds the funds, and the contractual consequences flowing from the arrangement. 29.There is therefore indeed a dispute between the parties. The Plaintiffs have neither challenged the validity of the arbitration clause nor demonstrated that the agreement is inoperative or incapable of performance. 30.The email relied upon by the Plaintiffs does not, in my view, constitute an unequivocal admission of liability. Read objectively, it shows a request for information regarding rolling reserve collections and corresponding credits. Such correspondence is equally consistent with an unresolved accounting dispute. 31.The mere joinder of the 2nd Defendant does not alter the substance of the dispute which remains anchored on rights and obligations arising from the Technology Services Agreement. The claim against the 2nd Defendant is inseparable from the contractual arrangement giving rise to the dispute. 32.I am further satisfied that the 1st Defendant moved the Court timeously before filing a defence and therefore complied with the procedural requirements of Section 6 of the Arbitration Act. 33.Accordingly, I find that the dispute between the Plaintiffs and the 1st Defendant falls within the arbitration clause and ought to be referred to arbitration. Whether a preservatory relief should issue 34.Having found that the dispute should be referred to arbitration, the next issue for my consideration is whether this Court ought to grant interim preservation orders pending the commencement and determination of the arbitral proceedings. 35.Section 7 of the Arbitration Act clothes this Court with the jurisdiction to grant interim measures of protection, so as to preserve the subject matter of the dispute and ensure that the arbitral process is not rendered nugatory. Subsection (1) thereof expressly provides that it is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the Court to grant such measure. 36.The principles governing the exercise of that jurisdiction were authoritatively set out by the Court of Appeal in Safaricom Limited v Ocean View Beach Hotel Limited & 2 Others [2010] eKLR, where the Court emphasized that interim measures under Section 7 are intended to safeguard the subject matter of the arbitration and to ensure that the arbitral proceedings are not rendered nugatory. 37.While the Court notes that the Plaintiffs brought the present application under Order 40 of the Civil Procedure Rules, the substance of the application is the preservation of funds said to constitute the very subject matter of the dispute. Article 159 (2) (d) of the Constitution mandates Courts to determine matters according to their substance and not merely the form in which they are presented. 38.The Plaintiffs contend that the disputed funds constitute rolling reserve monies held pursuant to Clause 7 of the parties’ agreement and that unless preserved, the arbitral process may be rendered nugatory. 39.The 1st Defendant, on its part, argues that the application is in substance a Mareva injunction intended to secure a debt claim and that no evidence of intended dissipation has been demonstrated. 40.The Court accepts that the claim is fundamentally monetary in nature. However, the material placed before the Court demonstrates that the dispute relates to an identifiable fund allegedly held pursuant to a contractual rolling reserve arrangement and not merely to an ordinary unsecured debt claim. The Plaintiffs have exhibited material indicating that the disputed amount is linked to a specific reserve account arrangement contemplated by the contract. 41.Equally, there remains uncertainty regarding the location, custody and disposition of the disputed funds. That uncertainty forms the core of the dispute intended for arbitral determination. 42.In the circumstances, and bearing in mind the Court’s duty to preserve the substratum of the dispute pending arbitration, I am satisfied that limited interim protective measures are warranted. 43.Accordingly, the 1st Defendant’s Chamber Summons dated 7 April 2026 is allowed on the following terms:i.These proceedings are hereby stayed, and the dispute between the Plaintiffs and the matter is referred to arbitration in accordance with Clause 17.2 of the Technology Services Agreement dated 1st December 2023.ii.As an interim measure of protection pending the constitution of the arbitral tribunal and for a period not exceeding ninety (90) days unless extended by the tribunal or a competent court, the 2nd Defendant shall preserve funds up to a maximum of USD 1,303,253.03 in Account No. 55010130019803 and shall not permit withdrawals reducing the preserved amount below that figure.iii.Upon constitution of the arbitral tribunal, any party shall be at liberty to seek further interim measures before the tribunal.iv.Costs of the Notice of Motion and the Chamber Summons shall abide the outcome of the arbitration. 44.It is so ordered. DATED, SIGNED, AND DELIVERED AT NAIROBI THIS 2ND DAY OF JULY 2026HON. MR. JUSTICE MOSES ADOJUDGE OF THE HIGH COURTIn the Presence of:Moses C/Afor the Applicantfor the Respondent