https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7313

PJ Crafts Limited v Malel Heights Development Ltd & 4 others (Civil Suit E006 of 2026) [2026] KEHC 7313 (KLR) (29 May 2026) (Ruling) Neutral citation: [2026] KEHC 7313 (KLR) Republic of Kenya In the High Court at Eldoret Civil Suit E006 of 2026 AK Ndung'u, J May 29, 2026 Between PJ Crafts Limited Plaintiff and Malel Heights Development Ltd 1st Defendant Ramadhan Kiprono 2nd Defendant Alima Cherono Ramadhan 3rd Defendant Mary Wangui Mwangi 4th Defendant Diana Waithira Kariuki 5th Defendant Ruling 1.Before this court is the Chamber Summons application dated 21st April 2026 brought under Sections 1B, 3, and 3A of the Civil Procedure Act and Section 6 of the Arbitration Act, Cap 49 Laws of Kenya. The Defendants seeks the following orders:a.That the interim orders of injunction issued by this Honourable Court on 15th April 2026 be vacated.b.That there be a stay of proceedings herein and/or any further action pending arbitration.c.That the dispute herein be referred to arbitration.d.That costs be provided for. 2.The application is premised on the following grounds:a.That this is a dispute arising out of a construction contract containing an arbitration clause.b.That the dispute belongs before an arbitral tribunal.c.That this Honourable Court lacks jurisdiction to hear and determine the instant dispute.d.That the interim orders in force are prejudicial and detrimental to the Defendants and third parties affected thereby.e.That there is sufficient reason to warrant the vacating of the interim orders in force. 3.The application is supported by the affidavit of Ramadhan Kiprono. 4.The Defendants/Applicants contend that the dispute herein arises from a road construction contract entered into between the Plaintiff and the 1st Defendant, both being limited liability companies. They aver that the 2nd to 5th Defendants were improperly joined to the proceedings as they were not parties to the contract. 5.According to the Applicants, the contractual relationship between the parties was established through a Letter of Award dated 4th November 2025 together with the General Conditions of Contract as published by the Joint Building Council (JBC), Kenya, 1999 Edition. They assert that the JBC Conditions contain an arbitration clause requiring all disputes arising from the contract to be referred to arbitration. Consequently, they argue that this Court lacks jurisdiction to hear and determine the dispute and that the matter ought to be stayed and referred to arbitration pursuant to Section 6 of the Arbitration Act. 6.The Applicants further depose that the Court had issued interim injunctive orders restraining activities on the construction site situated on Pioneer Langas Buki (Malel)/373 in Uasin Gishu County. They state that the site hosts other ongoing construction works being undertaken by third-party contractors, including construction of a perimeter wall and gate, which have since stalled as a result of the interim orders. 7.According to the Applicants, the stoppage has exposed the 1st Defendant to substantial losses and possible breach of obligations owed to third-party contractors due to delayed completion timelines. They maintain that any claim by the Plaintiff, if ultimately successful, can adequately be compensated by an award of damages, and therefore urge the Court to vacate the interim orders and refer the matter to arbitration. 8.In opposition to the application, the Plaintiff/Respondent avers that the application is misconceived, bad in law, and intended merely to delay the fair determination of the dispute. 9.The Plaintiff contends that although it forwarded the JBC Agreement Book to the Defendants for execution, the Defendants failed, refused, and/or neglected to execute the same, thereby frustrating the formalization of the contractual relationship. The Plaintiff therefore maintains that no binding agreement arose under the JBC Conditions of Contract and that the Defendants’ reliance on the arbitration clause contained therein is an afterthought lacking legal efficacy. 10.The Plaintiff further states that the governing contractual instrument between the parties is the Letter of Contract Award dated 4th November 2025, which expressly provides for the hierarchy of contractual documents, with the Letter of Award taking precedence over the JBC Agreement. The Plaintiff emphasizes that the Letter of Award itself does not contain any arbitration clause. 11.It is further argued that the unexecuted JBC Agreement annexed by the Defendants confirms its lack of legal effect and enforceability. Consequently, the Plaintiff contends that there exists no valid and binding arbitration agreement capable of ousting the unlimited original jurisdiction of this Court under Article 165(3)(a) of the Constitution of Kenya, 2010. 12.The Plaintiff additionally maintains that under Section 6(1) of the Arbitration Act, a stay of proceedings can only issue where there exists a valid, binding, and enforceable arbitration agreement. In the present case, the alleged arbitration clause is said to be null, void, inoperative, and incapable of being performed. The Plaintiff therefore argues that the Defendants are not entitled to a stay of proceedings or referral of the dispute to arbitration. 13.With regard to the interim injunctive orders, the Plaintiff avers that the same were lawfully and properly granted to preserve the substratum of the dispute pending hearing and determination of the suit. It is contended that the Defendants have failed to demonstrate sufficient cause to warrant the setting aside, variation, or discharge of the orders. 14.The Plaintiff further asserts that it stands to suffer substantial and irreparable loss incapable of compensation by damages should the interim orders be vacated, particularly in light of the Defendants’ conduct. The Plaintiff therefore urges the Court to dismiss the application with costs. 15.In their supplementary affidavit, the Applicants reiterate that the Plaintiff had forwarded the JBC Agreement after duly executing it on its part and that the 1st Defendant subsequently executed the same and delivered it to the project Quantity Surveyor in accordance with the terms of the Letter of Award. 16.The Applicants explain that the signed copy could not be availed because the Quantity Surveyor has allegedly been out of the country since February 2026. They further contend that construction works could not have commenced unless the project documents had been executed and the contract formalized. 17.The Applicants also maintain that the project was undertaken on the basis of five interrelated contractual documents, namely the Letter of Award, the JBC Agreement, the Contract Drawings, the Bills of Quantities, and the Specifications, all of which were intended to be read as mutually explanatory and not mutually exclusive. 18.They therefore argue that the Plaintiff is estopped from selectively relying on certain provisions of the JBC Conditions while denying the applicability of the arbitration clause contained therein. In particular, the Applicants point out that the Plaintiff had invoked force majeure and sought extension of time under clauses of the JBC Conditions, thereby demonstrating acceptance and application of those terms. 19.The Applicants further argue that even assuming the JBC Agreement was unsigned, the conduct of the parties in performing the contract and receiving payments thereunder demonstrates a clear intention to be bound by the JBC Conditions, including the arbitration clause. 20.They therefore urge the Court to uphold the parties’ intention to arbitrate disputes arising from the construction contract. Finally, the Applicants contend that the dispute is a technical construction dispute requiring specialized expertise, hence the necessity of referral to arbitration before an arbitrator appointed through the Architectural Association of Kenya or the Chartered Institute of Arbitrators. 21.I have considered the application, the affidavit evidence and learned submissions by respective counsel. The issues for determination are:a.Whether there exists a valid and enforceable arbitration agreement between the parties.b.Whether the unsigned Joint Building Council (JBC) Agreement Book can confer arbitral jurisdiction.c.Whether the Letter of Award constitutes the only binding contract between the parties.d.Whether the Defendants have met the threshold under Section 6 of the Arbitration Act for stay and referral to arbitration.e.Whether this Court has jurisdiction to determine this matter under Article 165(3)(a) of the Constitution. 22.On whether there exists a valid and enforceable arbitration agreement capable of ousting the jurisdiction of this Court and compelling referral of the dispute to arbitration under Section 6 of the Arbitration Act, Section 4(1) of the Arbitration Act provides that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Section 4(2) further provides that an arbitration agreement shall be in writing. 23.The law therefore requires clear evidence of the parties’ intention to submit disputes to arbitration. Further, under Section 6(1) of the Arbitration Act, a court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall stay the proceedings and refer the parties to arbitration unless it finds that the arbitration agreement is null and void, inoperative, incapable of being performed, or that there is no dispute with regard to the matters agreed to be referred to arbitration. 24.The Defendants contend that the dispute arises from a construction contract governed by the JBC Conditions of Contract which contain an arbitration clause. They further argue that the parties performed the contract on the basis of the JBC Conditions and that the Plaintiff itself invoked provisions relating to extension of time and force majeure under the JBC framework, thereby demonstrating acceptance of the said conditions. 25.According to the Defendants, the conduct of the parties established an intention to be bound by the arbitration clause notwithstanding the absence of a signed copy of the JBC Agreement Book. 26.On the other hand, the Plaintiff maintains that although the JBC Agreement Book was forwarded to the Defendants for execution, the same was never executed by the Defendants and therefore never attained legal validity. 27.The Plaintiff argues that the only binding contractual instrument between the parties is the Letter of Award dated 4th November 2025, which does not contain any arbitration clause. It is therefore the Plaintiff’s position that there exists no valid arbitration agreement capable of divesting this Court of jurisdiction. 28.I have carefully examined the material placed before the court. It is not disputed that the Letter of Award dated 4th November 2025 forms part of the contractual documents governing the relationship between the parties. 29.Clause 4 thereof expressly provided that for purposes of interpretation, the priority of documents would be: firstly, the Letter of Award; and secondly, the Agreement and Conditions of Contract for Building Works as published by the Joint Building Council, Kenya, 1999 Edition. The same clause further provided that the project documents were to be read as mutually explanatory and not mutually exclusive. 30.The Plaintiff has heavily relied on the fact that the JBC Agreement Book annexed to the application was unsigned. However, the Court notes that the absence of signatures alone is not necessarily conclusive of the absence of a binding agreement where the conduct of the parties demonstrates otherwise. 31.Contracts may arise through conduct where parties proceed to perform obligations contemplated under the contractual framework. In the present case, it is common ground that the construction works commenced and were substantially performed. 32.It is also not denied that the Plaintiff invoked provisions relating to force majeure and extension of time, remedies expressly provided for under the JBC Conditions of Contract. Such conduct is consistent with acceptance and application of the JBC contractual regime. 33.Further, the Court takes cognizance of the Defendants’ assertion that the signed copy of the JBC Agreement was delivered to the Quantity Surveyor in accordance with the Letter of Award and that the inability to produce the same is attributed to the Quantity Surveyor’s absence from the country. 34.While the Court is unable at this stage to conclusively determine whether the JBC Agreement Book was formally executed, the conduct of the parties, the commencement and execution of the works, and the reliance by both parties on provisions contained within the JBC Conditions strongly suggest that the parties intended the JBC Conditions to regulate their contractual relationship. 35.The Court is therefore persuaded that the JBC Conditions of Contract formed part of the contractual framework governing the parties’ relationship. In the plaint filed herein, the Plaintiff at paragraph 21 thereof specifically pleaded as follows:“If the Defendants had any issue with the Plaintiff’s mode of working, they ought to have served them with legal notices as prescribed in the Joint Building Council, which is an agreement and conditions of contract for building works. Therefore, the Defendants’ conduct was illegal to that extent.” 37.Consequently, the arbitration clause contained therein cannot be ignored merely on the basis that a signed copy has not been produced before Court. To hold otherwise would amount to permitting a party to approbate and reprobate by selectively relying on provisions beneficial to it while rejecting those that impose obligations such as dispute resolution through arbitration. 38.The position that an unsigned agreement may nonetheless be binding where the conduct of the parties demonstrates intention to be bound is well settled in law. 39.In RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14; [2010] 1 WLR 753, the United Kingdom Supreme Court held that whether parties intended to create legal relations depends not only on whether a formal contract was signed, but also on their words and conduct. 40.The Court stated that where parties have acted upon contractual terms and performed obligations thereunder, a binding contract may arise notwithstanding the absence of formal execution. 41.Similarly, in Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 (HL), the House of Lords held that although a draft agreement had not been formally executed, the conduct of the parties in acting upon the terms of the agreement and performing obligations thereunder established the existence of a binding contract. 42.Closer home, in Corporate Insurance Company Ltd v Wachira [1996] KECA 70 (KLR), the Court of Appeal affirmed the principle that a contract may be inferred from the conduct of parties and surrounding circumstances even in the absence of a formally executed document. 43.Further, in Suraya Property Group Limited v ICICI Bank Limited & Another [2015] eKLR, the High Court observed that where parties proceed to perform obligations contemplated under contractual documents, they may be estopped from denying the applicability of those contractual terms merely because a formal document was not executed. 44.The Court also finds persuasive the holding in Glencore Grain Ltd v TSS Grain Millers Ltd [2002] KEHC 1110 (KLR), where the Court recognized that arbitration agreements may be inferred from correspondence, conduct, and performance of contractual obligations, provided there is clear intention by the parties to submit disputes to arbitration. 45.Applying the foregoing principles to the present matter, this Court notes that the parties herein proceeded with the construction works contemplated under the project documents, payments were made and received, and significantly, the Plaintiff invoked provisions relating to force majeure and extension of time which are expressly provided for under the JBC Conditions of Contract. 46.Such conduct demonstrates that the parties treated the JBC Conditions as operative and binding upon them. 47.In the premises, the Court is satisfied that notwithstanding the absence of a signed copy of the JBC Agreement Book before Court, the conduct of the parties clearly demonstrated a contractual relationship governed by the JBC Conditions, including the arbitration clause contained therein. 48.The Court further notes that construction disputes are ordinarily technical in nature and often require specialized expertise. The parties herein expressly incorporated the JBC Conditions into their contractual framework, and the arbitration clause therein reflects their intention to have disputes resolved through a specialized dispute resolution mechanism. 49.This court is generally enjoined to uphold party autonomy and give effect to arbitration agreements where such intention is discernible. 50.Having found that the arbitration clause forms part of the contractual arrangement between the parties, the next issue is whether the Defendants have satisfied the requirements under Section 6 of the Arbitration Act. 51.The Court notes that the application for stay and referral to arbitration was brought promptly before the Defendants took substantive steps in the proceedings. 52.The dispute before Court falls squarely within the scope of the arbitration clause contained in the JBC Conditions of Contract. The Court is also not persuaded that the arbitration agreement is null, void, inoperative, or incapable of being performed. 53.In the circumstances, the Court finds that the Defendants have satisfied the threshold under Section 6 of the Arbitration Act for stay of proceedings and referral of the dispute to arbitration. 54.On the issue of jurisdiction, whereas Article 165(3)(a) of the Constitution grants this Court unlimited original jurisdiction in civil matters, the Court must nonetheless respect and uphold valid arbitration agreements freely entered into by parties. 55.The existence of an arbitration agreement does not oust the constitutional jurisdiction of the Court; rather, it obligates the Court to defer the dispute to the agreed dispute resolution mechanism in accordance with the Arbitration Act. 56.Consequently, the Court having found that the dispute falls within the ambit of the arbitration clause contained in the parties’ agreement, and having allowed the application under Section 6 of the Arbitration Act, the next issue concerns the appropriate consequential orders to be granted and the preservation of the subject matter pending arbitration. 57.It should be noted that the effect of a stay of proceedings is not to terminate the suit but merely to suspend the Court’s adjudicative role pending determination of the dispute through the agreed arbitral mechanism. 58.The Court nevertheless retains residual jurisdiction under Section 7 of the Arbitration Act to grant interim measures of protection for purposes of preserving the substratum of the dispute pending commencement and determination of arbitral proceedings. 59.In Safaricom Ltd v Ocean View Beach Hotel Ltd & 2 Others [2010] eKLR, the Court of Appeal held that interim measures of protection are intended to preserve the subject matter of the arbitration so as to ensure that the arbitral proceedings are not rendered nugatory. 60.Likewise, in CMC Holdings Ltd & Another v Jaguar Land Rover Exports Ltd [2013] eKLR, the Court emphasized that the Court retains jurisdiction to issue preservatory orders even where the dispute has been referred to arbitration. 61.Accordingly, this Court is satisfied that although these proceedings ought to be stayed, the existing interim orders should not automatically lapse. To vacate the preservatory orders before constitution of the arbitral tribunal would expose the subject matter to possible dissipation and may ultimately defeat the arbitral process itself. 62.In the premises, I allow the application and make the following orders:a.The proceedings herein are hereby stayed pending reference of the dispute to arbitration in accordance with the arbitration clause contained in the JBC Conditions of Contract and pursuant to Section 6 of the Arbitration Act.b.The parties are directed to commence and take steps towards constitution of the arbitral tribunal within seven (7) days from the date hereof.c.Pending the commencement and determination of the arbitral proceedings, the interim injunctive/status quo orders issued by this Court on 15th April 2026 shall remain in force solely for purposes of preserving the subject matter of the dispute, or until such further orders as may be issued by the arbitral tribunal upon its constitution.d.Costs of the application shall abide the outcome of the arbitration. 63.For avoidance of doubt, the preservatory orders herein are not intended to determine the merits of the dispute but merely to facilitate and safeguard the efficacy of the arbitral process agreed upon by the parties. DATED, SIGNED AND DELIVERED VIRTUALLY AT ELDORET THIS 29TH DAY OF MAY 2026.A.K. NDUNG’UJUDGE