https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9184

**REPUBLIC OF KENYA** **IN THE HIGH COURT AT ELDORET** **CIVIL APPEAL NO. E220 OF 2024** **PRISCAH ASERE …………………………….…………………….……….. APPELLANT** **VERSUS** **SILUS OWITI SEKO ………………………..…………………………….. RESPONDENT** **Coram: Before Justice R. Nyakundi** **Ms. Jepchirchir & Co. Advocates** **Ms. Njiru Kibaru & Co. Advocates** **RULING** 1. Before this Court is grounds of appeal which the Appellant seeks the following orders: 2. *THAT the learned Magistrate erred in law and in fact in dismissing the Appellant’s suit based on a Preliminary Objection that did not raise pure points of law.* 3. *THAT the learned Magistrate erred in law and in fact by holding that the trial Court lacked jurisdiction to entertain the matter based on the existence of an arbitration clause in the parties' Agreement which was not on record.* 4. *THAT the learned Magistrate erred in law and in fact by failing to acknowledge that the Respondent did not file the documents, including the arbitration agreement, which formed the basis of the Preliminary Objection.* 5. *THAT the learned Magistrate erred in law and in fact by failing to consider the Appellant’s submissions and authorities.* 6. *THAT the learned Magistrate erred in law and in fact in striking out the suit without considering the legal principles governing arbitration agreements and the judicial discretion vested in the Court.* 7. *THAT the Honourable Magistrate erred in law and fact by allowing the Preliminary Objection despite the Respondent's failure to file their submissions as directed by the Court.* 8. *THAT Honourable Magistrate misdirected herself in law by upholding the Preliminary Objection solely on the basis of the arbitration agreement without considering whether the agreement ousted the jurisdiction of the Court entirely.* 9. *Reasons whereof, the Appellant prays that:-* 10. *This appeal be allowed in its entirety.* 11. *The ruling delivered on the 20th day of September, 2024 in Eldoret Small Claims Commercial Case No. E877 of 2024 by Hon. T.W. Mbugua be set aside and the suit be reinstated for hearing on merits before the Eldoret Small Claims Court.* 12. *The Appellant be awarded costs of this Appeal.* 13. *Any other order that this Honorable Court deems fit and just to award/grant.* **Appellant’s Submissions** 1. It is the case of the Appellant that learned Magistrate erred in law in upholding preliminary objection and striking the entire suit. It was learned Counsel submission that under Section 38 of the Small Claims Court Act, a person aggrieved by a decision or order of the Small Claims Court may appeal to the High Court on matters of law only; an appeal so made shall be final. Relying in the case of **Mutwa & 2 Others v Mutembei & 2 Others [2025] KEHC 11726 (KLR)** ruling the High Court considered whether it had jurisdiction to entertain an appeal from a Small Claims Court under Section 38(1) of the Small Claims Court Act, which limits appeals to matters of law only. The Judge reviewed the Memorandum of Appeal and held as follows: “*On perusal of the Memorandum of Appeal dated 4th February 2025, the grounds of appeal on denial of a fair hearing, failure to exercise judicial discretion fairly and procedural fairness pursuant to Section 32 of the Small Claims Act, which are points of law. In that regard, it is my considered view that the instant appeal is properly before the Court and the Court has the requisite jurisdiction to entertain it".* 1. That it was learned Counsel’s contention relying on the following case law: *Mukisa Biscuit Manufacturing Co. Ltd. v West End Distributors Ltd [1969] EA 696, Mutwa & 2 Others v Mutembei & 2 Others [2025] KEHC 11726 (KLR), Gitonga v Farah & 4 Others (2024) eKLR, Omondi & Another v Angasa & 3 others [2022] KEHC 13007(KLR)*. That the trial learned Magistrate erred in law as such this appeal Court should review the decision and allow the appeal. 2. In this appeal, reliance was placed on the existence of an arbitration clause as the forum of *conveniens* involving the two parties to the commercial contract. This forum selection, apparently from the ruling, influenced the learned trial Adjudicator to dismiss the claim as filed by the Claimant. It was one of the fundamental principles of the law of contract that parties are bound by their agreement. Once the parties agree, they are bound by the agreement in which they selected the forum of adjudication of the dispute. Some salient features are necessary for the Court to draw a conclusion that there existed a contractual agreement on dispute resolution. These include: 1. The intention of the parties must be clear. 2. The terms of the agreement must be clear and unambiguous 3. There is the presumption that the parties meant what was reasonable in their agreement 4. It is not the duty of the Court to verify whether the term is reasonable or not. 5. The Court must ascertain and give effect to the terms of the contract freely entered into by the parties 3. In this appeal, I have read through the entire record and I found no documentary evidence on the issue of fact available to give effect to the arbitration clause although the same was strongly referred to by the learned Adjudicator. This appeal does not turn on the nebulous and dangerous basis of public policy such a stance could boomerang. But this is a Court which has endeavored, always to do substantial justice between the parties. Thus, the Courts in this country are of the view that in endeavoring to do substantial justice between the parties it would be naive to consider that a clause ousting the jurisdiction of the Court is in existence while in the real sense there is no such agreement before the Court to draw inspiration on jurisdiction as being invited by the Appellant in this appeal. The law regarding a clause hosting jurisdiction of the Court and so provided in the commercial agreement must be in black and white within the scope of that agreement. The choice of law is real, genuine, bonafide, legal and reasonable as provided for in the Arbitration Act. However, both the Appellant and the Respondent have not provided evidence of an agreement entered into to have their commercial dispute referred to arbitration. This is what Lord Denning said in the case of **Fehmam (1958) 1 AI E.R. 333 at p 335** which was adopted by the Supreme Court of Nigeria in the case of **Nika Fishing Co. Ltd b Lavina Corporation (2008) 16 NWLR (Pt. 1114) p 509).** Thus: *As a matter of public policy, our Court should not be too eager to divest themselves of Jurisdiction conferred on them by the Constitution and by other laws simply because parties in their contracts choose a foreign forum and a foreign law. Courts guard rather jealously their jurisdiction and even where there mere is an ouster of that jurisdiction by statute, it should be by clear and unequivocal words. If that is so as indeed it is, how much less can parties by their private acts, remove the jurisdiction properly and legally vested in our Courts? Our Courts should be in charge of their own proceedings when it is said that parties make their own contracts and that the Courts will only give effect to their intention as expressed in and by their contract, that should generally be understood to mean and imply a contract which does not rob the Court of its jurisdiction in favour of another foreign forum. "Where a domestic forum is asked to stay proceedings because parties in their contract choose a foreign Court and a foreign law to apply it should be very clearly understood by our Courts that the power to stay proceeding on that score is not mandatory. Rather it is a discretionary power which in the ordinary way, and in the absence of a strong reason to the contrary will be exercised both judicially and judiciously bearing in mind each parties right to justice.* 1. Even on the facts of this appeal and the principles governing the arbitration clause in the commercial agreements and in response to the appeal I am unable to sustain the appeal in the absence of the instrument which was relied upon by the trial Court in its ruling dated 20th of September 2024. With this evidential backing, the Small Claims Court was not bound by any clause ousting its jurisdiction in law. My firm view is that the appeal be and is hereby allowed with costs to the Respondent. This case docket being Cause No. E877 of 2024, should be transmitted back to the Small Claims Court for hearing and determination on the merits by the Deputy Registrar of the High Court. It is so ordered. **GIVEN UNDER MY HAND AND SEAL OF THIS HONORABLE COURT AND SHARED VIDE CTS AND EMAILS THIS 26TH DAY OF JUNE 2026.** **………………………………………** **R. NYAKUNDI** **JUDGE**