https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6895

Rhombus Construction Company Limited v Hansol Paper Co. Limited & 5 others (Commercial Case E299 of 2026) [2026] KEHC 6895 (KLR) (Commercial and Tax) (18 May 2026) (Ruling) Neutral citation: [2026] KEHC 6895 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Commercial Case E299 of 2026 RC Rutto, J May 18, 2026 Between Rhombus Construction Company Limited Plaintiff and Hansol Paper Co. Limited 1st Defendant Samsung C&T Corporation 2nd Defendant Lg Cns Co. Limited 3rd Defendant On Life Constrution Co. Limited 4th Defendant Aum & Lee Architects & Associates Co. Limited 5th Defendant Kenya Urban Roads Authority 6th Defendant Ruling 1.The Plaintiff herein filed an application under Section 7 of the Arbitration Act and Order 40, rules 1, 2 and 3 of the Civil Procedure Rules dated 4th May, 2026 seeking: -a.Spentb.Spentc.Spentd.Spente.An interim measure of protection do issue under Section 7 of the Arbitration Act, No. 4 of 1995 (as against the 1st Defendant/Respondent) and An interlocutory injunction do issue under Order 40 of the Civil Procedure Rules, 2010 (as against the 2nd to 6th Defendants/Respondents) restraining all the said Defendants/Respondents jointly and severally from giving effect to, acting upon, implementing or in any manner enforcing the Notice of Termination dated 22nd April, 2026, or any further or similar notice of termination founded on any alleged failure by the Plaintiff/Applicant to provide the Performance Bond pursuant to clause 10.2 of the Subcontract.f.An interim measure of protection do issue under Section 7 of the Arbitration Act, No. 4 of 1995 (as against the 1st Defendant/Respondent) and An Interlocutory Injunction do issue under Order 40 of the Civil Procedure Rules, 2010 (as against the 2nd to 6th Defendants/Respondents) restraining all the said Defendants/Respondents jointly and severally from interfering with the Plaintiff/Applicant's peaceable performance of the Subcontract, including denial of access to the Project Site, removal of the Plaintiff/Applicant's plant, equipment, materials or personnel therefrom, withholding of certified payments, and engagement of any replacement contractor.g.A mandatory interim measure of protection do issue under section 7 of the Arbitration Act, No. 4 of 1995 (as against the 1st Defendant/Respondent) and A mandatory interlocutory injunction do issue under Order 40 of the Civil Procedure Rules, 2010 (as against the 2nd to 6th Defendants/Respondents) compelling the 1st to 6th Defendants/Respondents jointly and severally, within fourteen (14) days of the date of the order made herein, to deliver to the Plaintiff/Applicant a certified true copy (or, where the said Defendants/Respondents claim confidentiality, a certified extract sufficient to demonstrate the matters set out below) of:a.the Main Contract for the Project (Contract No. KURA/DEV/HQ/321/2023-2024) executed between the 7th Defendant/Respondent and the Consortium;b.the Letter of Award issued by the 7th Defendant/Respondent in respect of the Project;c.the Joint Venture Agreement, Consortium Agreement or equivalent constitutive instrument under which the Consortium holds the Main Contract; andd.such other documentation, certified by the 1st Defendant/Respondent and countersigned by the 2nd to 6th Defendants/Respondents, as is necessary to enable the Plaintiff/Applicant's commercial bankers to issue the Performance Bond required under clause 10.2 of the Subcontract.e.In the event of default by the 1st to 6th Defendants/Respondents in compliance with the order made under prayer 7 above, an order do issue directing the 7th Defendant/Respondent to make available to the Plaintiff/Applicant a certified true copy of the Main Contract held in its custody, the costs whereof to be borne by the 1st to 6th Defendants/Respondents jointly and severally.h.Costs of this application be provided for and be paid by the 1st to 6th Defendants/Respondents jointly and severally.i.Such further and other relief as this Honourable Court may deem just and expedient to grant. 2.The Plaintiff/Applicant’s case is grounded on both jurisdictional and substantive bases arising from the Subcontract Agreement dated 25th September, 2025, between the Plaintiff/Applicant and the 1st Defendant/Respondent. The Plaintiff/Applicant relies on clause 24 of the Subcontract Agreement which provides for arbitration of disputes in Seoul under the Rules of the Korean Commercial Arbitration Board (KCAB), while expressly preserving, under Clause 24.7, the right of either party to seek urgent injunctive or interlocutory relief before Kenyan courts pending arbitration. 3.In that regard, the Applicant invokes Section 7 of the Arbitration Act, No. 4 of 1995, which empowers the Court to grant interim measures of protection pending arbitral proceedings. The Applicant indicates its intention to commence arbitration proceedings before the KCAB including filing an Emergency Arbitrator Application within seven days and maintains that the present proceedings are supportive of, rather than contrary to, the agreed dispute resolution mechanism. 4.The Applicant further contend that the claim against 2nd to 6th Defendants/Respondents, who are not parties to the arbitration agreement, properly fall within the jurisdiction of this Court. These include allegations of misrepresentation and violations of the Competition Act, No. 12 of 2010, particularly, under Sections 55, 57 and 70A of the Competition Act which are argued to be non-arbitrable and reserved for determination by the court and the Competition Authority of Kenya. Consequently, Order 40 of the Civil Procedure Rules is invoked as an alternative jurisdictional basis for the interim relief sought. 5.On the substantive issues, the Applicant asserts that it was ready and willing to perform its contractual obligations under the Subcontract, including the provision of the Performance Bond required under clause 10.2, but was prevented from doing so by the 1st Defendant/Respondent’s failure to provide the Main Contract documentation required by its bankers. The Applicant therefore argued that any default was induced by the 1st Defendant/Respondent’s own breach of clause 2.4 of the Subcontract. 6.The Applicant challenges the termination of the Subcontract by a notice dated 22nd April, 2026, contending that it was unjustified and retaliatory having been issued shortly after the Applicant raised concerns regarding the main contractor’s consortium structure. It further contends that the 1st Defendant Respondent’s prior attempt to terminate the contract on similar ground had been withdrawn and that continued performance and payment over several months amounted to waiver of right to terminate on that basis. 7.Additionally, the Applicant disputes the 1st Defendant/Respondent’s authority to unilaterally terminate the Subcontract asserting that the Main Contractor’s rights were jointly held by the consortium comprising the 1st to 6th Defendants/Respondents, whose existence was allegedly concealed. It is therefore argued that termination without the concurrence of the co-consortium members was invalid. 8.The Applicant contends that unless the orders sought are granted, it will suffer irreparable harm, including eviction from the project site, financial loss, loss of equipment, and reputational damage that cannot adequately be compensated by damages. 9.In support of the application for interim measures of protection, under Section 7 of the Arbitration Act, the Applicant submits that it satisfies the applicable four limb test. It argues that there exists a serious dispute involving issues such as induced breach, waiver, retaliatory termination, lack of authority, misrepresentation and contraventions of the Competition Act. 10.The Applicant further contends that it will suffer irreparable harm not compensable by damages if relief is denied, and that the balance of convenience favours preservation of the status quo particularly in light of the Respondent’s prior conduct of affirmation of the Subcontract and existing security arrangements. It maintains that the orders sought are preservatory in nature and do not encroach upon the arbitral tribunal’s mandate. 11.In respect to the claims against the 2nd and 6th Respondents, the Applicant relies on the principles in Giella v Cassman Brown & Co Ltd under Order 40 of the Civil Procedure Rules. It also urges that the mandatory injunction sought, requiring provision of the Main Contract documents, meets the higher threshold for such relief, as articulated in Locabail International Finance Ltd v Agroexport (The Sea Hawk) and adopted by Kenyan courts, since the order merely seeks enforcement of an existing contractual obligation under Clause 2.4 of the Subcontract. 12.The Application is opposed by the Respondents. The 7th Respondent filed a replying affidavit sworn on 7th May, 2026, while the 1st Defendant/Respondent filed a response sworn on 9th May, 2026, together with a Preliminary Objection dated on 9th May, 2026, on behalf of the 1st to 6th Defendants/Respondents .The Preliminary Objection seeks orders that the suit and application be struck out or stayed pending arbitration, that interim orders granted on 6th May, 2026, be vacated, that the parties be referred to arbitration in accordance with Clause 24 of the Subcontract, and that costs be awarded to the Respondents. 13.The central thrust of the Preliminary Objection is that this Court lacks jurisdiction by virtue of the arbitration clause in Clause 24 of the Subcontract, which mandates referral of all disputes arising from the agreement to arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul. 14.The Respondents argue that the dispute, being contractual in nature, falls squarely within the scope of the arbitration agreement, which the Applicant has itself acknowledged. They contend that the Court’s jurisdiction under Section 7 of the Arbitration Act is limited to interim preservatory measures and does not extend to determining substantive contractual rights. 15.It is further argued that the Applicant improperly seeks final and declaratory reliefs, thereby exceeding the permissible scope of interim intervention and encroaching on the arbitral tribunal’s jurisdiction. The Respondents also maintain that the Applicant has attempted to circumvent arbitration by framing contractual disputes as tortious or statutory claims, contrary to the doctrine of kompetenz-kompetenz and the principle of party autonomy. 16.Additionally, the Respondents contend that the claims under the Competition Act are misconceived, as the dispute concerns a commercial subcontract between corporate entities and does not disclose any actionable statutory violation. They further assert that the joinder of the 2nd to 6th Respondents, who are not parties to the Subcontract or arbitration agreement, violates the doctrine of privity. 17.The Respondents also argue that the Applicant was aware of the consortium structure of the project and cannot rely on alleged misrepresentation to found jurisdiction. They contend that the suit amounts to an abuse of process, as it invites parallel proceedings despite the Applicant’s stated intention to commence arbitration. 18.Finally, the Respondents submit that the suit is defective for failure to properly plead damages and that judicial intervention at this stage would prejudice a public infrastructure project, thereby undermining public interest considerations. 19.In response to the Preliminary Objection, the Plaintiff/Applicant through a supplementary Affidavit sworn on 11th May, 2026, contends that the Preliminary Objection does not meet the legal threshold of a competent preliminary objection as set out in the case of Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696. The Plaintiff argues that a proper preliminary objection must raise a pure point of law, based on uncontested facts apparent on the pleadings, and be capable of disposing of the matter. 20.It is contended that the Respondents’ objection is founded on contested factual issues, including whether the dispute falls within the arbitration clause, whether the 2nd to 6th Defendants were properly joined, whether the Plaintiff had knowledge of the consortium structure, whether there were violations of the Competition Act, and whether loss was properly pleaded. According to the Plaintiff, these are matters requiring evidentiary examination, and therefore, cannot properly be determined through a preliminary objection. The Plaintiff further maintained that a preliminary objection could not be used as a mechanism for litigating disputed facts under the guise of pure points of law and therefore urged the Court to dismiss the objection as incompetent. 21.On the arbitration, the Plaintiff argues that the Respondents had failed to comply with Section 6 of the Arbitration Act and rule 2 of the Arbitration Rules. It is submitted that referral to arbitration requires a formal application for stay of proceedings, made at the earliest opportunity. The Plaintiff contends that the 1st Defendant, having filed a replying affidavit addressing the merits without seeking such stay, has taken steps in the proceedings and cannot rely on the arbitration clause at this stage. 22.Consequently, the Plaintiff maintains that this Court retains jurisdiction and remains properly seized of the matter and ought to proceed with hearing and determining both the Notice of Motion and the substantive suit, and that the request to strike out the suit or refer the dispute to arbitration is procedurally incompetent. 23.The Plaintiff also took issue with the conduct of the 7th Defendant, the Kenya Urban Roads Authority (KURA), arguing that it was joined only for the limited purpose compliance with disclosure orders relating to the Main Contract for the Nairobi Intelligent Transport System Project. The Plaintiff contended that despite acknowledging that limited role, the 7th Respondent has improperly engaged with the substantive issues concerning the merits of the dispute. 24.Accordingly, the Plaintiff prays that the Preliminary Objection be dismissed with costs, that the interim orders in force be extended, and that the Court proceeds to hear both the application and the substantive suit before the Court. 25.This Court directed that the Preliminary Objection be canvassed first by way of written submissions. The 1st to 6th Defendants/Respondents and the 7th Defendant/Respondent filed submissions in support of the Preliminary Objection both dated 12th May, 2026, while the Plaintiff filed his submissions dated 14th May, 2026. Plaintiff’s submissions 26.The Plaintiff opposed the Preliminary Objection dated 9th May, 2026, arguing that it is both procedurally defective and substantively misconceived. It submits that, apart from the 1st Defendant, the other Defendants are not parties to the arbitration agreement and therefore lack standing to rely on the arbitration clause. Further, the Plaintiff contends that the suit raises statutory and public policy issues, particularly under the Competition Act, 2010 which fall outside the scope of arbitration. 27.On Procedure, the Plaintiff argues that the Arbitration Act and the Arbitration Rules prescribe an exclusive mechanism for invoking an arbitration agreement, that is, an application for stay under Section 6(1) of the Arbitration Act and rule 2 of the Arbitration Rules rather than through a Preliminary Objection. 28.It submits that a Preliminary Objection is not a proper procedure for seeking referral to arbitration. Reliance is placed on authorities such as Niazsons (K) Ltd v China Road & Bridge Corporation, Mt Kenya University v Step Up Holding (K) Ltd, and Total Security Surveillance Ltd v Oil Field Movers Ltd, which emphasize strict compliance with Section 6. 29.The Plaintiff further argues that, by filing a Preliminary Objection that goes beyond jurisdiction and engages the merits of the dispute, the 1st Defendant has submitted to the Court’s jurisdiction and thereby waived its right to arbitration. It relies on Yooshin Engineering Corporation v AIA Architects Ltd and Charles Njogu Lofty v Bedouin Enterprises Ltd to support the position that a party cannot simultaneously challenge jurisdiction and argue substantive issues. 30.The Plaintiff additionally argues that Article 159 of the Constitution cannot cure the procedural defects in the Preliminary Objection. Reliance is again placed on CM & A Logistics Limited v Upland Premium Diaries and Foods Limited [2022] KEHC 14428 (KLR) where the Court held that Article 159 cannot override the mandatory provisions of the Arbitration Act, and that a party invoking arbitration must strictly comply with the statutory framework. 31.The Plaintiff further submits that the Preliminary Objection does not meet the Mukisa Biscuit threshold because it raises contested factual matters requiring evidence and judicial interrogation. These includes questions relating to authority to bind the consortium; the Plaintiff’s knowledge of the other Defendants, the nature of the claims, and validity and scope of the arbitration agreement. Such issues, it argues, require factual inquiry and evidentiary determination. Reliance is placed on Scania Credit Solutions (PTY) Limited v Matunda (Fruits) Bus Services Limited [2022] KEHC 16591 (KLR). 32.The Plaintiff also challenges the operability of the arbitration clause, arguing that Clause 24 of the Subcontract is pathological and incapable of proper performance. The Plaintiff points out that Clause 24.3 simultaneously invokes the Rules of the Korean Commercial Arbitration Board and Article 30(2)(b) of the ICC Rules, thereby creating uncertainty as to the applicable arbitral framework and procedure. The Plaintiff also argues that Clause 24.6 improperly purports to create a right of appeal on points of law against an arbitral award despite no such right existing under the Korean Arbitration Act. Additionally, Clauses 24.1 and 24.2 establish a multi-tier dispute resolution process involving negotiation and mediation in Korea but fail to provide clear procedures for transitioning between those stages. The Plaintiff also notes that the Subcontract contains multiple references to a non-existent “Clause 0,” thereby rendering the arbitration framework incoherent and unworkable. The Plaintiff nevertheless points out that Clause 24.7 expressly preserves the right of parties to seek urgent injunctive or interlocutory relief before Kenyan courts pending arbitration, thereby justifying the present proceedings under Section 7 of the Arbitration Act. 33.With respect to the 2nd to 6th Defendants, the Plaintiff submits that they are strangers, non-signatories to the Subcontract and arbitration agreement and cannot invoke the arbitration clause. It maintains that the claims against them arise independently in tort, agency, statutory misrepresentation, and under Competition Act, and are therefore outside the arbitration framework. The Plaintiff also argues that to the extent the Defendants rely on agency, consortium or undisclosed principal theories to invoke arbitration, those matters themselves raise factual disputes unsuitable for determination through a Preliminary Objection. 34.Regarding arbitrability, the Plaintiff argues that claims under sections 55, 57 and 70A of the Competition Act establish statutory causes of action that cannot properly be referred to a private arbitral tribunal seated in Seoul and must be determined by the Court. The Plaintiff therefore argues that the statutory claims are inherently non-arbitrable. 35.Finally, on the interim orders issued on 6th May 2026, the Plaintiff submits that section 7 of the Arbitration Act expressly empowers the Court to grant interim measures of protection before or during arbitration proceedings. The Plaintiff argues that because the parties expressly preserved recourse to Kenyan courts under clause 24.7 and because the parties, assets and subject matter are situated in Kenya, the interim jurisdiction of the Kenyan courts remains intact notwithstanding that the seat of arbitration is Seoul. The Plaintiff therefore urges the Court to sustain the interim orders pending determination of both the Notice of Motion and the suit itself. 36.The Plaintiff concludes that the Preliminary Objection is incompetent, procedurally defective, and fails on the law, having been improperly brought, raising contested factual issues, and invoked by parties lacking standing. It therefore urges the Court to sustain the interim orders issued on 6th May, 2026, pending determination of the suit. 1st to 6th Defendant’s/Respondents submissions 37.The 1st to 6th Defendants/Respondents submit that the Plaintiff’s suit and application are incompetent as they contravene the binding arbitration clause (Clause 24) in the Subcontract Agreement dated 25th September, 2025. They argue that all disputes arising out of, or in connection with the contract—including issues of interpretation, performance, breach, and termination—are expressly reserved for final and binding arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul. Despite this, the Plaintiff improperly invoked the jurisdiction of the High Court while simultaneously seeking substantive relief reserved for arbitral determination. 38.The Respondents further contended that the joinder of the 2nd to 6th Respondents was improper, as they are not parties to the Subcontract Agreement. They argued that this offends the doctrine of privity of contract and cannot sustain any legally recognizable cause of action against them. They maintained that the dispute, as outlined even in the Plaintiff’s own pleadings, revolved around termination of the subcontract, contractual administration, technical compliance disputes, performance obligations, delays and contractual enforcement issues, all of which squarely fell within the arbitration clause. 39.The 1st to 6th Respondents framed three issues for determination, that is; whether this Honourable Court lacks jurisdiction to entertain the suit and application by virtue of Clause 24 of the subcontract agreement and Section 6 of the Arbitration Act; whether the Applicant’s claims fall within the scope of Clause 24 of the subcontract agreement; and whether the joinder of the 2nd to 6th Respondents violates the doctrine of privity of contract. 40.On the issue of jurisdiction, the Respondents argue that Section 6 of the Arbitration Act imposed a mandatory obligation upon courts to stay proceedings and refer disputes to arbitration where the dispute fell within the scope of a valid arbitration agreement unless the agreement was shown to be null, void, inoperative, or incapable of being performed. They emphasized that the Plaintiff had neither challenged the validity of Clause 24 nor demonstrated that it was incapable of performance. Instead, the Plaintiff was attempting to avoid arbitration by disguising contractual disputes as tortious misrepresentation and statutory claims. 41.The Respondents rejected the Plaintiff’s contention that a stay under Section 6 of the Arbitration Act could only be sought through a formal Chamber Summons application. They argued that the substance of their Preliminary Objection raised a pure jurisdictional issue founded on the existence of a binding arbitration agreement and that jurisdiction could be raised at any stage of proceedings. In support of that proposition, they relied heavily on the decision in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR 1 asserting that once a court determines that it lacks jurisdiction, it must immediately down its tools. 42.The Respondents also relied on the Court of Appeal decision in Safaricom Limited v Ocean View Beach Hotel Limited & 2 Others [2010] KECA 346 (KLR) which emphasized that courts must exercise restraint and respect party autonomy and the doctrine of kompetenz-kompetenz, leaving disputes agreed for arbitration to the arbitral tribunal. 43.On the scope of arbitration clause, the Respondents submitted that Clause 24 is broadly framed to cover disputes “arising out of or in connection with” the Subcontract Agreement. They argued that such wording had consistently received wide and purposive interpretation from courts to ensure that parties were held to their chosen dispute resolution mechanism. They argued that all the Plaintiff’s grievances related to termination, contractual administration, technical compliance, performance obligations, delays, certification disputes, and enforcement of contractual obligations under the subcontract, are inherently contractual and therefore subject to arbitration. 44.The Respondents maintained that the Plaintiff cannot circumvent arbitration by recharacterizing fundamentally contractual disputes as tort claims, statutory violations, competition law breaches, or public law grievances. In support of that position, the Respondents relied on Muruthi & 3 Others v Thiongo & Another [2025] KEHC 3423 (KLR) which emphasized that allegations framed as extending beyond the contractual framework did not automatically displace a binding arbitration agreement where the dispute remained substantially rooted in the contractual relationship between the parties. Also relied upon were the cases of Talent Academy v Embu High School Limited [2025] KEHC 8992 (KLR) and Ventura Aviation Limited v Skylink Express Limited & Another [2023] KEHC 19133 (KLR). 45.The Respondents further submitted that the public nature of the project does not alter the essentially private commercial character of the dispute, which remains governed by the contractual framework and is therefore fully arbitrable. 46.On the third issue the joinder of the 2nd to 6th Respondents, the Respondents submit that the claims against them were legally untenable because they were founded upon a contract to which those Respondents were neither signatories nor parties. They relied on the doctrine of privity of contract as a pure point of law capable of determination through a preliminary objection. In support, they relied on the Supreme Court decision in Charo v Mwashetani & 3 Others [2014] KESC 5 (KLR) where the Supreme Court adopted the principles in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696. The Respondents maintain that the Court was not being asked to ascertain disputed facts but merely to determine whether non-signatories could properly be sued under the Subcontract Agreement. 47.The Respondents further relied on the Court of Appeal decision in Agricultural Finance Corporation v Lengetia Limited & Jack Mwangi [1985] KLR where the Court affirmed that contracts generally affect only the parties to them and cannot ordinarily be enforced by or against strangers to the contract. They also cited Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & Another [2014] KECA 775 (KLR). 48.They contend that allegations of consortium arrangements, agency, or undisclosed principals were unsupported by evidence and could not establish contractual liability against non-signatories. 49.The Respondents also relied on Bandari Development Company Limited & Another v Trustees of the Kenya Ports Authority Pension Scheme [2023] KEHC 27612 (KLR) and Rana Auto Selection Limited v Kanyoro & Another [2026] KEHC 4 (KLR). 50.In conclusion, the Respondents submit that the suit is an attempt to circumvent the arbitration agreement, improperly confer jurisdiction before the Court and undermine party autonomy, and settle principles of contractual privity. Consequently, the Respondents urge the Court to uphold the Preliminary Objection, strike out or stay the suit and Notice of Motion, and refer the parties to arbitration strictly in accordance with Clause 24 of the Subcontract Agreement. 7th Respondent’s submissions 51.The 7th Respondent (KURA) submitted that it is a State Corporation responsible for managing and maintaining urban trunk roads and acts as the Employer for the Nairobi Intelligent Transport System (ITS) Project Phase I, a public infrastructure project funded through a bilateral arrangement with the Korean Export-Import Bank. It stated that the Plaintiff was engaged as a subcontractor for the Traffic Management Centre component. Following the Plaintiff’s alleged failure to provide a mandatory Performance Bond, the 1st Respondent issued a termination notice dated 22nd April, 2026, prompting the Plaintiff to seek interim relief, which the Court granted temporarily under Section 7 of the Arbitration Act. 52.KURA supported the Preliminary Objection dated 9th May, 2026, and opposed the grant of injunctive relief on the grounds of lack of jurisdiction, public interest and the Plaintiff’s alleged non-compliance with mandatory contractual obligations. It identified four issues for determination that is; whether the Court has jurisdiction to determine the substantive dispute; whether the Plaintiff has established a case for the grant of a temporary injunction; whether a party in breach of mandatory statutory or contractual conditions can seek protective orders from the Court; and who should bear the costs. 53.On jurisdiction, the 7th Respondent adopted the submissions made by the 1st to 6th Respondents arguing that Clause 24 of the Subcontract mandates arbitration before the KCAB in Seoul, thereby ousting the Court’s jurisdiction. It emphasized that under Section 6 of the Arbitration Act, the Court must refer disputes to arbitration where a valid arbitration agreement exists, and that its role under Section 7 is limited strictly to interim preservatory measures, not determination of substantive issues such as the validity of termination. 54.The 7th Respondent further submitted that interim relief is not automatic and must meet established legal thresholds. It urged that, the Plaintiff’s attempt to bypass arbitration by framing its claims as tortious misrepresentation and Competition Act violations, was an impermissible attempt to override the parties’ clear intention to arbitrate disputes. 55.Regarding the second issue, the 7th Respondent submits that the Plaintiff failed to satisfy the three-part test established in Giella v Cassman Brown & Co. Ltd [1973] EA 358. It argued first that the Plaintiff had failed to establish a prima facie case with a probability of success because the Plaintiff was in admitted breach for failing to furnish the mandatory Performance Bond which KURA described as a prerequisite condition for participation in the project. According to KURA, a party in material breach of contract could not successfully challenge a termination arising directly from that breach. Secondly, it was submitted that the Plaintiff had failed to demonstrate irreparable injury because the dispute arose from a commercial subcontract and any loss suffered by the Plaintiff would be purely financial and compensable by an award of damages if the Plaintiff were ultimately successful in arbitration. Thirdly, it argued that the balance of convenience tilted overwhelmingly in favour of the Respondents and the public, as the project was already five months behind schedule and granting further injunctive orders would exacerbate delays, increase financial costs under the donor loan arrangement, and strain bilateral relations between Kenya and the Korean government. 56.The 7th Respondent also contended that the Plaintiff approached the Court with unclean hands, having failed to comply with contractual obligations. It argued that equitable remedies should not be granted to a party in breach. In support of that argument, it relied on the decision in Showind Industries v Guardian Bank Limited & Another [2002] 1EA 284 where Ringera J held that interlocutory mandatory injunctions are granted sparingly and only in exceptional circumstances where the Applicant’s case is very strong and straightforward. 57.On the issue of costs, KURA submits that it had been unnecessarily dragged into litigation despite not being a party to the Subcontract Agreement. It argues that public resources had been used to defend what it termed as a meritless claim intended to delay a project of national significance. Consequently, KURA prays that the Plaintiff’s Notice of Motion dated 4th May, 2026, be dismissed in its entirety, that the parties be referred to arbitration pursuant to Clause 24 of the Subcontract Agreement, that the interim orders issued on 6th May, 2026, be vacated to allow the ITS Project to proceed without further delay and that costs of both the suit and the application be awarded to the Respondents. Analysis and Determination 58.I have carefully considered the Preliminary Objection, the pleadings, affidavits and submissions made by all parties. In my view, the following issues arise for determination:-a.Whether the Preliminary Objection dated 9th May, 2026, is competent.b.Whether this Court has jurisdiction to entertain the present suit and the Notice of Motion dated 4th May, 2026, in light of Clause 24 of the sub-contract agreement and Sections 6, 7 and 10 of the Arbitration Act.c.Whether the joinder of the 2nd to 6th Defendants/Respondents defeats or ousts the arbitration agreement or the doctrine of privity of contract. a.) Whether the Preliminary Objection dated 9th May, 2026, is competent. 59.The legal threshold for a preliminary objection was authoritatively set out in the case of Mukisa Biscuit Manufacturing Company Limited V West End Distributors Limited (1969) EA 696 where it was stated as follows:-“So far as I’m aware, a preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of 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.” 60.This principle has been consistently applied by the courts. In the case of Catherine Kawira v Muriungi Kirigia [2016] eKLR Gikonyo J reiterated and echoed the foregoing thus:-“(5)I do not want to reinvent the wheel on the legal threshold for Preliminary Objection. It is now a well-settled principle that a preliminary objection should be a point of law that is straight-forward and not obscured in factual details for it to be proved. Again, it must be potent enough to decimate the entire suit or application.” 61.The Plaintiff has argued that the Preliminary Objection before this Court falls outside the Mukisa Biscuit threshold on the basis that it raises contested factual issues referred to earlier. It further contended that Clause 24 of the Subcontract is inoperative or incapable of performance because it contains alleged inconsistencies regarding the applicable arbitral rules, (references to Article 30(2)(b) of the ICC Rules and references to a non-existent “Clause 0)” and drafting anomalies. It is submitted that such matters require evidentiary and legal interrogation and are therefore unsuitable for determination by way of a preliminary objection. 62.I have considered these arguments. While I agree that some of the issues raised, particularly those relating to alleged misrepresentation, consortium arrangements, and the Plaintiff’s knowledge of such arrangements, are indeed fact intensive and may ultimately require evidentiary inquiry, I do not agree that the entirety of the Preliminary Objection is thereby rendered incompetent. The central and dominant issue raised by the Preliminary Objection is whether the disputes pleaded before this Court fall within the scope of an admittedly existing arbitration agreement. 63.The existence of the arbitration clause is not disputed. Indeed, the Plaintiff expressly pleaded and relied upon Clause 24 of the subcontract which makes reference to arbitration, and has indicated its intention to commence arbitration proceedings before the Korean Commercial Arbitration Board (KCAB). The dispute among the parties therefore is on the legal effect of the said arbitration agreement on the jurisdiction of this court. 64.The question of whether a Court’s jurisdiction is ousted or limited by an arbitration agreement is fundamentally a question of law. In Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR 1, it was held that jurisdiction is everything and without it a court must down its tools. A jurisdictional objection anchored on an arbitration clause therefore properly falls within the ambit of a preliminary objection. 65.The Plaintiff also challenged the competence of the Preliminary Objection on procedural grounds, arguing that Section 6 of the Arbitration Act and Rule 2 of the Arbitration Rules require a formal application for stay by Chamber Summons and not a Preliminary Objection. The Plaintiff relies on authorities including Niazsons (K) Ltd v China Road & Bridge Corporation Kenya [2001] KECA 376 (KLR), Yooshin Engineering Corporation v AIA Architects Ltd [2020] KECA 266 (KLR), Total Security Surveillance Ltd v Oil Field Movers Ltd [2022] KEHC 12375 (KLR) and Olive Hills Surgical Centre Limited v BOM National Health Insurance Fund [2025] KEHC 4328 (KLR). 66.While those authorities underscore the importance of complying with the statutory procedure under Section 6(1) of the Arbitration Act, I do not interpret them as establishing an inflexible rule that a jurisdictional objection based on arbitration clause cannot be raised through a preliminary objection. 67.I find persuasive the reasoning in Muruthi & 3 others v Thiongo & another (Commercial Case 216 of 2023) [2025] KEHC 3423 (KLR) (Commercial and Tax) (19 March 2025) (Ruling) where the Learned Judge stated as follows:-“ 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 Biscuits 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.” This approach accords with the underlying principles of the Arbitration Act, including party autonomy, efficiency in dispute resolution and minimal judicial intervention under Section 10 of the Arbitration Act. 68.In my view, therefore, a preliminary objection grounded on an arbitration clause is competent provided that the existence of an arbitration agreement is admitted and not in dispute; the objection raises a pure question of jurisdiction, and it is raised at the earliest opportunity, before the objecting party has taken steps inconsistent with reliance on arbitration. Where, however, a party engages extensively with the merits of the dispute before invoking arbitration, such conduct may amount to waiver of the right to arbitration. 69.In the present matter, the 1st to 6th Defendants filed a Replying Affidavit. However, this must be viewed in context. The Plaintiff had already invoked the jurisdiction of this Court under Section 7 of the Arbitration Act seeking interim measures of protection pending arbitration. The Defendants, throughout their pleadings, consistently maintained that the substantive dispute remained subject to arbitration under Clause 24 of the Subcontract Agreement, and that the Court’s role was limited to interim preservatory relief. 70.In those circumstances, the filing of the Replying Affidavit, in response to an application for interim protection does not, without more, amount to a clear and an unequivocal waiver of the arbitration agreement or an outright submission to the substantive jurisdiction of this Court. It would be absurd if the statutory provisions contemplate the Court’s consideration of an application for interim relief without a corresponding right to response. At any rate, the Plaintiff’s application as I understood it, submitted that it raises issues beyond the scope of arbitration, into the realm of Competition Act, which are not governed by the provisions of the Arbitration Act that the Plaintiff, now relies upon, to challenge the responses. 71.Consequently, I am satisfied that the Preliminary Objection substantially raises pure points of law particularly on the issue of jurisdiction, the arbitrability of the dispute and privity of contract and does not require the resolution of contested facts for its determination. 72.Accordingly, I am satisfied and find that the Preliminary Objection dated 9th May, 2026, meets the threshold set in Mukisa Biscuit Case Manufacturing Co. Ltd v West End Distributors Ltd (1969) EA 696. With this determination, I now proceed to establish the Court’s jurisdiction to determine the present dispute. Whether this court has jurisdiction to entertain the present suit and the Notice of Motion dated 4th May 2026 in light of Clause 24 of the sub-contract agreement and Sections 6, 7 and 10 of the Arbitration Act. 73.This is the central issue for determination. The Subcontract Agreement before this Court was executed between the Plaintiff, Rhombus Construction Company Limited, and the 1st Defendant, Hansol Paper Kenya Branch Co. Ltd, in respect of TMC Building Works for the Nairobi Intelligent Transport System (ITS) Project. The existence and validity of the agreement is not disputed. Of particular relevance is Clause 24 which sets out an elaborate dispute resolution mechanism. 74.Clause 24.1 provides that:“In the case of any dispute, claim, controversy or disagreement arising out of or in connection with this Subcontract (including as to the interpretation, validity, enforceability or termination of this Subcontract) between the parties (any such dispute, claim, controversy or disagreement hereinafter referred to as a “dispute”) then prior to the commencement of arbitration in accordance with the provisions below in this clause o each party shall use its best efforts to resolve the dispute by negotiation with a period of seven (7) days.” 75.Clause 24.4 designates Seoul, Republic of Korea as the seat of arbitration while Clause 24.6 provides that the arbitral award shall be final and binding upon the parties. Importantly, however, Clause 24.7 expressly preserves the parties’ right to seek urgent interim relief before Kenyan courts. It provides that, “Nothing in this Subcontract shall prevent or delay a party seeking urgent injunctive or interlocutory relief in a court of competent jurisdiction in Kenya pending the resolution of a dispute in accordance with the provisions of this Subcontract.” 76.The Plaintiff heavily relies on Clause 24.7 and Section 7 of the Arbitration Act to assert that this Court retains jurisdiction to entertain the present proceedings. On the other hand, the Defendants contend that the Court’s jurisdiction is strictly limited to interim preservatory relief and does not extend to substantive adjudication of the disputes raised in the Plaint. 77.The legal framework governing the court’s role in arbitration matters is contained principally in Sections 6, 7 and 10 of the Arbitration Act. Section 6 obligates the Court to stay proceedings and refer disputes to arbitration where a valid arbitration agreement exists unless the agreement is null and void, inoperative or incapable of being performed. Section 10 further limits court intervention in arbitral matters except as expressly provided under the Act thus reinforcing the principles of party autonomy and minimal court interference. 78.The Court of Appeal in Safaricom Limited v Ocean View Beach Hotel Limited & 2 Others [2010] KECA 346 (KLR) emphasized that courts exercising jurisdiction under the Arbitration Act must exercise restraint and avoid encroaching upon matters reserved for arbitral determination. The Court further reaffirmed the doctrines of party autonomy and kompetenz kompetenz. 79.Having carefully considered the pleadings before this Court, I am satisfied that the substance of the Plaintiff’s grievance is contractual. The disputes concern termination of the Subcontract Agreement, alleged frustration of the requirement to provide a Performance Bond, alleged waiver of contractual rights, contractual administration, access to the project site, withholding of payments and the authority to terminate the subcontract. 80.Indeed, Clause 10.2 of the Sub-contract obligated the Plaintiff to furnish a Performance Bond while Clause 19.4 expressly provided for termination by the main contractor under specified circumstances including breach of contractual obligations and non-comply with project requirements. The Plaintiff’s case is that it was unable to provide the performance bond due to the alleged failure by the Defendants to supply necessary documentation as required by the institution that was to provide the Bond. This contention squarely concerns the interpretation and performance of contractual obligations. 81.The Plaintiff has sought to argue that the dispute transcends ordinary contractual spheres by invoking allegations of misrepresentation, consortium concealment and violations of Sections 55, 57 and 70A of the Competition Act. However, the Court must look beyond the drafting ingenuity employed in pleadings and examine the true substance of the dispute. In Ventura Aviation Limited v Skylink Express Limited & Another [2023] KEHC 19133 (KLR), the High Court held that parties cannot circumvent arbitration clauses through legal craftsmanship where the dispute substantially arises from the contractual relationship between the parties. 82.In the present case, the alleged misrepresentations, purported concealment of consortium arrangements, issues surrounding the performance bond the alleged retaliatory termination, and the impugned termination notice are all inextricably linked to and arise from the Subcontract Agreement. They therefore fall within the ambit of disputes “arising out of or in connection with” the agreement as contemplated under Clause 24.1. I therefore find that the substantive disputes raised in the Plaintiff’s documents fall squarely within the scope of the arbitration agreement voluntarily executed by the parties. 83.I am not persuaded that the mere invocation of the statutory provisions under the Competition Act, without more, is sufficient to remove the dispute from the arbitral framework voluntarily adopted by the parties. Besides, the references to the Competition Act relate to parties that are otherwise not party to the Subcontract Agreement. In my view, the Plaintiff’s cause of action against them, if at all, remains separable to arbitration related court intervention. To hold otherwise would undermine the doctrine of party autonomy and allow parties to evade arbitration through strategic drafting. 84.The Plaintiff has also challenged the operability of the arbitration clause arguing that it is inconsistent and incapable of performance. I have considered these arguments. However, at this stage, I am not persuaded that the alleged drafting inconsistencies rise to the threshold required under Section 6 of the Arbitration Act to render the arbitration agreement null, void, inoperative or incapable of performance. 85.The intention of the parties to submit disputes to arbitration before the Korean Commercial Arbitration Board is clear, deliberate, and unequivocal. Minor drafting imperfections or procedural ambiguities do not, in themselves, invalidate an otherwise enforceable arbitration agreement. Courts are enjoined to adopt an interpretation that upholds, rather than defeats, the parties’ chosen dispute resolution mechanism. 86.Accordingly, I find that while this Court retains limited jurisdiction under Section 7 to grant interim measures of protection, it does not have jurisdiction to entertain or determine the substantive disputes raised in the Plaint, which are properly reserved for arbitration. This is more so, when the Plaintiff invoked Section 7 of the Arbitration Act. In my view, it was not open to the Applicant to obfuscate the issues and extend the Court’s engagement beyond the Arbitration Act under Section 7 which is supposed to be a stop gap measure to be invoked pending arbitration. I reiterate this position bearing in mind that the Plaintiff was well aware that any dispute on substantive statutory provisions of the Competition Act could be beyond the scope of arbitration under the agreement. Whether the joinder of the 2nd to 6th Defendants/Respondents defeats or ousts the arbitration agreement or the doctrine of privity of contract. 87.It is not disputed that the Subcontract Agreement was executed between the Plaintiff and the 1st Defendant only. Clause 27.7 of the Subcontract Agreement expressly provides that: -“This Subcontract does not confer any rights or obligations on any person or party other than the parties to this Subcontract.” 88.In addition, Clause 27.6.3 expressly states that nothing in the subcontract shall create a partnership or joint venture relationship. These provisions reflect the fundamental principle of privity of contract, which remains a settled doctrine of Kenyan law. In Agricultural Finance Corporation v Lengetia Limited & Jack Mwangi [1985] KLR, the Court of Appeal affirmed that contracts bind only the parties to it and cannot ordinarily impose obligations upon non-parties. Notwithstanding this, the Plaintiff has advanced claims against the 2nd to 6th Defendants based on alleged consortium arrangements, agency relationships and undisclosed principal liability. The Plaintiff in its application went further to seek certain documents from these parties. 89.In my view, those allegations raise factual and evidentiary matters that cannot conclusively be determined at this preliminary stage. Whether the 2nd to 6th Defendants assumed obligations through consortium or agency arrangements requires evidence and cannot properly be resolved solely from the pleadings. Such matters fall outside the limited scope of determination in a preliminary objection. 90.However, even assuming without determining, that the Plaintiff may ultimately establish some form of consortium or agency relationship, the substratum of the dispute would still remain grounded in the Subcontract Agreement and therefore remain substantially arbitrable. The claims relating to termination, performance obligations, provision of the Performance Bond, and contractual administration are all inextricably linked to and arise from the contractual framework between the Plaintiff and the 1st Defendant and not open to interrogation by the Court particularly at this stage. 91.Accordingly, the mere joinder of non-signatory parties does not, in itself, defeat or oust an otherwise valid and operative arbitration agreement. To hold otherwise would permit parties to circumvent arbitration clauses through strategic joinder, thereby undermining the principles of party autonomy and efficiency in dispute resolution that underpin the Arbitration Act. 92.I therefore find that the disputes pleaded, even as against the 2nd to 6th Defendants, are substantially connected to and arise out of the Subcontract Agreement, and consequently fall within the broad ambit of Clause 24 to which the arbitral tribunal should be given an opportunity to adjudicate. In the premises, I am satisfied that: the substantive disputes fall squarely within the scope of the arbitration agreement, the doctrine of privity of contract does not, at this stage, provide a basis for ousting the arbitration agreement; and this Court’s jurisdiction is limited to the consideration of interim measures of protection under Section 7 of the Arbitration Act, pending arbitration, as acknowledged by the Plaintiff. 93.Accordingly, I make the following orders:-a.The Preliminary Objection dated 9th May, 2026, is hereby upheld.b.An interim measure of protection is issued under section 7 of the Arbitration Act, No. 4 of 1995 (as against the 1st Defendant/Respondent) restraining all the said Defendants/Respondents jointly and severally from giving effect to, acting upon, implementing or in any manner enforcing the Notice of Termination dated 22nd April, 2026, or any further or similar notice of termination founded on any alleged failure by the Plaintiff/Applicant to provide the Performance Bond pursuant to clause 10.2 of the Subcontract pending institution of the arbitration process.c.The Plaintiff Applicant to institute the arbitration process within thirty (30) days from the date of this order failure to which the Interim Measure Of Protection order issued in (b) above will automatically lapse.d.The costs of the Preliminary Objection shall abide the outcome of the arbitral proceedings. 94.Orders accordingly. DELIVERED, DATED AND SIGNED VIRTUALLY THIS 18TH DAY OF MAY, 2026RHODA RUTTOJUDGEIn the presence of;Court Assistant: WabwireMr. Justus Omollo for Plaintiff/ApplicantMs. Magor for 1st – 6th Defendants/RespondentsMr. Bett for 2nd Respondent