[2023] KEELRC 2996 (KLR)

Rono v Delish Nail & Beauty Ltd (Cause E038 of 2023) [2023] KEELRC 2996 (KLR) (23 November 2023) (Ruling)

Neutral citation: [2023] KEELRC 2996 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Kisumu

Cause E038 of 2023

CN Baari, J

November 23, 2023

Between

Amos Rono

Claimant

and

Delish Nail & Beauty Ltd

Respondent

Ruling

1. This ruling relates to the respondent’s Chamber Summons Application dated July 25, 2023, brought pursuant to section 6 of the Arbitration Act, rule 2 of the Arbitration Rules, section 3A of the Civil Procedure Act and article 159(2)(c) of the Constitution. The applicant seeks orders that: -i.There be a stay of all proceedings herein pending Arbitration.ii.The dispute between the claimant and the respondent be referred to arbitration.iii.In the alternative to prayer (2) hereinabove, this honourable Court be pleased to strike out this matter for being filed in the wrong forum.iv.The costs of this application be awarded to the respondent.

2. The application is support by the grounds on the face thereof and the Affidavit of Olivia Wanjiru Mathenge. The crux of the application is that under clause 19 of the contract of service between the parties herein, parties agreed to settle disputes through negotiations, and that if negotiation failed, then refer any disputes to mediation, then arbitration, if the parties were still in disagreement.

3. The respondent/applicant contends that the claimant filed the present suit before this Honourable Court without first exhausting all dispute resolution avenues agreed upon by the parties.

4. The claimant/respondent opposed the application vide a replying affidavit dated 31st July, 2023.

5. Parties urged the application orally on October 23, 2023.

6. Counsel for the respondent/applicant argued that the Court is bound by agreements between parties. He placed reliance in the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another, (2001)eKLR.

7. It is Counsel’s further submission that clause 19 of the contract between the parties, provides for the dispute resolution mechanisms applicable between the parties, and which have not been attempted. It is his submission that the claimant/respondent relied in the same agreement in bringing this matter to Court.

8. It is the applicant’s further argument that nothing has been put forward indicating why the clause in the employment contract should not be adhered to. It is their submission that nothing in the constituting Act bars parties from complying with clause 19 of the contract of service.

9. It is the applicant’s submission that the Court should hold parties to their bargain as no proof of fraud or undue influence has been proved to render the clause inapplicable.

10. Counsel for the claimant/respondent on his part argued that the Claimant’s employment was terminated unilaterally by the Respondent on May 10, 2023, and as a consequence, the relationship ceased to exist.

11. It is the claimant/respondent’s position that the termination was instigated by the respondent/applicant despite the arbitration clause from which they now seek refuge.

12. The claimant/respondent further avers that mandatory arbitration would be contrary to section 87 of the Employment Act, on the protection of enforcement of employment disputes by the state through the Courts. It is their submission that the same would also be a violation of the spirit of chapter IV of the Constitution on the protection and enforcement of fundamental rights and freedoms.

13. The claimant/respondent further states that under section 26 of the Employment Act, the Court is mandated to override the terms and conditions of an employment contract and apply terms and conditions of Parts V and VI of the Act to the extent that the terms and conditions under the Act are more favourable to the employee.

14. Counsel for the claimant further submitted that both parties had executed the contract of employment, but the respondent/applicant demonstrated their unwillingness to be bound by the arbitration clause by unlawfully terminating the claimant.

15. It is his submission that only disputes that arose in the course of employment were to be referred to arbitration, while the dispute in question did not arise in the course of employment. It is submitted that the claimant is currently unemployed and cannot afford to pay for an arbitration process, with the result that the claim if submitted to arbitration, will be defeated and the claimant denied the right of access to justice.

16. Counsel prays that the application be dismissed with costs.

Determination 17. I have considered the respondent/applicant’s Application, the grounds and Affidavit in support, the Replying Affidavit in opposition and the rival submission by Counsels. The issue for determination is whether the suit herein should be stayed on account of an arbitration clause in the employment agreement between the parties herein.

18. Section 6 of the Arbitration Act, provides for arbitration clauses in the following words: -“(1)A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought, stay the proceedings and refer the parties to arbitration unless it finds—(a)that the arbitration agreement is null and void, inoperative or incapable of being performed; or(b)that there is not in fact any dispute between the parties with regard to the matters agreed to be referred to arbitration.(2)Proceedings before the court shall not be continued after an application under subsection (1) has been made and the matter remains undetermined.(3)If the court declines to stay legal proceedings, any provision of the arbitration agreement to the effect that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.”

19. The Court in the case of Machangi v County Government of Nyandarua & 2 others (Miscellaneous Case E131 of 2021) [2022] KEELRC 3817 (KLR) (18 August 2022) (Ruling) relied on article 159(2)(c) of the Constitution of Kenya 2010 states: -‘Judicial authority exercised by courts and tribunals shall promote the use alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms.’

20. The claimant/respondent in his opposion to the instant application stated that the alternative mechanisms of dispute resolution in the agreement between himself and the respondent/applicant, were only applicable prior to his contract being terminated and not after. In Jane Muthoni Mukuna v Fsi Capital Limited [2015] eKLR the Court held thus: -‘The claimant also has another very valid argument that the employment relationship having been terminated there was nothing to refer to arbitration. That the respondent, having had a dispute with the claimant, should have referred the dispute to arbitration before termination of the contract. After its termination, and taking into account the fact that the claimant is not suing for reinstatement but for terminal dues, there is no contract to be referred to arbitration…’

21. It is also in my view, questionable whether arbitration is applicable to employment contract. In the case of Sammy Onyango Ochieng v Abno Softwares International Limited [2020] eKLR, the Court observed that: -“Even where the court were to consider arbitration as operable, such would be untenable for the reasons that under section 26 of the Employment Act the court is mandated to override the terms and conditions of an employment contract and apply terms and conditions of Parts V and VI of the Act to the extent that the terms and conditions under the Act are more favourable to the employee.”

22. Further, in Dr Kennedy Amuhaya Wanyonyi v African Medical and Research Foundation [2014] eKLR the Court held that section 15 of the Industrial Court Act does not refer to arbitration as one of the forms of alternative dispute resolution. The Court went on to conclude that the Industrial Court Act, nowELRCAct, excludes arbitration in employment cases.

23. It is my considered opinion that the wording of Clause 19 of the employment contract between the parties herein, was to allow negotiation, mediation and subsequently arbitration to disputes arising in the course of employment and not after the contract of employment has been terminated.

24. The respondent/applicant has not shown that it did try the alternative methods of dispute resolution prior to terminating the Claimant’s contract.

25. I arrive at the conclusion that the instant application is one intended to delay the course of justice, is without merit and is dismissed.

26. Costs shall abide the cause.

27. Orders accordingly.

SIGNED, DATED AND DELIVERED BY VIDEO-LINK AND IN COURT AT KISUMU THIS 23RD DAY OF NOVEMBER, 2023. CHRISTINE N. BAARIJUDGEAppearance:Mr. Onyango present for the Claimant/RespondentMr. Wambua present for the Respondent/Applicant