'REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT MACHAKOS
COMMERCIAL SUIT NO. E003 OF 2024
ANNE WANJIKU MUNENE……………………. PLAINTIFF/RESPONDENT
VERSUS
MWANANCHI CREDIT LTD…………...….1ST DEFENDANT/APPLICANT
MISTAN AUCTIONEERS LTD……............2ND DEFENDANT/APPLICANT
RULING
1. Before court for determination is a Notice of Preliminary Objection dated 12th February 2024 raised by the Defendants based on one major ground that:
• The letter of offer that the parties executed detailed for a dispute resolution process being by was of arbitration. This ousts the court’s jurisdiction in line with the Arbitration Act.
2. The Preliminary objection is in opposition to the Plaintiff’s Notice of Motion dated 6th February 2024 seeking that pending the hearing and determination of the Suit, this Honourable Court be pleased to grant a temporary injunction restraining the Respondents whether by themselves, their servants, agents or any person claiming through or under them from entering, selling, taking over, advertising, offering for sale or in any matter whatsoever interfering with that parcel of land known as MAVOKO TOWN BLOCK 3/1205.
3. The court gave directions for the Preliminary Objection to be canvassed by way of written submissions.
4. The Defendants’ submissions are dated 22nd July 2024.
5. The Plaintiff filed submissions dated 9th July 2024.
Analysis and Determination
6. I have considered the Notice of Preliminary Objection; the Parties’ Advocates submissions and the authorities cited. The issue for determination is whether or not the Preliminary Objection should be upheld.
7. The bone of contention here is on the terms of Clause 6 of a letter of offer dated 9/9/2022. The Clause provides that any dispute between the parties is to firstly resort to negotiations.
8. Relying on the above Clause the Defendants challenged this court’s jurisdiction in hearing and determining the Plaintiff’s Claim and contend that the matter has to be referred to arbitration.
9. The Defendants contend that the procedure is that, a party is to deliver a request to the other as a way to initiate consultations. In the event there is no resolution the dispute be referred to arbitration by a single arbitrator appointed by the parties jointly and severally and if they fail to agree the chairman of the Charter Institute of Arbitration Kenyan Chapter shall appoint the arbitrator. That in the present case the plaintiff has not demonstrated that she has utilized these processes before commencing of this suit. That the Plaintiff did not contest the existence of the letter of offer alongside a replying affidavit under protest sworn on 21/2/2024.
10. The Defendants further contend that there is no deposition of negotiations and or initiating arbitration before filing suit. The suit would not only be premature but also incompetent for want of jurisdiction. The court cannot entertain a suit where parties have agreed to the manner disputes are to be handled. The question of the processes leading to the Defendants exercising the statutory power of sale these are issues that are to be dealt with by the arbitral tribunal through the Arbitrator.
11. The Defendants urge the court to allow the Defendants’ preliminary objection.
12. The Plaintiff on the other hand contends that this court has been bestowed jurisdiction to hear and determine this matter by the Respondents through their conduct.
13. The Plaintiff avers that Section 104 of the Land Act provides for alternate modes that the court can approach and use while adjudicating on a matter of sale of land upon default by the Chargor. The Plaintiff submits that this matter strictly falls within the confines of the Land Act. That whereas the Defendants desire to invoke the Arbitration Clause in the letter of offer, an Arbitral Tribunal lacks the jurisdiction to hear and determine a dispute simply because the Respondent failed, refused and or neglected to issue the Applicant with the requisite notices before the sale.
14. The Plaintiff submits that these notices are enshrined in the Land Act No. 6 of 2012 and any dispute or assertion in relation to the notices falls with the mandates of the courts thus depriving the Arbitral Tribunal to hear and determine the matter.
15. The Plaintiff also submits that even if the Arbitral Tribunal had jurisdiction to determine this matter, it is trite law and axiomatic that a party that waives its recourse to right to arbitration confers the court with the jurisdiction to hear and determine the matter fully. Any party that takes procedural steps in a suit brought forward against it in a court of law, with the existence of an arbitration clause, accepts the claim and grants the court jurisdiction to hear and determine the matter.
16. The Plaintiff argues that the Defendants waived their right of application of stay of proceedings and conferred this court with jurisdiction to hear and determine this matter. That a close look into the Replying Affidavit by the Defendant/sRespondents sworn on 12th January 2024 confirms this assertion and further its ground of oppositions dated 2nd October 2023.
17. That by extension of the foregoing analogy, the jurisdiction of this court to intervene is donated by dint of Section 6(1) of the Arbitration Act 1995; and upon entering appearance both parties taking procedural steps in a matter. The Plaintiff reiterates that by the conduct of both parties in this matter, parties mutually suggested that they did not and or do not intend to honour the arbitration clause.
18. Section 6 of the Arbitration Act No. 4 of 1995 provides that:-
“ 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 that a 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
19. A party ousting the court’s jurisdiction with reference to an arbitration clause must not make any procedural steps in the court or in so doing, provides the court with the jurisdiction to hear and determine the matter even with the existence of an arbitration clause in the agreement. See Mt. Kenya University v Ste Up Holdings (K) Ltd (2018) eKLR.
20. In Nanchang Foreign Engineering Company (K) Ltd vs Easy Properties Kenya Limited [2014] eKLR, Kamau, J expressed herself as follows:
"It is a condition precedent that there be a dispute capable of being referred to arbitration before a court can stay proceedings filed in court. Bearing in mind that it is trite law that he who alleges must prove, the burden of proving that a dispute indeed exists for it to be referred to arbitration lies with the party alleging the fact ... This court''s conclusion is similar to that in the case of Ellis Mechanical Services Limited vs. Wates Construction Limited ... cited in the case of Civil Appeal No. 26 of 2007 UAP Insurance Company Limited vs. Michael John Beckett (Supra) where Lord Denning had the following to say:- The defendants cannot insist on the whole going to arbitration by simply saying that there is a dispute or difference about it. If the court sees that there is a sum which is indisputably due then the court can give judgment for that sum and let the rest go to arbitration."
21. The onus of proving that the matters in dispute falls within a valid and subsisting arbitration clause is on the party applying to the court for a stay of proceedings or challenging the jurisdiction of the court to hear the matter. Non-payment of approved and undisputed interim payment is not a dispute capable of being referred to arbitration. See Naizons (K) Ltd (vs China Road & Bridge Corporation Kenya Ltd (2001) KECA 376, eKLR, where the Court of Appeal analysed what happens when there is no dispute between A and B, but B just declines to pay.
" This pertinent issue was adequately dealt with by the Earl of Halsbury LC in the House of Lords London and North Western and Great Western Jointly Rly Cos vs J H Billington Ltd (1899) AC79 at 81 when he said:-“That a condition precedent to the invocation of the arbitrator on whatever grounds is that a difference between the parties should have arisen; and I think that must mean a difference of opinion before the action is launched either by formal plaint in the County Court or by writ in the superior courts. Any contention that the parties could, when they are sued for the price of the services, raise then for the first time the question whether or not the charges were reasonable and that therefore they have a right to go to an arbitrator, seems to be absolutely untenable.” If a debtor agrees that money is due, but simply fails to pay it, there is obviously no dispute, the creditor can and must proceed by action, rather than by arbitration. Equally, silence in the face of a screaming claim does not constitute nor raise a dispute……….. It is settled law that mere refusal to pay upon a claim, which is not really a dispute, does not necessarily give rise to a dispute calling an arbitration clause into operation. It must follow, therefore, that courts can be resorted to without previous recourse to arbitration to enforce a claim which is not disputed but which an employer merely persists in not paying. As there was in my view no or any genuine dispute between the parties, a stay on the respondent’s application ought to have been rejected by the learned judge”
22. The Defendants were expected to raise the necessity of stay in the matter immediately upon entering appearance or during entering of appearance and needed not to file any other document with regard to the matter. Filing and service of the Replying Affidavit in this court by the Defendants/Respondents automatically waived their inherent right to recourse to arbitration and confers this court with jurisdiction.
23. The Defendants have made procedural and substantive step before this court with regard to this matter and they can therefore not raise an objection in that regard neither can they stay these proceedings having waived their right to arbitration.
24. A preliminary objection contains a pure point of that requires no factual evidence to make it evident. The Defendants notice of Preliminary Objection is based on the Letter of Offer that the parties executed detailing for a dispute resolution process being by way of arbitration.
25. In Hassan Ali Joho & Another v Suleiman Said Shahbal & 2 Others which cited the leading decision on Preliminary Objections, Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd. (1969) EA 696, the Court held as follows:
"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... a preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion".
26. Accordingly, I find that the Notice of Preliminary Objection dated 12th February 2024 does not raise a pure point of law as the court has to interrogate the Letter of Offer herein to ascertain facts relating to the purported Arbitration Clause the same is overruled with costs to the Plaintiff.
27. It is hereby so ordered.
RULING WRITTEN, DATED & SIGNED AT MACHAKOS THIS 27TH NOVEMBER 2025
NOEL I. ADAGI
JUDGE
DELIVERED VIRTUALLY ON TEAMS AT MACHAKOS THIS 27TH NOVEMBER 2025
In the presence of :-
Mr. Moshe for Kiprop for Plaintiff
Mr Mathenge for Defendants
Milly- Court Assnt.
'
IN THE HIGH COURT OF KENYA AT MACHAKOS
COMMERCIAL SUIT NO. E003 OF 2024
ANNE WANJIKU MUNENE……………………. PLAINTIFF/RESPONDENT
VERSUS
MWANANCHI CREDIT LTD…………...….1ST DEFENDANT/APPLICANT
MISTAN AUCTIONEERS LTD……............2ND DEFENDANT/APPLICANT
RULING
1. Before court for determination is a Notice of Preliminary Objection dated 12th February 2024 raised by the Defendants based on one major ground that:
• The letter of offer that the parties executed detailed for a dispute resolution process being by was of arbitration. This ousts the court’s jurisdiction in line with the Arbitration Act.
2. The Preliminary objection is in opposition to the Plaintiff’s Notice of Motion dated 6th February 2024 seeking that pending the hearing and determination of the Suit, this Honourable Court be pleased to grant a temporary injunction restraining the Respondents whether by themselves, their servants, agents or any person claiming through or under them from entering, selling, taking over, advertising, offering for sale or in any matter whatsoever interfering with that parcel of land known as MAVOKO TOWN BLOCK 3/1205.
3. The court gave directions for the Preliminary Objection to be canvassed by way of written submissions.
4. The Defendants’ submissions are dated 22nd July 2024.
5. The Plaintiff filed submissions dated 9th July 2024.
Analysis and Determination
6. I have considered the Notice of Preliminary Objection; the Parties’ Advocates submissions and the authorities cited. The issue for determination is whether or not the Preliminary Objection should be upheld.
7. The bone of contention here is on the terms of Clause 6 of a letter of offer dated 9/9/2022. The Clause provides that any dispute between the parties is to firstly resort to negotiations.
8. Relying on the above Clause the Defendants challenged this court’s jurisdiction in hearing and determining the Plaintiff’s Claim and contend that the matter has to be referred to arbitration.
9. The Defendants contend that the procedure is that, a party is to deliver a request to the other as a way to initiate consultations. In the event there is no resolution the dispute be referred to arbitration by a single arbitrator appointed by the parties jointly and severally and if they fail to agree the chairman of the Charter Institute of Arbitration Kenyan Chapter shall appoint the arbitrator. That in the present case the plaintiff has not demonstrated that she has utilized these processes before commencing of this suit. That the Plaintiff did not contest the existence of the letter of offer alongside a replying affidavit under protest sworn on 21/2/2024.
10. The Defendants further contend that there is no deposition of negotiations and or initiating arbitration before filing suit. The suit would not only be premature but also incompetent for want of jurisdiction. The court cannot entertain a suit where parties have agreed to the manner disputes are to be handled. The question of the processes leading to the Defendants exercising the statutory power of sale these are issues that are to be dealt with by the arbitral tribunal through the Arbitrator.
11. The Defendants urge the court to allow the Defendants’ preliminary objection.
12. The Plaintiff on the other hand contends that this court has been bestowed jurisdiction to hear and determine this matter by the Respondents through their conduct.
13. The Plaintiff avers that Section 104 of the Land Act provides for alternate modes that the court can approach and use while adjudicating on a matter of sale of land upon default by the Chargor. The Plaintiff submits that this matter strictly falls within the confines of the Land Act. That whereas the Defendants desire to invoke the Arbitration Clause in the letter of offer, an Arbitral Tribunal lacks the jurisdiction to hear and determine a dispute simply because the Respondent failed, refused and or neglected to issue the Applicant with the requisite notices before the sale.
14. The Plaintiff submits that these notices are enshrined in the Land Act No. 6 of 2012 and any dispute or assertion in relation to the notices falls with the mandates of the courts thus depriving the Arbitral Tribunal to hear and determine the matter.
15. The Plaintiff also submits that even if the Arbitral Tribunal had jurisdiction to determine this matter, it is trite law and axiomatic that a party that waives its recourse to right to arbitration confers the court with the jurisdiction to hear and determine the matter fully. Any party that takes procedural steps in a suit brought forward against it in a court of law, with the existence of an arbitration clause, accepts the claim and grants the court jurisdiction to hear and determine the matter.
16. The Plaintiff argues that the Defendants waived their right of application of stay of proceedings and conferred this court with jurisdiction to hear and determine this matter. That a close look into the Replying Affidavit by the Defendant/sRespondents sworn on 12th January 2024 confirms this assertion and further its ground of oppositions dated 2nd October 2023.
17. That by extension of the foregoing analogy, the jurisdiction of this court to intervene is donated by dint of Section 6(1) of the Arbitration Act 1995; and upon entering appearance both parties taking procedural steps in a matter. The Plaintiff reiterates that by the conduct of both parties in this matter, parties mutually suggested that they did not and or do not intend to honour the arbitration clause.
18. Section 6 of the Arbitration Act No. 4 of 1995 provides that:-
“ 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 that a 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
19. A party ousting the court’s jurisdiction with reference to an arbitration clause must not make any procedural steps in the court or in so doing, provides the court with the jurisdiction to hear and determine the matter even with the existence of an arbitration clause in the agreement. See Mt. Kenya University v Ste Up Holdings (K) Ltd (2018) eKLR.
20. In Nanchang Foreign Engineering Company (K) Ltd vs Easy Properties Kenya Limited [2014] eKLR, Kamau, J expressed herself as follows:
"It is a condition precedent that there be a dispute capable of being referred to arbitration before a court can stay proceedings filed in court. Bearing in mind that it is trite law that he who alleges must prove, the burden of proving that a dispute indeed exists for it to be referred to arbitration lies with the party alleging the fact ... This court''s conclusion is similar to that in the case of Ellis Mechanical Services Limited vs. Wates Construction Limited ... cited in the case of Civil Appeal No. 26 of 2007 UAP Insurance Company Limited vs. Michael John Beckett (Supra) where Lord Denning had the following to say:- The defendants cannot insist on the whole going to arbitration by simply saying that there is a dispute or difference about it. If the court sees that there is a sum which is indisputably due then the court can give judgment for that sum and let the rest go to arbitration."
21. The onus of proving that the matters in dispute falls within a valid and subsisting arbitration clause is on the party applying to the court for a stay of proceedings or challenging the jurisdiction of the court to hear the matter. Non-payment of approved and undisputed interim payment is not a dispute capable of being referred to arbitration. See Naizons (K) Ltd (vs China Road & Bridge Corporation Kenya Ltd (2001) KECA 376, eKLR, where the Court of Appeal analysed what happens when there is no dispute between A and B, but B just declines to pay.
" This pertinent issue was adequately dealt with by the Earl of Halsbury LC in the House of Lords London and North Western and Great Western Jointly Rly Cos vs J H Billington Ltd (1899) AC79 at 81 when he said:-“That a condition precedent to the invocation of the arbitrator on whatever grounds is that a difference between the parties should have arisen; and I think that must mean a difference of opinion before the action is launched either by formal plaint in the County Court or by writ in the superior courts. Any contention that the parties could, when they are sued for the price of the services, raise then for the first time the question whether or not the charges were reasonable and that therefore they have a right to go to an arbitrator, seems to be absolutely untenable.” If a debtor agrees that money is due, but simply fails to pay it, there is obviously no dispute, the creditor can and must proceed by action, rather than by arbitration. Equally, silence in the face of a screaming claim does not constitute nor raise a dispute……….. It is settled law that mere refusal to pay upon a claim, which is not really a dispute, does not necessarily give rise to a dispute calling an arbitration clause into operation. It must follow, therefore, that courts can be resorted to without previous recourse to arbitration to enforce a claim which is not disputed but which an employer merely persists in not paying. As there was in my view no or any genuine dispute between the parties, a stay on the respondent’s application ought to have been rejected by the learned judge”
22. The Defendants were expected to raise the necessity of stay in the matter immediately upon entering appearance or during entering of appearance and needed not to file any other document with regard to the matter. Filing and service of the Replying Affidavit in this court by the Defendants/Respondents automatically waived their inherent right to recourse to arbitration and confers this court with jurisdiction.
23. The Defendants have made procedural and substantive step before this court with regard to this matter and they can therefore not raise an objection in that regard neither can they stay these proceedings having waived their right to arbitration.
24. A preliminary objection contains a pure point of that requires no factual evidence to make it evident. The Defendants notice of Preliminary Objection is based on the Letter of Offer that the parties executed detailing for a dispute resolution process being by way of arbitration.
25. In Hassan Ali Joho & Another v Suleiman Said Shahbal & 2 Others which cited the leading decision on Preliminary Objections, Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd. (1969) EA 696, the Court held as follows:
"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... a preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion".
26. Accordingly, I find that the Notice of Preliminary Objection dated 12th February 2024 does not raise a pure point of law as the court has to interrogate the Letter of Offer herein to ascertain facts relating to the purported Arbitration Clause the same is overruled with costs to the Plaintiff.
27. It is hereby so ordered.
RULING WRITTEN, DATED & SIGNED AT MACHAKOS THIS 27TH NOVEMBER 2025
NOEL I. ADAGI
JUDGE
DELIVERED VIRTUALLY ON TEAMS AT MACHAKOS THIS 27TH NOVEMBER 2025
In the presence of :-
Mr. Moshe for Kiprop for Plaintiff
Mr Mathenge for Defendants
Milly- Court Assnt.
'