REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT KWALE
COMMERCIAL CASE NO. E011 OF 2024
(Coram: Andayi W. F., J.)
IN THE MATTER OF AN APPLICATION UNDER SECTIONS 780, 782, 786 AND 789 OF THE COMPANIES ACT (CAP. 486) LAWS OF KENYA
JUSTIN ALEXANDER WELCH………………………PETITIONER/APPLICANT
AND
MARK ALEXANDER VAN GINKEL……………………..……..1ST RESPONDENT
EAST AFRICA HOSTELS LIMITED…………………………….2ND RESPONDENT
RULING
1. The petitioner herein as a majority shareholder with 51% shareholding in the 2nd respondent filed a petition dated 5/8/2024 under the Companies Act (Cap. 486) Laws of Kenya seeking various reliefs against the respondents. The reliefs are particularly directed at the 1st respondent as minority shareholder with 49% stake in the shareholding of the 2nd respondent (the company).
2. The petitioner averred that pursuant to an agreement entered into between the petitioner and the respondent, the petitioner runs the affairs of the 2nd respondent as the Chief Executive Officer as well as the visual and image carrier of the 2nd respondent while the 1st respondent has the duties of Chief Operating Officer and Managing Director responsible for the day-to-day operations of the company.
3. The 2nd respondent filed an application dated 16/9/2024 seeking orders of stay of proceedings herein and for the dispute between the petitioner and the respondent to be referred to arbitration in accordance with clause 52 of the 2nd respondent’s Articles of Association dated 23/9/2015.
4. The dispute was indeed referred to arbitration on 25/9/2024.
5. The petitioner subsequently filed the present application dated 25/10/2024 seeking orders that pending the hearing and determination of the arbitration, the 1st respondent be ordered to remit the petitioner’s salary for the month of September 2024 and/or as and when it falls due. Further that the 1st respondent be ordered to enable access by the petitioner to the Cloudbeds.com, e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms operated in the name of the 2nd respondent.
6. The grounds in support of the application are further expounded in the supporting affidavit sworn by Justin Alexander Welch, the petitioner. They are that in spite of this matter being referred to arbitration, the 1st respondent is committing acts of waste by unilaterally stopping the salary of the petitioner from the month of September 2024 going forward, blocking the petitioner from accessing Cloudbeds.com, an online account for setting company property rates, booking and reporting information, and promoting the 1st respondent’s personal business in Galu Backpackers aimed at defeating the 2nd respondent’s company’s Dani Backpackers and promoting conflict of interest to the detriment of the petitioner’s interest in the 2nd respondent’s company as evidenced by decrease in revenues.
7. According to the petitioner, these acts have been heightened following the reference of the dispute to arbitration, an indication of vengeance by the 1st respondent against the petitioner in order to waste away the 2nd respondent’s resources to the detriment of the petitioner. There is therefore urgent need for interim protection measures to assure the petitioner that his interests will survive the arbitration process and to compel the 1st respondent to do what he ought to do and refrain from doing what he ought not do. He avers further that the same can be granted without encroaching on the arbitration process.
8. In response, the 1st respondent filed a replying affidavit sworn on 16/12/2024 by Mark Alexander Van Ginkel. He acknowledges the issues raised by the petitioner and deposes that the delay in salary payments in September was occasioned by the company’s financial commitments as funds were directed toward settling arrears owed to the Kenya Revenue Authority (KRA) as per a prior agreement and unexpected legal costs which further impacted the company’s cash flow, contributing to the delay in remuneration.
9. He deposes further that despite the financial challenges, the respondents are willing to endeavour to pay the petitioner/applicant the September salary (in arrears) by the end of December, 2024 and shall continue to pay the petitioner his monthly salary as and when it falls due.
10. On the issue of access to the cloudbed.com platform, all users were required to provide new e-mail addresses for reactivation owing to a possible security threat on the system earlier in October, which necessitated the deactivation of all user accounts including that of the petitioner.
11. However, the petitioner refused to share a new e-mail address and the respondents had to send a prompt to the petitioner’s old e-mail address requiring him to set new passwords to enable the respondents activate the petitioner’s user account on the 2nd respondent’s cloudbeds.com platform.
12. He deposes further that in order to mitigate further potential security risks on the social media platforms, access to the platform is however conditional upon the petitioner indemnifying the respondents against any liability that the respondents may incur due to posts made by the petitioner against third parties while using the petitioner’s account on the 2nd respondent’s cloudbed.com platform.
13. He deposes further that the respondents are not largely opposed to the application and the prayers sought, provided the conditions outlined herein are met.
14. The 1st respondent’s prayer is that given the implications of the said orders, the court ought not to grant the orders sought unconditionally, as this would be unjust to the respondents.
15. The application was disposed of by way of written submissions filed by learned counsels for both parties which I have duly considered in the analysis and determination following.
16. I have considered the application, the grounds in support thereof and the supporting affidavit as well as the reply thereto and the submissions by learned counsels for the parties.
17. The application herein is brought under section 7 of the Arbitration Act (Cap. 49) Laws of Kenya which provides that:
1) It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High Court to grant that measure.
2) Where a party applies to the High Court for an injunction or other interim order and the arbitral tribunal has already ruled on any matter relevant to the application, the High Court shall treat the ruling or any finding of fact made in the course of the ruling as conclusive for the purposes of the application.
18. In the present application, the 1st respondent, against whom the interim measures are sought deposes that he is principally not opposed to the same being granted provided that the same are conditional. As I see it, this condition applies only to the second prayer for access to Cloud.com online platform and not on the issue of payment of salaries.
19. The nature and purpose of interim measures is captured by the Court of Appeal in the case cited by learned counsel for both parties of Safaricom Limited v Ocean View Beach Hotel Limited & 2 others [2010] KECA 346 (KLR) as follows;
“Interim measures of protection in arbitration take different forms and it would be unwise to regard the categories of interim measures as being in any sense closed (say restricted to injunctions for example) and what is suitable must turn or depend on the facts of each case before the Court or the tribunal – such interim measures include, measures relating to preservation of evidence, measures aimed at preserving the status quo measures intended to provide security for costs and injunctions. Under our system of the law on arbitration the essentials which the Court must take into account before issuing the interim measures of protection are: -
a. The existence of an arbitration agreement.
b. Whether the subject matter of arbitration is under threat.
c. In the special circumstances which is the appropriate measure of protection after an assessment of the merits of the Application?
d. For what period must the measure be given especially if requested for before the commencement of the arbitration so as to avoid encroaching on the tribunal’s decision-making power as intended by the parties?"
20. In this case, there is an arbitration agreement and the parties have agreed to refer the matter to arbitration. Learned counsel for the respondent submits that the parties are in the process of referring the dispute to arbitration meaning that as at the time of filing these submissions dated 8/4/2025, the process was still ongoing. The depositions by the petitioner in support of this application as to the operations of the company, which are not contested by the respondents satisfy me that the subject matter is under threat. The same therefore deserves interim protection.
21. The test for grant of interim measures pending the decision of an arbitral tribunal is as stated in the case of Channel Tunnel Group vs Balfour Beatly Ltd. [1993] 1 All E. R. 664, where the House of Lords applying section 12(6) of the Arbitration Act 1950, which is similar to our section 7 of the Arbitration Act, which gives the power to grant an interim measure of relief pending referral or determination of the dispute to arbitration held that a court is enjoined to consider,
“on the one hand the need for the court to make a tentative assessment of the merits in order to decide whether the plaintiff’s claim is strong enough to merit protection, and on the other the duty to respect the choice of Tribunal”.
22. Suffice it to say that the petitioner/applicant did not contest the conditions suggested by the 1st respondent with respect to the petitioner’s access to Cloudbeds.com. as he did file a supplementary affidavit. The 1st respondent on his part did not raise any objection to the petitioner’s prayer for unrestricted access to the 2nd respondent’s other communication channels and media such as e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms.
23. Therefore, in granting interim measures to the petitioner, the court will have to balance the interests of the petitioner and those of the company as indicated by the 1st respondent but at the same time ensuring that the orders do not encroach on the intended arbitrators’ powers to determine the dispute.
24. In the upshot and taking into account all these issues, I find that granting interim measures of protection in terms of the prayers sought in the application dated the 25/10/2024 with conditions as proposed by the 1st respondent is justiciable in the circumstances of this case.
25. Consequently, this court finds the application to have merit and grants the following orders: That pending the hearing and determination of the arbitration proceedings:
a. The respondents shall pay to the petitioner his monthly salary as and when they fall due as negotiated, agreed upon and made in the resolution of the 2nd respondent in the past, now or at a future date.
b. The petitioner shall be provided access to the 2nd respondent’s online platform cloudbed.com or couldbeds.com or cloudbet.com whichever is the correct name (as I have seen all these names in the documents filed in court) on the same terms and conditions as apply to the 1st respondent and unrestricted access to the 2nd respondents communication media including but not limited to e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms operated in the name of the 2nd respondent whether existing or to be opened in future.
26. The costs shall abide by the outcome of the arbitration proceedings.
27. Orders accordingly.
Delivered, dated and signed at Kwale on the Virtual Platform, Teams this 9th day of May 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Mapesa for the petitioner/applicant.
Kubai for the respondents
Johnson: Court Assistant.
ANDAYI W. F.
JUDGE
IN THE HIGH COURT OF KENYA AT KWALE
COMMERCIAL CASE NO. E011 OF 2024
(Coram: Andayi W. F., J.)
IN THE MATTER OF AN APPLICATION UNDER SECTIONS 780, 782, 786 AND 789 OF THE COMPANIES ACT (CAP. 486) LAWS OF KENYA
JUSTIN ALEXANDER WELCH………………………PETITIONER/APPLICANT
AND
MARK ALEXANDER VAN GINKEL……………………..……..1ST RESPONDENT
EAST AFRICA HOSTELS LIMITED…………………………….2ND RESPONDENT
RULING
1. The petitioner herein as a majority shareholder with 51% shareholding in the 2nd respondent filed a petition dated 5/8/2024 under the Companies Act (Cap. 486) Laws of Kenya seeking various reliefs against the respondents. The reliefs are particularly directed at the 1st respondent as minority shareholder with 49% stake in the shareholding of the 2nd respondent (the company).
2. The petitioner averred that pursuant to an agreement entered into between the petitioner and the respondent, the petitioner runs the affairs of the 2nd respondent as the Chief Executive Officer as well as the visual and image carrier of the 2nd respondent while the 1st respondent has the duties of Chief Operating Officer and Managing Director responsible for the day-to-day operations of the company.
3. The 2nd respondent filed an application dated 16/9/2024 seeking orders of stay of proceedings herein and for the dispute between the petitioner and the respondent to be referred to arbitration in accordance with clause 52 of the 2nd respondent’s Articles of Association dated 23/9/2015.
4. The dispute was indeed referred to arbitration on 25/9/2024.
5. The petitioner subsequently filed the present application dated 25/10/2024 seeking orders that pending the hearing and determination of the arbitration, the 1st respondent be ordered to remit the petitioner’s salary for the month of September 2024 and/or as and when it falls due. Further that the 1st respondent be ordered to enable access by the petitioner to the Cloudbeds.com, e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms operated in the name of the 2nd respondent.
6. The grounds in support of the application are further expounded in the supporting affidavit sworn by Justin Alexander Welch, the petitioner. They are that in spite of this matter being referred to arbitration, the 1st respondent is committing acts of waste by unilaterally stopping the salary of the petitioner from the month of September 2024 going forward, blocking the petitioner from accessing Cloudbeds.com, an online account for setting company property rates, booking and reporting information, and promoting the 1st respondent’s personal business in Galu Backpackers aimed at defeating the 2nd respondent’s company’s Dani Backpackers and promoting conflict of interest to the detriment of the petitioner’s interest in the 2nd respondent’s company as evidenced by decrease in revenues.
7. According to the petitioner, these acts have been heightened following the reference of the dispute to arbitration, an indication of vengeance by the 1st respondent against the petitioner in order to waste away the 2nd respondent’s resources to the detriment of the petitioner. There is therefore urgent need for interim protection measures to assure the petitioner that his interests will survive the arbitration process and to compel the 1st respondent to do what he ought to do and refrain from doing what he ought not do. He avers further that the same can be granted without encroaching on the arbitration process.
8. In response, the 1st respondent filed a replying affidavit sworn on 16/12/2024 by Mark Alexander Van Ginkel. He acknowledges the issues raised by the petitioner and deposes that the delay in salary payments in September was occasioned by the company’s financial commitments as funds were directed toward settling arrears owed to the Kenya Revenue Authority (KRA) as per a prior agreement and unexpected legal costs which further impacted the company’s cash flow, contributing to the delay in remuneration.
9. He deposes further that despite the financial challenges, the respondents are willing to endeavour to pay the petitioner/applicant the September salary (in arrears) by the end of December, 2024 and shall continue to pay the petitioner his monthly salary as and when it falls due.
10. On the issue of access to the cloudbed.com platform, all users were required to provide new e-mail addresses for reactivation owing to a possible security threat on the system earlier in October, which necessitated the deactivation of all user accounts including that of the petitioner.
11. However, the petitioner refused to share a new e-mail address and the respondents had to send a prompt to the petitioner’s old e-mail address requiring him to set new passwords to enable the respondents activate the petitioner’s user account on the 2nd respondent’s cloudbeds.com platform.
12. He deposes further that in order to mitigate further potential security risks on the social media platforms, access to the platform is however conditional upon the petitioner indemnifying the respondents against any liability that the respondents may incur due to posts made by the petitioner against third parties while using the petitioner’s account on the 2nd respondent’s cloudbed.com platform.
13. He deposes further that the respondents are not largely opposed to the application and the prayers sought, provided the conditions outlined herein are met.
14. The 1st respondent’s prayer is that given the implications of the said orders, the court ought not to grant the orders sought unconditionally, as this would be unjust to the respondents.
15. The application was disposed of by way of written submissions filed by learned counsels for both parties which I have duly considered in the analysis and determination following.
16. I have considered the application, the grounds in support thereof and the supporting affidavit as well as the reply thereto and the submissions by learned counsels for the parties.
17. The application herein is brought under section 7 of the Arbitration Act (Cap. 49) Laws of Kenya which provides that:
1) It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High Court to grant that measure.
2) Where a party applies to the High Court for an injunction or other interim order and the arbitral tribunal has already ruled on any matter relevant to the application, the High Court shall treat the ruling or any finding of fact made in the course of the ruling as conclusive for the purposes of the application.
18. In the present application, the 1st respondent, against whom the interim measures are sought deposes that he is principally not opposed to the same being granted provided that the same are conditional. As I see it, this condition applies only to the second prayer for access to Cloud.com online platform and not on the issue of payment of salaries.
19. The nature and purpose of interim measures is captured by the Court of Appeal in the case cited by learned counsel for both parties of Safaricom Limited v Ocean View Beach Hotel Limited & 2 others [2010] KECA 346 (KLR) as follows;
“Interim measures of protection in arbitration take different forms and it would be unwise to regard the categories of interim measures as being in any sense closed (say restricted to injunctions for example) and what is suitable must turn or depend on the facts of each case before the Court or the tribunal – such interim measures include, measures relating to preservation of evidence, measures aimed at preserving the status quo measures intended to provide security for costs and injunctions. Under our system of the law on arbitration the essentials which the Court must take into account before issuing the interim measures of protection are: -
a. The existence of an arbitration agreement.
b. Whether the subject matter of arbitration is under threat.
c. In the special circumstances which is the appropriate measure of protection after an assessment of the merits of the Application?
d. For what period must the measure be given especially if requested for before the commencement of the arbitration so as to avoid encroaching on the tribunal’s decision-making power as intended by the parties?"
20. In this case, there is an arbitration agreement and the parties have agreed to refer the matter to arbitration. Learned counsel for the respondent submits that the parties are in the process of referring the dispute to arbitration meaning that as at the time of filing these submissions dated 8/4/2025, the process was still ongoing. The depositions by the petitioner in support of this application as to the operations of the company, which are not contested by the respondents satisfy me that the subject matter is under threat. The same therefore deserves interim protection.
21. The test for grant of interim measures pending the decision of an arbitral tribunal is as stated in the case of Channel Tunnel Group vs Balfour Beatly Ltd. [1993] 1 All E. R. 664, where the House of Lords applying section 12(6) of the Arbitration Act 1950, which is similar to our section 7 of the Arbitration Act, which gives the power to grant an interim measure of relief pending referral or determination of the dispute to arbitration held that a court is enjoined to consider,
“on the one hand the need for the court to make a tentative assessment of the merits in order to decide whether the plaintiff’s claim is strong enough to merit protection, and on the other the duty to respect the choice of Tribunal”.
22. Suffice it to say that the petitioner/applicant did not contest the conditions suggested by the 1st respondent with respect to the petitioner’s access to Cloudbeds.com. as he did file a supplementary affidavit. The 1st respondent on his part did not raise any objection to the petitioner’s prayer for unrestricted access to the 2nd respondent’s other communication channels and media such as e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms.
23. Therefore, in granting interim measures to the petitioner, the court will have to balance the interests of the petitioner and those of the company as indicated by the 1st respondent but at the same time ensuring that the orders do not encroach on the intended arbitrators’ powers to determine the dispute.
24. In the upshot and taking into account all these issues, I find that granting interim measures of protection in terms of the prayers sought in the application dated the 25/10/2024 with conditions as proposed by the 1st respondent is justiciable in the circumstances of this case.
25. Consequently, this court finds the application to have merit and grants the following orders: That pending the hearing and determination of the arbitration proceedings:
a. The respondents shall pay to the petitioner his monthly salary as and when they fall due as negotiated, agreed upon and made in the resolution of the 2nd respondent in the past, now or at a future date.
b. The petitioner shall be provided access to the 2nd respondent’s online platform cloudbed.com or couldbeds.com or cloudbet.com whichever is the correct name (as I have seen all these names in the documents filed in court) on the same terms and conditions as apply to the 1st respondent and unrestricted access to the 2nd respondents communication media including but not limited to e-mails, CCTV, Instagram, tik tok and other social media accounts and platforms operated in the name of the 2nd respondent whether existing or to be opened in future.
26. The costs shall abide by the outcome of the arbitration proceedings.
27. Orders accordingly.
Delivered, dated and signed at Kwale on the Virtual Platform, Teams this 9th day of May 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Mapesa for the petitioner/applicant.
Kubai for the respondents
Johnson: Court Assistant.
ANDAYI W. F.
JUDGE