Background
1. The present application arises from ongoing arbitral proceedings between the Applicant, Lavington Shopping Complex Limited, and the Respondent, Axis Real Estate Limited, currently before Hon. Arbitrator C.J. Mwaura. The dispute stems from a Commercial Property Management Agreement dated 16th April 2012, under which CB Richard Ellis Limited (the predecessor to the Respondent) was contracted to manage the Applicant’s property, Lavington Green Mall.
2. The agreement was initially set for a three-year term but contained a clause allowing for automatic annual renewal unless terminated by either party with prior written notice. The Applicant issued a notice of termination dated 15th December 2017, effectively ending the Respondent’s management role as of 31st December 2017. Following the termination, a dispute arose regarding unpaid management fees and other related claims, leading to the commencement of arbitration proceedings.
3. The Respondent contends that the dispute was properly referred to arbitration by way of a notice issued on 9th October 2018, in accordance with Section 22 of the Arbitration Act. However, the Applicant disputes this assertion, arguing that the Respondent had no valid claim, as it was not privy to the original contract, and that the claim was time-barred under Section 4(1)(a) of the Limitation of Actions Act. The Applicant further asserts that the arbitration proceedings could not be lawfully initiated by the Respondent and that the Arbitrator lacked jurisdiction to entertain the matter.
4. The Applicant initially raised a Preliminary Objection before the Arbitrator on 31st July 2024, seeking to have the arbitration claim dismissed for being time-barred. The Arbitrator, in a ruling delivered on 27th September 2024, dismissed the objection, holding that the arbitral proceedings commenced within the six-year limitation period as per Sections 22 and 34(3) of the Limitation of Actions Act. Dissatisfied with this ruling, the Applicant has now moved to this Court under Section 17 of the Arbitration Act and Rule 3 of the Arbitration Rules, 1997, seeking to set aside the Arbitrator’s ruling and to have the arbitration proceedings declared time-barred.
5. The Applicant initially raised a Preliminary Objection before the Arbitrator on 31st July 2024, seeking to have the arbitration claim dismissed for being time-barred. The Arbitrator, in a ruling delivered on 27th September 2024, dismissed the objection, holding that the arbitral proceedings commenced within the six-year limitation period as per Sections 22 and 34(3) of the Limitation of Actions Act. Dissatisfied with this ruling, the Applicant has now moved to the High Court under Section 17 of the Arbitration Act and Rule 3 of the Arbitration Rules, 1997, seeking to set aside the Arbitrator’s ruling and to have the arbitration proceedings declared time-barred.
6. The Applicant argues that the Arbitrator erred in his interpretation of the limitation period and in finding that the arbitration was properly commenced. The Applicant further contends that the Respondent, having not been a party to the original contract, lacked the legal standing to initiate the arbitration. Additionally, the Applicant faults the Arbitrator for allegedly disregarding material facts and legal principles, leading to an erroneous finding on jurisdiction.
7. This application, therefore, seeks the intervention of this Honourable Court to stay the ongoing arbitration proceedings and to determine whether the claim before the Arbitrator is indeed statute-barred. The Applicant prays for orders declaring the arbitration proceedings void, setting aside the Arbitrator’s ruling, and awarding costs in its favor.
8. The Respondent opposed the application, arguing that the arbitration proceedings were properly commenced within the limitation period and that the Arbitrator’s ruling was sound in law. The Respondent asserts that the application before this Court is procedurally defective, lacking merit, and should be dismissed.
9. The matter was canvassed by way of written submissions. Applicant filed its submissions dated 11th December 2024, whilst the Respondent’s submissions are dated 18th November 2024.
Applicant’s Submissions
10. The Applicant’s submissions in support of the Notice of Motion dated 24th October 2024 were premised on the argument that the arbitral proceedings initiated by the Respondent were time-barred under Section 4(1)(a) of the Limitation of Actions Act. The Applicant contended that the contract in question, which was entered into on 16th April 2012, had a fixed term of three years and expired on 16th April 2015. The Applicant further asserted that there was no valid renewal or extension of the contract beyond this period, and as such, any claim arising from it ought to have been instituted within six years from the date of expiry, in accordance with the Limitation of Actions Act. Consequently, the Applicant argued that the arbitration claim, which was filed in 2024, was statutorily barred and ought to be dismissed.
11. In support of this argument, the Applicant relied on established judicial authority, including Gathoni v Kenya Co-operative Creameries Ltd (1982) KLR 104, where the court emphasized that the law of limitation was designed to protect defendants against unreasonable delays in the institution of suits. The Applicant further relied on the decision in Deposit Protection Fund Board in Liquidation of Euro Bank Limited (In Liquidation) v Rosaline Njeri Macharia & Another [2016] eKLR, in which the court held that a suit instituted outside the limitation period was irredeemably time-barred and could not be sustained.
12. Beyond the issue of limitation, the Applicant also contended that the Respondent lacked the legal standing to institute the arbitration proceedings, as it was not a party to the original contract. It was submitted that the contract had been entered into between the Applicant and CB Richard Ellis Limited. The Respondent, Axis Real Estate Limited, had purportedly changed its name from CB Richard Ellis Limited, but the Applicant insisted that no formal notification of this change had ever been given. The Applicant relied on the doctrine of privity of contract, citing Agricultural Finance Corporation v Lendetia Ltd, where the court held that a contract could not confer rights or impose obligations on a third party. Similarly, reliance was placed on Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & Another (2015) eKLR, where the Court of Appeal reaffirmed that only a party to a contract could sue or be sued under it. The Applicant thus maintained that the Respondent’s claim was not only time-barred but also incompetent for lack of contractual standing.
13. The Applicant further submitted that, in light of the limitation period having expired and the Respondent’s lack of legal standing, the Arbitrator lacked jurisdiction to hear the dispute. The principle that jurisdiction is a fundamental issue was underscored by the Court of Appeal in Owners of the Motor Vessel "Lilian S" v Caltex Oil (K) Ltd [1989] KLR, where it was held that "jurisdiction is everything, and a court (or tribunal) must down its tools the moment it finds it has no jurisdiction." The Applicant maintained that the arbitration proceedings were void ab initio since the contract in question had expired in April 2015, and any claims arising from it were statutorily time-barred under Section 4(1)(a) of the Limitation of Actions Act. Furthermore, the Applicant contended that the Respondent lacked locus standi to institute the arbitration, as it was not the original contracting party, CB Richard Ellis Limited, and no evidence had been presented to show a valid novation or assignment of rights from CB Richard Ellis Limited to Axis Real Estate Limited.
14. On the question of whether the arbitral proceedings should be stayed and the Arbitrator’s ruling of 27th September 2024 set aside, the Applicant reiterated that allowing the arbitration to proceed would be a violation of well-established legal principles governing limitation periods and contractual privity. The Applicant relied on MAC Hotels Limited v Rider Levett Bucknall UK Limited [2020] eKLR, where the High Court emphasized that once a limitation defence is pleaded, the burden shifts to the claimant to demonstrate that the cause of action falls within the statutory limitation period. The Applicant argued that the Respondent had failed to discharge this burden, as it had not provided any evidence, such as a valid contract between it and the Applicant, to establish its legal standing in the matter.
15. The Applicant therefore prayed that the instant application be allowed, and the Preliminary Objection dated 31st July 2024 be upheld. The Applicant further sought a declaration that the arbitration claim was time-barred under Section 4(1)(a) of the Limitation of Actions Act and that the Arbitrator lacked jurisdiction to entertain the matter. Consequently, the Applicant urged the Court to grant an order staying the arbitral proceedings and setting aside the Arbitrator’s ruling of 27th September 2024, with costs awarded to the Applicant.
Respondent's Submissions
16. The Respondent opposed the Applicant’s Notice of Motion dated 24th October 2024, arguing that the application was both procedurally defective and substantively unmerited. The Respondent maintained that the arbitral proceedings were validly commenced within the limitation period and that the Applicant’s arguments on limitation and jurisdiction were based on a misinterpretation of the applicable legal provisions.
17. At the outset, the Respondent challenged the competence of the Applicant’s application, particularly the affidavit in support, which was sworn by the Applicant’s counsel. It was submitted that the affidavit contained disputed facts, which an advocate had no capacity to depose to, thus rendering it defective. The Respondent relied on International Community of Women Living with HIV Trustees v NGO Coordination Board & 2 Others [2019] eKLR, where the court held that an advocate should not swear an affidavit on contested matters, as doing so would improperly place them in the position of a witness. Similarly, the Respondent cited Mi-Tech Limited v Catherine Wambui Felistus [2021] eKLR, which reiterated that an advocate’s role was to argue legal issues rather than testify on factual matters. On this basis, the Respondent urged the Court to strike out the supporting affidavit and, by extension, the entire application.
18. Beyond the procedural defects, the Respondent also contended that the application contravened Rule 3 of the Arbitration Rules, 1997, which mandates that an application under Section 17 of the Arbitration Act must be made by way of an originating summons. The Respondent cited the Court of Appeal decision in Scope Telematics International Sales Limited v Stoic Company Limited & Another [2017] eKLR, where failure to follow the prescribed procedure for invoking the court’s jurisdiction under the Arbitration Act was deemed fatal. Additionally, reliance was placed on Lavington Shopping Complex Ltd v Axis Real Estate Ltd & Another (Misc. Application E642 of 2021) [2022] KEHC, where the High Court struck out an application for failure to comply with Rule 3 of the Arbitration Rules. The Respondent thus submitted that the Applicant’s failure to file an originating summons rendered the application incurably defective and liable to be struck out.
19. On the substantive issue of limitation, the Respondent submitted that the Applicant had selectively relied on Section 4(1)(a) of the Limitation of Actions Act while deliberately ignoring Section 34(3) of the same Act, as well as Section 22 of the Arbitration Act. It was the Respondent’s position that, under these provisions, arbitral proceedings are deemed to commence on the date when a notice of arbitration is served on the opposing party. In this case, the Respondent asserted that it had served a notice of dispute on the Applicant on 9th October 2018, thereby validly initiating arbitration within the limitation period. In support of this argument, the Respondent relied on Sonile Holdings Limited v Vinayak Builders Limited; Simon Saili Malonza (Interested Party) [2020] eKLR, where the court held that arbitration proceedings commence upon service of a notice of dispute, in accordance with Section 22 of the Arbitration Act. Similarly, in West Mount Investments Limited v Tridev Builders Company Limited, the court affirmed that time stops running when a party serves notice of arbitration.
20. The Respondent further argued that the Applicant’s contention that the contract expired in April 2015 was misleading. Clause 6 of the contract provided for automatic renewal unless terminated by either party through written notice. The Respondent asserted that the contract continued beyond its initial three-year term and was only formally terminated by the Applicant through a letter dated 15th December 2017, which took effect on 31st December 2017. As such, the cause of action accrued on 31st December 2017, and since the notice of arbitration was served on 9th October 2018, the claim fell well within the six-year limitation period, which would have lapsed on 31st December 2023.
21. In addressing the issue of jurisdiction, the Respondent maintained that the Arbitrator had properly ruled on the matter under the Kompetenz-Kompetenz doctrine, which is enshrined in Section 17 of the Arbitration Act. It was submitted that, under this principle, an arbitral tribunal has the power to determine its own jurisdiction, including objections relating to limitation. The Respondent relied on Bellevue Development Company Limited v Vinayak Builders Limited & Another [2014] eKLR, where the court held that an arbitral tribunal has exclusive authority to determine whether a dispute is time-barred.
22. In conclusion, the Respondent urged the Court to dismiss the Applicant’s application, holding that the arbitration proceedings had been properly commenced within the limitation period and that the Arbitrator had correctly assumed jurisdiction over the matter. The Respondent further prayed that the costs of the application be awarded against the Applicant, arguing that the application was a deliberate attempt to frustrate the resolution of the dispute through arbitration.
Analysis And Determination
23. I have carefully considered the Applicant’s Notice of Motion dated 24th October 2024, the Respondent’s Replying Affidavit, the parties’ submissions, and the authorities cited. The primary issues for determination are:
i. Whether the arbitration claim before the Arbitral Tribunal is time-barred under Section 4(1)(a) of the Limitation of Actions Act.
ii. Whether the Respondent had the legal standing to initiate arbitration proceedings.
iii. Whether the Arbitrator’s ruling of 27th September 2024 should be set aside for lack of jurisdiction.
iv. Whether the Applicant’s application is procedurally defective.
Whether the Arbitration Claim is Time-Barred
24. The Applicant’s central contention is that the claim before the Arbitrator is statute-barred, as the Commercial Property Management Agreement, entered into on 16th April 2012, expired on 16th April 2015. It was argued that, pursuant to Section 4(1)(a) of the Limitation of Actions Act, any claim arising from the contract ought to have been brought within six years from the date of expiry. Since the arbitration was initiated in 2024, the Applicant contends that the claim is irredeemably time-barred.
25. The Respondent, on the other hand, argues that the arbitration proceedings were properly commenced within time. It relies on Section 34(3) of the Limitation of Actions Act and Section 22 of the Arbitration Act, which stipulate that arbitral proceedings are deemed to commence when a party serves a notice of arbitration on the other party. The Respondent asserts that it served such a notice on 9th October 2018, well within the limitation period, as the contract was only formally terminated on 31st December 2017.
26. The law on limitation is clear. Section 4(1)(a) of the Limitation of Actions Act states that:
“The following actions may not be brought after the end of six years from the date on which the cause of action accrued— (a) actions founded on contract.”
27. The key question here is when the cause of action accrued. The Applicant argues that the contract expired in 2015, while the Respondent contends that the termination occurred in December 2017, meaning the limitation period runs from that date. Clause 6 of the contract provided for automatic renewal unless terminated by written notice. Since termination was only communicated on 15th December 2017 and took effect on 31st December 2017, I find that the cause of action accrued on the latter date.
28. Given that the Respondent issued a notice of arbitration on 9th October 2018, the proceedings were commenced within the limitation period, which would have expired on 31st December 2023. This is in line with the Court’s finding in Sonile Holdings Limited v Vinayak Builders Limited; Simon Saili Malonza (Interested Party) [2020] eKLR, where it was held that arbitration proceedings commence when a notice of arbitration is served. Similarly, in West Mount Investments Limited v Tridev Builders Company Limited, the court reaffirmed that time stops running once a party serves a notice of arbitration.
29. Furthermore, the principles enshrined in Article 3(2) of the UNCITRAL Arbitration Rules (2021) reinforce this position, stating:
"Arbitral proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the respondent."
30. The consistent position taken by courts is that arbitration proceedings commence upon service of the notice of arbitration, not upon the filing of the Statement of Claim or the appointment of an arbitrator.
31. Having found that the contract termination took effect on 31st December 2017, and that the notice of arbitration was served on 9th October 2018, I hold that the arbitration claim was filed within the statutory limitation period. Consequently, I find that the claim was not time-barred, and the Applicant’s assertion that the arbitration proceedings were statutorily barred under Section 4(1)(a) of the Limitation of Actions Act is without merit.
Whether the Respondent Had Legal Standing to Initiate Arbitration.
32. The Applicant contended that the Respondent, Axis Real Estate Limited, lacked the legal standing to initiate the arbitral proceedings, as it was not a party to the original contract dated 16th April 2012. The contract had been entered into between the Applicant and CB Richard Ellis Limited, and the Applicant argued that no formal notification of a name change had ever been given. The Applicant thus asserted that the Respondent could not lawfully enforce or rely on the contract as a basis for arbitration.
33. The Respondent, however, maintained that it was formerly CB Richard Ellis Limited and had undergone a change of name to Axis Real Estate Limited. The Respondent submitted that this name change did not affect the continuity of its rights and obligations under the contract, nor did it render it a stranger to the dispute. The Respondent further argued that the Applicant had continued to engage with it in the same capacity even after the name change and had, in previous arbitral proceedings, sought to enforce contractual obligations against it.
34. In Macfoy v United Africa Co. Ltd [1961] 3 All ER 1169, Lord Denning made a crucial distinction between acts that are void and those that are voidable, stating:
“…… If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”
35. The implication of this decision is that a mere change of name does not create a new legal entity or extinguish the obligations that a company previously undertook. The Respondent, therefore, retained the same legal personality and could enforce rights and obligations arising from contracts entered into prior to the name change.
36. The High Court in Posco International Corporation v Punjab National Bank (K) Ltd [2023] eKLR, dealing with a similar question, held that once a company has provided prima facie evidence of a name change, the burden shifts to the opposing party to disprove the same. The Court stated:
‘’ The plaintiff in this case had the initial burden to produce prima facie evidence of the name change. The Notification of Company Name Change on the face of it reflects the name change by the plaintiff. Having discharged its evidential burden of proof and laid a probable basis for the change of name, the evidential burden moved to the defendant to disprove the evidence or attack the veracity of the evidence produced by the plaintiff by way of further evidence.’’
37. In the present case, the Respondent produced documentary evidence to show that it formerly operated as CB Richard Ellis Limited. The Applicant, however, failed to adduce any evidence challenging the validity of this name change. The Respondent also pointed out that the Applicant had previously engaged with it in the same capacity even after the name change.
38. Given the foregoing, this Court finds that the Respondent had locus standi to initiate the arbitration proceedings. The change of name from CB Richard Ellis Limited to Axis Real Estate Limited did not affect its ability to enforce or be bound by contracts entered into prior to the name change. The Applicant's argument that the Respondent lacked standing is therefore without merit and is dismissed.
Whether the Arbitrator’s Ruling Should Be Set Aside for Lack of Jurisdiction
39. The Applicant sought to set aside the Arbitrator’s ruling on the basis that he lacked jurisdiction to hear the matter. It relied on the principle established in Owners of the Motor Vessel “Lilian S” v Caltex Oil (K) Ltd [1989] KLR, which held that jurisdiction is fundamental and that a tribunal must down its tools if it finds that it lacks jurisdiction.
40. The Respondent, however, maintained that the Arbitrator correctly assumed jurisdiction under the Kompetenz-Kompetenz doctrine, which is enshrined in Section 17 of the Arbitration Act. This principle allows an arbitral tribunal to determine its own jurisdiction, including objections related to limitation. The Respondent cited Bellevue Development Company Limited v Vinayak Builders Limited & Another [2014] eKLR, where the court held that an arbitral tribunal has the authority to determine whether a dispute is time-barred.
41. I find that the Arbitrator correctly assumed jurisdiction over the dispute. The question of limitation was properly determined by the Arbitrator in his ruling of 27th September 2024, and the Applicant has not demonstrated any fundamental error that would warrant this Court’s intervention. As held in Anne Mumbi Hinga v Victoria Njoki Gathara [2009] eKLR, courts must be slow to interfere with arbitral awards unless clear grounds under the Arbitration Act are met. The court held that:
“A careful look at all the provisions cited in the heading in the application and invoked by the appellant in the superior court clearly shows that, all the provisions including the Civil Procedure Act and rules do not apply to arbitral proceedings because Section 10 of the Arbitration Act makes the Arbitration Act a complete code and rule 11 of the Arbitration Rules cannot override Section 10 of the Arbitration Act which states:
“Except as provided in this Act, no court shall intervene in matters governed by this Act.”
. …The provisions of the Arbitration Act make it clear that it is a complete code except as regards the enforcement of the award/decree where the Arbitration Rules 1997 apply, the Civil Procedure Rules, where appropriate.”
42. The Applicant has failed to show that the Arbitrator’s decision was manifestly erroneous or that he exceeded his jurisdiction. Consequently, there is no basis for setting aside the ruling.
Whether the Applicant’s Application is Procedurally Defective
43. The Respondent raised a fundamental procedural objection to the Applicant’s application, arguing that it failed to comply with Rule 3 of the Arbitration Rules, 1997, which mandates that applications under Section 17 of the Arbitration Act must be brought by originating summons. The Respondent contended that the Applicant had instead filed the application herein as a miscellaneous application, thereby failing to properly invoke the jurisdiction of the Court.
44. The Court of Appeal in Scope Telematics International Sales Limited v Stoic Company Limited & Another [2017] eKLR was categorical that failure to adhere to prescribed procedural requirements under the Arbitration Rules is fatal. The Court emphasized:
“The manner of initiating a suit cannot be termed as a mere case of technicality. It is the basis of jurisdiction. Obviously, in overlooking a statutory imperative, the learned Judge cannot be said to have exercised his discretion properly. There can be no other interpretation of Rule 2. The application should have been anchored on a suit. It was not about what prejudice the appellant or the 2nd respondent would suffer or what purpose the suit would have served. Discretion cannot be used to override a mandatory statutory provision.”
45. Similarly, in Lavington Shopping Complex Ltd v Axis Real Estate Ltd & Another (Misc. Application E642 of 2021) [2022] KEHC, the High Court relying on the Court of Appeal decision in Scope Telematics International Sales Limited (supra), struck out an application for failure to comply with Rule 3 of the Arbitration Rules, reiterating that the procedure outlined in the Arbitration Rules must be followed strictly, as it forms the foundation for the Court’s jurisdiction in arbitration-related matters.
46. The procedural framework for arbitration applications is not a mere technicality but a jurisdictional requirement. Failure to comply with it is not curable under Article 159(2)(d) of the Constitution, which provides that justice shall be administered without undue regard to procedural technicalities. The courts have repeatedly held that Article 159 cannot be used as a panacea for procedural lapses that go to the jurisdiction of the Court.
47. Given the foregoing, the Court finds that the Applicant’s failure to file the application by originating summons, as required under Rule 3 of the Arbitration Rules, 1997, is fatal. This procedural defect is not a mere irregularity but goes to the root of the Court’s jurisdiction to entertain the application. Accordingly, the Applicant’s application is incompetent and is liable to be struck out on this ground alone.
Disposition
48. In light of the foregoing, I make the following findings:
i. The arbitration claim was not time-barred as the notice of arbitration was served within the statutory limitation period.
ii. The Respondent had the legal standing to initiate arbitration proceedings.
iii. The Arbitrator properly assumed jurisdiction under the Kompetenz-Kompetenz doctrine, and his ruling should not be interfered with.
iv. The Applicant’s application is procedurally defective for failure to comply with Rule 3 of the Arbitration Rules, 1997.
v. Consequently, the Applicant’s Notice of Motion dated 24th October 2024 is dismissed with costs to the Respondent.
49. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 27TH DAY OF MARCH 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant