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JudgmentMEGA WHOLESALERS LIMITED VS JUAL WHOLESALERS LIMITED AND S.C Johnson & Son Kenya limited11 min read

MEGA WHOLESALERS LIMITED VS JUAL WHOLESALERS LIMITED AND S.C Johnson & Son Kenya limited

High Court at Milimani High Court · · Moses Ado

Introduction

1. The 1st Defendant filed a Notice of Motion application dated 25th April 2025 pursuant to Sections 1A and 3A of the Civil Procedure Act, Order 51 of the Civil Procedure Rules.

2. The application seeks an order for stay of the arbitration proceedings initiated by the 2nd defendant against the 1st defendant before the International Court of Arbitration of the International Chamber of Commerce in ICC Case Reference 29153/CPB pending the hearing and determination of this suit.

3. The application is premised on the grounds on its face and is supported by the affidavit of Emmanuel Kewasis, sworn on 25th April 2025.

4. The background to the present application is largely uncontested. The 1st defendant entered into separate distributorship agreements in the year 2022 with both the plaintiff and the 2nd defendant. According to the 1st defendant, one of the agreements dated 30th July 2022 appointed the 2nd defendant as a distributor in specified western territories.

5. The 1st defendant averred that the distributorship agreement provided that the 2nd defendant would exclusively purchase products from the 1st defendant for resale within designated territories and that the relationship between the parties was purely contractual and did not create an agency, partnership, or joint venture. That the agreement further contained an arbitration clause under Clause 19.3 providing for reference of disputes to arbitration under the ICC Rules.

6. The plaintiff subsequently instituted this suit against the defendants, alleging breach of contractual obligations and seeking, inter alia, orders holding the defendants jointly and severally liable for sums allegedly due and owing.

7. The 2nd defendant entered appearance and filed a statement of defence. Thereafter, the 2nd defendant issued a notice to co-defendant seeking indemnity against the 1st defendant on the basis of alleged breaches of the distributorship agreement, including interference with territories, preferential treatment accorded to the plaintiff, misuse of customer data, and unlawful termination of the distributorship arrangement.

8. The 1st defendant contends that the issues raised in the notice to co-defendant are substantially identical to the claims subsequently raised by the 2nd defendant in arbitration proceedings commenced before the International Court of Arbitration of the International Chamber of Commerce in ICC Case Reference 29153/CPB. The 1st defendant avers that a sole arbitrator has since been appointed in the said arbitration.

9. It is the 1st defendant’s case that by filing a statement of defence and notice to co-defendant before this Court, the 2nd defendant submitted to the jurisdiction of this Court and thereby waived its right to arbitrate. The 1st defendant contends that permitting the arbitration proceedings to proceed concurrently with the present suit would expose it to duplicative proceedings and the risk of conflicting decisions.

10. The application is opposed. The 2nd defendant filed a replying affidavit sworn on 12th May 2025 by Kunal Shah, a Director of the 2nd defendant.

11. The 2nd defendant’s position is that this Court lacks jurisdiction to stay arbitration proceedings commenced pursuant to a valid arbitration agreement governed by the ICC Rules. The 2nd defendant maintains that Clause 19.3 of the distributorship agreement expressly provides for arbitration and that the parties remain bound by that agreement.

12. The 2nd defendant further contends that the present suit principally concerns a dispute between the plaintiff and the 1st defendant relating to a bank guarantee and payment for goods supplied. It denies any contractual relationship with the plaintiff and maintains that the arbitration concerns distinct disputes arising solely between the 1st and 2nd defendants under the distributorship agreement.

13. The 2nd defendant denies having waived its right to arbitrate and asserts that its statement of defence expressly reserved such right. It further contends that the notice to co-defendant was merely ancillary and contingent in nature and did not constitute submission to the jurisdiction of this Court over the substantive dispute.

14. The 2nd defendant further contends that once arbitration proceedings commenced under the ICC Rules, procedural matters concerning the arbitration ought properly to be addressed before the arbitral tribunal.

15. In a further affidavit sworn on 2nd September 2025, Emmanuel Kewasis reiterated for the 1st Defendant that this Court retains inherent jurisdiction under Sections 1A and 3A of the Civil Procedure Act to prevent abuse of process and multiplicity of proceedings.

16. The 1st defendant also deposed that it had separately instituted High Court Miscellaneous Application No. E421 of 2025 under Section 12(5) of the Arbitration Act, challenging the appointment of the arbitrator on the basis that it had been excluded from the appointment process.

17. The application was canvassed by way of written submissions. The 1st defendant’s submissions were filed by the firm of Jared Kangwana & Company Advocates LLP t/a Clyde & Company Keystone Park, while the firm of Iseme, Kamau & Maema Advocates filed the 2nd defendant’s submissions.

Analysis and Determination

18. The Court has duly considered the instant application, the grounds on its face, the affidavits filed in support thereof, the 2nd defendant’s replying affidavit, and the written submissions by Counsel for the parties. The issues that arise for determination are:

i. Whether this Court has the requisite jurisdiction to determine the application herein; and

ii. Whether an order for stay of the arbitration proceedings initiated at the International Court of Arbitration of the International Chamber of Commerce in ICC Case Reference 29153/CPB should issue.

Whether this Court has the requisite jurisdiction to determine the application

19. The 2nd defendant’s position is that this Court lacks jurisdiction to entertain the application herein.

20. It is settled law that a Court’s jurisdiction flows from either the Constitution or statute, and a Court cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. In the often-cited case of Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR 1, Nyarangi JA stated as follows:

“………Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.”

21. The 2nd defendant has challenged this Court’s jurisdiction to stay arbitral proceedings on the basis of Sections 6 and 10 of the Arbitration Act. Section 10 of the Arbitration Act expressly limits judicial intervention in arbitral matters and provides that:

“Except as provided in this Act, no court shall intervene in matters governed by this Act.

22. Section 6 of the Arbitration Act, on the other hand, empowers a Court to stay court proceedings and refer parties to arbitration, subject to the conditions set out therein. It provides as follows:

“(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.

23. A plain reading of Section 6 of the Arbitration Act demonstrates that the jurisdiction conferred upon the Court is limited to staying court proceedings pending referral of a dispute to arbitration. The provision does not expressly grant the Court power to stay arbitral proceedings already commenced.

24. The 2nd defendant contended that the statutory framework under the Arbitration Act deliberately circumscribes judicial intervention in arbitral proceedings and that any attempt by the Court to stay ongoing arbitration proceedings would offend both the letter and spirit of the Act.

25. The 1st defendant, on the other hand, asserted that this Court retains inherent jurisdiction under Sections 1A and 3A of the Civil Procedure Act to make such orders as may be necessary for the ends of justice or to prevent abuse of the Court process.

26. In determining this issue, the Court is guided by the decision of the Court of Appeal in Nyutu Agrovet Limited v Airtel Networks Kenya Limited [2015] KECA 1012 (KLR), where the Court stated:

“Certainly, I do not agree that the Civil Procedure Act applies to arbitral proceedings, even as the issue has not been fully ventilated before us. However, much as I am not yet ready to pronounce that the Arbitration Act is a complete code excluding any other law applicable in civil-like litigation, I do not see where the Civil Procedure Act applies in this matter. Rule 11 of the Arbitration Rules states:

“11. So far as is appropriate, the Civil Procedure Rules shall apply to all proceedings under these Rules.”

The subject is only as far as it is appropriate. Civil Procedure Rules shall apply to the Arbitration Rules – not the Act. In any event, a rule cannot override a substantive section of an Act – section 10.”

27. Similarly, the Supreme Court in Synergy Industrial Credit Limited v Cape Holdings Limited [2019] KESC 12 (KLR) observed as follows:

“We have no doubt in our minds that just like Article 5, Section 10 of our Arbitration Act is meant to ensure that the judicial process will only be resorted to where the Act so provides and only within the parameters provided.”

28. In Anne Mumbi Hinga v Victoria Njoki Gathara [2009] KECA 466 (KLR), the Court of Appeal emphasized that the Arbitration Act was enacted to limit court intervention in arbitral proceedings and to uphold the principles of party autonomy and finality in arbitration, save where the Act expressly permits intervention.

29. Further, the doctrine of kompetenz–kompetenz, codified under Section 17 of the Arbitration Act, recognizes that an arbitral tribunal has the primary mandate to determine its own jurisdiction. In Safaricom Limited v Ocean View Beach Hotel Limited & 2 others [2010] KECA 346 (KLR), the Court of Appeal stated:

“The section gives an arbitral tribunal the power to rule on its own jurisdiction and also to deal with the subject matter of the arbitration. It is not the function of a national court to rule on the jurisdiction of an arbitral tribunal except by way of appeal under section 17(6) of the Arbitration Act as the Commercial Court in this matter purported to do. In this regard, I find that the superior court did act contrary to the provisions of section 17 and in particular violated the principle known as “Competence/Competence” which means the power of an arbitral tribunal to decide or rule on its own jurisdiction.”

30. This Court is also cognizant of Article 159(2)(c) of the Constitution which obligates courts to promote alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms.

31. Inherent jurisdiction exists to enable the Court prevent abuse of its process and ensure that the ends of justice are met. However, inherent powers cannot be invoked in a manner that overrides or defeats an express statutory scheme. Where Parliament has deliberately circumscribed judicial intervention in arbitral proceedings through Section 10 of the Arbitration Act, the Court cannot employ Sections 1A and 3A of the Civil Procedure Act to confer upon itself jurisdiction that the statute intentionally withholds. To hold otherwise would undermine the policy of finality, efficiency and party autonomy that underpins arbitration law.

32. The fact that the arbitral tribunal may have issued a temporary procedural stay pending determination of the present application does not amount to recognition of supervisory jurisdiction beyond that conferred by the Arbitration Act. Such procedural accommodation by the tribunal cannot enlarge the jurisdiction of this Court where none exists in law.

33. In the circumstances, while this Court possesses general jurisdiction under the Constitution and inherent powers under Sections 1A and 3A of the Civil Procedure Act, such jurisdiction must be exercised in accordance with the provisions of Section 10 of the Arbitration Act, which imposes strict limits on judicial intervention in arbitral processes.

34. Consequently, in the absence of circumstances expressly contemplated under the Arbitration Act permitting intervention, this Court finds that it lacks jurisdiction to stay ongoing arbitration proceedings commenced pursuant to a valid arbitration agreement.

Whether an order for stay of the subject arbitration proceedings should issue

35. Having found that this Court lacks jurisdiction to stay ongoing arbitral proceedings, it would ordinarily be unnecessary to consider the parties’ arguments on waiver of the arbitration agreement. Nevertheless, since the issue was extensively canvassed before the Court, I will briefly address it.

36. The 1st defendant contended that the 2nd defendant waived its right to arbitrate by filing a statement of defence and a notice to co-defendant seeking indemnity founded on alleged breaches of the distributorship agreement.

37. The 2nd defendant maintained that its participation in these proceedings was expressly subject to and consistent with its right to arbitrate and that the indemnity claim was merely ancillary and contingent.

38. Without making any definitive pronouncement on the issue, this Court notes that the question whether a party has waived an arbitration agreement is itself a matter capable of determination by the arbitral tribunal in the first instance pursuant to Section 17 of the Arbitration Act and the doctrine of kompetenz–kompetenz.

39. In any event, even assuming that waiver had been established, as already been pointed out, the Arbitration Act does not confer upon this Court jurisdiction to stay arbitral proceedings already commenced. The remedy contemplated under Section 6 of the Arbitration Act is a stay of court proceedings pending arbitration and not the converse.

40. Ultimately, this Court is not persuaded that it possesses jurisdiction under the Arbitration Act to stay arbitral proceedings commenced pursuant to a valid arbitration agreement. To grant the orders sought would amount to judicial intervention beyond the limits prescribed under Section 10 of the Arbitration Act.

41. Consequently, the 1st defendant’s Notice of Motion dated 25th April 2025 lacks merit and is hereby dismissed with costs to the 2nd defendant.

42. It is so ordered.

DATED, SIGNED, AND DELIVERED AT NAIROBI
THIS 21ST DAY OF MAY 2026

HON. MR. JUSTICE MOSES ADO
Judge of the High Court

In the Presence of:
Moses C/A
Ms. Odiero………………for the 1st Deff/Applicant

Ms. Weru……………for the 2Def/Respondent
Ms. Kinyua……………for the Plaintiff