The defendant, through a notice of motion dated 11.3.26 sought that the proceedings herein be stayed pending determination of the alternative dispute resolution and/or arbitration. The application is grounded on the affidavit of Vivian Mmboka and grounds listed on the face of the motion. The gist of the application is that the plaintiff and the defendant entered into a contract dated 2.3.2021 and that the contract expressly incorporates the FIDIC conditions of contract for construction, Second Edition 2017, which provided a structured dispute resolution mechanism which typically includes:
i) Referral of dispute to the Engineer
ii) To dispute Avoidance/Adjudication Board (DAAB) and
iii) Final resolution through Arbitration
The application was opposed by the plaintiff through a replying affidavit by one Divyesh Ramesh Kotecha, a director of the plaintiff company, sworn on 2.4.26. The plaintiff, through its director deposed that though clause 21 of the contract established a dispute resolution mechanism, the parties failed to appoint or establish a dispute Avoidance/Adjudication Board (DAAB) within the period laid out in the contract. That the constitution of the Dispute Avoidance/Adjudication Board was required to be undertaken jointly by the parties within 28 days after the letter of acceptance pursuant to clause 21.1 of the contract. Unfortunately, none of the parties took any steps to constitute the DAAB.
The plaintiff therefore contends that the failure to constitute the DAAB meant that the dispute resolution mechanism was not activated in accordance with the contract. The plaintiff’s director further deposed that the defendant has never denied liability for the sums demanded and that the present claim arises solely from the delayed payment of certified sums and the contractual consequences thereof.
The defendant submitted that sub-clause 21.8 (No DAAB in place) of the FIDIC conditions of contract expressly provides that where a dispute Avoidance/Adjudication Board DAAB has not been constituted, the parties are at liberty to proceed to arbitration without reference to the DAAB process. The defendant’s case is that the effect of clause 21.8 of the contract is to dispense with the requirement of prior reference of disputes to DAAB and any notice of dissatisfaction, thereby preserving and enabling progression to the next dispute resolution stage. The defendant invoked the provisions of Article 159(2)(c) of the constitution which obligates courts to promote alternative forms of dispute resolution mechanism including reconciliation, arbitration amongst others. The defendant cited the case of Muthinja & Another v Henry & 1756 others (2015) KECA 304 (KLR).
The plaintiff in its submissions, while agreeing that the contract had dispute resolution provisions, contended that the defendant had failed to satisfy the statutory threshold under section 6 of the Arbitration Act.
The plaintiff submitted that the existence of the arbitration clause does not automatically oust the jurisdiction of the high court. The plaintiff cited the case of Nyutu Agrovet Ltd v Airtel Networks Kenya Ltd & Another (2019) eKLR to buttress the proposition that arbitration remains subject to judicial oversight. The plaintiff submitted that the defendant was seeking to revive a dispute resolution process that it ignored during performance of the contract. That the defendant has failed to demonstrate that the arbitration agreement remains operative and capable of being performed.
DETERMINATION
The brief background of this case is that the plaintiff instituted the suit against the defendant claiming a sum of Kshs. 42,542,823.04, being alleged interest on sums payable under a contract for works done for the defendant. There is no dispute that the contract expressly incorporates FIDIC conditions of contract for construction which provided alternative dispute resolution mechanisms. Clause 21 of the FIDIC conditions provides a structured dispute resolution mechanism, which include:
i) Referral of dispute to Engineer
ii) To dispute Avoidance/Adjudication Board (DAAB)
iii) Final resolution through Arbitration
Sub-clause 21.8 of the conditions provides that where a DAAB has not been constituted, the parties are at liberty to proceed to Arbitration without reference to the DAAB procedures.
The only issue for determination is whether the court can stop the proceedings pending resolution of this dispute before ADR.
It is trite law that parties are bound by their agreements, and it is not the business of the courts to rewrite the contracts or agreements. In Wrigley Company (East Africa) v Attorney General & 3 others (2013) eKLR the court held:
“Courts cannot rewrite what has already agreed upon by the parties as set out in the agreement. The parties had agreed that in case of a dispute arising as to the validity of the agreement, the same would be subject to arbitration and the court cannot rewrite the same.”
The law governing stay of proceedings pending arbitration is found in section 6(1) of the Arbitration Act which provides:
“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 the 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 matter to be referred to arbitration.’’
The court is required to determine whether the applicant has satisfied the conditions laid out in section 6 of the Arbitration Act. In particular, the court should consider whether the arbitration agreement is null and void, inoperative or incapable of being performed.
In Niazsons (K) Ltd v China Road & Bridge Corporation Kenya (2001) eKLR the court of appeal held as follows:
“The court will then be obliged to consider three basic aspects. First, whether the applicant has taken any steps allowed by the said section. Second, whether there are any legal impediments on the validity, operation or performance of the arbitration agreement. Third, whether the suit indeed concerns a matter agreed to be referred.”
In the present case, the defendant entered appearance and filed the instant application. There is no defence filed and in my view, there is no step in the proceedings that can be said to be inconsistent with the right to arbitrate.
On whether there exists a valid arbitration agreement, sub-clause 21.8 of the FIDIC conditions of contract for construction provides that where a DAAB has not been constituted, the parties are at liberty to proceed to Arbitration without reference to the DAAB process. There is no valid challenge to the legality or enforceability of the said clause. I am therefore satisfied that there exists a valid and enforceable arbitration agreement between the parties and there has been no demonstration that the clause is null and void, inoperative or incapable of being performed.
This court is enjoined to uphold party autonomy and give effect to arbitration agreements except in limited circumstances provided under section 6 of the Arbitration Act.
Consequently, I find merit in the application dated 11.3.26 and proceed to make the following orders:
i) These proceedings are hereby stayed pending arbitration in accordance with clause 21.8 of the FIDIC conditions of contract for construction
ii) The parties are hereby referred to arbitration in terms of the said agreement
iii) The costs of the application shall abide the outcome of the arbitration.
It is so ordered.
Ruling delivered virtually, dated and signed this 28 th July 2026.
D.O. ONYANGO
JUDGE
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i) Referral of dispute to the Engineer
ii) To dispute Avoidance/Adjudication Board (DAAB) and
iii) Final resolution through Arbitration
The application was opposed by the plaintiff through a replying affidavit by one Divyesh Ramesh Kotecha, a director of the plaintiff company, sworn on 2.4.26. The plaintiff, through its director deposed that though clause 21 of the contract established a dispute resolution mechanism, the parties failed to appoint or establish a dispute Avoidance/Adjudication Board (DAAB) within the period laid out in the contract. That the constitution of the Dispute Avoidance/Adjudication Board was required to be undertaken jointly by the parties within 28 days after the letter of acceptance pursuant to clause 21.1 of the contract. Unfortunately, none of the parties took any steps to constitute the DAAB.
The plaintiff therefore contends that the failure to constitute the DAAB meant that the dispute resolution mechanism was not activated in accordance with the contract. The plaintiff’s director further deposed that the defendant has never denied liability for the sums demanded and that the present claim arises solely from the delayed payment of certified sums and the contractual consequences thereof.
The defendant submitted that sub-clause 21.8 (No DAAB in place) of the FIDIC conditions of contract expressly provides that where a dispute Avoidance/Adjudication Board DAAB has not been constituted, the parties are at liberty to proceed to arbitration without reference to the DAAB process. The defendant’s case is that the effect of clause 21.8 of the contract is to dispense with the requirement of prior reference of disputes to DAAB and any notice of dissatisfaction, thereby preserving and enabling progression to the next dispute resolution stage. The defendant invoked the provisions of Article 159(2)(c) of the constitution which obligates courts to promote alternative forms of dispute resolution mechanism including reconciliation, arbitration amongst others. The defendant cited the case of Muthinja & Another v Henry & 1756 others (2015) KECA 304 (KLR).
The plaintiff in its submissions, while agreeing that the contract had dispute resolution provisions, contended that the defendant had failed to satisfy the statutory threshold under section 6 of the Arbitration Act.
The plaintiff submitted that the existence of the arbitration clause does not automatically oust the jurisdiction of the high court. The plaintiff cited the case of Nyutu Agrovet Ltd v Airtel Networks Kenya Ltd & Another (2019) eKLR to buttress the proposition that arbitration remains subject to judicial oversight. The plaintiff submitted that the defendant was seeking to revive a dispute resolution process that it ignored during performance of the contract. That the defendant has failed to demonstrate that the arbitration agreement remains operative and capable of being performed.
DETERMINATION
The brief background of this case is that the plaintiff instituted the suit against the defendant claiming a sum of Kshs. 42,542,823.04, being alleged interest on sums payable under a contract for works done for the defendant. There is no dispute that the contract expressly incorporates FIDIC conditions of contract for construction which provided alternative dispute resolution mechanisms. Clause 21 of the FIDIC conditions provides a structured dispute resolution mechanism, which include:
i) Referral of dispute to Engineer
ii) To dispute Avoidance/Adjudication Board (DAAB)
iii) Final resolution through Arbitration
Sub-clause 21.8 of the conditions provides that where a DAAB has not been constituted, the parties are at liberty to proceed to Arbitration without reference to the DAAB procedures.
The only issue for determination is whether the court can stop the proceedings pending resolution of this dispute before ADR.
It is trite law that parties are bound by their agreements, and it is not the business of the courts to rewrite the contracts or agreements. In Wrigley Company (East Africa) v Attorney General & 3 others (2013) eKLR the court held:
“Courts cannot rewrite what has already agreed upon by the parties as set out in the agreement. The parties had agreed that in case of a dispute arising as to the validity of the agreement, the same would be subject to arbitration and the court cannot rewrite the same.”
The law governing stay of proceedings pending arbitration is found in section 6(1) of the Arbitration Act which provides:
“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 the 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 matter to be referred to arbitration.’’
The court is required to determine whether the applicant has satisfied the conditions laid out in section 6 of the Arbitration Act. In particular, the court should consider whether the arbitration agreement is null and void, inoperative or incapable of being performed.
In Niazsons (K) Ltd v China Road & Bridge Corporation Kenya (2001) eKLR the court of appeal held as follows:
“The court will then be obliged to consider three basic aspects. First, whether the applicant has taken any steps allowed by the said section. Second, whether there are any legal impediments on the validity, operation or performance of the arbitration agreement. Third, whether the suit indeed concerns a matter agreed to be referred.”
In the present case, the defendant entered appearance and filed the instant application. There is no defence filed and in my view, there is no step in the proceedings that can be said to be inconsistent with the right to arbitrate.
On whether there exists a valid arbitration agreement, sub-clause 21.8 of the FIDIC conditions of contract for construction provides that where a DAAB has not been constituted, the parties are at liberty to proceed to Arbitration without reference to the DAAB process. There is no valid challenge to the legality or enforceability of the said clause. I am therefore satisfied that there exists a valid and enforceable arbitration agreement between the parties and there has been no demonstration that the clause is null and void, inoperative or incapable of being performed.
This court is enjoined to uphold party autonomy and give effect to arbitration agreements except in limited circumstances provided under section 6 of the Arbitration Act.
Consequently, I find merit in the application dated 11.3.26 and proceed to make the following orders:
i) These proceedings are hereby stayed pending arbitration in accordance with clause 21.8 of the FIDIC conditions of contract for construction
ii) The parties are hereby referred to arbitration in terms of the said agreement
iii) The costs of the application shall abide the outcome of the arbitration.
It is so ordered.
Ruling delivered virtually, dated and signed this 28 th July 2026.
D.O. ONYANGO
JUDGE
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