The Defendants in the application dated 16.11.2022 invokes section 6 of the Arbitration Act and seeks to stay the suit pending reference to arbitration under a Shareholders Agreement dated 24.03.2021 between the Plaintiffs and 1st Defendant.
There is pending an application dated 31.10.2022 for permission by the Plaintiff to commence a derivative suit against the Defendants under section 138 and 239 of the Companies Act, 2015. Since the court has not granted permission for the Plaintiffs to commence the suit, the Defendants’ application for stay is premature.
In the meantime, the Defendant is entitled to commence arbitration proceeding in light of arbitration clause in the Agreement which provides for a mode of appointing an arbitrator. I do not see the dispute as to the validity of the agreement as an impediment since the arbitrator under the Kompetenz Kompetenz Rule has the right to determine the validity of the said agreement.
The application dated 16.11.2022 is therefore struck out with costs to the Plaintiff.
The Plaintiff’s application dated 31.10.2022 shall be heard on 18.05.2023.
DATED and DELIVERED at NAIROBI this 13th day of APRIL 2023
D. S. MAJANJA
JUDGE