Republic of Kenya - in the Chief Magistrate`s Court at Malindi - Civil Case No. 406 of 2013

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In view of the foregoing, it is my humble view that the argument that the defendant has already taken a step in the proceedings and is therefore deemed to have waived his right to Arbitration does not hold water given the amendment. Consequently, the authority relied upon by the Plaintiff and indeed most leading authorities on section 6 of the Arbitration Act cease to apply as the decisions were made prior to the amendment. Taking a step as such, is no longer a hindrance to an application for reference to Arbitration under section 6(1) of the Arbitration Act.

The issue was canvassed in the recent case of Africa Spirits Limited-v-Prevab Enterprises Limited[2014]eKLR wherein the defendant entered appearance and at the same time filed a statement of defence and an application to refer the matter to arbitration under section 6 of the arbitration Act. The court held that in view of the amendment to the provision in the Arbitration Act, the filing of a statement of defence could not invalidate the motion for stay. The court further observed that had the defendant filed the defence before the application for stay, then in that case, he would have been deemed to have waived his right to arbitration but since the defence and application were filed simultaneously, the application for stay was not vitiated.

In the instant case, the defendant is yet to file its statement of defence. Section 6 (1) of the arbitration Act provides that the application for stay of proceedings ought to be filed not later than the time when a party enters appearance or otherwise acknowledges the claim against which the stay of proceedings is sought. In my considered view, such an application is to be made at the time of entering an appearance or before the defendant acknowledges the claim. In the case of Niasons (K) LTD-v-China Road and Bridge Corporation Kenya[2001]KLR 12, Bosire JA, with whom O`Kubasu JA concurred held that the application for stay of proceedings under section 6 of the Arbitration Act ought to be made promptly.

The defendant herein entered appearance on 9.12.13 but filed the application on 19.12.13. That was after a period of about 10 days from the date of entering appearance. In my considered view, the application was made promptly and within the confines of section 6 (1) of the Arbitration Act.

It was submitted on behalf of the plaintiff that an application under section 6 (1) of the arbitration Act is a stand alone application and that a party cannot apply for stay of proceedings and in the same breath either substantively or in the alternative apply for striking out of the plaint. It was further submitted that section 6 of the arbitration Act does not donate power to the court to strike out pleadings. I agree with the latter submission that the court cannot strike out pleadings pursuant to section 6 of the arbitration Act.

The said provision does not expressly bar a party from making any other prayer in an application for stay of proceedings. In my considered view, it is for the court to decide which prayers to grant but of course that has to be done within the confines of the law. If the law does not provide for a certain prayer, the court will simply dismiss or disregard it.

The prayer for striking out the plaint is made in the alternative. The question is, does that invalidate the application? I do not think so. My view is fortified by the provisions of Article 159(2) of the Constitution of Kenya which provides as follows:

“In exercising judicial authority, the courts and tribunals shall be guided by the following principles-

(c) alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted, subject to clause (3 );

(d)justice shall be administered without undue regard to procedural technicalities.”

The Constitution enjoins the courts to promote alternative dispute resolution mechanisms. The parties vide the lease agreement expressed their willingness to resort to arbitration in case of a dispute arising from the lease agreement. Denying them that opportunity for no compelling reason would be impeding upon their freedom to contract. The Plaintiff does not state that it is opposed to arbitration. Its main argument is that the defendant has by its conduct waived its right to arbitration. For the reasons already given herein above, it is my finding that the defendant is yet to waive its right to arbitration. The fact that there is a prayer to strike out the plaint in the alternative is a procedural technicality which, in my humble view, cannot and should not invalidate the application.

Having made the above analysis, I find that the application dated 19.12.13 has merit. The same is allowed in terms of prayer 1 thereof. Consequently, this court hereby stays the proceedings herein pending reference of the dispute to Arbitration. The parties to refer the dispute to arbitration in terms of the lease agreement and the Arbitration Act. The alternative prayer is dismissed. The merits and demerits of the dispute shall be canvassed in the arbitration proceedings. Costs of the application shall be in the cause. It is so ordered.

Right of appeal 30 days.

Dated at Malindi this 7th day of May 2014.

Y .A. SHIKANDA

Ag. SENIOR RESIDENT MAGISTRATE

Delivered in open court in the presence of:-

Mr Nyakoe for plaintiff/respondent

Ms Mwangi holding brief for Matata for defendant/applicant

Onyancha-c/assistant.

Y .A. SHIKANDA

Ag. SENIOR RESIDENT MAGISTRATE