If it ain't broke, don't fix it!

When the man in the street says: "If it ain't broke, don't fix it," the lawyer writes:
"Insofar as manifestations of functional deficiencies are agreed by any and all concerned parties to be imperceivable, and are so stipulated, it is incumbent upon said heretofore mentioned parties to exercise the deferment of otherwise pertinent maintenance procedures."

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Inspiration beats methods and technique

"Method is much, technique is much, but inspiration is even more."

U.S. Justice Benjamin Cardozo

— Law and Literature

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A clause for giving an orange!

The professor of a contract law class asked one of his better students, "If you were to give someone an orange, how would you go about it?"
The student replied, "Here's an orange."
The professor was outraged. "No! No! Think like a lawyer!"

The student then replied, "Okay. I'd tell him `I hereby give and convey to you all and singular, my estate and interests, rights, claim, title, claim and advantages of and in, said orange, together with all its rind, juice, pulp, and seeds, and all rights and advantages with full power to bite, cut, freeze and otherwise eat, the same, or give the same away with and without the pulp, juice, rind and seeds, anything herein before or hereinafter or in any deed, or deeds, instruments of whatever nature or kind whatsoever to the contrary in anywise notwithstanding...'"

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Most good lawyers dies poor?

Most good lawyers live well, work hard, and die poor.
- Daniel Webster



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Time to network with potential clients!

An airliner was having engine trouble, and the pilot instructed the cabin crew to have the passengers take their seats and get prepared for an emergency landing.

A few minutes later, the pilot asked the flight attendants if everyone was buckled in and ready.

"All set back here, Captain," came the reply, "except one lawyer who is still going around passing out business cards."

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I hate tyranny, anywhere!

I have no desire to go in for tyranny or to play the part of King Charles. I hate tyranny in any field of human activity.

-Charles Edison

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To butcher is the roast, to lawyer is legal advice!

A dog ran into a butcher shop and grabbed a roast off the counter. Fortunately, the butcher recognized the dog as belonging to a neighbor of his. The neighbor happened to be a lawyer.

Incensed at the theft, the butcher called up his neighbor and said, "Hey, if your dog stole a roast from my butcher shop, would you be liable for the cost of the meat?" The lawyer replied, "Of course, how much was the roast?" "$7.98."

A few days later the butcher received a check in the mail for $7.98. Attached to it was an invoice that read: Legal Consultation Service: $150.

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What I am bound to do!

I am not bound to win, but I am bound to be true.
I am not bound to succeed, but I am bound to live up to what light I have.

- Abraham Lincoln

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When you have to justify the bill...

A client who felt his legal bill was too high asked his lawyer to itemize costs. The statement included this item:
"Was walking down the street and saw you on the other side. Walked to the corner to cross at the light, crossed the street and walked quickly to catch up with you. Got close and saw it wasn't you. --- Kshs 5,000.00."

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What gives lawyers advice worth

A lawyer's opinion is worth nothing unless paid for.

- English proverb

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Where is my Rolex???!!!

A lawyer opened the door of his BMW, when suddenly a car came along and hit the door, ripping it off completely. When the police arrived at the scene, the lawyer was complaining bitterly about the damage to his precious BMW.

"Officer, look what they've done to my Beeeemer!!!", he whined.

"You lawyers are so materialistic, you make me sick!!!" retorted the officer, "You're so worried about your stupid BMW, that you didn't even notice that your left arm was ripped off!!!"

"Oh my gaaad....", replied the lawyer, finally noticing the bloody left shoulder where his arm once was, "Where's my Rolex???!!!!!"

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Pamela Akora Imenje v Akora ITC International Ltd & Another

Reported by: PAUL N. MUSYIMI

CASE DETAILS

COURT: High Court, at Milimani

CASE NO: Civil Suit No. 368 of 2005

JUDGE: Waweru J

DATE: 17^th August, 2007

 

CASE OUTLINES

Arbitration-application for stay of proceedings-Section 6(1) of the Arbitration Act, 1995-plaintiff filing suit in breach of articles of association-articles providing for mandatory settlement of disputes by arbitration- whether the Plaintiff can apply under section 6(1) for stay of proceedings and reference to arbitration

 

Civil Practice and procedure-striking out suit-the Defendant urging striking out of suit in submissions against an application-whether striking out order may be granted without a formal application for it on the court record

 

CASE SUMMARY

The ruling reported dealt with the following two issues:

1. Whether the Plaintiff can apply for stay of proceedings under section 6(1) of the Arbitration Act, 1995;
2. Whether an order striking out the suit can be granted without a formal application in the court record.

Held:

The court held as follows on the foregoing issues:

1. From the wording of section 6(1) of the Arbitration Act, 1995, it is clear that it is available only to the defendants.
2. An order striking out the suit is too drastic in nature to be granted without a formal application on the record of the court.

CASE NOTES

The court was ruling on an application by plaintiff under section 6(1) of the Arbitration Act seeking stay of the proceedings and reference to arbitration dated 12^th October 2005.

 

Apparently the Plaintiff, a member of the Defendant Company, had filed the instant suit in default of the Company's articles of association. The Articles of association provided mandatory settlement of disputes by arbitration. The Plaintiff failed to invoke the method provided by the articles and was now, through the vehicle of the instant application, seeking to have recourse to section 6(1) of the arbitration to refer the matter to arbitration.

 

The Plaintiff cited as the main ground for the application the fact that the Defendants had neither entered appearance nor filed defence in the suit.

 

On their part, the Defendants objected the entire suit stating that the same was bad in law and that it constituted abuse of the process of the court given that the articles of association of the 1^st Defendant provided for a mandatory mode of settlement of disputes by arbitration which the Plaintiff had failed to invoke. The Defendants therefore urged the court to strike out the entire suit.

 

The judge ruled that the Plaintiff's application was misconceived as having chosen to file a suit instead of invoking the arbitration clause in the articles of association of the 1^st Defendant; she could not purport to later have recourse to section 6(1) of the Arbitration Act. The court held that from their wording, the provisions of section 6(1) of the Arbitration Act, 1995 is available only to the defendants. Therefore, the Plaintiff having made her bed by filing the suit, she had to lie by standing or falling by it. The court therefore dismissed the Plaintiff's application with costs.

 

The court, however, avoided striking the entire suit in limine as the Defendants had urged in their submissions. In this, it cited the fact that no formal application was on record for the same. The court held that the order striking out the suit was too drastic in nature to be granted without a formal application on the record of the court.

What makes a man superior is actions

"The superior man is modest in his speech, but exceeds in his actions."

- Confucius
— The Confucian Analects

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The bandit, the Ranger and the Lawyer

A Mexican bandit made a specialty of crossing the Rio Grande from time to time and robbing banks in Texas. Finally, a reward was offered for his capture, and an enterprising Texas ranger decided to track him down.

After a lengthy search, he traced the bandit to his favorite cantina, snuck up behind him, put his trusty six-shooter to the bandit's head, and said, "You're under arrest. Tell me where you hid the loot or I'll blow your brains out."

But the bandit didn't speak English, and the Ranger didn't speak Spanish. Fortunately, a bilingual lawyer was in the saloon and translated the Ranger's message. The terrified bandit blurted out, in Spanish, that the loot was buried under the oak tree in back of the cantina.

"What did he say?" asked the Ranger.

The lawyer answered, "He said 'Get lost, you turkey. You wouldn't dare shoot me.'"

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Peter Muema Kahoro & Another-v-Benson Maina Githethuki

CASE DETAILS

Coram

Case No: [2006] HCCC (Nairobi) No. 1295 of 2005 (Unreported)

Forum: High Court of Kenya (Nairobi Law Courts)

Judge: P. K. Kariuki

Date: 24^th February, 2006

Counsels for the Parties

Miss Muchiri for the Plaintiff

Mr. Mwangi Kariuki for the Defendant

Authorities Cited in the Ruling

1. Rawal-v-The Mombassa Hardware Ltd [1968] E.A. 398

2. Section 6 of the Arbitration Act, 1995

CASE NOTES

An arbitration clause or arbitration agreement in a contract is not an impediment to resolving disputes in court until a party to the agreement objects by seeking stay of the proceedings within the appropriate time. The court in Rawal-v-The Mombassa Hardware Ltd [1968] E.A. 398 said as much when it held that an arbitration agreement does not limit or oust the jurisdiction of the court to grant reliefs sought by way of a Plaint.

In the instant case, the Plaintiff had filed a suit seeking to enforce an agreement for sale of land by way of permanent injunction and in addition applied and was granted ex-parte temporary injunction pending inter-partes hearing of the application. The said agreement had arbitration clause under which the parties had undertaken to refer any dispute arising to a single arbitrator appointed by the Law Society of Kenya. The Defendant entered appearance and, in addition, filed grounds of opposition to the application for injunction.

The Defendant then brought an application seeking to strike out the Plaintiff's suit and the application thereof on the ground that the court was not seized of jurisdiction to try the matter. The learned counsel for the Defendant argued in support of the aforesaid ground that the Plaintiff having failed to invoke fully the arbitration agreement clause, the court had no jurisdiction to entertain the suit and/or the application as the reliefs sought by the Plaintiff were best sought under inter section 7 of the Arbitration Act. The Plaintiff in response cited the Rawal case (supra) arguing that an arbitration clause does not limit or oust the jurisdiction of the court and that the Defendant had taken steps in the suit.

The court found for the Plaintiff holding that striking out the suit was beyond the ambit of section 6 of the Arbitration Act. The court further held that the Defendant having failed to move the court in appropriate time under section 6 to refer the matter to arbitration and instead taking steps in the proceedings, had waived his right to rely on and invoke the arbitration agreement. Thus, the Defendant's application to strike out the suit and/or stay the proceedings was dismissed with costs.

In a word, the parties can choose to ignore the arbitration agreement and file the proceedings in a court. However, if one of the parties is desirous of relying on the arbitration agreement when the other has gone to court, then the former party may seek an order of the court under section 6 of the Arbitration Act staying the court proceedings. The grant of the order of stay of legal proceedings under section 6 leaves the initiator of the court proceedings with no option but to follow the provisions of the arbitration agreement if he wishes to have the dispute resolved.

When it comes to the cause of justice

"When it comes to the cause of justice, I take no prisoners and I don't believe in compromising."

Mary Frances Berry

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Billing for dreaming about the case?

"I'm beginning to think that my lawyer is too interested in making money."
"Why do you say that?"
"Listen to this from his bill: 'For waking up at night and thinking about your case: Kshs 15,000'."

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Don't break the case, quickly!

The lawyer's son wanted to follow in his father's footsteps, so he went to law school. He graduated with honors, and then went home to join his father's firm.

At the end of his first day at work he rushed into his father's office, and said, "Father, father, in one day I broke the accident case that you've been working on for ten years!"

His father responded: "You idiot, we could live on the funding of that case for another ten years!"

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Don't say I will settle for second!

Once you say you're going to settle for second, that's what happens to you in life, I find.
- John F. Kennedy

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Is there a lawyer in the house?

A lawyer, who was talking to his son about entering college, said, "Now what got into your head that you want to be a doctor instead of a lawyer?"

"Well, dad," answered the son, "did you ever hear anybody get up in a crowd and shout frantically, 'Is there a lawyer in the house?' "

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Difference between a good and a bad lawyer

What's the difference between a good lawyer and a bad lawyer?

A bad lawyer can let a case drag out for several years.

A good lawyer can make it last even longer.

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VIOLATION OF CONSTITUTIONAL RIGHTS NULLIFIES PROSECUTION

Reported By Nicholas Okemwa

Nairobi

Republic v Amos Karuga Karatu [2008] eKLR ()

High Court of Kenya at Nyeri

M. S. A. Makhandia (Judge)

26th May 2008

A prosecution mounted in breach of the law is a violation of the
rights of the accused and it is therefore a nullity. It matters not
the nature of the violation. It matters not that the accused was
brought to court one day after the expiry of the statutory period
required to arraign him in court.

On 26th May 2008, Mr. Amos Karuga Karatu who had been charged with
the offence of murder was set free by the Nyeri High Court due to the
fact that his constitutional rights had been violated.

Mr. Karatu had pleaded not guilty to the charge and his trial was
initially fixed for 13th December 2006 but eventually commenced on
4th January 2007 before Justice Makhandia. The prosecution called a
total of 10 witnesses and closed their case on 9th April 2008.

After the close of the prosecution's case, Mr. Gathiga Mwangi,
counsel appearing for Mr. Karatu, made brief submissions on the fact
that the accused had no case to answer. In these submissions, he
alluded to the alleged violation of Mr. Karatu's constitutional
rights enshrined in section 72 (3) (b) and 77 (1) of the Constitution
of Kenya. He contended that the accused was arrested on 19th January
2006 but was charged on 9th June, 2006 over 5 months later. This was
alleged to be a violation of the accused constitutional rights as he
ought to have been charged within 14 days upon his arrest and tried
within a reasonable time. The delay according to counsel had not been
sufficiently explained by the investigating officer. He maintained on
the premises that no prima facie case had been made out by the
prosecution in the circumstances to warrant the accused being put on
his defence.

Mr. Orinda, the Principal State Counsel, opted not to respond to
those submissions. All he said was that he would rely on the evidence
on record and that indeed a prima facie case had been established
against the accused.

The issue of the violation of Mr. Karatu's constitutional rights
arose from the cross examination of the investigating officer, Mr.
Mwangi, who stated that though he was through with conducting the
investigations within two weeks, he had taken 6 months to bring the
accused before the court due to the processing of the file through
the offices of the DCIO, PCIO and the state counsel.

The court took issue with the investigating officer's explanation of
the delay in bringing the accused before the court. It noted that the
investigating officer did not even explain what the offices of the
DCIO, PCIO and the state counsel were required to do with the file.
The court then proceeded to examine whether this explanation passed
the litmus test set out in section 72 (3) (b) and 77 of the
Constitution, that is, that the accused person despite the delay was
brought before a court as soon as was reasonably practicable and,
that accused would be accorded a fair hearing within reasonable time.

The court found the investigating officer's explanation to be
wanting. Justice Makhandia stated that a period of 6 months delay
could not be explained away on the basis that the investigating
officer's hands were tied and he could do nothing due to the
procedure of processing the investigations file in their systems. He
further remarked that the constitutional and fundamental rights of an
accused person could not be sacrificed at the altar of the so called
police procedures.

The court took the view that the law of the land had to be obeyed
particularly by those entrusted to enforce it. It said that if the
supreme law of the land stated that an accused person had to be
brought before court within 24 hours in the event of a non-capital
offence and 14 days for a capital one, that law had to be strictly
observed and failing this, the police had a burden cast on them to
satisfy the court that the accused had been brought before court as
soon as was reasonably practicable. The court held that the
investigating officer was unable to discharge that heavy burden in
the circumstances of the case. It opined that the offices of the
investigating officer, the DCIO, PCIO and the state counsel were lax,
did not treat the case with the seriousness it deserved and had no
qualms trampling upon Mr. Karatu's constitutional rights more so the
fair trial provisions of the Constitution of Kenya.

The court went further to opine that this was no longer the 1980's
where the fundamental rights of the citizens were trampled upon by
the police and the courts of law then could not stand up to challenge
such conduct. The court took note of the Court of Appeal's recent
remarks that the courts chose to see no evil and hear no evil, taking
part in a conspiracy of silence that gave rise to the infamous Nyayo
House torture chambers, a history which the courts could never be
proud of. The court said that this was never be allowed to happen
again in this country and that it was a result of the foregoing
legacy that the citizens of this country had lost faith in the
Judiciary particularly when it came to the enforcement and securing
the constitutional and fundamental rights of the citizenry.

The court proceeded to state that the time was nigh for the
Judiciary to rise to the occasion and reclaim its mantle by
scrupulously applying the law that sought to secure, enhance and
protect the fundamental rights and freedoms of an accused person. A
prosecution mounted in breach of the law was a violation of the
rights of the accused and it was therefore a nullity. It mattered not
the nature of the violation. It mattered not that the accused was
brought to court one day after the expiry of the statutory period
required to arraign him in court. Finally the court stated that it
mattered not that the evidence available against him was weighty and
overwhelming for as long as that delay was not explained to the
satisfaction of the court, the prosecution remains a nullity.

The court relied on the decision in Albanus Mwasia Mutua v Republic
where the court stated that at the end of the day, it was the duty of
the courts to enforce the provisions of the Constitution, otherwise
there would be no reason for having those provisions in the first
place.

Ultimately, the court held that the accused having been brought to
court in breach of the provisions of section 72 (3) and 77 (1) of the
constitution, his continued prosecution was illegal and a violation of
his constitutional rights. It also ruled that no prima facie case has
therefore been made to warrant the accused being put on his defence.
Mr. Karatu was subsequently acquitted and set free.

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If laws could complain...

If the laws could speak for themselves, they would complain of the lawyers.

Edward F. Halifax

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A lawyer is a bad neighbour

A good lawyer is a bad neighbour.

French Proverb

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STAY OF LEGAL PROCEEDINGS FOR ARBITRATION REFERENCE

Generally, the courts have no direct power, and of their own motion, to compel arbitration. However, it can do so indirectly, and upon application of a party to an arbitration agreement. This is possible where the court, after an application for stay of proceedings for reference to arbitration, refuses the claimant audience and/or remedy through the court process. An order for stay of proceedings has the effect that if aggrieved party wants to pursue his claims, he can only do so by arbitration.

 

The necessity of stay of proceedings arises where the parties have a valid arbitration agreement and upon a dispute arising on a matter covered by the same, one party goes to the court in breach of the Arbitration agreement. An application for stay of the legal proceedings is what section 6 of the Arbitration Act avails the defendant if he/she is to give effect to the arbitration agreement.

 

An arbitration clause or arbitration agreement in a contract is not an impediment to resolving disputes in court until a party objects. In other words, the parties can choose to ignore the arbitration clause and/or arbitration agreement and file the proceedings in a court. However, if one of the parties is desirous of effectuating the arbitration agreement when the other has lodged a court action, then the former party may seek an order of the court under section 6 of the Arbitration Act staying the court proceedings. Grant of the order of stay of legal proceedings under section 6 leaves the initiator of the court proceedings with no option but to follow the provisions of the arbitration agreement if he wishes the dispute to be resolved.

 

Conditions for grant of stay under section 6 of the Act

In granting stay of proceedings, the courts generally have regard to the following conditions:

 

(i)                 The applicant must prove the existence of an arbitration agreement which is valid and enforceable. The rationale here is that to stay proceeding where there is no valid Arbitration Agreement would otherwise amount to driving the claimant from the seat of justice as s/he cannot get redress by enforcing the arbitration agreement.

 

The doctrine of separability is important here in the sense that it enables the arbitration clause to survive the termination by breach of any contract of which it is part. Even if the underlying contract is void, the parties are presumed to have intended their disputes to be resolved by arbitration. If the arbitration agreement's validity is questioned the court should endeavour to ascertain the same before staying the proceedings. At least, it should stay the proceedings pending the determination of the issue of validity.

 

Section 6 of the Act is to the effect that the court shall grant stay unless, inter alia, it finds that the arbitration agreement (as opposed to the entire agreement) is null and void, inoperative or incapable of being performed. For instance, this is the case where the arbitration agreement is inconsistent with a law.

 

What do you think should be the ideal policy for the court under this condition? Can you recommend that the court lean towards giving effect to the Arbitration Agreement as far as possible?

 

(ii)               The applicant must be a party to the arbitration agreement or at least a person claiming through a party e.g. a personal representative or trustee in bankruptcy. This requirement is in view of the doctrine of privity of a contract which is to the effect that only parties to a contract can enforce it and a party not party to a contract cannot enforce it.

 

(iii)             The dispute which has arisen must fall within the scope of the Arbitration Clause. The draftsmanship in vogue in Kenya today is to have the arbitration clause as wide and comprehensive as possible. However, there arise instances where the parties intended only some limited disputes to be referred to arbitration. In such an instance, the party opposing the arbitration may argue that the dispute is not covered by the arbitration agreement and therefore the court action is not in breach of the same. The court is bound to stay the proceedings unless it finds:

 

"that there is not in fact any dispute between the parties with regard to the matters referred to arbitration." (Section 6(1) (b) of the Arbitration Act 1995)

 

In TM AM Construction Group (Africa) v. Attorney General HCCC (Milimani) No. 236 of 2001 the plaintiff opposed the application for stay, inter alia, on basis that the AG was in fact making an application under section 6 of the Arbitration Act as a delay in tactic as there was not in fact a dispute about the claim. It was submitted that the AG took too long and did not do anything and thus was precluded under section 6 (1) (b) of the Arbitration Act.

 

The AG claimed that there was dispute between it and the respondent that deserved to be referred to arbitration. The respondent retorted that there was not in fact any dispute between the parties with regard to matters agreed to be referred to arbitration. The court found that there was failure by AG to tender any evidence showing that there was in fact any dispute between the parties and that this meant that no basis had been established to show that a dispute in fact existed to justify staying the proceedings and referring the proceedings to arbitration.

 

Can an applicant stay part of the proceedings where the other parts are not subject of the agreement, for example, in torts and contract claims and the scope of arbitration is confined to contractual agreement?

 

What if the clause in question is an Alternative Disputes Resolution Clause i.e. where matters cannot be referred to arbitration immediately without first exhausting the other agreed methods of dispute resolution? The House of Lords in Channel Tunnel Corporation Ltd and others-v-Balfour Beatty Construction Ltd [1993] 1 Lloyd's Rep. 291, HL thought that will not prevent the court and the position was adopted in UK Arbitration Act of 1996.

 

(iv)    The party making the application for stay must have taken steps in the proceedings to answer the substantive claim. For instance, the party must not have served defence or taken another step in the proceedings to answer the substantive claim. The rationale of this requirement is to ensure that stay of proceedings for reference to arbitration is not used as a delay tactic by the defence side. The reasoning is that by taking steps to answer the substantive claim, the party submits or is at least taken to be submitting to the jurisdiction of the court and electing to have court deal with the matter rather than insisting on the right to arbitration. (See Russell on Arbitration (supra) p. 301)

 

Under section 6 of the Arbitration Act a party wishing to enforce the arbitration agreement in a situation where the other party has initiated court proceedings must apply to court not latter than the time when that party enters appearance or files any pleadings or takes any other steps in the proceedings. This is to say that the application for stay must be made at the correct time under section 6 of the Act. What, then, is the correct time?

 

In Eagle Star-v-Yural [1978] Llods Rep. 357, Lord Denning MR was of the view that to merit refusal of stay, the step in the proceedings must be one which "impliedly affirms the correctness of the [Court's] proceedings and the willingness of the defendant to go along with the determination by the courts instead of arbitration". In other words, the conduct of the applicant must be such as demonstrates election to abandon the right to stay in favour of the court action proceeding. However, the courts in Kenya have opted to interpret the provisos to section strictly and will not stay proceedings unless the application was filed at the time of filling the memorandum of appearance.

 

In the leading case of TM AM Construction Group (Africa) v. Attorney General (supra), an application for stay of proceedings under section 6 of the Act had also been opposed for having been filed after defendant had entered appearance. The plaintiff in the case had instituted the suit against the Attorney General on 21^st January 2001. The learned AG then entered appearance on the 15^th March 2001. The application for stay of proceedings was then made on the 25^th April 2001.

 

Mbaluto J (as he then was) held that an applicant was obliged to apply for a stay 'not later than the time when he entered appearance'. The court thus found that the AG had lost the right to rely on the arbitration clause because if the AG was to rely on it he was obliged to make and application under section 6 not later than when he entered appearance.

 

The decision in TM AM case was followed in Victoria Furniture Limited-v-African Heritage Limited &  Another HCCC (Milimani) No. 904 of 2001. The case involved third-party proceedings where the third-party sought a stay of 'all the proceedings' and reference to arbitration under, inter alia, section 6 of the Arbitration Act. The applicant had been served with a Third Party Notice to which it had made an appearance on 10.8.2001. However, the applicant did not file the application for stay until 11.10.2001.

 

The Court held that the clear position was that if a party wishes to take advantage of an arbitration agreement under section 6(1) of the Arbitration Act, s/he was obliged to apply for a stay 'not later than the time when he

 

(a)   enters appearance; or

(b)   files any pleadings; or

(c)   takes any other steps in the proceedings.

 

In the court's view, the above means that if a party takes any of the steps above without at the same time  applying for a stay of proceedings, the s/he losses the right to subsequently make the application.

 

The learned Mbaluto J in the latter case reasoned that if section 6 of the Act were to be interpreted to mean that a party could file an appearance or take the two other steps and then wait for some time before applying for stay of proceedings, the phrase 'not later than the time he entered appearance or etc, etc' would be not only superfluous but also meaningless. In any case, the court found that in the instant case there was delay of more than 31 days after appearance had been made which situation in the court's view was not what was contemplated under Section 6 (1) of the Arbitration Act.

 

What if the party has indicated that it still intends to seek stay despite the act? For instance, if a party seeks leave to defend and stay of default judgment-is he to be taken as taking steps in the proceedings as preclude his/her entitlement to a stay? The Court of Appeal of England in Patel-v-Patel [1998] 3 WLR 322 thinks not. What do you think?

 

It is to be noted that an action to resist interim injunction is not a step in proceedings. Applications for interim applications are interlocutory proceedings whereas the steps proscribed have to taken in substantive proceedings.

 

Even where the stay is sought against a counter-claim or set off, the rule as to not taking steps in the proceedings still apply with equal force. So that the party seeking stay of the counterclaim must not have filed a defence/reply to the counterclaim or at least any pleading or even counter. The applicant must not have filed an application strike out the counter-claim or taken any other steps in the proceedings. (See Chappel-v-North [1891] 2 Q.B 252)

 

(v)     Where a third-party is involved. The court in the Victoria Furniture Case (supra) also grappled with the issue of whether stay of proceedings will be granted where a third party not party to the arbitration agreement is involved. In the case, the arbitration agreement was only applicable as against the Defendant and the third party to the exclusion of the Plaintiff.

 

The application for stay was opposed on the ground that the suit would ultimately, and in any event, have to be determined by the Court. The court upheld this point with its finding that apart from the Defendant and the applicant, there was another party involved, namely the Plaintiff. As such, whether or not either of the Defendant or applicant is liable, the matter will have to come back to court for final adjudication as between either of them and the Plaintiff. The court reasoned that the process of arbitration could only decide the issue of who, between the Defendant and the applicant was liable, but not the issue of liability to the defendant. The court also found that there were several questions of law to be resolved in the case.

 

The court upheld as extant in matter the following grounds supplied in Emden & Gills Building Contracts and Practice 7^th Edition, at page 363 upon which a court may refuse to stay proceedings and refer a matter to arbitration:

 

1.      where there are questions of law involved;

2.      where there is multiplicity of proceedings and (it is necessary to avoid) inconsistent findings of facts;

3.      where the arbitration is appropriate, (as was obviously the case in the matter) for only a part of the dispute.

 

The court concluded that it would be a miscarriage of justice to parties if the proceedings were stayed and the matter referred to arbitration.

 

In a word, the ratio of the court's ruling on the above point is that a stay may be refused where there are questions of law involved; where there is multiplicity of proceedings and (it is necessary to avoid) inconsistent findings of facts; and where the arbitration is appropriate, for only a part of the dispute e.g. in third party proceedings as was the case in the matter.

 

The position seems to be that where a third party is involved, the court may refuse to stay the proceedings as the case will only be appropriate for only a part of the dispute. It is noteworthy that the position in UK has changed and involvement of third party is no longer a reason to refuse stay.

 

(vi)    What if the suit is brought by a claimant who is a pauper and can show the court that he is not in position to afford arbitration? Generally, the position in UK is that the poverty of the Defendant is not a ground for staying arbitration unless the same has been brought about by the breach of contract on part of the Defendant. (At least this was the position taken by the court in Fakes-v-Taylor Woodrow Construction Limited [1973] Q.B. 436) However, the court is enjoined to take into account whether or not the Plaintiff would be unable to receive legal aid for arbitration proceedings. (Edwin Journeys-v-Thyssen (GB) Ltd [1991] 57 Build. L.R 116) In addition, the court may also consider taking into account the ability of the Plaintiff to fund the take off of the arbitration process.

 

 

Procedure for the applications for stay

The party seeking stay of legal proceedings for reference to arbitration moves the court in the manner provided under rule 2 of the Arbitration Rules 1997. Rule 2 of the Arbitration Rules 1997 provides that an application under section 6 shall be made by summons in the suit.

 

Some judges are of the view that that if you move the court using a wrong procedure the error is fatal to the application. So that if instead of a chamber summons one prefers a notice of motion, the application may be struck-out. There are, however, decisions overlooking such mishap.

 

In James Muhando Mwangi-v-B.O.G Premier Academy & Another HCCC (Milimani) No. 78 of 2001 an application for stay of proceedings under section 6 of the Arbitration Act was opposed on the ground that, inter alia, it did not comply with the requirements of Rule 2 of the Arbitration Rules. The argument was that Rule 2 requires that an application under Section 6 of the Arbitration Act be made by summons in the suit while the application was headed "Chamber Summons" but took the form of a Notice of Motion.

 

The Respondent's Counsel in the case was of the view that that was a defect which could not be cured by amendment and urged dismissal of the application. However, the court held that the chamber summons, though wrongly taking the form of a Notice of Motion, did not invalidate the application for stay which the rules require to be made by summons. The court reasoned that the defects manifested were in form only and not substance and the respondent was not prejudiced thereby.  

 

In Nakumatt Holdings Limited-v-Kenya Wildlife Services HCCC (Milimani) No. 1131 of 2001 (O.S.) the plaintiff was seeking orders to refer a dispute between it and the Defendant to arbitration. In addition, appointment of an arbitrator from the list of three availed to the court was sought. The application did not disclose which arbitration Act was being invoked nor did the title of the summons indicate under which rule the matter had been brought.

 

On that basis, the Originating Summons was preliminarily objected as being patently incompetent and should be dismissed. The learned judge upheld the objection holding that the application was patently defective and could not succeed. Hence the Originating Summons was dismissed with costs.

 

The Moral of the case? To be on the safe side do not overlook such minor issues as ensuring that the heading  indicates that the Arbitration Act is 1995 one and indicating the rules under which the application is brought in the application.

 

The summons is to be accompanied by a supporting affidavit obviously annexing the arbitration agreement or clause.

 

Generally, there is no requirement that reference to arbitration be already started before application for stay of proceedings. (Enco Civil Engineering Ltd-v-Zeus International Development Ltd [1991] 56 Build. L.R. 43) But the Act allows a party to commence arbitral proceedings despite the pendancy of stay of proceedings application. The legal position is that while the application for stay is pending, arbitration may still be commenced and an arbitral award made. (Section 6(2) of the Act) This provision appears justified given the innumerable delays witnessed in our court system.

 

Conclusion

The best time for application of a stay of proceedings under section 6 of the Arbitration Act 1995 if a party has a valid arbitration agreement that the instant court action breaches and there is dispute referable to arbitration under the agreement is as early as possible after service of summons on the suit and not latter than when the party enters appearance. Such factors as whether the suit involves third parties not party to the arbitration agreement and whether proper procedure of chamber summons supported by an affidavit as provided under Rule 2 of the Arbitration Rules 1997 has been followed will be important consideration for the court in granting or refusing the stay.

What lawyers and painters share

Lawyers and painters can soon make what's black, white.

Proverb

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A shilling to bury a lawyer

A Dublin lawyer died in poverty and many barristers of the city subscribed to a fund for his funeral. The Lord Chief Justice of Orbury was asked to donate a shilling. Only a shilling? said the Justice, "Only a shilling to bury an attorney?" Here's a guinea; "go and bury 20 more of them."

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The dog who runs with the bone

When two dogs fight for a bone, and the third runs off with it, there's a lawyer among the dogs.

-German Proverb-

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Do you serve lawyers?

A man walked into a bar with his alligator pet.
He sat on the counter and asked the bartender, "Do you serve lawyers here?"
"Sure do" replied the bartender.
"Good," said the man.
His order was "Give me a beer, and I'll have a lawyer for my 'gator."

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When to make application under Section 6 of Arbitration Act

TM AM Construction Group (Africa) v. Attorney General HCCC (Milimani) No. 236 of 2001

High Court of Kenya (Milimani, Nairobi), Mbaluto J.

Date: 5^th June, 2001.

Authorities Referred to in the Ruling

1. Co-operative Insurance Co. v. Loice Wanjiru Wachira (Court of Appeal, Civil Appeal No. 151 of 1995)

2. London and North Western Joint Railway v. JH Billington Limited (1899) AC 79

3. Section 6(1) of the Arbitration Act 1995

4. Section 107 (1) and 109 of the Evidence Act

This is a leading case on applications under section 6(1) of the Arbitration Act 1995. The main issue here was what time an application for stay of proceedings for reference to arbitration can be made. The court held that an application must be made not later than the time when appearance is made otherwise the it will be incompetent and doomed to fail.

The court was making a ruling pursuant to an application by the Attorney-General, the defendant in the matter, under section 6(1) of the Arbitration Act 1995 and Rule 2 of the Arbitration Rules 1997 for orders that the suit be stayed and the dispute between the parties referred to arbitration. The application was opposed allegedly as being bad in law for contravening section 6(1) of the Arbitration Act. The Plaintiff opposition was grounded in the fact that the application was filed after defendant had entered appearance and that there was no dispute "between the parties which could be referred to arbitration."

The plaintiff in the case had instituted a suit against the Attorney General on 21^st January 2001. The learned AG entered appearance on the 15^th March 2001. The instant application was then made on the 25^th April 2001.

Even though the presiding judge found there was an arbitration clause providing for reference of disputes to arbitration, he upheld the Plaintiff's opposition dismissing the application with costs. On the question of time Justice Mbaluto found that the AG had not taken action in the matter within the times limited by law. Not only did the AG file and serve a memorandum of service late, but he also failed to file a defence within prescribed time prescribed under the Civil Procedure Rules. Indeed, the Plaintiff's advocates had lodged an application on 10.4.2001 for leave to apply for judgement against the AG for failure to file and serve the necessary defence in the prescribed time.

The learned judge cited Co-operative Insurance Co. v. Loice Wanjiru Wachira (Court of Appeal, Civil Appeal No. 151 of 1995) where the Court of Appeal stated:-

"In the present case the appellant did more than just enter an appearance it delivered a defence, which is of course a pleading. The appellant made no application for stay of proceedings. The appellant was a party to an arbitration agreement within the meaning of section 6 of the Act. Arbitration clauses such as the arbitration clause in this case are known as Scott v. Avery arbitration clauses named after a leading case decided by the House of Lords in 1856 in which their efficacy was considered and have long been accepted as valid. These clauses do more than provide that disputes shall be referred to arbitration. They also stipulate that the award of arbitration is to be a condition precedent to the enforcement of any rights under the contract so that a party has no cause of action in respect of a claim falling within an arbitration clause unless and until a favourable award has been obtained. … In the present case if the appellant wished to take the benefit of the clause it was obliged to apply for a stay after entering appearance and before delivery of any pleading. By filing a defence the appellant lost its right to rely on the clause."

Applying the foregoing decision of the Court Appeal, the learned judge found that the AG was obliged to apply for a stay 'not later than the time when he entered appearance'. The court thus held that the AG had lost the right to rely on the arbitration clause because if the AG was to rely on the same he was obliged to make and application under section 6 not later than when he entered appearance.

On the second ground as to lack of dispute for arbitration, it was argued for the plaintiff that the AG was in fact making an application under section 6 of the Arbitration Act as a delay tactic given that there was not in fact a dispute about the claim. It was submitted that the AG took long and did not do anything on the matter and thus was precluded under section 6 (1) (b) of the Arbitration Act.

Section 6(1) (b) of the Arbitration Act provides that the court shall stay the proceedings and refer the parties to arbitration, unless it finds:-

"(b) that there is not in fact any dispute between the parties with regard to matters agreed to be referred to arbitration"

The AG claimed that there was dispute between it and the respondent deserved to be referred arbitration. The respondent retorted that there was in fact no dispute between the parties with regard to matters agreed to be referred to arbitration. The court found that the AG had failed to tender any evidence showing that there was in fact any dispute between the parties. The learned judge interpreted this to imply that no basis had been established to show that a dispute in fact existed to justify staying the proceedings and referring the proceedings to arbitration.

On this second point Justice Mbaluto cited a passage from the old case of London and North Western Joint Railway v. JH Billington Limited (1899) AC 79 In that case, Lord Halsbury stated at page 81:-

"A condition precedent to the invocation of the arbitrator on whatever grounds is that a difference between the parties should have arisen and I think that must mean a difference of opinion before the action is launched either by plaint or by writ. Any contention that the parties could when they are sued for the price of the services raised for the first time the question whether or not the charges were reasonable and that therefore they have a right to go to an arbitrator seems to me to be absolutely untenable."

In the learned judge's view, the above statement correctly expressed the view held by the court in the present case that a party who is wholly unable to produce the minutest of evidence to support an allegation of a dispute in a contract of the magnitude evidenced in the matter had absolutely no right to come to court and seek a stay of proceedings and reference to arbitration allegedly because he for the first time alleges that there is a dispute between the parties.

In this finding the judge was relying of provisions of section 107 (1) and 109 of the Evidence Act dedicated to burden proof generally and proof of a particular fact respectively.

"107. (1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist."

109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

The learned judge found that the requirements of the above sections of the Evidence Act had not been met by the affidavit evidence availed by the applicant to prove that there was dispute. He took issue with the fact that the affidavit on record only made reference to a discussion relating to a dispute while not a single piece of evidence was tendered to show that a dispute in fact exists between the parties. The judge also concluded that there was no positive disposition in the affidavit as to existence of a dispute or any documents to support the dispositions.

Grounds for refusal of stay under s. 6 of Arbitration Act, 1995

Victoria Furniture Limited-v-African Heritage Limited & Another HCCC (Milimani) No. 904 of 2001.

 

High Court of Kenya at Milimani, Nairobi. Mbaluto, J.

Date: 30^th November, 2001.

 

Authorities cited in the Judgement

1. TM AM Construction Group (Africa) v. Attorney General HCCC (Milimani) No. 236 of 2001
2. Emden & Gills Building Contracts and Practice 7^th Edition, at page 363

Advocates on Record

Miss Muriu for Applicant (Third Party)

Mr. Rayani for the Respondent (Defendant)

 

This case involved third-party proceedings where the third-party sought a stay of 'all the proceedings' and reference of the same to arbitration under, inter alia, section 6 of the Arbitration Act, 1995. The applicant had been served with a Third Party Notice against which it entered a memorandum of appearance in the case on 10.8.2001. However, the instant application was not filed until 11.10.2001.

 

The counsel for the Respondent submitted that by reason of the applicant's failure to file the application not later than the time when it entered appearance, there was non-compliance with the requirements of Section 6(1) of the Arbitration Act, 1995 and consequently the application was doomed to fail.

 

The applicant's side argued that an application under section 6(1) of the Arbitration Act did not have to be filed contemporaneously with appearance but could be filed at any time before any other pleadings are filed or taken.

 

The court did not agree with the applicant. Rather, it held that the clear position was that if a party wishing to take advantage of an arbitration agreement under section 6(1) of the Arbitration Act was obliged to apply for a stay 'not later than the time when he

(a)   enters appearance; or

(b)   files any pleadings; or

(c)   takes any other steps in the proceedings.'

 

In the court's view, that meant that if a party took any of the three steps without at the same time applying for a stay of proceedings, the he automatically lost the right to subsequently make the application for stay. The court in so holding upheld the decision in TM AM Construction Group (Africa) v. Attorney General HCCC (Milimani) No. 236 of 2001.

 

The court reasoning was that if the section were to be interpreted to mean that a party could file an appearance or take the two other steps and then wait for some time before applying for stay of proceedings, the phrase 'not later than the time  he entered appearance or etc, etc' would be not only superfluous but also meaningless. In any case, the court found that in the instant case there was delay of more than 31 days after appearance had been made which situation in the court's view was not what was contemplated under Section 6 (1) of the Arbitration Act. The court found these reasons enough to disentitle the applicant from applying for stay of proceedings.

 

The application for stay was also opposed on ground that the suit would ultimately in any event have to be determined by the Court. The court upheld this point finding that apart from the Defendant and the applicant, there was another party involved, namely the Plaintiff. As such, whether or not either of the Defendant or applicant is liable (which was the issue to be decided by arbitration), the matter was wont to come back to court for final adjudication as between either of two and the Plaintiff. The process of arbitration could clearly only decide the issue of who, between the Defendant and the applicant was liable, but not the issue of liability to the defendant. As a result, the court concluded that there were several questions of law to be resolved in the case.

 

The Court proceeded to uphold as extant in matter the following grounds supplied in Emden & Gills Building Contracts and Practice 7^th Edition, at page 363 upon which a court may refuse to stay proceedings and refer a matter to arbitration:

 

1. where there are questions of law involved;
2. where there is multiplicity of proceedings and (it is necessary to avoid) inconsistent findings of facts;
3. where the arbitration is appropriate, (as was obviously the case in the matter) for only a part of the dispute.

 

For the above reason, the court concluded that a miscarriage of justice to parties was therefore concluded to be likely if the proceedings were stayed and the matter referred to arbitration. In any case, the court ruled that the question of arbitration did not arise in the first place as the applicant was disqualified by reason of non-compliance with section 6 (1) of the Arbitration Act, 1995 from applying for a stay or reference to arbitration.

 

In a word, the ratio of the court's ruling on the second point is that a stay may be refused where there are questions of law involved; where there is multiplicity of proceedings and (it is necessary to avoid) inconsistent findings of facts; and where the arbitration is appropriate, for only a part of the dispute e.g. in third party proceedings as was the case in the matter.

Where do you think lawyers come from?

An anxious 15 year old girl comes home from school.
"Mum", she asks tentatively, "can you get pregnant from anal sex?"
"Don't be silly of course you can", replies her mother, "where do you think lawyers come from?"

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COURT OKs FOREIGNER'S DENIAL OF WORK PERMIT

Republic v Minister for Home Affairs & 2 others ex parte Leonard
Sitamze [2008] eKLR

High Court at Nairobi, Justice J.G. Nyamu, April 18, 2008.

The High Court has declined to reverse the decision of the Principal
Immigration Officer to refuse to issue a work permit to a foreign
national.

Leonard Sitamze, a Cameroonian national, had filed an application in
the High Court seeking a judicial review of the decision of the
Minister for Home Affairs and the Principal Immigration Officer in
which his application for a Class "H" work permit was declined. A
Class H permit is one of several types of work permits which an
Immigration Officer may issue to a foreigner. The discretionary power
to issue the permits is given to the Immigration Officer by section 5
of the Immigration Act.

Sitamze had told the court that he had been running a successful
company in Kenya with the aid of his wife, Josphine, a citizen of
Kenya, and that he had been issued with both a trading license by and
a certificate of good conduct. He stated that the police had
wrongfully accused him of not being in possession of valid
immigration documents and subjected him to intimidation, harrassment
and inhuman treatment. Sitamze termed the decision of the Minister
and Immigration Officer as discriminatory and unjust and amounting to
a denial of his right to the quiet use and enjoyment of his property,
his right to found a family as enshrined in Article 5 of the
Declaration of the Human Rights of Individuals Who Are Not Nationals
of the Country on Which They Live and Article 6(2) of the
International Covenant on Economic, Social and Cultural Rights
(ICSR).

He asked the High Court to issue the special order of mandamus to
compel the Minister to issue him with a class "H" work permit and an
order of Prohibition to forbid the Commissioner of Police from
harassing him, arresting him or hindering his free movement in Kenya.


The Minister, the Commissioner of Police and the Principal
Immigration Officer, who were named as the respondents to the court
action, all opposed Sitamze's application. They relied mainly on the
argument that they had acted in accordance with the provisions of the
Immigration Act empowering the Minister to issue a permit to a
foreigner after all the conditions for the issuance had been
satisfied and to direct the removal from Kenya of any person whose
presence is found to be unlawful. A classified document was produced
to the Court on behalf of the state as part of the Immigration
Department's evidence that Sitamze's presence in Kenya posed a threat
to national security.

Judge J. Nyamu agreed that indeed, the Minister for Home Affairs is
authorized by law to issue work permits to foreigners and in that
regard, the Minister would the best person to decide whether a
foreigner who seeks a permit has met the requirements provided by
law. In the Judge's view, it would be wrong for the Court to
interfere with the decision made by the Minister unless it is shown
that the decision has been made in abuse of discretion or of a legal
duty. The same considerations applied to the actions and decisions
taken by the Kenya Police who had a legal mandate to maintain law and
order and to detect and prevent crime. "Work permits are not an
automatic entitlements and have to be issued in accordance with the
domestic law" the Judge further noted. "They could be refused on
reasonable grounds and in the national interest". In any case, the
Court was satisfied that even though the fundamental rights enshrined
in the Constitution of Kenya were to be enjoyed by both citizens and
foreigners, Sitamze had failed to establish that he had been
subjected to torture or inhuman punishment by the police.

The Court appreciated that under the ICSR, to which Kenya was a
party, the right to work is a fundamental right. Sitamze was entitled
to the right to work and to seek redress if the right was infringed.
Further, under the Declaration on The Human Rights of Individuals Who
Are Not Nationals of The Country in Which They Live, he was entitled
to the right to choose a spouse, to marry and to found a family.
However, as an alien, the same Declaration obliged him to observe the
domestic laws of the State in which he was present and to regard with
respect the customs and traditions of the people of that State.
Sitamze had failed to prove that he had been discriminated against or
that his right to found a family had been violated.

Justice Nyamu was satisfied that the State had adduced sufficient
evidence to demonstrate that Sitamze's presence was a threat to
national security and this was a valid reason to decline to issue him
with a work permit. It would be wrong, he further observed, to
discriminate against a foreigner where he has created legitimate
employment for himself and his family but where there are national
security concerns, the Minister would be entitled to decline to issue
a work permit or to renew an existing one. Such a decision would not
constitute a violation of the constitutional and international human
rights to work and to establish a family life. The foreigner would
have a choice to emigrate with his family to his country of origin.
In this case, however, the Court was satisfied that Sitamze had
failed to prove that his right to family had been breached and that
in any event, the national interest would prevail.

Ultimately, the Court found that there was no merit in Sitamze's
application and it was dismissed.

Download Case


Reported by Michael Murungi, Advocate
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Law maketh business for itself

The one great principle of English law [and incidentally law the world over] is to make business for itself.

-Charles Dickens-

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