Agip (K) Ltd v Kibutu [1981] KECA 48 (KLR)
The bottom line
#What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the dispute should have been referred to arbitration notwithstanding that no application for stay of proceedings was made under Section 6(1) of the Arbitration Act
- 2.Whether by filing a defence and counterclaim the defendant waived the arbitration clause or was disqualified from invoking it
- 3.Whether the learned judge erred in dismissing the application for a temporary injunction without hearing argument on its merits
- 4.Whether the judge misapplied the decision in Maluki v Oriental Fire and General Insurance
Key legal issues
#Whether the arbitration clause could be invoked without a formal stay application under Section 6(1) of the Arbitration Act
No. A stay must be applied for by notice of motion supported by affidavit before any pleading is delivered; raising the arbitration clause as a point of law in a defence is self-destructive and ineffectual.
Section 6(1) of the Arbitration Act requires the application to be made before delivering any pleadings or taking any other step in the proceedings. Delivery of a defence is itself a step, and a counterclaim is a cross-suit invoking the court's jurisdiction. Raising the clause in a pleading therefore defeats the very application. The formal order made no order of stay or reference, and none could be implied. The requirement is mandatory and strictly construed.
Whether the defendant demonstrated readiness and willingness to arbitrate
No affidavit was on record establishing that the defendant was, and remained, ready and willing to do everything necessary for the proper conduct of the arbitration, so any stay application had to be dismissed.
Citing Halsbury's Laws of England, 4th Ed, Vol II, paragraph 564, and Madan JA in Kenya Oil Co Ltd v Rajwani, the court held the court must be satisfied of the applicant's readiness and willingness to arbitrate. There was no affidavit and no such holding by the judge, so even treating paragraph 6 of the defence as a stay application, it failed on two grounds: late filing and lack of evidence of readiness.
Whether the judge could dismiss the temporary injunction application without hearing argument on its merits
He could not. The parties had agreed he would first determine the arbitration question; the injunction application was not in issue and its dismissal without argument was wrong.
The parties had consented that the judge determine whether the dispute should be referred to arbitration before hearing the merits of the injunction application. No submissions were made on the merits, yet the judge dismissed the application. Dismissing an application that was not in issue, without hearing any argument, denied the parties a hearing on the relief sought and was an error requiring the ruling to be set aside.
Legal principles established
#- An application for a stay of proceedings under Section 6(1) of the Arbitration Act must be made before delivering any pleadings or taking any other step in the proceedings, and cannot be raised as a point of law within a pleading.
- Filing a defence and counterclaim constitutes a step in the proceedings which disqualifies a party from seeking a stay under Section 6(1).
- The court must be satisfied on material before it that the applicant is ready and willing to do everything necessary for the proper conduct of the arbitration; absent such satisfaction the stay application must be dismissed.
- A court cannot dismiss an interlocutory application that was not in issue before it and on which no argument was heard.
Court orders
#- 1.Appeal allowed with costs
- 2.The ruling and formal order of the High Court dismissing the plaintiff's application for a temporary injunction set aside
- 3.The plaintiff's application dated June 11, 1981 for a temporary injunction remitted to the High Court to be heard and determined by another judge
- 4.Costs of the abortive hearing in the High Court left in the discretion of the judge who hears the remitted application
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya
- Civil Suit No 1121 of 1981
- Jurisdiction invoked
- First appellate jurisdiction over an interlocutory ruling of the High Court (Arbitration Act, Cap 49, Section 6(1) in issue)
Relief refused
#Referral of the dispute to arbitration / stay of the suit
No stay application was made before delivery of pleadings, the defendant had taken a step in the proceedings, and there was no affidavit evidencing readiness and willingness to arbitrate
Costs
Appeal allowed with costs to the appellant; costs of the abortive High Court hearing in the discretion of the judge hearing the remitted application.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The only way in which an application for stay to enforce an arbitration clause in an agreement can be made is by notice of motion supported by affidavit; it cannot be disguised as a point of law contained in a pleading.
The court must be satisfied as to this, and unless so satisfied the application to stay must be dismissed.
It was not open, and is not now open, to the defendant to apply for the suit to be stayed, as he has taken a step in the proceedings by delivering a defence and counterclaim before making any such application.
We set aside the ruling and formal order, the subject of this appeal, and direct that the plaintiff's application dated June 11, 1981, for a temporary injunction, be remitted to the High Court to be heard and determined by another judge.
Issues in the judgment
#The judgment cites Maluki v Oriental Fire and General Insurance with inconsistent citations: [1973] EA 162 on first mention and [1973] EA 1962 in ground 3 of the appeal
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Shikuku v Hamptons Hospital (Cause E002 of 2025) [2025] KEELRC 1704 (KLR)[2025] KEELRC 1704 (KLR)12 Jun 2025distinguished
Cite this brief
#Cite this brief
Caselaw, "Agip (K) Ltd v Kibutu [1981] KECA 48 (KLR)", Case Analysis (1981). Civil Appeal (from Civil Suit No 1121 of 1981). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1981/48/eng@1981-12-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.