KISUMUWALLA OIL INDUSTRIES LIMITED v PAN ASIATIC COMMODITIES PTE LIMITED & another [1997] KECA 107 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that parties relying on arbitration clauses must promptly apply for a stay of court proceedings, or lose that right entirely.
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 Court should depart from its own recent decision in Corporate Insurance Company v Loise Wanjiru Wachira regarding the efficacy of Scott v Avery arbitration clauses
- 2.Whether a party relying on a Scott v Avery clause may use it as a defence instead of applying for a stay of proceedings under section 6 of the Arbitration Act (Cap 49)
- 3.Whether the Corporate Insurance case is distinguishable on the facts from the present appeal
- 4.Whether the appellant's application to strike out the plaint amounted to a step in the proceedings waiving reliance on the arbitration clause
Key legal issues
#Whether Scott v Avery clauses are subject to section 6 of the Arbitration Act (Cap 49) in Kenya
Yes. Because common law is subordinate to Kenyan statute law under section 3(1) of the Judicature Act, a Scott v Avery clause is no different from any other arbitration clause in Kenya and a defendant relying on it must apply for a stay under section 6.
The court distinguished the English position, where Scott v Avery clauses have common law status alterable only by express legislation. In Kenya, section 3(1) of the Judicature Act makes common law applicable only subject to written law and the circumstances of Kenya. Since the Kenyan Arbitration Act contains no classification of arbitration clauses, the clause is governed by section 6, and section 26(4) even empowers the court to order such a condition-precedent provision to cease to have effect.
Whether the Corporate Insurance Company v Wachira decision should be departed from
No. It was a reserved and well-considered decision, correctly decided, and binding on the court.
Applying the Dodhia v National & Grindlays Bank guidance, the court held the previous decision correctly reflected Kenyan statute law. The English authorities relied on by the appellant (Woodall, W. Bruce, Hardwick Game Farm, Hanessian, Kuwait Airways) were distinguished as different on facts or as resting on the different English common law position. The court would give foreign commercial decisions their due place of honour but would not apply them slavishly.
Whether the appellant took a step in the proceedings disentitling it from reliance on clause 29
Yes. Filing a chamber summons to strike out the plaint and dismiss the suit was a step in the proceedings evidencing an election to abide by the court proceedings.
Relying on Eagle Star v Yuval and Motokov v Auto Garage, the court held that any application to the court for an order in respect of proceedings is a step in the proceedings. The appellant also never applied for a stay after entering appearance, never indicated any dispute to the plaintiff, and participated in the injunction hearing. By failing to apply for a stay it disentitled itself from the benefit of clause 29.
Legal principles established
#- In Kenya, a Scott v Avery arbitration clause is subject to section 6 of the Arbitration Act; a party wishing to rely on it must apply for a stay of proceedings after appearance and before delivering any pleading.
- English common law applies in Kenya only in a subordinate position to Kenyan statute law and only so far as the circumstances of Kenya permit; English decisions on Scott v Avery clauses do not displace the Kenyan Arbitration Act.
- An application to strike out a plaint is a step in the proceedings which waives the right to rely on an arbitration clause.
- The Court of Appeal will not depart from its own well-considered previous decision merely because it conflicts with long-settled English authority.
Court orders
#- 1.The appeal is dismissed with costs to the 1st respondent
- 2.No order as to costs respecting the appeal against the 2nd respondent, who took no part in the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Agreed with the draft judgments of Pall JA and Bosire Ag JA. Held that Corporate Insurance Co v Wachira was correctly decided, that Scott v Avery clauses in Kenya are subject to section 6 of the Arbitration Act, and that English decisions should not be slavishly applied.
I have myself no doubt that the CORPORATE INSURANCE COMPANY Case was correctly decided in accordance with our law as it then stood.p. 1
Wrote the judgment
Held that the Corporate Insurance case was good law and binding; that a party relying on a Scott v Avery clause must apply for a stay of proceedings after appearance and before pleading; and that the appellant took a step in the proceedings by filing its chamber summons to strike out the plaint, disentitling it from reliance on clause 29.
I further hold that the Corporate case is good law. There is no error in it and I am bound by that decision.p. 8
Wrote the judgment
Held that under section 3(1) of the Judicature Act common law is subordinate to Kenyan statute law, so a Scott v Avery clause is no different from any other arbitration clause in Kenya and is subject to section 6 of the Arbitration Act; dismissed the preliminary point and the appeal with costs to the 1st respondent, making no order as to costs against the 2nd respondent.
a Scott v. Avery clause when looked at in light of the Kenya law and circumstances is not any different from any other arbitration clausep. 13
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C. No. 84 of 1993
- Jurisdiction invoked
- First appellate jurisdiction over an interlocutory appeal from the High Court (no specific constitutional provision stated in the judgment)
Relief refused
#Request to constitute a bench of five Judges to review the Corporate Insurance decision
The court declined and directed that the point be argued before the bench of three Judges hearing the appeal
Invitation to depart from the Corporate Insurance decision
The decision was a reserved, well-considered verdict correctly decided in accordance with Kenyan law
Striking out of the plaint and dismissal of the suit for non-compliance with clause 29
The appellant never applied for a stay of proceedings and took a step in the proceedings by filing the chamber summons to strike out
Costs
Appeal dismissed with costs to the 1st respondent; no order as to costs respecting the appeal against the 2nd respondent, who did not take part in the appeal.
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.
I therefore, dismiss the preliminary point in its entirety, and in view of the fact that the appellant’s appeal, was, by its counsel’s indication at the beginning, to be determined only on the basis of the preliminary issue, l would also dismiss the appeal with costs to the 1 st respondent.
The 2nd respondent having not taken part in this appeal I would make no order as to costs respecting the appeal against it.
I further hold that the Corporate case is good law. There is no error in it and I am bound by that decision.
a Scott v. Avery clause when looked at in light of the Kenya law and circumstances is not any different from any other arbitration clause
We will continue to give English or any other foreign decisions, particularly on commercial matters, their due place of honour, but it is unreasonable for any one to expect that we will slavishly apply those decisions without looking at our own Statutes and circumstances.
Moreover by not filing an application for stay of the legal proceedings the Appellant has disentitled itself of clause 29 of the contract.
Issues in the judgment
#The 2nd respondent is named inconsistently within the judgment - 'East African Shortage Company Limited' in the first header versus 'East African Storage Company Limited' elsewhere
The judgment contains typographical errors in quoted statutory text, e.g. 'the briging of an action' in the quotation of section 26(4)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kiunga v Wellendorf (Environment and Land Case Civil Suit E005 of 2025) [2026] KEELC 491 (KLR)[2026] KEELC 491 (KLR)29 Jan 2026
- National Irrigation Authority formerly the National Irrigation Board v Satom SA (Civil Appeal E933 of 2023) [2025] KECA 1472 (KLR)[2025] KECA 1472 (KLR)12 Sept 2025
Cite this brief
#Cite this brief
Caselaw, "KISUMUWALLA OIL INDUSTRIES LIMITED v PAN ASIATIC COMMODITIES PTE LIMITED & another [1997] KECA 107 (KLR)", Case Analysis (1997). Civil Appeal No. 100 of 1995. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1997/107/eng@1997-02-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.