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Court of AppealAllowedCivil Application No. Nai. 326 of 1998 (130/98 UR)

RAYTHEON AIRCRAFT CREDIT CORPORATION & NAC AIRWAYS LIMITED vs AIR ALFARAJ LIMITED [1998] KECA 213 (KLR)

Court of Appeal
15 January 1999
1,521 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~6 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that a negotiated choice of foreign court and law in a contract binds parties unless the plaintiff shows strong cause to ignore it.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Nairobi (Kwach, Tunoi and Shah JJ.A) on a notice of motion seeking a stay of further proceedings in the High Court pending an intended appeal. The underlying suit, filed by Air Alfraj Limited against Raytheon Aircraft Credit Corporation and NAC Airways Limited, sought a mandatory injunction for the return of a Beechcraft 1900 aircraft, a permanent injunction, and a declaration that the defendants' repossession was unlawful. Before Mbogholi Msagha J, the defendants raised preliminary objections contending that the High Court lacked jurisdiction because the contract contained a choice of law and forum clause pointing to Kansas, USA. The judge ruled against them, and the defendants sought a stay pending appeal. The Court of Appeal held the intended appeal arguable, not frivolous, noting that issues of forum and applicable law are weighty. It held that a formal stay application in the superior court was not indispensable, since a jurisdictional point taken by preliminary objection could be ruled upon. It found it arguable whether section 60(1) of the Constitution ousts a freely negotiated jurisdiction clause, and criticised the judge's reliance on Pattni v Ali as out of place. It reaffirmed that strong cause must be shown by a plaintiff to depart from a jurisdiction and applicable law clause. On the nugatory test, the aircraft had been flown to South Africa and any return order might be unenforceable. The court allowed the application and stayed further proceedings in H.C.C.S. No. 1611 of 1998 pending the intended appeal, with costs in the intended appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the intended appeal is frivolous or arguable
  2. 2.Whether a stay of proceedings could be granted where no formal application for stay was made in the superior court, the point having been raised as a preliminary objection
  3. 3.Whether the result of the intended appeal would be rendered nugatory if a stay is not ordered
  4. 4.Whether the High Court's jurisdiction under section 60(1) of the Constitution can be ousted by a freely negotiated choice of law and forum clause

Key legal issues

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01

Whether a stay of proceedings pending appeal could be granted where none was formally sought in the superior court

Holding

Yes. A jurisdictional point raised by way of preliminary objection suffices; a formal application is prudent but not mandatory.

Reasoning

The defendants raised the jurisdiction of the High Court by preliminary objection rather than a formal stay application. The court held that a preliminary objection is a point of law which, if successful, would dispose of the suit, and that the superior court had jurisdiction to decide it. Whilst prudence favours a formal application, the High Court may hear arguments and rule on such a point. The objection that no stay was sought below therefore failed.

p. 2
02

Whether the intended appeal was arguable

Holding

The intended appeal was arguable and not frivolous; issues of forum and applicable law are weighty issues.

Reasoning

The court found the point in issue clearly arguable, noting that authorities relied on by both counsel establish that issues of forum and applicable law are weighty. It was also arguable whether the judge was right to find the forum term oppressive because it bound only the plaintiff while the first defendant had an unlimited choice of fora, and whether section 60(1) of the Constitution ousts a freely negotiated jurisdiction clause.

p. 2
03

Whether the appeal would be rendered nugatory without a stay

Holding

Yes. The aircraft, the subject-matter, had been flown to South Africa and any order for its return might not be enforceable, while the defendants appeared able to pay damages.

Reasoning

The nugatory test was satisfied because the aircraft was outside the jurisdiction and an order for its return to Kenya might not be enforceable. The court reasoned that a court should not make an order it knows to be incapable of enforcement, and there was no suggestion the defendants could not pay damages for breach of contract. Both prime requirements for a stay of proceedings pending appeal were therefore met.

p. 3
04

Whether convenience of the plaintiff alone can oust a jurisdiction and applicable law clause

Holding

No. Convenience of the plaintiff alone cannot by itself oust a jurisdiction and applicable law clause; strong cause must be shown by the plaintiff.

Reasoning

The court criticised the learned judge's reliance on Kuloba J's observations in Pattni v Ali regarding the High Court's unlimited original jurisdiction under section 60(1) of the Constitution, holding those remarks out of place and not germane. It held that a plaintiff's convenience in choosing a forum cannot by itself displace a freely negotiated jurisdiction and applicable law clause; strong cause, borne by the plaintiff, is required.

p. 3

Legal principles established

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  • A preliminary objection consists of a point of law which has been pleaded or arises by clear implication out of a pleading or application, and which if argued as a preliminary point may dispose of the suit.
  • The High Court has jurisdiction to hear and rule on a jurisdictional point raised as a preliminary objection even where no formal application for stay of proceedings was filed.
  • Strong cause must be shown to justify departure from a jurisdiction and applicable law clause, and the onus of showing such strong cause lies on the plaintiff.
  • A court should not make an order which to its knowledge is incapable of enforcement.

Court orders

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  1. 1.Further proceedings in High Court Civil Case Number 1611 of 1998 stayed pending the hearing and determination of the intended appeal
  2. 2.Costs of the application to be in the intended appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
High Court of Kenya at Nairobi
H.C.C.S. No. 1611 of 1998
Jurisdiction invoked
Appellate jurisdiction of the Court of Appeal over an intended appeal from the High Court (rule 5(2)(b) application for stay of proceedings pending appeal)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

A preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of a pleading or an application before the court and which, if argued as a preliminary point, may dispose of the suit.
p. 2Definition of a preliminary objection
Strong cause must be shown to justify a departure from the jurisdiction and applicable law clause, and the onus of showing such strong cause lies on the plaintiff.
p. 3Departure from choice of forum and law clauses
We allow the application and order that further proceedings in High Court Civil Case Number 1611 of 1998 be and are hereby stayed pending the hearing and determination of the intended appeal.
p. 3Final orders - stay of proceedings granted
A court should not make an order which to its knowledge is incapable of enforcement
p. 3Nugatory principle / enforceability of orders

Issues in the judgment

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minor

The delivery date is stated as 15th January 1998, which precedes the High Court ruling of 8th October 1998 that the application appeals from; the date is almost certainly 15th January 1999.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "RAYTHEON AIRCRAFT CREDIT CORPORATION & NAC AIRWAYS LIMITED vs AIR ALFARAJ LIMITED [1998] KECA 213 (KLR)", Case Analysis (1999). Civil Application No. Nai. 326 of 1998 (130/98 UR). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/213/eng@1998-01-15

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.