AL. SAI (K) LTD v SEGWAYS BEACH HOTEL LTD [2011] KECA 350 (KLR)
The bottom line
#Kenya's Court of Appeal refused to halt an arbitration ordered by the High Court, ruling that parties must honour arbitration clauses they signed before rushing to court.
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 orders of the High Court of 10th June 2010, including the reference of the dispute to arbitration, should be stayed pending the hearing and determination of the intended appeal
- 2.Whether the intended appeal is arguable and whether the orders sought would be rendered nugatory if refused
Key legal issues
#Whether a stay of the High Court's orders referring the dispute to arbitration should be granted under Rule 5(2)(b) of the Court of Appeal Rules
The application was refused as lacking merit and as an abuse of the court process.
The Court examined clause 29 of the Management Agreement and found that it provided for all disputes to be referred to arbitration by the named joint arbitrators or a single arbitrator appointed by the Chairman of the Law Society of Kenya. The learned judge's order merely implemented the contractual scheme. The applicant, having terminated the agreement and taken over the hotel, could not use a stay application to escape the arbitration to which it had agreed. Counsel for the applicant did not even address arguability.
Whether a stay of the prohibitory injunction over specified hotel items could be granted
The Court declined to stay the injunction, expressing inability to see how such a stay could operate in respect of the listed items.
The applicant sought a stay of a prohibitory injunction restraining interference with the respondent's kitchen equipment, stocks, furniture, fittings and installations including the Chinese kitchen and restaurant. The Court found the request conceptually unworkable and addressed no substantive analysis to it, treating it as an untenable component of the application.
Legal principles established
#- Where the contract itself mandates arbitration of all disputes, a party wishing to challenge interim orders ancillary to the reference must first go to arbitration; an appellate stay application seeking to avoid the contractual reference is an abuse of court process.
- Any application to extend the period within which an arbitral award must be submitted, where the reference was ordered by a superior court, must be made to that referring court, not to the Court of Appeal on a stay application.
Court orders
#- 1.The application for stay of execution pending the intended appeal is dismissed
- 2.No orders for costs - each party bears its own costs of the application
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C. No. 254 of 2009
- Jurisdiction invoked
- Sections 3, 3A, 3B and Rule 5(2)(b) of the Appellate Jurisdiction Act
Relief refused
#Stay of the orders requiring the dispute to be referred to the arbitrators
The Management Agreement itself provided for arbitration of all disputes, which is exactly what the learned judge ordered; instead of going for arbitration the applicant chose to come to this Court.
Stay of the prohibitory injunction relating to the Chinese kitchen, Chinese restaurant, television sets, air conditioners, furniture, fittings and kitchen equipment
The Court could not understand how a stay of a prohibitory injunction could be granted in respect of the specified items.
Stay of the direction requiring the arbitrators to complete deliberations and submit their award within 90 days
This was in substance a request for extension of time for the award, which if needed must be sought from the court that referred the matter to arbitration.
Costs
The application is dismissed with no orders for costs.
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.
Having carefully considered the background facts to this application and what has been urged before us, we are of the firm view that this application is devoid of any merit. It is clearly an abuse of the Court process and we have no hesitation in rejecting it.
Accordingly, the application is dismissed but with no orders for costs.
If such an extension of time is needed, then the Court which referred the matter to arbitration ought to be asked to grant such extension of time in which the award should be submitted.
Instead of going for arbitration the applicant chose to come to this Court vide this application which was filed on 14th July, 2010.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "AL. SAI (K) LTD v SEGWAYS BEACH HOTEL LTD [2011] KECA 350 (KLR)", Case Analysis (2011). Civil Application No. NAI. 175 of 2010 (UR. 126/2010). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2011/350/eng@2011-03-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.