Areva T & D India Limited v Priority Electrical Engineers & Ezetec Limited
The bottom line
#Kenya's Court of Appeal ruled that parties must honour agreed foreign arbitration clauses unless they prove special, exceptional reasons to depart.
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 give effect to the exclusive jurisdiction clause conferring jurisdiction on the Courts of Delhi, India, in a contract performed in Kenya
- 2.Whether the respondent established special and exceptional circumstances to depart from the exclusive jurisdiction/arbitration clause
- 3.Whether the High Court had jurisdiction to order the parties to agree on a single arbitrator and to fix timelines for arbitration
Key legal issues
#Effect of exclusive jurisdiction and arbitration clauses in contracts performed in Kenya
The clause must be given effect; the party seeking to avoid it bears the burden of showing strong, special and exceptional reasons, which mere inconvenience, oppression allegations without particulars, or urgency do not satisfy.
The court adopted the English line of authority (The Fehmarn, EI Amria, Makefjell) and Madan JA's formulation in United India Insurance. Business people choose arbitration for expeditious resolution, so urgency negates rather than supports departure. The respondent's affidavits asserted 'special and exceptional circumstances' without specifying them, so the burden was not discharged.
Jurisdiction of the High Court to appoint an arbitrator and set arbitration timelines
The High Court exceeded its jurisdiction by ordering the parties to agree on a single arbitrator within fourteen days, failing which the Chairman of the Institution of Engineers of Kenya would appoint one.
Having declined to stay the suit, the Judge went 'one step further' and effectively varied the parties' agreed dispute-resolution mechanism. The court held this order was without jurisdiction, as the choice of arbitrator and procedure was a contractual matter the court could not impose.
Legal principles established
#- An exclusive jurisdiction/forum-selection clause freely agreed by the parties must be honoured unless special and exceptional circumstances affording strong reason for departure are shown, and the burden lies on the party resisting the clause.
- A court has no jurisdiction to re-write a contract or to impose an arbitrator and arbitration timelines on parties who agreed otherwise.
Court orders
#- 1.Appeal allowed
- 2.Orders made by the High Court set aside
- 3.All prayers in the Memorandum of Appeal allowed
- 4.Costs awarded to the appellant both in the Court of Appeal and in the High Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the lead judgment: exclusive jurisdiction clauses must be honoured absent special and exceptional circumstances; none were established; the High Court's order appointing an arbitrator was without jurisdiction.
I fully agree that the rule that the parties should be held to their bargain should only be departed from in a special and exceptional case.p. 5
Wrote the judgment
Concurred with Visram JA, adopting his recitation of facts; held no exceptional circumstances justified departing from the agreed New Delhi arbitration venue, and a court cannot re-write a contract.
It is trite that a court cannot re-write a contract for the parties.p. 5
- On appeal from
- High Court of Kenya at Nairobi
- H C C C No 536 of 2009
- Jurisdiction invoked
- First appellate jurisdiction over an interlocutory ruling of the High Court; judgment delivered under rule 31(3) of the Court of Appeal Rules
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.
Accordingly, and for reasons stated, I allow the appeal, and set aside the orders made by the High Court, and I allow all the prayers outlined in the Memorandum of Appeal. I also award costs to the appellant, both here and in the High Court.
I fully agree that the rule that the parties should be held to their bargain should only be departed from in a special and exceptional case.
The burden of proving such a strong case is on the plaintiffs.
It is trite that a court cannot re-write a contract for the parties.
Business people choose arbitration over courts mainly because they want a more expeditious resolution of disputes.
Issues in the judgment
#United India Insurance citation appears inconsistently as [1985] KLR 998 and [1985] KLR 898
Bosire JA appears in coram but no judgment by him is included
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Areva T & D India Limited v Priority Electrical Engineers & Ezetec Limited", Case Analysis (2012). Civil Appeal No 103 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2012/258/eng@2012-05-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.