Sucham Investments Limited T/A Amani Tiwi Beach Resort v Kenya Hotel and Allied Workers Union (khawu) & 1 other

The court accepted the Judge's finding that mere closure of the business did not terminate the recognition agreement, which required termination under section 54(5) of the Labour Relations Act or a court order. However, the Judge overlooked that the entity which re-opened the hotel in October 2012 under the name Amani Tiwi Beach Resort was legally distinct from Tiwi Beach Resort (Sucham Investments Ltd) which had executed the 2006 agreement. Invoking Salomon v Salomon and section 16(2) of the Companies Act, and the doctrine of privity of contract, the court held the appellant could not be held liable for another entity's contractual obligations.

The court accepted counsel's submission, anchored on Article 36 of the Constitution on freedom of association, that an employer has the right to choose the union with which to enter a recognition agreement, provided that union has recruited 51% of the employees, the two rights being construed in harmony. Since there was no privity binding the appellant to the 1st respondent, the order compelling it to negotiate a fresh CBA with the 1st respondent could not stand.

The court acknowledged two divergent decisions - Koskei J.'s in Cause No. 39 of 2007 excluding KUDHEIHA from the hotel industry and the three-judge bench decision in Petition No. 5 of 2013 upholding KUDHEIHA's freedom of association. Following Rika J.'s approach, the court declined to be drawn into that controversy, as its role was only to determine whether the Judge erred in the orders against the appellant.