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ELRCPartially AllowedNot stated in the judgment (Cause filed 2 July 2015)· [2015] KEELRC 88 (KLR)

Walter Onyango Odhiambo v Khetia Drapers Limited [2015] KEELRC 88 (KLR)

Employment and Labour Relations Court
18 December 2015
RSRadido Stephen
515 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~2 min to read original · ~4 min brief

The bottom line

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A Kenyan court halted an unfair dismissal lawsuit because the employment contract required arbitration first, but sent the dispute to a neutral Labour Officer instead of the employer's managers.

What this practically means

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Executive summary

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The Claimant, Walter Onyango Odhiambo, sued Khetia Drapers Ltd on 2 July 2015 alleging unlawful/illegal termination of employment. Instead of filing a Response, the Respondent filed a motion on 20 July 2015 seeking a stay of proceedings and referral of the dispute to arbitration, relying on Clause 19 of the Memorandum and Employment Contract. That clause provided that disputes between the company and the employee be referred, in preferred order, to the Manager, Senior Management or District Labour Office, and failing resolution, to an agreed arbitrator or, in default, the Chairman of the Chartered Institute of Arbitrators (Kenya Branch). The Court, considering the motion, supporting affidavit and grounds of opposition, held that the clause's terms and scope clearly covered disputes concerning termination of employment and found merit in the motion to stay proceedings pending arbitration. However, because the dispute alleged an unlawful act by the Respondent, the Court held it would be unfair to refer it to the Respondent's Managers; an independent and neutral person should arbitrate. Noting that the default arbitration by the Chartered Institute's Chairman could attract expenses, the Court directed the parties to submit to the County Labour Officer, Kitale (the District Labour Officer at the time of the agreement's execution), the only office able to arbitrate without direct expense to the parties. Prayers 2 and 3 were granted with that rider; the stay was limited to 90 days for the arbitration and filing of a report, with a mention on 18 March 2016. Costs of the motion were made costs in the cause.

Key legal issues

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01

Whether the termination dispute falls within the arbitration clause in Clause 19 of the Memorandum and Employment Contract

Holding

The Court held that the clause covered disputes concerning termination of employment, warranting a stay pending arbitration

Reasoning

The employment relationship was reduced to writing, and Clause 19 provided a tiered dispute resolution mechanism ending in arbitration by an agreed arbitrator or, in default, the Chairman of the Chartered Institute of Arbitrators (Kenya Branch). The Court found the clause's terms and scope left no doubt that termination disputes were included. The motion to stay proceedings pending arbitration was therefore found to have merit.

p. 1
02

Who should conduct the arbitration given the allegation of an unlawful act by the Respondent

Holding

The Court modified the clause's mechanism, directing the parties to the County Labour Officer, Kitale, as a neutral and cost-free arbitrator

Reasoning

Because the claim alleged an unlawful act by the Respondent, it would be unfair to have the Respondent's Managers resolve it; an independent and neutral person should arbitrate. The default arbitration by the Chairman of the Chartered Institute of Arbitrators might attract expenses, so the County Labour Officer (formerly the District Labour Officer named in the agreement) was the only office able to arbitrate without direct expense to the parties in the first instance.

p. 2

Legal principles established

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  • Where an employment contract contains an arbitration clause covering disputes, the court should stay proceedings pending arbitration where the dispute falls within the clause
  • A dispute alleging an unlawful act by an employer should not be referred to the employer's own internal management for resolution; an independent and neutral person should arbitrate it

Court orders

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  1. 1.Prayers 2 and 3 of the motion granted - proceedings in the cause stayed pending arbitration
  2. 2.Parties to submit the dispute to arbitration by the County Labour Officer, Kitale
  3. 3.Stay of proceedings in force for 90 days to enable the County Labour Officer to arbitrate and file a report with the Court before expiry of the 90 days
  4. 4.Cause to be mentioned on 18 March 2016 to confirm the results of the arbitration
  5. 5.Costs of the motion shall be in the cause
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes; motion under the Court's procedure to stay proceedings pending arbitration per the parties' contract

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, "Walter Onyango Odhiambo v Khetia Drapers Limited [2015] KEELRC 88 (KLR)", Case Analysis (2015). Not stated in the judgment (Cause filed 2 July 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/88/eng@2015-12-18

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