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ELRCDismissedNot stated in the judgment

Okeyo v Board of Directors HHI Management Service Ltd & another (Cause E970 of 2023) [2024] KEELRC 1006 (KLR)

Employment and Labour Relations Court of Kenya
6 May 2024
2,895 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that an arbitration clause in an employment contract cannot force an employee out of court and into arbitration.

What this practically means

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Executive summary

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The 2nd respondent, the claimant's former employer, moved by chamber summons dated November 27, 2023 under section 6(1) of the Arbitration Act, 1995 seeking a stay of the employment claim and referral to arbitration pursuant to clause 6.2 of the employment contract dated May 30, 2021, which required mediation and then arbitration before any right of action. The claimant, formerly the Group CEO, opposed the application, arguing that the arbitration clause could not oust the court's jurisdiction, that the Employment Act permits the court to override less favourable contractual terms, that arbitration would be expensive for him, and that the respondent had acted in bad faith. The sole issue was whether the application was merited, specifically whether section 6(1) of the Arbitration Act ousted the court's jurisdiction. The court held it did not: its exclusive jurisdiction over employment disputes flows from article 162(2)(a) of the Constitution and section 12 of the ELRC Act; the arbitral law was principally intended for commercial disputes; section 15(1) of the ELRC Act deliberately omits arbitration as an ADR mechanism; and arbitral clauses in employment contracts reflect unequal bargaining power and are imposed by employers. Applying section 26 of the Employment Act and section 6(3) of the Arbitration Act, and adopting the reasoning in Sammy Onyango Ochieng, Wanguhu and Dr Kennedy Amuhaya Wanyonyi, the court found the application unmerited and dismissed it with no orders as to costs on May 6, 2024.

Questions the Court framed

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

  1. 1.Whether the 2nd respondent's chamber summons dated November 27, 2023 seeking a stay of the claim and referral to arbitration is merited
  2. 2.Whether section 6(1) of the Arbitration Act, 1995 ousts the ELRC's jurisdiction to hear and determine a suit based on an employment contract containing an arbitral clause
  3. 3.Whether the issue of referral to arbitration was already addressed in the ruling delivered on December 7, 2023

Key legal issues

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01

Whether an arbitration clause in an employment contract mandates a stay of proceedings under section 6(1) of the Arbitration Act

Holding

No. The court declined to stay the employment claim and refer it to arbitration, holding the Arbitration Act was principally intended for commercial disputes and that the ELRC's exclusive jurisdiction under article 162(2)(a) and section 12 of the ELRC Act is not ousted by an arbitral clause.

Reasoning

The court traced its exclusive jurisdiction to article 162(2)(a) of the Constitution and section 12 of the ELRC Act. It noted section 15 of the ELRC Act, which governs referral to ADR, is silent on arbitration - a deliberate legislative omission. It relied on the Supreme Court's guidance in Synergy Industrial Credit v Cape Holdings and Maureen Onyango J's decision in the AMREF case. It found arbitral clauses are imposed on employees due to unequal bargaining power, and that arbitration is not more favourable to the employee than litigation under the Employment Act, whose minimum conditions apply via section 26.

p. 7
02

Effect of section 6(3) of the Arbitration Act where a stay is declined

Holding

Where the court declines a stay, any provision making an arbitral award a condition precedent to litigation is of no effect in those proceedings.

Reasoning

The court observed that although section 6(1) is couched in mandatory tone, section 6(3) addresses instances where a stay is not granted, neutralising condition-precedent clauses in the arbitration agreement. This reinforced the court's power to proceed with the employment claim notwithstanding clause 6.2 of the contract.

p. 7

Legal principles established

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  • The ELRC retains exclusive original jurisdiction over employment disputes notwithstanding an arbitration clause in the employment contract
  • Section 15(1) of the ELRC Act deliberately omits arbitration as an ADR mechanism, so referral to arbitration requires consent of both parties
  • Arbitral clauses in employment contracts are atypical and reflect unequal bargaining power between employer and employee

Court orders

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  1. 1.The 2nd respondent's chamber summons dated November 27, 2023 is dismissed
  2. 2.No orders as to costs

The bench

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

majority

Wrote the judgment

Jurisdiction invoked
Article 162(2)(a) of the Constitution of Kenya, 2010 read with section 12 of the Employment and Labour Relations Court Act, 2011

Relief refused

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Stay of the claim and referral of the dispute to arbitration under section 6(1) of the Arbitration Act, 1995

The court found the arbitration law was intended for commercial disputes, not employment disputes, and section 15(1) of the ELRC Act omits arbitration as an ADR mechanism; the court was not persuaded that arbitration is more favourable than litigation for the employee

p. 7

Costs

The chamber summons was dismissed with no orders as to costs

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.

only the Employment and Labour Relations Court has exclusive jurisdiction to hear and determine disputes relating to employment and labour relations pursuant to article 162(2)(a) of the Constitution of Kenya, 2010 read with section 12 of the Employment and Labour Relations Court Act, 2011.
p. 6Exclusive jurisdiction of the ELRC
it is clear that the arbitral law in Kenya was principally intended to resolve commercial disputes, as opposed to employment disputes as is the case in the instant case.
p. 7Scope of the Arbitration Act
The court is not persuaded that reference of an employment dispute to arbitration is more favourable than litigation which is an integral part of part VI of the Act.
p. 8Section 26 Employment Act - more favourable terms
it is the finding of the court that the 2nd respondent’s chamber summons dated November 27, 2023 is unmerited and it is accordingly dismissed with no orders as to costs.
p. 9Final orders

Issues in the judgment

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minor

The judgment inconsistently names the AMREF decision author/case name, referring to 'Dr Kennedy Amuhaya Manyonyi' in paragraph 47 while the submissions cite 'Dr Kennedy Amuhaya Wanyonyi'

minor

The judgment refers to 'the court's view is also clear under paragraph 156' apparently quoting Synergy Industrial Credit without context

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Okeyo v Board of Directors HHI Management Service Ltd & another (Cause E970 of 2023) [2024] KEELRC 1006 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1006/eng@2024-05-06

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