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ELRCDismissedChamber Summons dated 18 January 2024 (Cause number not stated in the judgment)

Muhamed v Deltar M.N. Properties Limited (Cause E1018 of 2023) [2025] KEELRC 1692 (KLR)

Employment and Labour Relations Court
12 June 2025
RSRADIDO STEPHEN
765 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employment court ruled that an unfair termination claim can go to court even when the employment contract contains an arbitration clause.

What this practically means

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Executive summary

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Deltar M.N. Properties Ltd, by Chamber Summons dated 18 January 2024, sought referral of the dispute to arbitration and a stay of proceedings under clause 21 of the contract of service with its former employee, Hanan Zaili Muhamed, who had sued for unfair termination. The Respondent argued the Claimant disregarded and failed to disclose the arbitration clause. The Claimant opposed, contending that the disputes raised were outside the arbitration clause, which concerned disputes during the employment relationship; that arbitration was not mandatory or suitable for termination disputes; and that the clause was unconscionable given the power imbalance, and that she could not afford arbitration costs. The Court examined clause 21, which required disputes over the interpretation, rights, obligations and/or implementation of the contract to go first to negotiation and then to arbitration under the Arbitration Act. It framed the question as whether the action revolved around the interpretation of contract terms, and held that the gravamen of the Claimant's action was unfair termination and violation of rights to fair labour practices under the Constitution and the Employment Act, going beyond contract interpretation and requiring examination of legal breaches. The Claimant therefore did not breach the arbitration clause by moving the Court. The Court observed, obiter, that ADR is always desirable before invoking the Court's jurisdiction and that it may refer disputes to ADR on its own motion, but declined to do so. The Summons was dismissed with costs in the cause.

Questions the Court framed

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

  1. 1.Whether the dispute should be referred to arbitration as per the arbitration agreement (clause 21 of the contract of service)
  2. 2.Whether proceedings in the suit should be stayed pending reference to arbitration
  3. 3.Whether the Claimant breached the arbitration clause by moving the Court directly

Key legal issues

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01

Whether the dispute fell within the scope of the arbitration clause (clause 21)

Holding

It did not; the Claimant's action for unfair termination and violation of fair labour practices went beyond interpretation of contract terms, so the arbitration clause was not triggered.

Reasoning

The arbitration clause covered disputes about the interpretation, rights, obligations and/or implementation of the contract's provisions. The gravamen of the Claimant's suit was unfair termination and violation of rights to fair labour practices under the Constitution and the Employment Act. Although clause 10 dealt with termination on notice, her assertions required examination of legal breaches, not mere contract interpretation. She therefore did not breach the arbitration clause by filing suit.

p. 2
02

The desirability of alternative dispute resolution

Holding

ADR is desirable before invoking the Court's jurisdiction, and the Court may refer a dispute to ADR on its own motion, but no reference was made here.

Reasoning

The Court noted obiter that attempting ADR before invoking the Court's jurisdiction is always desirable, and that it can even refer a dispute to ADR fora on its own motion. However, having found the dispute outside the arbitration clause, the Court did not exercise that power and dismissed the application.

p. 2

Legal principles established

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  • A party does not breach an arbitration clause by going to court where the dispute raised extends beyond the interpretation, rights, obligations or implementation of the contract and requires examination of legal breaches (such as unfair termination and constitutional/statutory violations).
  • Courts encourage alternative dispute resolution, and may even refer disputes to ADR fora on their own motion.

Court orders

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  1. 1.The Summons dated 18 January 2024 is dismissed with costs in the cause.

The bench

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

RS
majority

Wrote the judgment

Jurisdiction invoked
Original employment and labour relations jurisdiction; the application was brought under the Arbitration Act and the contract's arbitration clause (clause 21)

Relief refused

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Reference of the dispute to an arbitrator as per the terms of the Agreement

The dispute concerned unfair termination and violation of constitutional and statutory rights, extending beyond the interpretation of contract terms covered by the arbitration clause

p. 2

Stay of proceedings in the suit pending reference to arbitration

No reference to arbitration was warranted, so no stay could issue

p. 2

Costs

Dismissed with costs in the cause.

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.

The Court finds that the Claimant did not breach the arbitration clause when she moved the Court.
p. 2No breach of arbitration clause
The gravamen of the Claimant’s action is unfair termination of employment and violation of the rights to fair labour practices in terms of the Constitution and Employment Act.
p. 2Scope of the dispute
The Summons dated 18 January 2024 is dismissed with costs in the cause.
p. 3Final orders

Issues in the judgment

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minor

The Cause number of the suit is not stated in the judgment, only the Chamber Summons date.

minor

Dates are inconsistent: the Respondent's submissions are recorded as filed 24 May 2024 and the Claimant's replying affidavit and submissions as 3 July 2024, suggesting submissions pre-dated the reply chronology.

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, "Muhamed v Deltar M.N. Properties Limited (Cause E1018 of 2023) [2025] KEELRC 1692 (KLR)", Case Analysis (2025). Chamber Summons dated 18 January 2024 (Cause number not stated in the judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1692/eng@2025-06-12

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