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IndustrialDismissedNot stated in the judgment as provided

Mwangi & 183 others v Kenya Shell Ltd (Cause 752 of 2011) [2011] KEIC 1 (KLR)

Industrial Court of Kenya
29 September 2011
3,371 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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Kenya's Industrial Court confirmed it alone decides employment disputes, but employees must first ask the High Court to lift an earlier order blocking their case.

What this practically means

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Executive summary

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The claimants, employees of Kenya Shell Ltd, filed a memorandum of claim seeking declarations that the intended sale of the respondent's business in Kenya amounted to a material change in their employment relationship, wrongful and unfair dismissal, and redundancy entitling them to compensation, together with an injunction restraining the sale or transfer of shares pending their consent or payment of redundancy benefits. They also sought to vacate a stay of proceedings that the respondent had obtained from the High Court in judicial review proceedings (Miscellaneous Application No. 254 of 2010) challenging the Industrial Court's jurisdiction. The claimants argued the court was seized of jurisdiction, that the respondent was forum shopping, and relied on Musinga J's ruling in Petition No. 573 of 2009 and on the High Court decision in Jane Maina v. KTDA. The respondent contended that the Industrial Court as then constituted was not the Article 162(2) court, that the High Court retained supervisory jurisdiction, and that the sale by its shareholders did not affect the claimants' employment rights. The court held that it has exclusive jurisdiction over the labour dispute: section 22 of the Sixth Schedule preserved its jurisdiction pending establishment of the Article 162(2) court, and the Industrial Court Act 2011 (section 32) endorsed it as that court. It found the employees' rights squarely engaged by the proposed transaction, the respondent being the face of its shareholders. However, the court declined to vacate the High Court order, which remains valid until vacated, and for that reason was unable to grant any of the substantive orders sought for the time being.

Questions the Court framed

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

  1. 1.Whether the Industrial Court has jurisdiction to hear this employment dispute and to determine its own jurisdiction notwithstanding the High Court judicial review proceedings
  2. 2.Whether the Industrial Court as constituted is the court contemplated under Article 162(2) of the Constitution
  3. 3.Whether the court has power to vacate the High Court order staying/prohibiting proceedings in this matter
  4. 4.Whether the intended sale of the respondent's business affects the claimants' rights as employees

Key legal issues

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01

Jurisdiction of the Industrial Court post-2010 Constitution

Holding

The Industrial Court, as reconstituted under the Industrial Court Act 2011, is the court contemplated by Article 162(2) of the Constitution and has exclusive jurisdiction over labour disputes; the High Court has no supervisory jurisdiction over it and cannot entertain matters within its jurisdiction under Article 165(2)

Reasoning

The court relied on section 22 of the Sixth Schedule which preserves jurisdiction pending establishment of the Article 162(2) court, and on section 32 of the Industrial Court Act 2011 whose transition clauses deemed the existing court and its judges and staff to be continued under the new Act. It endorsed Musinga J's ruling in Petition No. 573 of 2009 and held that any dissatisfaction lies by appeal to the Court of Appeal, not by judicial review in the High Court.

p. 7
02

Whether the intended sale of the respondent's business engages the claimants' employment rights

Holding

The respondent cannot divorce itself from its shareholders; the claimants' rights as employees are at the heart of the proposed transaction and the dispute is a labour dispute within the court's jurisdiction

Reasoning

The court rejected the argument that the sale by shareholders does not affect the respondent. The respondent contracts with employees on behalf of its shareholders and is arranging the sale on their behalf. Employees are entitled to know the identity of the new employer, whether to continue serving, and who will settle accrued rights. The dispute therefore flows from the employment contracts and is a labour dispute.

03

Power to vacate the High Court order

Holding

Although the court has jurisdiction to hear the case, it cannot vacate the High Court order prohibiting proceedings, which remains valid until vacated by the High Court

Reasoning

The order was made prior to the promulgation of the new Constitution and the enactment of the Industrial Court Act 2011. The court expressed hope that the parties would petition the High Court to vacate its orders so that the dispute could be heard as prescribed by the Constitution and the new Act.

p. 7

Legal principles established

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  • The Industrial Court has exclusive jurisdiction over labour disputes, and a respondent cannot oust that jurisdiction by resort to the High Court by way of judicial review
  • An order of a court remains valid and binding until vacated, even if the basis for it has fallen away

Court orders

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  1. 1.The court declined to grant any of the substantive orders sought in the claimants' application for the time being
  2. 2.The court expressed its willingness to proceed to hear the matter once the High Court order is vacated

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) of the Constitution of Kenya 2010; section 22 of the Sixth Schedule; Industrial Court Act 2011; section 87 Employment Act 2007 and section 112 Labour Institutions Act 2007

Relief refused

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Vacation of the High Court order staying proceedings and restoration of the interlocutory injunction

The court held it has jurisdiction to proceed but lacks power to vacate the High Court order made before the new Constitution and the Industrial Court Act 2011; parties should petition the High Court to vacate it

p. 7

Costs

No costs order made in the judgment.

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 logical conclusion of our foregoing conclusions is that we have the jurisdiction to proceed to hear this case.
p. 7Jurisdiction of the Industrial Court
In the circumstances we are unable to grant any of the substantive orders sought for the time being.
p. 7Final disposition
Parliament has therefore spoken in a clear and loud voice.
p. 7Legislative endorsement of the Industrial Court under the Industrial Court Act 2011
The dispute is therefore a labour dispute since it flows from the claimants' employment contracts with the respondent.
p. 5Characterisation of the dispute as a labour dispute

Issues in the judgment

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minor

Inconsistent case-number references: the claimant's counsel's citation of Petition No. 573 of 2009 is later referred to by the court as 'petition 573 of 2010'

minor

Date inconsistencies in the chronology: the memorandum of claim is stated as filed 30th June 2010 while the Notice of Motion is dated 30th June 2011, and the stay order of 20th July 2011 is later referred to as recorded on 20th July 2010

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, "Mwangi & 183 others v Kenya Shell Ltd (Cause 752 of 2011) [2011] KEIC 1 (KLR)", Case Analysis (2011). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2011/1/eng@2011-09-29

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