Wambua v Unity Micro Investments Limited & another (Commercial Case E1442 of 2025) [2026] SCC 94 (KLR)
The bottom line
#The Mombasa Small Claims Court struck out a KShs 1 million claim because the parties' contract required them to resolve disputes through negotiation and arbitration, not court.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Small Claims Court has jurisdiction to hear the claim in light of the arbitration clause in the investor agreement dated 27th May 2021
- 2.Whether the Chamber Summons Application for stay of proceedings and referral to arbitration should be allowed
- 3.Whether there exists a dispute capable of being referred to arbitration
Key legal issues
#Whether the Small Claims Court has jurisdiction where the underlying agreement contains an arbitration clause
The court lacked jurisdiction to determine the claim because the dispute falls squarely within the parties' arbitration clause, which had not been engaged and was not shown to be null, void, inoperative or incapable of performance
Section 6(1) of the Arbitration Act obliges a court, on application, to stay proceedings and refer parties to arbitration where the matter is subject of an arbitration agreement, unless the agreement is null and void, inoperative or incapable of being performed, or there is no dispute. The claimant asserted a claim which the respondent denied, so a dispute existed. The pre-condition of prior good-faith negotiations between authorised officials had not been satisfied. The court therefore could not determine the claim without usurping the arbitrator's powers and rewriting the parties' contract.
Whether a dispute exists capable of referral to arbitration where the claim is not denied in substance but contested
A dispute existed because the claimant sought the court's intervention to ascertain its rights while the respondent averred it owed no money
Relying on Black's Law Dictionary's definition of a dispute as a conflict of claims or rights, the adjudicator held that the claimant's assertion of a right met by the respondent's contrary assertion that it owed nothing constituted a dispute. The mere framing of a claim does not remove a matter from the arbitration clause; the existence of contrary positions discloses a dispute that must first go through the negotiated negotiation-then-arbitration process.
Whether the pre-arbitration negotiation step under Clause 15.1.1.1 had been complied with
No cogent evidence of good-faith negotiations between authorised officials of each party was placed before the court
Clause 15.1.1.1 required the parties first to attempt in good faith to resolve disputes by negotiations between officials with authority to settle, failing which the matter would be referred to arbitration. Neither party produced evidence that such negotiations had occurred. The court therefore found the contractual dispute-resolution process unengaged, reinforcing the conclusion that the claim could not proceed before the court.
Jurisdiction of the Small Claims Court generally
Jurisdiction is conferred by the Constitution and statute; the Small Claims Court is a subordinate court established under Article 169(1)(d) with pecuniary jurisdiction over money claims of one million shillings or less under section 12(2) and (3)
The court restated the foundational principle that jurisdiction is everything and anything done without jurisdiction is a nullity operating retrospectively, citing Owners of the Motor Vessel 'Lillian S' and Phoenix of E.A Assurance. It confirmed that the claim for money held and received, after waiver of the excess above one million shillings, would otherwise fall within its pecuniary jurisdiction, but the arbitration clause displaced the court's ability to entertain it.
Legal principles established
#- A dispute exists where an assertion of a right or claim on one side is met by contrary claims on the other, and the existence of a consensual arbitration clause obliges the court to stay proceedings and refer the parties to arbitration
- A court cannot rewrite the contract of the parties by entertaining a claim subject to a valid arbitration clause
Court orders
#- 1.The Statement of Claim is struck out for want of jurisdiction in limine
- 2.No orders as to costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Article 169(1)(d) of the Constitution of Kenya, 2010 and Sections 12(2) and (3) of the Small Claims Court Act
Relief refused
#Judgment in the sum of one million and seventy-five thousand shillings (reduced by waiver to Kshs. 1,000,000/= under section 12(3) of the Small Claims Court Act)
The Statement of Claim was struck out for want of jurisdiction as the dispute falls within the arbitration clause in Clause 15 of the investor agreement
Costs
No orders as to costs - the Statement of Claim was struck out 'with no orders as costs'
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the end the Statement of Claim herein is hereby struck out for want of jurisdiction in limine with no orders as costs.
were this court to proceed to determine the claim and award the reliefs sought, would amount to usurping the powers of the Arbitrator, and efiectively rewriting the terms of a contract, which this Court has no authority to do
A suit filed devoid of jurisdiction is dead on arrival and cannot be remedied.
Jurisdiction is everything. Without it, a court has no power to make one more step.
this court is bound to give efiect to the parties' agreement
Issues in the judgment
#Internal date inconsistencies: the Chamber Summons is described as dated 19th January 2026 in the opening sentence but as 'dated 19th January 2025' in the following sentence; the Statement of Claim is said to be filed on 15th December 2026 although court directions on it were issued on 30th January 2026
The debt accrual appears anachronistic: the claim is for breach of an agreement dated 27th May 2021 with interest accruing from September 2021, yet the claim was filed in 2026 and the Small Claims Court Act cap of Kshs. 1,000,000 is applied without the accrued-interest arithmetic being reconciled
The case number of the suit before the court is not stated anywhere in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Wambua v Unity Micro Investments Limited & another (Commercial Case E1442 of 2025) [2026] SCC 94 (KLR)", Case Analysis (2026). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2026/94/eng@2026-04-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.