Akilano Molade Akiwumi, Richard Otieno Kwach, John Mwangi Gachuhi
Kenindia Assurance Co Ltd v Patric Muturi  eKLR
Kenindia Assurance Co Ltd v Muturi
Court of Appeal, at Nyeri May 31, 1994
Gachuhi, Kwach & Akiwumi JJ A
Civil Appeal No 87 of 1993
(Appeal from the ruling of the High Court of Kenya at Meru (Mr Justice Kuloba) dated 11th day of May, 1993 in HCCC No 114 of 1990)
Arbitration – insurance contract providing for arbitration in event of dispute – whether a party can sue prior to undergoing arbitration process.
Civil Practice and Procedure – stay of suit – parties consenting to stay of suit pending arbitration – one party dissatisfied with delays in arbitration process and fixing the suit for hearing without first setting aside the stay order – whether subsequent hearing and determination of the suit was valid.
The respondent sued the appellant seeking compensation for loss of his vehicle which was completely damaged as a result of an accident.
The appellant however relying on an arbitration clause in the insurance contract asked for the stay of the suit pending arbitration. This position was accepted by the respondent and the case was stayed by consent of the parties.
The arbitration process however ran into problems with the respondent complaining that the appellant was using it to delay the settlement of the claim. Consequently the respondent returned to Court to have the case fixed for hearing. Despite the fact that the Court acceded to the request and gave a hearing date no application was made to set aside the stay order granted by consent earlier.
When the suit came up for hearing, counsel for the appellant brought to the attention of the trial judge the fact that the stay order which was made by consent had not been set aside. On that ground, he contended that the suit could not possibly proceed to hearing.
Counsel further contended that the completion of the arbitration proceedings and the making of an award was a precondition to filing any action in Court.
The trial court however dismissed the objections by the appellant’s counsel and proceeded to hear the suit.
1. The making of an award after an arbitration is what shall give rise to any right of action against the appellant.
2. If no arbitration is first carried out, no matter how dilatory the tactics of a party to it may be, the insured cannot bring an action against the insurer arising out of the policy of insurance unless perhaps it can be shown that the insurer was fraudulently and deliberately frustrating the determination of the arbitration proceedings.
3. A consent judgment may only be set aside for fraud, collusion or for any reason which would enable the Court to set aside an agreement.
4. The substantive order of stay of proceedings could not be set aside by a side wind within the context of an informal application for fixing a hearing date.
5. The proceedings in the suit in the High Court remained stayed and the suit could not have gone on for hearing and what hearing took place was null and void.
Brooke Bond Liebig (T) Ltd v Mallya  EA 266
Arbitration Act (cap 49) sections 6, 9, 12
Mr Ghadialy for the Appellant
Mr Mithega for the Respondent