1.The Applicant has moved this court by an Originating Summons application dated June 20, 2022 brought (under Sections 4 and 12 of the Arbitration Act and Rule3(1) of the Arbitration Rules 1997) seeking the courts determination of the following questions;1.Whether the appointment of Nyagah B Kithinji as the sole arbitrator by the defendant ought to be set aside.2.Which party is to bear the costs of this suit?
2.The Originating Summons is premised on the grounds that there does not exist an arbitration agreement between the parties that is capable of being acted upon by any person. Simultaneously with the filling of the Originating Summons, the Applicant filed a supporting affidavit sworn by Issa Fidow with the authority of the Applicant/Plaintiff. The Originating Summons seeks to challenge the appointment of an arbitrator to determine a dispute arising pursuant to an unregistered lease over LR No 11927/23 IR 59416/18 situated within Nairobi City in the County of Nairobi.
3.The challenge is premised on the fact the parties herein entered into a 25 year lease agreement for the suit property but failed to register the same. A dispute has now arisen and the Defendant pursuant to the lease agreement seeks to have the dispute resolved by a sole arbitrator and has moved ahead to nominate a sole arbitrator to preside over the dispute.
4.In objecting to the appointment, the Plaintiff alleges that the Defendant cannot to purport to rely on a document that has flouted the dictates of the law. It is the Defendant’ argument that the lease between the parties has not been stamped as required by the Stamp Duty Act, Section 19(2). Subsequently, the Plaintiff contends that there is no valid lease capable of being relied on by the parties to refer the dispute to arbitration as is being sought to be done herein.
Analysis and Determination:
5.I have carefully considered the pleadings as filed by the parties herein and the responses thereto. I note that the only issue for determination is:-
6.It is not disputed that the parties herein entered into a lease agreement for 25 years with the intention to redevelop the suit premises from a residential dwelling into a commercial one with malls and shops therein. It is also not contested that neither party has caused the said lease to be stamped as provided for by the Stamp Duty Act. The Defendant has vehemently argued that the said lease document is invalid for want of compliance with The Stamp Duty Act Section 19(1) and (2) which provides as follows:-(1)1) Subject to the provisions of Subsection (3) of this section and to the provisions of Sections 20 and 21, no instrument chargeable with stamp duty shall be received in evidence in any proceedings whatsoever, except—
7.Several decisions emanating from the courts have however held that an unstamped and unregistered lease or document is still a contract binding upon the two parties to it and can be relied upon by a court of law to interpret the rights and obligations conferred upon the said parties by the document, irrespective. This interpretation seeks to remedy a situation where party to the said unstamped lease or agreement will hide behind the requirements of the Stamp Duty Act to avoid their obligations created by the unstamped instrument.
8.I have considered the arguments advanced by the Plaintiff in seeking to declare the lease agreement here invalid for failure to comply with the Stamp Duty Act requirements. I have equally considered the rival arguments advanced by the Defendants and the decided cases relied on. I note that Justice Angote faced with a similar situation where a document was not stamped under the Stamp Duty Act in the case of Prabhagauri Shashikant Maru v Martha Kalove Nzivo  eKLR stated as follows:-
9.I have considered the above finding by the court and I am persuaded by the reasoning therein. I am therefore satisfied that the lease between the plaintiff and the defendant is valid for purposes of enforcing their obligations as between the two and an arbitrator sitting in an arbitral proceeding may rely on it to determine the dispute that has now arisen and been declared and for which an arbitrator has been appointed.
11.In light of the above provisions and having identified that the unstamped and unregistered lease agreement is a valid contract for enforcement between the parties, the court is minded to allow the arbitration proceedings to continue and noting that an arbitrator has already been appointed, the court will therefore forthwith dismiss the Originating summons and the subsequent applications filed thereto and allow the process to continue.
12.Costs of this application are to the defendant to be paid by the plaintiff.