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|Case Number:||Civil Case 149 of 2010|
|Parties:||CANELAND LIMITED v JOHN DEERE (PROPRIETARY) LIMITED|
|Date Delivered:||04 Nov 2011|
|Court:||High Court at Kisumu|
|Citation:||CANELAND LIMITED v JOHN DEERE (PROPRIETARY) LIMITED  eKLR|
|Disclaimer:||The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information|
IN THE HIGH COURT OF KENYA
CIVIL CASE 149 OF 2010
R U L I N G
3. The defendants, its employees, servants and/or agents be restrained by orders of injunction from terminating the exclusive agricultural dealer agreement pending hearing and determination of the suit (the other part of the prayer was abandoned.);
5. the costs of this application follow the cause.”
The said application was opposed through grounds of opposition dated 16th May, 2011 and a replying affidavit sworn on the same date by Len Johan Brand. The grounds of opposition contained the following grounds:
2. The plaintiff has not made out a prima facie case to warrant an injunction pending the resolution of a dispute by the high court;
4. The plaintiff has quantified its damages which militates against granting an injunction;
In the affidavit the respondent to agrees with the plaintiff’s initial preposition that the matter be subjected to an arbitrator under the Exclusive Agricultural Dealer Agreement dated 2nd October, 2009, and more specifically clause 9.9 which provides that the agreement will be governed by the Laws of the Republic of South Africa irrespective of the location of the dealer and in the event of disagreement the dispute will be arbitrated over by a panel selected by Arbitration Foundation of South Africa (AFSA) and according to its rules.
1. There be a stay of any further legal proceedings and the matter be referred to hearing and determination before an arbitration penal constituted under the Arbitration Foundation of Southern Africa
3. The court be pleased to grant interim measures of protection limited to 30 days only form the date of the order to enable the plaintiff institute the necessary arbitral proceedings failing, which the order should automatically cease to operate;
4. Costs be in the cause.
On the 30th of June, 2011 this court directed the 2 applications to be argued together. Mr. Okero for the plaintiff took the first shot in the matter, he argued that the applicant seeks for injunction orders as the defendant is not only in breach of the agreement but instances of the alleged breach are fundamental as to cause failure of consideration. The said breach is oppressive so as to prejudice the applicant’s right under Article 50(1) of the Constitution of Kenya, further that the breach creates legal impedicament that it would be oppressive to subject the applicant to arbitration in South Africa.
In response and in answer to the 2nd application Mr. Okero submitted as follows that the issue before court is whether or not the arbitration claim has been rendered inoperative, whether the conduct of the respondent has rendered the same unenforceable in the light of the provision of the constitution
- whether or not the arbitration clause in the Exclusive Agricultural Dealer Agreement dated 2nd October, 2009 (Dealer Agreement) is operative?
- Whether the alleged breach of the Dealer Agreement is so oppressive so as to deny the applicant access to a fair trial as envisaged by the Constitution of Kenya 2010;
- Is this a proper case for issuance of an injunction.
In filing suit in this court the applicant claimed that respondent fundamentally by its action or omissions breached the Dealer Agreement causing the same to be incapable of performance. Several acts and omissions were cited on the part of the respondent. The applicant further claimed that clause 9.9 of the Dealer Agreement, is unconstitutional as it violates Articles 2 48 & 50(1) of the Constitution.
Articles 2, 48& 50(1) of the Constitution provide as follows:
Every person has the right to have any dispute that can be resolved by the application of law decided in a fair and public hearing before court or, if appropriate, another independent and impartial tribunal or body.”
In my view Article 50(1) is in favour of arbitration so long as the issue before an arbitration body is decided in an open and fair manner.
“This agreement shall be governed by and implemented in accordance with the laws of the Republic of South African irrespective of the location of Dealers place of business and the area for which the dealer has been appointed to represent the company in accordance with the provisions of this agreement. Both the company and the dealer hereby irrevocably and unconditionally consent to arbitration by the Arbitration foundations of Southern Africa (AFSA), Johannesburg. According to its rules…….”
The operative words of the clause are irrevocably and unconditionally consent to……..
The applicant unreservedly agreed to two things to have any dispute arising between the parties arbitrated upon by the Arbitration Foundation of South Africa and to have the Laws of South African apply to the implementation of the agreement.
Some of the alleged breaches may be summarized:
- despite prior agreement the respondent excluded the applicant from a programme to advertise and promote equipments and parts thus undermining the plaintiff’s business;
- the respondent has declared the applicant as under performing giving the plaintiff 9 months to improve its performance while being itself in breach of the agreement.
The above issues in my view are issues that ought to fall within the armpit of an arbitration body I do not classify them as obvious oppressive or constitutional concerns so as to invoke section 50(1).
Section 6(1) provides:
(a) that the arbitration agreement is null and void, in operational or incapable of being performed or;
2. proceedings before the court shall not be continued after an application under section (1) has been made and the matter remains undetermined;
I do not find the Dealer Agreement as being null and void with the evidence so far on record, neither in operative or incapable of being performed.
“It is not incompatible with an arbitration agreement for a party to request from the High Court, before or during arbitral proceedings, an interim measure of protection and for the High court to grant that measure.”
The applicant’s sought for an injunction is therefore and in seeking for stay the respondent is in favour of the court giving limited protective measures. Both in my view are relevant positions.
1. That there be a stay of this proceedings pending reference of this matter to the Arbitration Foundation of South Africa. (AFSA) for arbitration.
2. The defendant, its employees, servants, and/or agents be and are hereby jointly and severally restrained by way of an injunction from terminating the Exclusive Agricultural Dealer Agreement pending hearing and determination of the issues between the parties before a panel to be constituted under the Arbitration Foundation of South Africa in accordance with the Dealer Agreement.
4. costs in the cause.
In the presence of: