Yooshin Engineering corporation v AIA Architects Ltd [2020] eKLR Case Summary

Court
Court of Appeal at Nairobi
Category
Civil
Judge(s)
Ouko (P), Koome, Musinga, JJ.A.
Judgment Date
October 23, 2020
Country
Kenya
Document Type
PDF
Number of Pages
2

Case Brief: Yooshin Engineering corporation v AIA Architects Ltd [2020] eKLR


1. Case Information:
- Name of the Case: Yooshin Engineering Corporation v. AIA Architects Ltd
- Case Number: Civil Appeal No. 147 of 2019
- Court: Court of Appeal at Nairobi
- Date Delivered: 23rd October 2020
- Category of Law: Civil
- Judge(s): Ouko (P), Koome, Musinga, JJ.A.
- Country: Kenya

2. Questions Presented:
The central legal issues in this appeal include:
- Whether the trial court had jurisdiction to hear the matter given the arbitration clause in the contract.
- Whether the injunctive orders granted by the trial court were justified based on the established legal principles for granting such orders.

3. Facts of the Case:
The dispute arose from an agreement made in 2012 between the parties to submit a tender to the Kenya Ports Authority for consultancy services related to the Lamu Port project. Following the tender award, the appellant allegedly sidelined the respondent, coercing it into a sub-consultancy agreement that significantly reduced the compensation from Kshs.413,900,005 to Kshs.18,000,000. The respondent filed a plaint on 8th May 2013, claiming the sub-consultancy agreement was unlawful and sought various declarations and injunctive reliefs to prevent the appellant from terminating the contract and engaging other firms.

4. Procedural History:
The case progressed through the High Court, where the respondent filed applications for injunction and to suspend the termination notice. The appellant raised a preliminary objection regarding the court's jurisdiction, arguing that the matter should be referred to arbitration. The trial court, after hearing both the applications and the preliminary objection, ruled that the arbitration clause was inoperative due to the appellant's failure to raise the objection timely, and granted the respondent's injunctive requests. The appellant appealed against this ruling.

5. Analysis:
- Rules: The court considered the Arbitration Act, 1995, particularly section 6(1), which outlines the timing for raising jurisdictional objections related to arbitration agreements.
- Case Law: The court referenced previous cases such as *Geoffrey M. Asanyo & 3 Others v Attorney General* and *Mount Kenya University v Step Holding (K) Ltd*, which emphasized the necessity of timely objection to jurisdiction and the procedural requirements for invoking arbitration clauses.
- Application: The court found that the appellant had forfeited the right to insist on arbitration by not raising the objection at the time of entering appearance. The learned judge's ruling on the injunctive orders was scrutinized, revealing that the judge had only considered the existence of a prima facie case without addressing the principles of irreparable loss and balance of convenience, leading to a misapplication of the law.

6. Conclusion:
The Court of Appeal ruled in favor of the appellant, setting aside the injunctive orders granted by the trial court. The court concluded that the trial judge had not properly considered all the necessary legal principles for granting injunctions and that the appellant had effectively submitted to the court's jurisdiction by taking procedural steps after entering appearance.

7. Dissent:
There was no dissenting opinion noted in the judgment.

8. Summary:
The Court of Appeal's decision in *Yooshin Engineering Corporation v. AIA Architects Ltd* underscores the importance of timely objections regarding jurisdiction in arbitration matters and the necessity of adhering to established legal principles when granting injunctive reliefs. The ruling has broader implications for contractual disputes involving arbitration clauses, emphasizing the need for parties to act promptly and in accordance with legal requirements to protect their rights.

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