Reference of an employment dispute to arbitration was not more favourable than litigation which was an integral part of the Employment Act
Headnote: the main issue was whether arbitration was a proper and reliable form of dispute resolution in employer-employee relationships. The court held that Incorporation of arbitral clauses in employment contract was atypical and underlined the reality of the unequal bargaining power between the employer and the employee. Such clauses were imposed on employees by employers. Reference of an employment dispute to arbitration was not more favourable than litigation which was an integral part of Part VI of the Employment Act,

Okeyo v Board of Directors HHI Management Service Limited & another (Cause E970 of 2023) [2024] KEELRC 1006 (KLR) (6 May 2024) (Ruling)
Neutral Citation: [2024] KEELRC 1006 (KLR)
Employment and Labour Relations Court at Nairobi
JK Gakeri, J
May 6, 2024
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Employment Law – employment relationship – employer-employee relationship – employment contracts viz a viz alternative dispute resolution – inclusion of arbitration clause in an employment contract – claim that an arbitration clause in an employment contract affects the bargaining power of an employee – whether arbitration was a proper and reliable form of dispute resolution in employer-employee relationships – Constitution of Kenya, 2010, article 162 (2) (a); Employment and Labour Relations Court Act, 2012, sections 12 and 15; Employment Act, 2007, section 26

Brief Facts:
The 2nd respondent made an application seeking that the claim filed against it be stayed and the dispute be referred to arbitration in accordance with the contract of the parties as set out in the employment contract. The 2nd respondent relied on section 6(1) of the Arbitration Act, 1995 to urge that since the contract of employment between the parties had an arbitration clause, the matter should be referred to arbitration. The 2nd respondent submitted that the arbitral clause divested the court with jurisdiction to hear and determine the dispute and the court could not rewrite the contract.

Issue:
Whether arbitration was a proper and reliable form of dispute resolution in employer-employee relationships

Held:
  1. Article 162(2)(a) of the Constitution of Kenya, 2010 conferred upon Parliament power to establish the Employment and Labour Relations Court to hear and determine disputes relating to employment and labour relations by enacting the Employment and Labour Relations Court Act, 2011 which established the court under Section 4 and prescribed its composition and jurisdiction. Only the Employment and Labour Relations Court had exclusive jurisdiction to hear and determine disputes relating to employment and labour relations pursuant to article 162(2) of the Constitution of Kenya, 2010 read with Section 12 of the Employment and Labour Relations Court Act, 2011. Relatedly, section 15 of the Act conferred upon the court jurisdiction to refer a dispute to alternative dispute resolution mechanisms suo motu or on application or request of the parties, or at any stage of the proceedings if it was apparent that the dispute ought to be referred to other methods of dispute resolution, the provision was silent on arbitration.
  2. The arbitral clause in any contract binds the parties thereto. However, the arbitral law in Kenya was principally intended to resolve commercial disputes, as opposed to employment disputes as was the case in the instant case. Prospective employees were seldom involved in the negotiation of terms of employment other than salary and allowances. The document was drawn by the employer in its language and inserted terms and clauses formulated in its words and prospective employees were, in most cases, eager to sign the dotted line to secure employment to return the favour.
  3. Incorporation of arbitral clauses in employment contract was atypical and underlined the reality of the unequal bargaining power between the employer and the employee. Such clauses were imposed on employees by employers.
  4. Part V and Part VI of the Employment Act, 2007 prescribed the minimum conditions of employment and the latter part addressed termination and dismissal. Under section 26 of the Employment Act, 2007, the minimum conditions of employment applied in all cases where the terms and conditions of employment agreed upon by the parties or prescribed by regulations or other written law or collective agreement or decreed by the court were less favourable. Reference of an employment dispute to arbitration was not more favourable than litigation which was an integral part of Part VI of the Act.
  5. The claimant was apprehensive that the arbitral process was expensive for him and bearing in mind that the parties would jointly appoint the sole arbitrator, both were obligated to pay the arbitrator. The respondent had not responded to the claimant’s apprehension which could be founded on the reality of arbitral practice in Kenya.
  6. Although Article 159(2)(c) of the Constitution of Kenya, 2010 included arbitration, section 15(1) of the Employment and Labour Relations Court Act, 2011, an Act of Parliament enacted after the promulgation of the Constitution of Kenya, 2010 conspicuously omitted the word.
Application dismissed.


Kenya Law
Case Updates Issue 040/23-24
Case Summaries
JURISDICTION Water used for commercial salt production was part of Kenya’s territorial waters (sea) and its usage was subject to control by the country’s laws

Headnote: The dispute that gave rise to the appeal concerned charges levied by the respondent for the appellant’s use of sea water for commercial salt production at Gongoni and Marereni areas near Malindi. The court found that the water that the appellant used for its salt production was part of Kenya’s territorial waters (sea), and was not res nullius. It was res publicae, and thus its usage was subject to control by the country’s laws. The respondent was therefore entitled, under the repealed Water Act, 2002 and the Water Act, 2016, to develop principles, guidelines and procedures to govern, inter alia, usage of the said water.

Krystalline Salt Limited v Water Resources Management Authority (Civil Appeal 252 of 2018) [2024] KECA 191 (KLR) (23 February 2024) (Judgment)
Neutral citation: [2024] KECA 191 (KLR)

Court of Appeal at Nairobi
DK Musinga, HA Omondi & GWN Macharia, JJA

Reported by Robai Nasike Sivikhe

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Law of the sea – – territorial sea – res nullius viz a viz res publicae – claim that sea water used for salt production was res nullius – whether the territorial sea water used for production of salt was res publicae and therefore subject to control by the country’s laws – whether territorial sea water used for salt production was a water resource and therefore subject to regulation under the Water Act, 2002 – Water Act, 2002, sections 2, 3 and 4; Geneva Convention on the Territorial Sea and the Contiguous Zone, (1958 Geneva Convention), articles 1 & 5; United Nations Convention on the Law of the Sea, 1982, articles 2 (1) & 3
Land Law – – territorial sea water – control of territorial sea water – use of territorial sea water – imposition of charges on a private entity that used sea water as a water resource during production of salt – assessment of water use arrears using information from a company website – whether assessment and computation of water use arrears using information from a company’s website resulted in a faulty assessment
Definitions – – – definition of – internal waters – Any natural or artificial body or stream of water within the territorial limits of a country, such as a bay, gulf, river mouth, creek, harbour, port, lake or canal - Black’s Law Dictionary (9th Edition)
Definitions – – – definition of – water course – a body of water; usually of natural origin, flowing in a reasonably definite channel with bed and banks. The term includes not just rivers and creeks, but also springs, lakes, and marshes in which such flowing streams originate or flow – Black’s Law Dictionary (9th Edition) .

Brief Facts
The dispute that gave rise to the appeal concerned charges levied by the respondent for the appellant’s use of sea water for commercial salt production at Gongoni and Marereni areas near Malindi.
At the trial court, it was held that the respondent was legally mandated to charge the appellant for the use of sea water that it abstracts for salt extraction with effect from October 1, 2007 when water use charges were gazetted, requiring water users to pay to the respondent 50cent/m3 for the raw water it abstracts for its use in its salt production until April 19, 2017 when the Water Act of 2016 was amended to expressly to remove the obligation to obtain a permit or pay water use charges with regard to abstraction and/or use of sea water to extract salt; and that the appellant was also enjoined to pay compound interest on the sum due at the rate of 2%, and was also obligated to pay a fixed permit fee of Kshs.135,000/= per year to the respondent during that period. The judgment was entered in favour of the respondent as prayed in its amended plaint. The appellant’s appeal faulted the trial court’s judgment and sought to have it set aside.

Issues:

  1. i. Whether the territorial sea water used for production of salt was res publicae and therefore subject to control by the country’s laws.
  2. Whether territorial sea water used for salt production was a water resource and therefore subject to regulation under the Water Act.
  3. Whether assessment and computation of water use arrears using information from a company’s website resulted in a faulty assessment. Read More..

Held:

  1. The facts in Kenya Ports Authority vs East African Power & Lighting Company Ltd (KLR) (E & L) 1 82 (Civil Appeal No. 41 of 1981) were distinguishable from the facts in the case that gave rise to the instant appeal. In addition, it appeared that in the above cited authority, the court’s attention was not drawn to the provisions of the 1958 Geneva Convention on the Territorial Sea and the Contiguous Zone, (1958 Geneva Convention), particularly articles 1 and 5.
  2. Under the 1958 Geneva Convention, only waters of the high seas could be referred to as res nullius. The term ‘high seas’ was defined as all parts of the sea that were not included in the territorial sea or in the internal waters of a State under article 1 of 1958 Geneva Convention on the High Seas. Before the passage of the United Nations Convention on the Law of the Sea, 1982 (UNCLOS), only waters beyond three miles of the coast line could be regarded as res nullius. But under Article 3 of the UNCLOS, the limits of a country’s territorial sea were up to 12 nautical miles from its coastline. Article 2 (1) of UNCLOS granted jurisdictional control over territorial sea to the coastal State, in the instant case, Kenya.
  3. The water that the appellant used for its salt production was part of Kenya’s territorial waters (sea), and was not res nullius. It was res publicae, and thus its usage was subject to control by the country’s laws. The respondent was therefore entitled, under the repealed Water Act, 2002 and the Water Act, 2016, to develop principles, guidelines and procedures to govern, inter alia, usage of the said water.
  4. Section 3 of the Water Act, 2002(repealed) stated that every water resource was vested in the State, subject to any rights of the user granted by or under the Act or other written law. Section 4 empowered the Minister to exercise control over every water resource in accordance with the Act. Section 2 defined water resource to mean any lake, pond, swamp, marsh, stream, watercourse, estuary, aquifer, artesian basin or water body flowing or standing water, whether above or below the ground.
  5. The appellant was using territorial sea water, which was a water resource that was subject to regulations under the Water Act, 2002. The trial court’s visit to the two private properties revealed that the sea water was not naturally flowing into the two parcels of land, the water was actually being pumped into dams that the appellant had dug on its private lands.
  6. The appellant pumps sea water from the creek to dams, then to its private parcels of land for salt extraction. Hence, the respondent had power and authority to regulate the use of the sea water that the appellant used for salt extraction since the water was a water resource under the Act.
  7. The respondent used information from the appellant’s website to compute its claim of Kshs.2,079,590,000/= . The appellant did not adduce any contrary evidence with regard to its water usage for salt production. Its witness simply alleged that the information that it had posted on its website about its salt production was erroneous. No evidence was adduced by the appellant in substantiation of the alleged error. The actual water used by the appellant was within its special knowledge, but it failed to adduce the same to controvert the respondent’s estimate as pleaded in the amended plaint.
  8. In view of the fact there was no self-assessment that was made by the appellant, and there was no agreement on the assessment of the quantity of water used by the appellant, the respondent’s assessment prevailed. The trial court could not be faulted for accepting the respondent’s assessment.
  9. Rule 107 of the Water Resources Management Rules, 2007, set a time limitation regarding a claim for arrears of use of water by a permit holder or a person who was required to have a water permit or who was obliged to pay water use charges but had failed to do so. The respondent was entitled to charge arrears that were limited to a period of twelve months. The respondent’s claim ought to have been limited to a period of twelve months from the October 1, 2013 to September 30, 2014 plus simple interest on the arrears at two percent (2%) per month until full payment in terms of rule 114. The rule did not stipulate payment of compound interest on the arrears as was awarded by the trial court.
  10. With regard to computation of the arrears payable, the annual salt production capacity of 350,000 Tonnes that was stated by the appellant in its official website was adopted. At the rate of Kshs.530/= per Tonne that amounted to Kshs.185,500,000/=. The trial court’s findings of the water use arrears by the appellant which were from October 1, 2007 to April 19, 2017 was set aside
  11. Legal Notice 171 of September 2007 obligated the appellant to obtain a permit at Kshs.135,000 per year for a fixed permit fees for water usage, but the appellant had not done so. The amount was therefore rightly claimed and awarded by the trial court.

Appeal dismissed. One half of the costs of the appeal was awarded to the respondent.

Orders

The appellant was obligated to pay to the respondent Kshs.135,000/= for fixed permit fees, and arrears for its use of sea water up to a maximum of Kshs.185,500,000/= plus simple interest on the arrears at the rate of 2% per month from October 1, 2013 until the amount was paid in full.
STATUTES

National Transport and Safety Authority Act was enacted with observance of the public participation principle.

Headnote: The main issue was whether the National Transport and Safety Authority Act (NTSAA) was enacted without observance of the public participation principle. The High Court found that the respondents provided tangible evidence showing extensive public participation and stakeholder involvement in the policy formulation and legislative process leading to the NTSAA. Moreover, section 2(1)(b) of the sixth schedule to the Constitution granted the National Assembly a qualified, temporary exemption from stringent public participation procedures when enacting transitional laws required for effective governance before the first general elections under the new constitution. Since the NTSAA was enacted in October 2012 and came into force in December 2012, before the March 2013 general elections, it fell within the section 2(1)(b) transition window.

Osiemo v National Transport and Safety Authority & 4 others (Petition 48 of 2020) [2024] KEHC 2817 (KLR) (Constitutional and Human Rights) (15 March 2024) (Judgment)
Neutral citation: [2024] KEHC 2817 (KLR)
High Court at Nairobi
LN Mugambi, J
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Statutes – constitutionality of statutes – constitutionality of the National Transport and Safety Authority Act – whether the National Transport and Safety Authority Act was unconstitutional for lack of public participation – Constitution of Kenya, 2010, articles 10(2)(a), 118(b)
Statutes – interpretation of statutes – interpretation of - section 2(1)(b) of the Sixth Schedule to the Constitution – provision which granted temporary exemption for the National Assembly from the strict requirement of public participation in the enactment of certain laws during the transition period after the promulgation of the Constitution - principles to consider in the interpretation of the Constitution and statutes - what were the principles to consider in the interpretation of the tranisitional provisions of the Constitution - whether the National Assembly was exempted from conduction public participation by section 2(1)(b) of the Sixth Schedule of the Constitution - Constitution of Kenya articles 10(2)(b), 118(b), and section 2(1)(b) of the sixth schedule.

Brief facts:
The claimant asserted that the National Transport and Safety Authority Act was enacted without observance of the public participation principle. The respondent deponed that contrary to the petitioner's allegation the National Transport and Safety Authority Act was enacted in accordance with the law.
The respondent contended that they subjected the Bill to comments from various stakeholders both in the private and public sector on the policy. Further that the Act was exempted from public participation by section 2(1)(b) of the sixth schedule to the Constitution.

Issues:

  1. Whether the National Transport and Safety Authority Act was enacted without observance of the public participation principle.
  2. Whether the National Assembly was exempted from conducting public participation by section 2(1)(b) of the Sixth Schedule of the Constitution (which granted temporary exemption for the National Assembly from the strict requirement of public participation in the enactment of certain laws during the transition period after the promulgation of the Constitution).. Read More...

Held:

  1. Public participation was one of the national values and principles under article 10 and 118 of the Constitution. How public participation was given effect would vary from case to case but it must be clear, upon examination of the legislative process, that reasonable level of participation had been accorded to the public. What mattered was that at the end of the day a reasonable opportunity was offered to members of the public and all interested parties to know about the issues and to have an adequate say. Whatever amounted to a reasonable opportunity would depend on the circumstances of each case
  2. The respondent established by way of tangible evidence that public participation was extensively carried out and stakeholders were actively involved in the process that led to the establishment of the National Transport and Safety Authority Act
  3. The National Transport and Safety Authority Act was passed and assented to before the first general election. The Act having been assented to on October 12, 2012 and coming into force on December 1, 2012 was exempted taking judicial notice the first general elections under the current Constitution were held on March 4, 2013. Therefore, even if public participation had not been done, which was not the case, that ground alone would not have invalidated the National Transport and Safety Authority Act.

Petition dismissed with no orders as to costs.