In an affidavit, Surgilinks director Deepak Kothari told the court that on March 1, 2009, or thereabout, his firm and Adcock Ingram East Africa entered into an agreement for the distribution of the latter’s products in Kenya.
It provided that any differences which would arise in the life of the agreement would be freely discussed between the parties and solved amicably failing which the parties would refer them to arbitration.
Mr Kothari said representatives of the two companies met on March 23, 2012, in an effort to resolve a dispute that had arisen but were unable to agree and, therefore, the next logical step was to refer the matter to arbitration in accordance with the agreement.
Instead, Adcock Ingram moved to court on April 25, 2012, and sought a mandatory injunction to compel Surgilinks to pay the money owed within 15 days. In their application, Kothari argued that the move to file the suit was bad in law and the court had no jurisdiction in a matter reserved for arbitration.
Adcock Ingram East Africa filed their grounds of opposition saying Surgilinks had breached its obligations under the distributorship agreement by failing to pay the amount, which had already risen to Sh90.8 million.
Surgilinks had acknowledged the debt. The only amount in dispute and which then was the subject to negotiation and arbitration was Sh6.4 million which was less than 10 per cent of the total debt.
Adcock Ingram East Africa argued that it would be against public policy for a matter to be referred to arbitration when there was no dispute as to the amount due or a partly admitted liability.
The ruling
“It would be unconstitutional and abuse of the court process for a party to be burdened with astronomical costs and delay in being asked to refer a matter to arbitration when there is no dispute or there has been admission of liability,” the company’s lawyer argued.
Further, they submitted that there was no dispute that Surgilinks were entitled to a commission for the distribution hence that was not an issue to be taken to arbitration.
They said they were willing to go for arbitration on the disputed Sh6.4 million on condition that the evidence supporting that dispute was made clear to the court.
Once more, Justice Musinga had an easy time dealing with this application for arbitration.
