Kenyan courts lack jurisdiction to hear Valour taxis dispute

Kenyan courts have no jurisdiction to hear any dispute between popular long-distance taxi provider Valour Cabs and its clients in the country.

The High Court in Voi declared that all disputes between the firm and its clients can only be heard in the United States as per a clause in the vehicle hiring agreement.

The agreement is governed by Connecticut and US federal laws. The court made the determination in a case where the firm had sued a French national over the damage to its car.

Mr Briquet Logan had hired a Toyota Prado worth Sh3.5 million from Valour that entered the Kenyan market in 2019. The car was damaged, and the firm sought compensation from Logan.

Valour Cabs and Travels Limited sued Logan for damaging the car. Logan raised a primary objection on December 15, 2023, which was dismissed by Principal Magistrate K. Kithinji.

Logan’s notice of preliminary objection held that the dispute required a full hearing, including whether the clause was binding and whether Kenyan courts should decline jurisdiction.

Unsatisfied with the verdict, Logan moved to the High Court, saying that the trial court failed to determine whether it was clothed with jurisdiction to hear and determine the suit.

He said in light of the choice of law and exclusive jurisdiction provided in the Vehicle Car Hire Agreement dated November 6, 2023, the court lacked the jurisdiction to determine the case.

Logan said that Clause (8c) of the vehicle hire agreement states that all issues flowing from the said agreement, including any dispute on the validity and interpretation of the agreement and the legal relationship of the parties thereto, shall be governed by the laws of the state of Connecticut and applicable United States of America federal law.

He said the magistrate reached a decision that is ex facie manifestly devoid of any legal justification.

Logan said Valour Cabs and Travels Limited is not a registered entity and lacks ownership of the motor vehicle that is registered to a third party.

In her ruling, Justice Asenath Ongeri agreed with Logan that the car hire dispute facing French National Briquet Logan Nicholas Simon is governed by Connecticut and U.S. federal laws.

The judge said a suit by a non-existent entity is a nullity and that a party lacking legal capacity cannot sue.

Justice Ongeri said Kenyan courts have consistently upheld forum selection clauses unless there are compelling reasons to disregard them and that jurisdiction is a threshold issue that must be determined at the earliest opportunity.

“I find that on the issue of jurisdiction, the same is clearly stated at Clause 8(c) of the Vehicle Hire Agreement: the parties ousted Kenyan courts’ jurisdiction by stipulating that disputes be governed by Connecticut and U.S. federal laws,” said Ongeri.

Justice Ongeri ruled that Logan being a foreigner, order 5, Rule 21 of the Civil Procedure Rules requires leave of court before serving summons outside Kenya.

The judge said the trial magistrate wrongly dismissed Logan’s NOPO as a mere procedural defect rather than a jurisdictional flaw, contrary to established precedent.

He found that the issues raised in NOPO were pure points of law capable of disposing of the case without factual inquiry.

“The Civil Case No. E233 of 2023 be and is hereby struck out for lack of jurisdiction due to the exclusive forum selection clause and also for improper service (failure to obtain leave under Order 5 Rule 21 CPR) and for the Respondent’s lack of locus standi,” said Justice Ongeri.

“Since the respondent’s existence and ownership claim were disputed, the trial court should have addressed this as a threshold issue,” said Justice Ongeri.