Introduction
It is not unusual in Kenya for parties bound by arbitration clauses to bypass arbitration and pursue court proceedings where a debt has been admitted. This is because several High Court decisions have permitted judgment on admission applications under the Kenya Civil Procedure Rules, 2010 (KCPR), enabling a party to apply for judgment where the counterparty has plainly admitted a debt.
Legal Basis for Judgment on Admission
Order 13 Rule 2 of the KCPR allows a party to seek a court judgment or order on any fact that has been admitted. Admissions may appear in pleadings or in other documents, including correspondence. A party may bring such an application at any time and need not await the resolution of other issues between the parties. To succeed, the admission must be unmistakable “plain and obvious, as plain as a pikestaff and clearly readable,” such that the fact is evident on its face without requiring scrutiny.
Practical Advantages
Judgment on admission offers an expedited route to partially or fully determining a dispute. Because witness testimony is typically unnecessary, these applications are resolved far more quickly than full trials or arbitral hearings and involve fewer variables. The speed and lower cost of court summary procedure often make it an attractive alternative to arbitration for creditors seeking enforcement of admitted debts.
Judicial Reasoning and Case Law
The High Court has repeatedly held that where a debt is admitted there is nothing left to litigate. In Vehicle and Equipment Leasing Limited v Coca Cola Juices Kenya Limited [2017] eKLR, the court approved the reasoning in Ideal Ceramics Ltd v Suraya Property Group Ltd (HCCC No. 408 of 2016, unreported), observing that Order 13 of the KCPR exists to prevent parties from litigating non-existent disputes and to avoid unnecessary costs and delay.
To quote an excerpt:
“The law on summary procedure vide a judgment on admission is now relatively clear. The purpose of the law laid out under Order 13 of the Civil Procedure Rules is to ensure that a party whose entitlement is evidently due and admitted does not wait for determination by the court of a non-existence question. It is undesirable to litigate when there is no question or issue of fact or law. The summary process in this regard assists in ensuring that unnecessary costs and delays are not invited.”
Courts have extended this rationale to cases involving arbitration clauses, concluding that an admitted debt removes any “dispute, controversy or claim arising out of the agreement” that would otherwise be referred to arbitration. Consequently, jurisdictional objections based on arbitration clauses have often been dismissed in judgment-on-admission proceedings. The High Court in the cases of Scanad Kenya Limited v Independent Electoral & Boundaries Commission [2021] KEHC 7348 (KLR) and Al-Sabah v East African Fitness Limited [2021] KEHC 269 (KLR) allowed judgment on admission applications despite the existence of arbitration clauses. In the Al Sabah Case, the High Court emphatically held that:
“Having come to the conclusion that the debt is admitted, then there can be no dispute for which the arbitration agreement can be properly invoked.”
Conflicting Authorities
Despite the line of High Court decisions favouring summary judgment on admitted debts, the case law is not uniform. There remain conflicting authorities on whether courts may determine admitted debts where the parties have agreed to arbitrate. The conflicting decisions mean that the question of whether one can bypass an arbitral process on account of an admission is not settled and it is possible that different Judges will decide the matter differently. Accordingly, each time a party opts to bypass a binding arbitral process in favour of the court process they subject themselves to the risk that such an application may be dismissed with costs and valuable time within which the counter party may, among others, dissipate assets may be lost.
Conclusion
Judgment on admission can be an effective and efficient means of enforcing an admitted debt, and Kenyan courts have on several occasions allowed such proceedings despite arbitration clauses. However, because the authorities are not entirely consistent, parties should carefully assess the legal and commercial implications and seek legal advice before electing to bypass arbitration.