Uchumi wants sub-tenants eviction case sent to arbitration

Corporate News

An Uchumi Supermarkets outlet. The retailer argues that sub-tenants are abusing court process. PHOTO | FILE 

By SIMON CIURI

In Summary

• Uchumi argues that part of the agreement Uchumi had with the sub-tenants prohibits them from moving to court when disputes arise before going for arbitration.

Uchumi Supermarkets has asked the High Court to order for an arbitration settlement in a case pitting the listed retailer against sub-tenants of its specialty shops seeking to stop their eviction.

The retailer through its lawyer Ochieng, Onyango, Kibet & Ohaga Advocates argues in court documents that part of the agreement Uchumi had with the sub-tenants prohibits them from moving to court when disputes arise before going for arbitration.

“Clause 11 of the agreements entered  into by the parties expressly provide that any dispute, difference  or question  which arises at any time  between the parties touching on the  construction  of the  agreements  or their rights and liabilities or otherwise in respect of  the matters the subject  of the agreements  should  be referred to the decision of a single arbitrator,” argues Uchumi.

Uchumi has 127 specialty shops in its outlets that employ 2,000 people.

The management of the retail chain is reported to be scouting for traders who will pay a higher rent and bring global brands to the vacated shops.

READ: Uchumi Supermarkets kicks sub-tenant retailers out of its stores

It expects this will make the outlets more productive and boost its revenue as it strives to bounce back to profitability.

Specialty shop owners currently pay Uchumi a commission for every product sold.

“The plaintiff have filed the present suit before this honourable court in defiance  of clause  11 of the agreements entered into by the parties and the present suit is accordingly an abuse of the process of the court,” says Uchumi. The Nairobi Securities Exchange-listed retail chain filed the application on Tuesday.

The matter will be heard on October 1.

Barring Uchumi

The High Court on Thursday last week granted an extension to the sub-tenants barring Uchumi from evicting them or disrupting their operations until the matter is heard on October 1.

“Interim orders be and are hereby extended until then, October 1, 2015,” ordered Justice Mary Gitumbi.

Uchumi had on August 4 written to its tenants informing them that the management had reviewed their business strategy and required the tenants to vacate by mid this month.

“We are terminating your contract due to a change in business strategy, Kindly note that your last day of operation will be on September 15,” read a letter sent to specialty shop owners dated August 4 and signed by the then acting Uchumi Supermarkets chief executive officer Owino Ayodo