A dispute between Kenyan taxi drivers and US online taxi firm, Uber, over the reduction of fares has been referred for arbitration in Nairobi, dealing a setback to the operators who sought to avoid the mediation route citing high costs.
High Court judge David Majanja also suspended the trial of the case in court pending its transfer to an arbitrator.
The drivers rejected arbitration on claims that the disputed service agreements were imposed on them by Uber. The drivers also claimed that arbitration is costly and would deny them a proper and convenient forum to resolve the dispute.
Justice Majanja rejected the assertions by the operators.
The case was filed in court by Kanuri Ltd, which is in the public transport business, and other taxi drivers in September 2016, claiming Uber had breached a partnership agreement by dropping the fare from Sh60 per kilometre to Sh35 and the minimum fare from Sh300 per trip to Sh200.
The other plaintiffs are taxi owners, drivers, and operators of passenger service vehicles (PSVs) within Nairobi.
They stated that despite the reduction of the fares, Uber’s charge of 25 per cent per transaction remained in force, leaving the drivers to absorb all the operating costs.
They accused Uber of engaging in restrictive trade practices and abuse of its dominant position in the market contrary to provisions of the Competition Act.
The plaintiffs also alleged that Uber was in breach of contract, claiming exploitation, secrecy, conspiracy, and illegality.
In the case, they urged the court to declare that the reduction of fares was illegal, unsustainable, and in disregard of local market factors, thus unfair and draconian.
They also sought an order compelling Uber to restore the fare rates to Sh60 per kilometre and the minimum fare of Sh300 with immediate effect.
Referring the dispute to arbitration, Justice Majanja found that the drivers did not deny they executed the Service Agreements with Uber which has an arbitration clause.
The agreement states that the governing law of the partnership deal is the law of The Netherlands. “It is trite that parties should always be held to their bargain that should only be departed from in a special and exceptional case,” the judge said.
“The court should carry out the intention of the parties and enforce the agreement made by them in accordance with the principle that a contractual undertaking should be honoured unless there is a strong reason for not keeping them bound by their agreement.”
He agreed with Uber that an arbitration agreement can only be avoided if it is impossible to perform and not simply because its compliance would be inconvenient.