Remember the Uber drivers’ lawsuit in Kenya? Well, now Uber is seeking to activate the arbitration clause within the drivers’ contracts.
In 2016, a group of 34 drivers filed a lawsuit against Uber Kenya. The drivers claimed that Uber—in reducing ride fares from $0.54 per kilometre to $0.3—had breached the terms of their contract, and made it impossible for them to profit from their work.
Uber Kenya had previously reduced the fares in order to address the fierce competition it was facing from other ride-hailing platforms in Kenya.
In response to the lawsuit, Uber Kenya claimed that it didn’t enter a contract with the drivers. It however stated that Uber BV, a private LLC and a different corporate body, was the company the drivers had contracted with, and as such was not liable for the charges. In other words, “Don’t sue us, sue the other Uber guys.”
Last October, a Kenyan High Court struck out Uber’s defence, lifted the corporate veil, and stated that while they were separate entities, there was an undeniable link between them.
The corporate veil is a term used to describe the distinction between a person, and the business(es) they register. That is, a company can be accused of fraud under the founder’s guidance, but the founder itself would not be guilty of fraud. Arbitration clauses are terms in a contract that instruct that all [or certain] disputes arising from that contract be settled outside of the court.
Now Uber Kenya is asking the court to honour the terms within the drivers’ contract which calls for arbitration, not litigation, as a dispute resolution mechanism.
Kasigo Khaole, Head of Central Operations at Uber South Africa noted, “I am advised by the 2nd defendant’s (Uber B.V.) Advocate on record, which advice I verily believe to be true, that there are no justifiable reasons to warrant a departure from the terms of the agreements.”
It’s been almost 6 years since the lawsuit started and the drivers aren’t closer to a reprieve. Arbitration notably has a shorter timeframe than litigation, but it does come with its own demerits, one of which is the absence of a court ruling that can then be applied as precedence. Basically, Uber can keep reducing fares at their drivers’ peril, and the drivers can sue because of the arbitration clause, at least not until Kenya enacts a law that regulates the sector.