A dispute between Growth Studio Ventures, an Africa-focused venture capital firm, and Lipa Later Limited, an e-commerce credit provider, has taken a turn after the High Court ruled to stay court proceedings and referred the dispute to arbitration.
- •Growth Studio Ventures sued Lipa Later, seeking to recover outstanding sums from two investment agreements; US$169,125 and US$43,000, representing the principal and interest from these agreements, respectively.
- •Lipa Later countered by invoking the arbitration clause present in the investment agreements, asserting that the dispute should be resolved through arbitration, as initially agreed upon by both parties.
- •The firm also disputed the figures presented by Growth Studio, claiming that certain payments were not taken into account and that the interest rate of 30% per annum on the USD-denominated loan was unconscionable.
“This Court seeks to promote other forms of dispute resolution where circumstances of the case allow. Consequently, this matter ought to be referred to arbitration as envisaged by the parties in their Agreements,” Justice Helene Namisi ruled.
Growth Studio’s argued that Lipa Later’s admission of debt negated the need for arbitration. However, Justice Namisi clarified that the existence of a dispute—even if one party acknowledges an underlying obligation, does not invalidate an arbitration clause ingrained within an agreement between parties.
The decision effectively halts the court proceedings, compelling Growth Studio and Lipa Later to seek resolution through arbitration.
Lipa Later is currently under administration, just two years after it acquired struggling e-commerce platform Sky.Garden for US$1.6 million. This followed months of speculation that the startup was facing financial challenges, forcing it to restructure operations and lay off some of its personnel.
In 2023, the firm secured KSh 500 million funding in a privately placed debt issuance signifying investor interest in Kenya’s lucrative Buy Now Pay Later (BNPL) space. It also planned on raising an additional KSh2 Billion in both Equity and Debt to spur growth further.
