Arbitration Law in Kenya
Arbitration Law in Kenya
Kenya has developed a strong framework for arbitration, making it one of the leading jurisdictions for dispute resolution in East Africa. Arbitration in Kenya is governed by both domestic laws and international conventions, providing a robust environment for both domestic and international arbitration.
1. Legal Framework
The primary legislation governing arbitration in Kenya is the Arbitration Act, No. 4 of 1995, which was modeled on the UNCITRAL Model Law on International Commercial Arbitration. The Act provides the legal basis for both domestic and international arbitration in Kenya.
Amendments: The Arbitration Act has undergone several amendments, including significant changes in 2010 and 2015, to streamline the arbitration process and ensure it aligns with modern practices.
International Treaties: Kenya is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), ensuring that foreign arbitral awards can be recognized and enforced in Kenya.
Other Relevant Legislation:
- The Civil Procedure Act (Cap 21), which provides guidance on the enforcement of awards in Kenya.
- The Companies Act, which also touches on dispute resolution, particularly in the corporate context.
2. Arbitration Agreement
Arbitration in Kenya is based on a valid arbitration agreement, which can either be a separate agreement or an arbitration clause in a larger contract.
Form: The agreement must be in writing. It can be a clause within a contract, a separate agreement, or even an exchange of letters or emails confirming an agreement to arbitrate.
Enforceability: Arbitration agreements are enforceable under the Arbitration Act, and Kenyan courts generally support the enforcement of valid arbitration agreements unless they violate public policy or other legal requirements.
Arbitrability: Certain types of disputes are non-arbitrable, such as criminal matters, family law issues, and disputes involving the interpretation of the Constitution.
3. Types of Arbitration
Kenya supports both domestic and international arbitration.
Domestic Arbitration: This involves disputes between parties who are located within Kenya, where both the subject matter and the parties are connected to the country.
International Arbitration: Arbitration involving foreign parties, including disputes with a connection to Kenya but involving international elements. This can include cases under institutions like the International Chamber of Commerce (ICC) or UNCITRAL.
Investment Arbitration: Kenya has a number of bilateral investment treaties (BITs) and international agreements that provide for the arbitration of disputes between investors and the state.
4. Arbitration Procedure
The Arbitration Act provides a flexible procedural framework for arbitration in Kenya, allowing parties to determine the rules and procedures they wish to follow, subject to certain safeguards.
Arbitrators: The parties are free to appoint arbitrators. If the parties cannot agree on the arbitrators, they can request the Kenyan courts to make the appointment. In the case of multiple arbitrators, they will generally appoint one arbitrator each, with the third arbitrator being appointed by the others or by the courts.
Arbitration Rules: The parties are free to choose their own arbitration rules. If they fail to do so, the tribunal will determine the applicable rules. Commonly used rules include the UNCITRAL Arbitration Rules or institutional rules like those of the ICC.
Place of Arbitration: The parties can choose the seat of arbitration. If they do not agree, the tribunal will determine the place based on the circumstances.
Language of Arbitration: The parties can agree on the language to be used in the proceedings. If no agreement is reached, the arbitral tribunal will decide.
Interim Measures: The parties can request interim measures from the arbitral tribunal. If the tribunal cannot provide these, the Kenyan courts have the authority to grant interim relief to preserve the status quo or prevent harm to a party’s rights.
5. Court Involvement
The courts in Kenya have a limited role in the arbitration process, primarily ensuring that the arbitration process is fair, and that arbitral awards are enforced.
Appointment of Arbitrators: If the parties fail to agree on the appointment of arbitrators, they may apply to the Kenyan courts for assistance. The courts also intervene if the arbitral tribunal becomes deadlocked or if issues arise in the arbitration process.
Interim Measures: Kenyan courts can provide interim measures or relief before or during the arbitration process, such as freezing assets or ordering the preservation of evidence.
Setting Aside Awards: The grounds for setting aside an arbitral award in Kenya are limited. A party may apply to the court to set aside an award on the following grounds:
- The tribunal lacked jurisdiction.
- The award was obtained through fraud or corruption.
- The award contravenes Kenyan public policy.
- The arbitral tribunal did not follow the proper procedures, resulting in a denial of due process.
6. Recognition and Enforcement of Foreign Arbitral Awards
Kenya is a signatory to the New York Convention and, as such, foreign arbitral awards are enforceable in Kenya, subject to certain conditions.
Recognition Process: To enforce a foreign arbitral award, the party must apply to the Kenyan courts. The courts will assess whether the award meets the criteria under the New York Convention, including whether it complies with the principles of Kenyan public policy.
Grounds for Refusal: A foreign arbitral award may be refused recognition or enforcement in Kenya if:
- The award was made in a country that is not a party to the New York Convention (although this is rare).
- The award is against the public policy of Kenya.
- The award deals with a dispute not covered by the arbitration agreement.
- The party seeking enforcement was not given proper notice of the proceedings or was otherwise denied a fair hearing.
7. Arbitration Institutions in Kenya
Kenya has a number of institutions that provide services for both domestic and international arbitration, including:
The Nairobi Centre for International Arbitration (NCIA): The NCIA is a key institution in Kenya, designed to facilitate the resolution of disputes in East Africa and beyond. It administers arbitrations under its own rules and the UNCITRAL Arbitration Rules.
Kenya International Arbitration Conference (KIAC): This is another key institution offering a platform for arbitration, particularly for international disputes involving parties in Kenya or East Africa.
Chartered Institute of Arbitrators, Kenya Branch: A professional body offering training, certification, and support for arbitrators and dispute resolution professionals in Kenya.
8. Challenges and Opportunities in Arbitration in Kenya
Challenges
Awareness and Familiarity: There is still a degree of unfamiliarity with arbitration, particularly among small businesses and individuals, who may prefer litigation.
Backlog in Courts: While Kenyan courts generally support arbitration, the backlog of cases in some courts may delay the enforcement of awards, though this has been improving.
Cost: Arbitration can be costly, particularly for small and medium-sized enterprises (SMEs) that may find it expensive compared to litigation.
Opportunities
Regional Hub: Kenya is positioning itself as the arbitration hub for East Africa, particularly due to its location, growing economy, and ongoing investments in infrastructure.
Growing Legal Profession: The legal profession in Kenya is increasingly recognizing arbitration as a key dispute resolution tool, and institutions like NCIA are gaining international recognition.
Government Support: The Kenyan government is supportive of arbitration as a means of attracting foreign investment, with reforms and efforts to streamline the legal framework further promoting the country as a favorable jurisdiction for arbitration.
Conclusion
Kenya has a robust and modern arbitration framework that aligns with international best practices. With a solid legislative foundation, strong judicial support for arbitration, and a growing number of local and international arbitration institutions, Kenya is becoming a significant player in the African arbitration landscape. The country’s commitment to arbitration, along with its adherence to the New York Convention, provides a secure and attractive environment for resolving both domestic and international disputes.
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