With the growth of cross-border trade and investment, alternative dispute resolution mechanisms like arbitration have gained prominence. Kenya has positioned itself as a regional hub for international arbitration, offering a robust legal framework and institutional support. This article explores the advantages, procedure, and enforceability of commercial arbitration in Kenya.

Legal Framework

Kenya's Arbitration Act 1995 (as amended) governs domestic and international arbitrations. The Act is modeled on the UNCITRAL Model Law on International Commercial Arbitration, ensuring harmony with global best practices.

Key provisions include:

Section 6: Arbitration agreements must be in writing.

Section 10: Parties are free to agree on the procedure for appointing arbitrators.

Section 20: Arbitral tribunals have the power to grant interim measures.

Section 32A: Arbitral awards are binding and enforceable as decrees of the High Court.

Section 35: Arbitral awards can only be set aside on limited grounds like incapacity, invalidity of the agreement, lack of notice, or public policy.

Kenya is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, facilitating the enforcement of Kenyan awards abroad.

Advantages of Arbitration

Arbitration offers several advantages over litigation for commercial disputes in Kenya:

1. Party autonomy: Parties have greater control over the arbitration process, including choice of arbitrators, procedural rules, and applicable law.

2. Flexibility: Arbitration allows for tailored procedures that can be more efficient and cost-effective than court litigation.

3. Confidentiality: Arbitration proceedings and awards are generally confidential, protecting sensitive commercial information.

4. Expertise: Parties can appoint arbitrators with specialized knowledge in the subject matter of the dispute.

5. Finality: Arbitral awards are final and binding, with limited grounds for challenge or appeal, providing certainty and closure.

6. Enforceability: Kenya's legal framework and international treaty obligations make arbitral awards readily enforceable.

Arbitral Institutions

Kenya has several established arbitral institutions that provide administrative support and procedural rules for arbitrations:

Nairobi Centre for International Arbitration (NCIA): Established under the Nairobi Centre for International Arbitration Act 2013, the NCIA promotes and administers arbitrations with a regional focus.

Chartered Institute of Arbitrators Kenya Branch (CIArb-K): CIArb-K provides education, training, and appointment of arbitrators, and administers arbitrations under its rules.

International Chamber of Commerce (ICC) Kenya National Committee: The ICC Kenya National Committee promotes and facilitates ICC arbitrations in Kenya, including providing assistance with the appointment of arbitrators and organizat ion of hearings.

These institutions offer standard arbitration clauses, panel of arbitrators, case management services, and modern facilities for hearings.

Arbitration Procedure

The typical procedure for a commercial arbitration in Kenya involves the following steps:

Commencement: The claimant submits a request for arbitration to the respondent and the agreed arbitral institution (if any), setting out the dispute and proposed arbitrator(s).

Appointment of Arbitrators: The parties appoint the arbitrator(s) as per their agreement or the applicable institutional rules. In the absence of agreement, the High Court may make the appointment.

Preliminary Meetings: The arbitral tribunal holds preliminary meetings with the parties to discuss procedural issues, timetable, and any interim measures.

Pleadings: The parties submit their detailed statements of claim and defense, along with supporting documents.

Hearing: The arbitral tribunal holds oral hearings where parties present evidence and arguments. Witnesses and experts may be examined.

Award: After the hearings conclude, the arbitral tribunal deliberates and issues its final award, which is binding on the parties.

The entire process is typically completed within 6-12 months, subject to the complexity of the dispute and the parties' cooperation.

Enforcement of Awards

One of the key advantages of arbitration is the ease of enforceability of awards. In Kenya, arbitral awards are enforced as orders of the High Court under Section 36 of the Arbitration Act.

The party seeking enforcement files an application in the High Court, along with the original award and arbitration agreement. The Court may refuse enforcement only on limited grounds, such as invalidity of the agreement, lack of due process, or violation of public policy. These grounds mirror the grounds for setting aside awards under Section 35 of the Act.

Kenyan courts have generally taken a pro-enforcement stance. In the 2019 case of Synergy Industrial Credit Limited v Cape Holdings Limited, the Court of Appeal held that courts should not reopen the merits of the dispute when considering enforcement and should lean towards enforcement unless the award is "inimical to the tenets of justice and morality".

For foreign arbitral awards, enforcement is governed by the New York Convention framework. Kenya courts have also upheld the enforceability of foreign awards, as seen in the 2020 case of Glencore Energy UK Limited v Kenya Bureau of Standards, where the High Court enforced a London arbitral award.

Conclusion

Commercial arbitration offers an attractive dispute resolution mechanism for businesses operating in Kenya. The legal framework, institutional support, and pro-enforcement stance of courts provide a conducive environment for arbitrations.

Parties should carefully draft their arbitration agreements, choosing suitable rules and institutions. Engaging experienced arbitration counsel and arbitrators can ensure effective case management and outcomes.

As Kenya continues to develop its arbitration ecosystem, capacity building of local practitioners, modernization of infrastructure, and specialization of courts will be key. Sustained efforts to position Kenya as a premier arbitral seat will benefit not just the legal sector but the broader economy by boosting investor confidence.

Arbitration's adaptability and efficiency make it well-suited to resolve the increasingly complex and high-stakes commercial disputes in Kenya's dynamic business landscape. Embracing arbitration as a primary dispute resolution tool can help businesses save time and costs, protect relationships, and unlock value.