Commercial Arbitration in Kenya: Advantages, Procedure, and Enforceability

As trade and investment across East Africa grow, so do commercial disputes. Many businesses would rather resolve those disputes privately, quickly and before experts than in open court. Arbitration offers exactly that. Kenya has a modern arbitration law, a supportive Constitution, an established international arbitration centre in Nairobi and courts that generally respect arbitral awards. This article explains the advantages of arbitration, how the process works under Kenyan law, and how awards are enforced.

Key takeaways

• Arbitration in Kenya is governed by the Arbitration Act, 1995, based on the UNCITRAL Model Law, and supported by Article 159(2)(c) of the Constitution.
• Courts may only intervene in arbitration where the Act expressly allows it (section 10).
• An award can only be set aside on the limited grounds in section 35, and an application must be filed within three months of receiving the award.
• Kenya is party to the New York Convention, so Kenyan awards can be enforced abroad and foreign awards can be enforced in Kenya.
• The Nairobi Centre for International Arbitration (NCIA) administers domestic and international arbitrations.

Why choose arbitration?

Arbitration is not always cheaper than litigation, since parties pay the arbitrators and venue costs. However, the ability to control the timeline and avoid multiple appeals often makes it more efficient overall.

The legal framework

• Constitution of Kenya, 2010: Article 159(2)(c) directs courts to promote alternative forms of dispute resolution, including arbitration.
• Arbitration Act, 1995 (amended 2009): governs domestic and international arbitrations seated in Kenya.
• Arbitration Rules, 1997: set out court procedures for applications under the Act.
• Nairobi Centre for International Arbitration Act, 2013: established the NCIA and an Arbitral Court.
• New York Convention: Kenya acceded in 1989.

The arbitration agreement

Arbitration depends on agreement. The arbitration agreement must be in writing and may be a clause in a contract or a separate agreement. A well-drafted clause should state:

• the scope of disputes covered;
• the seat (legal place) of arbitration, such as Nairobi;
• the number of arbitrators and how they are appointed;
• the applicable rules, such as the NCIA Arbitration Rules, the Chartered Institute of Arbitrators (Kenya Branch) Rules, or the ICC or LCIA rules;
• the language of the arbitration; and
• the governing law of the contract.

If a party files a court case in breach of an arbitration agreement, the other party can apply under section 6 for the court proceedings to be stayed and the matter referred to arbitration. The application must be made at the time of entering appearance or before filing any pleadings or taking any other step in the proceedings.

The arbitration procedure step by step

1. Notice of arbitration

The claimant serves a notice requiring the dispute to be referred to arbitration. Under the Limitation of Actions Act, arbitration is treated as commenced for limitation purposes when this notice is served.

2. Appointment of the tribunal

The parties appoint the arbitrator or arbitrators according to their agreement. If they fail to agree, the appointing authority named in the clause, or the High Court, can make the appointment. Arbitrators must disclose any circumstances that could raise doubts about their impartiality or independence.

3. Jurisdiction

Under section 17, the tribunal may rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement. A party dissatisfied with the ruling may apply to the High Court within 30 days.

4. Preliminary meeting and directions

The tribunal and parties agree a timetable for pleadings, document production, witness statements, expert reports and the hearing.

5. Interim measures

The tribunal can order interim measures of protection. A party can also apply to the High Court under section 7 for interim measures before or during the arbitration, for example to preserve assets or evidence.

6. Hearing

Parties present their evidence and arguments. Hearings may be in person, virtual or hybrid, and many arbitrations are decided largely on documents and written submissions.

7. The award

The tribunal issues a written, signed and reasoned award, unless the parties agree otherwise. The award may order payment of money, specific performance, declarations, costs and interest.

Challenging an award

Section 35 provides that an award may be set aside by the High Court only if the applicant proves that:

• a party was under some incapacity;
• the arbitration agreement is not valid;
• the applicant was not given proper notice or was unable to present its case;
• the award deals with a dispute outside the scope of the reference;
• the tribunal's composition or the procedure was not in accordance with the parties' agreement;
• the making of the award was induced by fraud, bribery, undue influence or corruption; or
• the subject matter is not capable of settlement by arbitration under Kenyan law, or the award conflicts with the public policy of Kenya.

The application must be made within three months from the date the applicant received the award. Courts interpret "public policy" narrowly and will not re-examine the merits of the dispute. In Nyutu Agrovet Limited v Airtel Networks Kenya Limited (2019), the Supreme Court held that an appeal to the Court of Appeal from a High Court decision under section 35 is possible only in exceptional circumstances, such as where the High Court has stepped outside the grounds in section 35.

Recognition and enforcement

Domestic awards

Under section 36, a domestic award is recognised as binding and, on application to the High Court, enforced as a decree of the court. The applicant files the original award, or a certified copy, and the arbitration agreement.

Foreign awards

International awards are enforced in accordance with the New York Convention. Under section 37, recognition can only be refused on limited grounds similar to those for setting aside, including incapacity, lack of proper notice, excess of jurisdiction, irregular procedure, the award not yet being binding, non-arbitrability or public policy.

Arbitration with government entities

Contracts with public bodies often contain arbitration clauses. Enforcement against the government follows the Government Proceedings Act, which requires a certificate of order against the government rather than execution against public property. Parties dealing with public bodies should take this into account when negotiating dispute resolution provisions.

Frequently asked questions

Can Kenyan courts overturn an arbitral award on the merits?

No. Courts cannot set aside an award simply because they disagree with the arbitrator's findings of fact or law. Only the limited grounds in section 35 apply.

How long does arbitration take in Kenya?

Many commercial arbitrations conclude within 12 to 18 months, depending on complexity and the cooperation of the parties. Expedited procedures can be faster.

Is mediation an alternative to arbitration?

Yes. Mediation is a non-binding, facilitated negotiation, and many contracts provide for mediation before arbitration. Kenyan courts also run court-annexed mediation.

How W.O.A. Advocates can help

We draft arbitration clauses, represent parties in domestic and international arbitrations, and act in court applications for stays, interim measures, setting aside and enforcement. Talk to our dispute resolution team.