International Arbitration 2024

Last Updated August 22, 2024

Kenya

Law and Practice

Authors



Oraro & Company Advocates is a leading African law firm, established in 1977, specialising in dispute resolution and corporate and commercial law. The firm has 45 lawyers and over 80 staff members, with several of its top lawyers consistently ranked in Chambers Global and other legal directories. It offers specialist legal services in areas such as arbitration, banking and finance, corporate and commercial, and tax, serving local and foreign clients across various sectors. The firm provides local and cross-jurisdictional services through relationships with leading firms globally, including Tanzania’s MWEBESA LAW GROUP, and is a full affiliate member of AB & David Africa (ABDA). This affiliation helps the team offer seamless cross-jurisdictional legal advice. Oraro & Company Advocates is committed to quality legal services through a partner-led approach, combining local knowledge with global perspectives.

Increased activity in infrastructure projects, mainly implemented under public-private partnership (PPP) arrangements, as well as the mining, oil and gas, and renewable energy sectors, have increased the prevalence of international arbitration as a mode of resolving disputes in Kenya. This is mainly because the legislation, bilateral agreements or contracts governing projects in these sectors provide for arbitration as a dispute resolution mechanism. There has also been a considerable increase in international arbitration activity, arising from the construction industry and technology and finance, owing to increased foreign and bilateral investment. 

Most of the contracts in respect of the aforesaid sectors and projects have foreign counterparties who prefer to have disputes resolved by international arbitration for various reasons, including the perception that international arbitral tribunals are likely to be neutral and impartial, the final nature of arbitral awards, international arbitration’s appreciation and accommodation of diverse legal cultures, the willingness of courts in Kenya to enforce foreign awards, and the perceived backlog of cases in Kenyan courts. 

Domestic Parties

Domestic parties prefer to resolve disputes through litigation in local courts mainly because of the perceived high cost of international arbitration. While they are generally not averse to domestic arbitration, they rarely implement international arbitration clauses due to the perceived high cost. 

International Arbitration

It is very common to find international arbitral awards being enforced in Kenya, as the attitude of the Kenyan courts in this regard has so far been fairly positive and supportive.

Historically, international arbitrations have hardly been seated in Kenya. Both domestic and foreign parties seem to prefer foreign seats such as Dubai and London, with the latter being particularly popular. However, given the recent establishment of international arbitration centres in Kenya, Rwanda and Tanzania, and the high cost of arbitration that is associated with foreign seats, there is some growth in locally seated international arbitrations. The Nairobi Centre for International Arbitration (NCIA), a government-sponsored international arbitration centre, stated in the NCIA 2023 Annual Report that 2.4% of cases instituted before it in the 2022–2023 financial year represented international arbitrations. It is anticipated that in future more international arbitrations will be seated in East Africa.

As stated in 1.1 Prevalence of Arbitration, Kenya has seen significant international arbitration activity in infrastructure projects, and PPPs in particular. The construction, mining, oil and gas, renewable energy, technology and finance sectors have also seen an increase in international arbitration activity owing to increased foreign and bilateral investments. 

Kenya has had some investor-state disputes referred to the International Centre for Settlement of Investor Disputes (ICSID) owing to the fact that Kenya is a party to the ICSID Convention and has entered into a number of bilateral investment treaties (BITs).

Other commonly used arbitration centres are the International Chamber of Commerce (ICC), the Chartered Institute of Arbitrators (Ciarb) and the London Court of International Arbitration (LCIA). 

Increasingly, parties are selecting the NCIA as a preferred arbitration institution and, given the popularity of the Kigali International Arbitration Centre (KIAC), more Kenyans are likely to be referring disputes to it in future.

There are no specific designated arbitration courts in Kenya. The jurisdiction to determine disputes related to or arising from domestic and international arbitration is conferred on the High Court of Kenya. Such disputes are primarily brought before the Commercial and Tax Division of the High Court at Nairobi, Kenya’s capital and commercial and financial hub. Nonetheless, all High Courts in Kenya may hear and determine disputes related to arbitration under their unlimited original jurisdiction over civil and criminal matters.

In some circumstances, such disputes may proceed on appeal to the Court of Appeal, which has limited appellate jurisdiction. In rare cases, a further appeal may proceed to the Supreme Court of Kenya if a matter is adjudicated to be of general public importance or relating to the interpretation of the Constitution of Kenya. 

Kenya is among 93 states and 126 jurisdictions around the world where legislation based on the UNICTRAL Model Law has been adopted (see Goodison Sixty-One School Limited v Symbion Kenya Limited [2017] eKLR). Arbitration in Kenya is governed by three primary pieces of legislation:

  • the Constitution of Kenya, 2010 – Article 159 of the Constitution explicitly recognises the need for courts and tribunals to encourage and promote alternative forms of dispute resolution, including arbitration;
  • the Arbitration Act supplemented by the Arbitration Rules 1997 – the Arbitration Act is modelled entirely on the UNCITRAL Model Law, and except for the limitations set out in the Act, it applies to both domestic and international arbitrations; and
  • the Nairobi Centre for International Arbitration Act – this Act establishes the NCIA to promote, facilitate and encourage the conduct of international and domestic arbitration.

These statutes are supplemented by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which Kenya ratified in 1989. The New York Convention is part of domestic law in Kenya by virtue of Article 2(6) of the Constitution which states that any treaty or convention ratified by Kenya will form part of the laws of Kenya.

Section 36(2) of the Arbitration Act further complements the New York Convention by providing that an international arbitral award will be recognised as binding, and enforced in accordance with the provisions of the New York Convention or any other convention to which Kenya is a signatory.

Finally, Kenya has also ratified the ICSID Convention, which is the legal framework applicable to dispute resolution and conciliation between international investors and states.

Kenya’s arbitration legislation does not depart from the UNCITRAL Model Law in any significant way. The laws reflect most of the UNCITRAL Model Law principles, including the finality of arbitral awards, limited court intervention or interference, and principles such as separability and kompetenz-kompetenz (competence-competence).       

There have been no amendments to the Arbitration Act in the past year, nor is there pending legislation before parliament to amend the Act. 

An arbitration agreement under Kenyan law, like any contract, must satisfy the essential requirements of a contract – validity, capacity and form. In particular, Section 35(2)(1) of the Arbitration Act empowers the court to set aside an award if it is proved that one of the parties to the arbitration agreement did not have the capacity to sign the agreement. In addition, parties to an arbitration must ensure that the agreement they are entering into is valid under the laws of Kenya or the laws under which the parties have subjected it, otherwise courts in Kenya may refuse to enforce it pursuant to Sections 6(1)(a) and 37(1)(a)(ii) of the Arbitration Act. Finally, pursuant to Section 4 of the Arbitration Act, an arbitration agreement must be writing.

There is no statutory list of non-arbitrable matters in Kenya. However, the courts do consider some matters as non-arbitrable disputes, including rights and liabilities arising from criminal offences, and insolvency and winding-up proceedings.

The general consideration is whether a dispute raises issues of public interest or issues that concern public policy. An example is criminal matters that are considered as an affront against the state, in which the state has a vested interest and would be reluctant to allow to be referred to an arbitral forum or other private forum.

Generally, disputes relating to dissolution of marriage, custody and maintenance have been regarded as being excluded from arbitration, however, the decision of the Court of Appeal in TSJ v SHSR [2019] eKLR held that there is nothing in the Arbitration Act that would prevent disputes “of a personal nature” – involving  matrimony, custody and the maintenance of children – from being referred to arbitration, and upheld a decision of the Aga Khan Shia Imami Ismailia National Conciliation and Arbitration Board, dissolving an Islamic marriage and making orders as to custody and maintenance.

Article 159(2)(d) of the Constitution of Kenya expressly recognises alternative forms of dispute resolution, such as arbitration. As such, the attitude of the courts in Kenya is generally very supportive and, more often than not, the courts are willing to enforce an arbitration agreement. 

However, the courts may decline to stay a suit pending arbitration if the arbitration agreement is invalid or inoperable. Further, the courts have drawn a distinction between disputed and undisputed claims. Where a dispute exists and the parties agreed to arbitration, the courts will generally stay any proceedings filed in court in breach of an arbitration agreement and refer the parties to arbitration. However, if the claim is undisputed – for instance, where there has been a clear admission of liability – the court will decline to enforce the arbitration agreement or to refer the dispute to arbitration on the grounds that no dispute exists to be referred to arbitration (see Niazsons (K) Ltd v China Road & Bridge Corporation Kenya [2001] eKLR). 

Further, whereas the courts in Kenya are generally willing to enforce arbitration agreements, it is incumbent upon a party seeking to enforce an arbitration agreement to apply to have a dispute that has been filed in court in breach of an arbitration agreement referred to arbitration at the earliest opportunity. An indolent party or one that has acquiesced or participated in court proceedings is likely to be barred from subsequently referring the dispute to arbitration (see Eunice Soko Mlagui v Suresh Parmar & four others [2017] eKLR).

Arbitration agreements are usually enforced in Kenya, save for instances where the arbitration agreement is considered null and void, inoperative or the dispute is not within the matters agreed to be referred to arbitration (see also 3.1 Enforceability).

Section 17(1)(b) of the Arbitration Act provides that “a decision by the arbitral tribunal that the contract is null and void shall not itself invalidate the arbitration clause”. This means that the invalidity of an agreement does not render the arbitration clause or contract invalid, since the two are treated as separate contracts.

The Court of Appeal affirmed this position in Kenya Anti-Corruption Commission & another v Nedermar Technology BV Limited [2017] eKLR when it declared “the arbitration clause in a contract is considered to be separate from the main contract, and as such it survives the termination of the contract”. 

As discussed above, the separability rule is enshrined under Section 17(1)(a) of the Arbitration Act. Arbitration clauses contained in an invalid agreement do not therefore suffer the invalidity of the main contract.

There are no limits under Kenyan law on a party’s right to select arbitrators. Section 11 of the Arbitration Act provides that parties are free to determine the number of arbitrators in their dispute, and failing such agreement, the number of arbitrators will be one.

The court in Nyoro Construction Company Limited v Attorney General [2018] eKLR expounded on this when it said: “As a general rule, since Arbitration is based on a contract, the parties are in principle free to choose their arbitrator. They can appoint anyone with legal capacity to act as an arbitrator. Party autonomy is thus the principal controller of the appointment process [...] Alternatively, the parties can agree on appointment procedure by submitting their dispute to arbitration rules which provide for the appointment of arbitrators.”

However, the provisions of Section 12(9) of the Arbitration Act are relevant. These require that when the High Court is appointing an arbitrator, it is to be guided by the qualifications required of an arbitrator by the agreement of the parties. In addition, the High Court should take into account considerations that are likely to secure the appointment of an independent and impartial arbitrator as affirmed by the High Court in Edward Muriu Kamau & four others all t/a Muriu, Mungai & Co Advocates v John Syekei Nyandieka [2014] eKLR. 

In the event that the parties’ chosen method for selection of an arbitrator fails, the default procedure is outlined under Section 12 of the Arbitration Act. In summary:

  • in an arbitration with three arbitrators, each party will appoint one arbitrator and the two arbitrators so appointed will appoint the third arbitrator;
  • in an arbitration with two arbitrators, each party will appoint one arbitrator; and
  • in an arbitration with one arbitrator, the parties will agree on the arbitrator to be appointed.

Section 12(3) of the Arbitration Act further stipulates that where one party to an arbitration indicates that it is unwilling to appoint an arbitrator, or fails to do so within the time allowed under the arbitration agreement (and where there is no time limit under the arbitration agreement, within 14 days), then the party that has duly appointed an arbitrator may give notice to the party in default that they propose to appoint the chosen arbitrator to act as a sole arbitrator. 

Multi-party arbitrations have not been expressly dealt with under the Arbitration Act. As such, the parties are free to come to an agreement in such cases. However, the NCIA Rules, 2015 (the “NCIA Rules”) stipulate that the NCIA takes the reins where there are multiple claimants and/or respondents who are unable to agree on an arbitrator(s).

In particular, Rule 7(10) of the NCIA Rules states that where there are multiple claimants or multiple respondents, and where the dispute is to be referred to three arbitrators, the parties are to jointly nominate an arbitrator for confirmation. However, where this is deemed impossible by virtue of the parties failing to agree, Rule 7(12) dictates that the arbitration agreement will, for all purposes, be considered as an agreement by the parties for the appointment of a three-member arbitral tribunal by the NCIA. In such a case, the NCIA will be free to appoint each member of the tribunal and designate one of the members to act as president of the tribunal.

Under Section 12(5) of the Arbitration Act, the High Court can intervene and set aside the appointment of an arbitrator where a sole arbitrator was appointed in default of one party participating in the appointment (see 4.2 Default Procedures). The High Court may intervene to set aside the appointment of the arbitrator only if it is satisfied that there was good cause for the failure or refusal of the party in default to appoint an arbitrator in good time. It is important to note, however, that the decision of the High Court in this respect is final and not subject to appeal (see Section 12(8) of the Arbitration Act).

Section 12(9) of the Arbitration Act requires that when the High Court is appointing an arbitrator, it is to be guided by the qualifications required of an arbitrator by the agreement of the parties. In addition, the High Court should take into account considerations that are likely to secure the appointment of an independent and impartial arbitrator. (see 4.1 Limits on Selection). 

Pursuant to Section 13(3) of the Arbitration Act, an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality and independence, or if the arbitrator does not have the qualifications agreed to by the parties, or if the arbitrator is physically or mentally incapable of conducting the proceedings, or there are justifiable doubts as to their capacity to do so. Also, a party may only challenge an arbitrator appointed by them, or in whose appointment that party has participated, for reasons of which the party becomes aware after the appointment. A determination by the High Court on a challenge to an arbitrator’s appointment is final and is not appealable.

Section 13 (1) of the Arbitration Act requires arbitrators to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. From the time of their appointment and throughout the arbitration proceedings, arbitrators are required to disclose any such circumstances without delay to the parties, unless the parties have already been informed by said arbitrator. Similar rules on the disclosure of conflicts and/or any circumstances that may give rise to justifiable doubts on impartiality and independence exist under Rule 14 of the Ciarb Rules and Rule 8 of the NCIA Rules. 

As previously discussed in 3.2 Arbitrability, matters of a criminal nature, disputes relating to insolvency and winding-up proceedings may not be referred to arbitration.

The principle of kompetenz-kompetenz is provided for under Section 17(1) of the Arbitration Act, which affirms the arbitral tribunal’s power to rule on its own jurisdiction.

In general, the courts in Kenya are reluctant to intervene in matters that are subject to arbitration save where such court intervention has been expressly sanctioned in the Arbitration Act. 

However, where the arbitral tribunal rules, as a preliminary question, that it has jurisdiction, any party aggrieved by such ruling may apply to the High Court within 30 days of having received notice of the ruling, to decide the matter. The High Court’s decision in such cases is final and is not subject to appeal. 

It should also be noted that while an application on the jurisdiction of an arbitral tribunal is pending before the High Court, the parties may commence, continue and conclude arbitration proceedings, but no award in such proceedings may take effect until the application is decided, and such award will be void if the application is successful.

A party challenging the jurisdiction of an arbitral tribunal to hear a dispute ought to do so at the earliest opportunity and in any event not later than the submission of the statement of defence (Section 17(2) of the Arbitration Act). 

However, a party aggrieved by the decision of the arbitral tribunal on jurisdiction may apply to the court within 30 days of receipt of the notice of the ruling. A party therefore approaches the court only after an award has been rendered by the arbitral tribunal on the question of its jurisdiction.

The courts have generally interpreted their role as supporting the arbitration process and have shied away from dealing with the merits of disputes that are subject to arbitration. In this regard, the courts in Kenya will generally defer to the findings of an arbitral tribunal. 

However, with regard to issues of jurisdiction and admissibility, it appears that the court will exercise its jurisdiction de novo as the applicable standard of review. This was evidenced in the case of Assumption Sisters of Nairobi Registered Trustee v Stanley Kebathi & Another [2008] eKLR where the court began its inquiry into the arbitrator’s jurisdiction to hear and determine the dispute by considering whether there existed an agreement between the parties by virtue of which the arbitrator could vest themselves of authority and or jurisdiction to arbitrate on the matter.

Courts in Kenya will generally stay or suspend court proceedings that have been commenced in breach of an arbitration agreement. This power is provided under Section 6 of the Arbitration Act. In order for the court to stay or suspend the proceedings, the party seeking to have the dispute referred to arbitration has to apply to the court not later than the time of entering appearance, otherwise they may be deemed to have submitted to the jurisdiction of the court (see also 3.3 National Courts’ Approach).

There is a general reluctance on the part of Kenyan courts to allow court proceedings to continue where parties agreed to refer the dispute to arbitration. However, there is a duty on the other party to object to the court proceedings before entering appearance in the matter. If a party has delayed in raising an objection with respect to the court proceedings, the court may find that such party has waived its right to contest the jurisdiction of the court.

Additionally, stay of court proceedings may be declined where the claim is undisputed, for instance, where there has been a clear admission of liability, and the court holds that there is no dispute to be referred to arbitration (see also 3.3 National Courts’ Approach) or where the arbitration agreement is considered null and void, inoperative or the dispute is not within the matters agreed to be referred to arbitration (see also 3.1 Enforceability).

There is no express legislation that permits third parties to be joined to arbitration proceedings. However, there are rare instances where the rights and obligations of a party to the arbitration can be assumed by a third party with the result that the arbitral tribunal would assume jurisdiction over the third party concerned. These include cases where a personal representative of a deceased party takes the place of the deceased party, or where a trustee is appointed in relation to a bankrupt party.

With respect to agency, the court in Kenya National Highways Authority v Masosa Construction Limited & another [2015] eKLR observed that a principal (as a third party) may be bound to an arbitration agreement if evidence is produced to show that they authorised or ratified the arbitration agreement.

Except as discussed above, an arbitral tribunal cannot assume jurisdiction over third parties. Parties aggrieved with the conduct of a third party can only seek recourse in a court of law.

Arbitral tribunals in Kenya are permitted to grant preliminary and/or interim relief under both the Arbitration Act and institutional rules applicable within the Kenyan jurisdiction:

  • Section 18(1)(a) of the Arbitration Act – An arbitral tribunal can order a party to take such interim measures of protection as it deems necessary or appropriate.
  • Rule 18(2)(i) of the Ciarb Arbitration Rules: An arbitral tribunal has jurisdiction to make one or more interim awards, including injunctive relief and conservatory measures.
  • Rule 27(1) of the NCIA Rules 2015: An arbitral tribunal, subject to the agreement between the parties, can issue a range of interim or conservatory orders in the arbitration.

An interim award made pursuant to the Ciarb and NCIA Arbitration Rules is final and binding upon the parties pursuant to the Arbitration Act and the institutional rules, which define an “arbitral award” to include any award by an arbitral tribunal, including an interim award. 

There is no automatic right of appeal against a decision allowing an application for security for costs brought under Section 18 of the Arbitration Act. A party may only appeal such a decision on a point of law that arises within the arbitration or stems from an award to the High Court (under Section 39 of the Arbitration Act). This recourse, however, is only available where parties have reserved their right of appeal. In the absence of such an agreement by the parties, an arbitral award is final and binding and can only be set aside, or its enforcement challenged, on the basis of the limited grounds set out under Sections 35 and 37 of the Act.

There is no express limit on the types of interim relief that can be awarded by an arbitral tribunal. The Arbitration Act stipulates that a tribunal can order a party to take whatever interim protection measures it deems necessary pertaining to the subject matter of the dispute. In the case of Safaricom Limited v Ocean View Beach Hotel Limited & two others [2010] eKLR: “Interim measures of protection in arbitration take different forms and it would be unwise to regard the categories of interim measures as being in any sense closed (say restricted to injunctions for example) and what is suitable must turn or depend on the facts of each case before the Court or the tribunal.” 

Interim Measures

Section 7(1) of the Arbitration Act provides that the High Court may allow applications for interim measures when so moved by either of the parties. The primary objective of the courts when intervening is to ensure that the subject matter of the arbitration proceedings is not jeopardised before an award is issued, thereby rendering the entire proceedings of no value. This purpose was well elaborated in the case of CMC Holdings Limited v Jaguar Land Rover Exports Limited [2013] eKLR: “In practice, parties to international arbitrations normally seek interim measures of protection. They provide a party to the arbitration an immediate and temporary injunction if an award subsequently is to be effective. The purpose of an interim measure of protection is to ensure that the subject matter will be in the same state as it was at the commencement or during the arbitral proceedings. The court must be satisfied that the subject matter of the arbitral proceedings will not be in the same state at the time the arbitral reference is concluded before it can grant an interim measure of protection.”

Interim relief in foreign-seated arbitrations

The existing law in Kenya is unclear on whether courts can grant interim relief in foreign-seated arbitrations, as there are conflicting decisions on the matter. In some cases, the courts have found that they have jurisdiction to grant interim relief, while in other cases, the courts have declined to grant interim relief when there is a foreign governing law clause or jurisdiction clause and a foreign seat.

The Kenyan courts had occasion to consider an application under Section 7 of the Act in the case of Skoda Export Limited v Tamoil East Africa Limited [2008] eKLR. Despite the fact that the subject matter of the contracts was in Kenya, the courts upheld the defendant’s preliminary objection to the jurisdiction of the High Court on the basis that the proper law of the contract was the Law of England and Wales, and that the seat of the proposed arbitration was London, England. In declining to issue any interim relief, the courts held that: “The idea of the place and law applicable to the dispute between the parties was mooted and mutually agreed between the parties and having mutually agreed to refer any dispute arising between them to International Arbitration, none of them has any recourse to any Municipal court like ours.”

Despite this principle, there have been instances where the Kenyan courts have accepted jurisdiction notwithstanding an exclusive foreign jurisdiction clause.

Section 7 of the Arbitration Act is silent on the types of interim measures, the conditions for granting these measures and the scope of the measures that can be granted, leaving the courts with wide discretion to make orders that preserve the subject matter of a dispute.

Emergency Arbitrators

There is no reference to emergency or expedited arbitration in the Arbitration Act, Arbitration Rules or the Ciarb’s Arbitration Rules. However, the NCIA Rules are modelled on international arbitration institution rules and contain provisions governing both expedited and emergency arbitrations. Rule 10 of the NCIA Rules states that in exceptional circumstances, prior to or on the commencement of the arbitration, a party may apply to the NCIA for the expedited formation of an arbitral tribunal. The application must be made in the prescribed form provided under the NCIA Rules. Rule 28 of the NCIA Rules allows a party to make an application for the appointment of an emergency arbitrator prior to the appointment of an expedited arbitral tribunal, which application is to be made in accordance with the procedure set out in the Second Schedule to the NCIA Rules. Under Rule 28(4), upon expedited formation of the arbitral tribunal, the emergency arbitrator will have no further power to act in the dispute. Under Rule 28(6) of the NCIA Rules, an order or award made by the emergency arbitrator is binding on all the parties upon being issued. However, under Rule 28(5), an order or award made by the emergency arbitrator will cease to be binding where:

  • the arbitral tribunal is not constituted within 90 days of the order/award; 
  • the arbitral tribunal proceeds to make a final award; or 
  • the claim is withdrawn. 

Furthermore, Rule 28(8) allows the arbitral tribunal, upon formation, either on an application by one of the parties or on its own motion, to vary, discharge or revoke in whole or in part an award of the emergency arbitrator (except an award referring to the arbitral tribunal). There is no provision in the Arbitration Act or institutional rules that sanctions court intervention once an emergency arbitrator has been appointed. There also do not appear to be any decisions on the matter. It appears that the courts would treat an award of an emergency arbitrator like any other arbitral award. As such, a party aggrieved by such an award could apply to set it aside on the limited grounds set out in the Arbitration Act, or appeal it on points of law where parties have agreed to reserve their right of appeal. 

Section 18(1)(c) of the Arbitration Act allows the arbitral tribunal to award security for costs as an interim measure of protection. Similarly, Rule 18(2)(j) of the Ciarb Arbitration Rules and Rule 26(1) of the NCIA Rules make provision for security for costs.

In determining the merits of an application for security for costs, the court will consider the following matters:

  • the prospects of success of the claimant’s case as against the prospects of success of the defence raised by the respondent;
  • the risk that an award of costs made in favour of a respondent will not be satisfied; and
  • whether it is fair in the circumstances of the case to require the claimant to pay security for the costs of the arbitration.

The Arbitration Act, the NCIA Rules and the Ciarb Arbitration Rules are the commonly applied rules that govern the procedure of arbitration in Kenya. Under Section 20 of the Arbitration Act, the applicable procedural rules are as follows: 

  • the tribunal will follow the procedure as agreed upon by the parties;
  • in the absence of consensus between the parties, the tribunal will conduct the arbitration as it deems appropriate while affording parties a fair arbitration proceeding and while availing reasonable opportunities to be heard;
  • the power of arbitral tribunals includes the determination of the admissibility, relevance, materiality and weight of any evidence so as to determine the substantive details of the proceeding;
  • similar privileges and immunities will be afforded to every witness and advocate giving evidence in proceedings before an arbitral tribunal as in court; and
  • the tribunal has a mandate to give directions to the effect that a party or witness will be examined on oath and can administer or take the necessary oath or affirmation.

While the rules under the Arbitration Act automatically apply to arbitrations that are governed by Kenyan law or are seated in Kenya, the NCIA or the Ciarb rules would only apply if adopted by the parties or provided in the contract in question. This notwithstanding, pursuant to the principle of party autonomy, parties are at liberty to choose the applicable laws and rules for their arbitration. In the event that parties fail to agree on the rules and laws, the arbitral tribunal may proceed with the arbitration in a manner it considers appropriate, having regard to cost, time and fairness. This power extends to the tribunal determining relevance, admissibility, materiality and weight of evidence.

There are no codified procedural steps that are required to be followed in arbitration proceedings conducted in Kenya.

Parties are encouraged to agree on the powers of the arbitrator(s). Otherwise, an arbitrator will generally have the power to: 

  • determine the applicable rules where parties have failed to do so (Section 20 of the Arbitration Act);
  • order interim measures of protection (Section 18 of the Arbitration Act);
  • order provision of security for the claim or amount in dispute (Section 18 of the Arbitration Act;)
  • order provision of security for costs (Section 18 of the Arbitration Act);
  • seek court assistance in exercising the above-mentioned powers (Section 18 of the Arbitration Act);
  • award interest (Section 32C of the Arbitration Act); and
  • determine the place of arbitration (Section 21 of the Arbitration Act).

An arbitral tribunal also has the power to impose sanctions for non-compliance with an order. Section 26 of the Arbitration Act enables the tribunal to make a peremptory order requiring compliance within a prescribed period of time. Section 26(g) sets out a range of other (limited) sanctions for non-compliance with a peremptory order. As such, the tribunal may: 

  • direct that the party in default will not be entitled to rely on any allegation or material that is the subject matter of the order; 
  • draw such adverse inferences from the non-compliance as the circumstances justify; 
  • proceed to an award on the basis of such materials as have been properly provided to it; 
  • make such order as it thinks fit regarding the payment of costs of the arbitration incurred as a result of the non-compliance.

There are no specific qualification requirements for representatives appearing on behalf of parties to an arbitration conducted in Kenya. Parties may appear or act in person or may be represented by any other person of their choice. However, in respect of applications to the High Court arising from the arbitration, representatives appearing for parties in Kenya must be a qualified advocate. The Advocates Act defines a qualified advocate as:

  • one who is admitted as an advocate;
  • one whose name is on the roll; and
  • one who has a valid practising certificate.

With respect to foreign legal representatives, the Attorney General has the power to admit an advocate from a Superior Court of the Commonwealth (Section 11 of the Advocates Act). The foreign advocate must pay the prescribed admission fee and must appear with an advocate.

Section 20 of the Arbitration Act gives parties the freedom to decide on the procedure to be adopted by the arbitral tribunal in the conduct of proceedings. This agreement should entail how evidence is brought before the tribunal and all the rules that should be put in place to govern it. There is no requirement that mandates parties to disclose particular documents; the documents only need to be relevant to the arbitration.

Section 20(4) of the Act states that every witness giving evidence and appearing before the arbitral tribunal will have the same privileges and immunities as witnesses and advocates in proceedings before the court. Furthermore, Section 10(5) – while not addressing the rules pertaining to cross-examination per se – states that the arbitral tribunal may direct that a party or witness be examined on oath or affirmation, and may for that purpose administer such oath or affirmation. 

The Arbitration Act itself does not make specific provision for, or rules governing, the discovery of documents or disclosure. However, Rule 9(3) of the Ciarb Arbitration Rules also allows the arbitral tribunal, at any time during proceedings, to order parties to produce documents, exhibits or evidence it deems necessary or appropriate.

Section 20(3) of the Arbitration Act gives the arbitral tribunal the power to determine the admissibility, relevance, materiality and weight of any evidence, and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made.

Whereas domestic matters in Kenya are governed by the Evidence Act (Chapter 80, Laws of Kenya), Section 2(1) of the Evidence Act explicitly states that it does not apply to proceedings before an arbitrator. 

Section 28 of the Arbitration Act makes provision for court assistance in taking evidence. It states that the arbitral tribunal, or a party with the approval of the arbitral tribunal, may request from the High Court assistance in taking evidence, and the High Court may execute the request within its competence and according to its rules on taking evidence.

In considering an application brought under Section 28 of the Act, the Court in Premji & another v Virunga Limited & another (Miscellaneous Civil Application E237 of 2021) [2022] KEELC 3342 (KLR) (23 May 2022) (Ruling) declined to uphold a request for assistance in taking evidence where the tribunal previously dismissed the request and no approval was obtained to seek the intervention of the High Court. In doing so, the High Court emphasised that Section 28 is couched in mandatory terms – that the approval of the tribunal is necessary when seeking the intervention of the court.

Where a party seeks assistance from the High Court under Section 28 of the Act, the court has the power to compel and/or order the production of evidence from a non-party to an arbitration. 

There are no express legal provisions for confidentiality of arbitrations other than those set out in Rule 34 of the NCIA Rules. As stated above, the NCIA Rules only apply if parties have agreed to adopt them. Parties are, however, free to agree on the degree of confidentiality of the proceedings, pleadings, documents and award. Nonetheless, the courts have generally held that arbitration processes, whether international or domestic, are absolutely confidential (see Nedermar Technology BV Ltd v Kenya Anti-Corruption Commission & Another [2006] eKLR). Where parties have agreed that the arbitration process should remain confidential, the same cannot be disclosed in subsequent proceedings. 

Under Section 32 of the Arbitration Act, an award must meet specific requirements for it be valid and binding. The award must be in writing, signed by the arbitrator, dated, and it must state the juridical seat. Additionally, an award must provide the reasons upon which it is based, unless:

  • the parties have agreed that no reasons are to be given; or
  • the award arises from a settlement recorded by the parties.

Unless the parties impose a time limit within which an award should be delivered, there are no specific or prescribed timelines under the Arbitration Act for the delivery of an arbitral award. However, some arbitration institutions impose time limits for the delivery of awards. For instance, under Article 29 of the NCIA Arbitration Rules, an award must be made within three months from the date of close the hearing.

There are no express limits to the types of remedies an arbitral tribunal may award. However, Section 35(2)(a)(iv) of the Arbitration Act provides that an award cannot deal with a dispute not contemplated within the terms of reference to arbitration, or address issues beyond the scope of reference to arbitration. In addition, Section 35(2)(b)(ii) of the Arbitration Act provides that the remedy must not conflict with public policy in Kenya. Accordingly, should the arbitral tribunal award remedies to the contrary, the High Court may, upon an application by a party, set aside the remedy. 

The general approach in Kenya is that costs follow the event in the absence of any extenuating circumstances. Under Section 32B of the Arbitration Act, unless the parties agree otherwise, the legal costs will be determined by the arbitral tribunal in its award, failing which, each party will be deemed responsible for their own legal and other expenses, and for an equal share of the arbitral tribunal’s fees and expenses. 

On interest, Section 32C of the Arbitration Act provides that unless parties agree otherwise, and to the extent that the rules of the applicable law permit, an arbitral award may include provisions for the payment of interest calculated from such date at such rate and with such rests as may be specified in the award. 

Unless otherwise agreed by the parties, arbitral awards are considered final and binding with no recourse to appeal. However, where parties have adopted the provisions of Section 39 of the Arbitration Act, which permits parties to appeal an award, an aggrieved party may approach the High Court for recourse on points of law only. 

The procedure for appealing entails filing an application to the High Court to set aside the award by way of originating summons made returnable for a fixed date before the judge in chambers, to be served on all parties at least 14 days before the return date. However, the application may only be made if:

  • the award dealt with a dispute that was not within the terms of reference to arbitration; 
  • the award contains decisions on matters beyond the scope of reference to arbitration; 
  • the award was induced by fraud, bribery, undue influence and corruption; 
  • the arbitration agreement was invalid under the applicable law or laws of Kenya;
  • the party to the arbitration agreement was under some incapacity;
  • the tribunal’s composition or its procedure was not as agreed by the parties; 
  • the applicant was not given proper notice of an arbitrator’s appointment, the proceedings or was unable to present their case;
  • the award conflicts with public policy; and 
  • the dispute cannot be settled by arbitration under the law of Kenya.

On whether the finding of the High Court is also subject to appeal, the Kenyan Supreme Court in Nyutu Agrovet Limited v Airtel Networks Kenya Limited; Chartered Institute of Arbitrators – Kenya Branch (Interested Party) [2019] eKLR held that since there was no express bar to appeals under Section 35 of the Arbitration Act, an unfair determination by the High Court should not be absolutely immune from appellate review on such unfairness. Therefore, if it is found in review of the award that the High Court stepped outside the grounds set under Section 35 and arrived at a decision which is manifestly wrong, an appeal against such a decision would lie to the Court of Appeal.   

Parties cannot enter into an agreement to exclude or expand the grounds for challenging an award beyond those specified under Section 35 of the Arbitration Act. An agreement to the contrary would be contra-statute and hence, unenforceable by the court. While the Arbitration Act remains silent on the scope of appeal in international arbitration, Section 39 allows parties in domestic arbitration to agree on the right of appeal to the High Court on a question of law arising during the arbitration or out of the award. Further appeal to the Court of Appeal against the High Court’s decision is permissible only if the parties agreed prior to the award, or the Court of Appeal grants leave to appeal on the basis that the appeal raises points of law of general importance. 

The only express recourse provided to parties in international arbitration is to set aside the arbitral award on the grounds specified under Section 35 of the Arbitration Act.

Court Support of Arbitration

Generally, Kenyan courts adopt a supportive role in arbitration matters, intervening only when expressly allowed by the Arbitration Act. Section 10 of the Arbitration Act discourages court intervention in arbitration disputes. In the cases of Kangethe & Company Advocates v Kenya Pipeline Company Limited Civil Appeal No 211 of 2006 [2011] eKLR it was explained that: “In Kenya the role of court is limited by section 10 of the Arbitration Act and its role or intervention must remain as specified in the Arbitration Act. Indeed, the aim of the Act is to drastically reduce the extent of the Court intervention in the arbitral process. In practice this must in turn involve balancing the right of party autonomy against abuse of process which may occur in the hands of the arbitral tribunals. Court and arbitration must of necessity remain close partners in the situation such as those described in this matter for reasons which include, inter alia, the observation by Lord Mustill in the Kenyan originated case of Coppee Lavalin S A Ren Ken Chemicals and Fertilizers Ltd [1995] 1 AC 38 at 64:- ‘It is only a court with coercive powers that would rescue an arbitration which is in danger of foundering.’”

Court Reluctance to Intervene in an Arbitral Award

Regarding application to set aside arbitral awards, the High Court would be reluctant to exercise its jurisdiction de novo and defers to findings of fact and conclusions of law reached by an arbitral tribunal. For instance, in the case of Brookside Dairy Limited v Limuru Milk Processor Limited & another [2020] eKLR, the court observed that: “Taken as a whole the gravamen of the Applicant’s argument is that the Arbitrator misconstrued the evidence and misapprehended the law. The Applicant is clearly dissatisfied with the findings of fact made by the Arbitrator and claims that the award reached by the Arbitrator is not supported on the evidence presented in Arbitral proceedings. These are arguments which would typically be made by a party in support of an appeal. The Applicant is in effect asking this court to re-examine the evidence placed before the Arbitrator and arrive at a different conclusion. A court sitting on appeal can do this but Section 35 does not authorize the High Court to sit on appeal over an Arbitral Award. The High Court under Section 35 is only concerned with the propriety of the Arbitral process and must restrict itself to the specific grounds for setting aside an Arbitral Award as specified in Section 35. To do otherwise would mean this court would be exceeding its mandate under the Arbitration Act.”

Court Acceptance of the Fact-Finding of Arbitrators

Likewise in the case of Kenyatta International Convention Centre (KICC) v Greenstar Systems Ltd [2018] eKLR, the court observed that: “The arbitrators are the masters of the facts. On an appeal the court must decide any question of law arising from an award on the basis of a full and unqualified acceptance of the findings of fact of the arbitrators. It is irrelevant whether the court considers those findings of fact to be right or wrong. It also does not matter how obvious a mistake by the arbitrators on issues of fact might be, or what the scale of the financial consequences of the mistake of fact might be. [...] Parties who submit their disputes to arbitration bind themselves to agreement to honour the arbitrators’ award on the facts, the principle of party autonomy decrees that a court ought never to question the arbitrators’ findings of fact.”

Kenya ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention”) on 10 February 1989. Pursuant to Article I(3) of the Convention, Kenya acceded to it with the reciprocity reservation that the Convention applies only to the recognition and enforcement of awards made in the territory of another contracting state. In line with Article 2(6) of the Constitution of Kenya, 2010, which states that any treaty ratified by Kenya will form part of Kenyan law, the Convention is now incorporated into domestic law in Kenya. Additionally, Section 36(2) of the Arbitration Act reinforces reliance on the Convention for matters related to international arbitration.   

Section 36 of the Arbitration Act provides that a domestic arbitral award is binding and will be enforceable upon an application in writing to the High Court. An international arbitration, on the other hand, will be recognised as binding and enforced in accordance with the provisions of the Convention or any other convention relating to arbitral awards to which Kenya is a signatory. The procedure for enforcing an award in Kenya entails making an application to the High Court by summons in chambers and providing the High Court with:

  • the original arbitral award or a duly certified copy of it; and
  • the original arbitration agreement or a duly certified copy of it.

A certified translation of the award or arbitration agreement must be supplied if the said documents are not written in the English language. 

Article V(1)(e) of the Convention provides that the recognition and enforcement of an award may be refused if there is proof that the award was set aside or suspended by a competent authority of the country in which, or under the law of which, it was made. The Kenyan courts apply this provision. In general, enforcement courts have the discretion under Article V(1) of the Convention to refuse to recognise and enforce an award if (conditions are a replica of Section 35 of the Arbitration Act):

  • the parties were, under the law applicable to them, under some incapacity;
  • the agreement is not valid under the law to which the parties subjected it or under the law of the country where the award was made;
  • the applicant was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was unable to present their case;
  • the award deals with a difference not contemplated within the terms of the submission to arbitration or has decisions on matters beyond the scope of the submission to arbitration; 
  • the composition of the arbitration authority or the procedure was not in accordance with the agreement of the parties or was not per the law of the country where the arbitration took place; 
  • the award has not yet become binding on the parties;
  • the subject matter of the difference cannot be settled by arbitration under the law of Kenya; or 
  • the recognition or enforcement is contrary to the public policy of Kenya. 

Under Article VI of the Convention, a court has discretion to adjourn its decision on the enforcement of an award which is the subject of pending set-aside or suspension proceedings. The court may, however, on the application of the party seeking enforcement, order the other party to give suitable security in the meantime. In Glencore Grain Ltd v TSS Grain Millers Ltd [2012] eKLR, it was held that the Arbitration Act provides for a new approach to the enforcement of international awards and that the Convention may be invoked to stay such enforcement pending a ruling on set-aside. This power of the court is however discretionary.

Arbitral Awards and the State

Section 41 of the Arbitration Act provides that the Kenyan government will be bound by the provision of the Act, including Section 36 on recognition and enforcement of an award. Similarly, the court in Tononoka Steels Limited v Eastern and Southern Africa Trade Development Bank [1999] eKLR held that where a state engages in purely commercial activities, it would be prejudicial and contrary to public policy to uphold sovereign immunity. 

This notwithstanding, Section 4 of the Privileges and Immunities Act (Chapter 179 of the Laws of Kenya) imports certain provisions of the Vienna Convention on Diplomatic Relations which accords immunities and privileges to diplomatic missions or consular posts and to persons connected with such missions or posts. Further, the doctrine of sovereign and diplomatic immunity is recognised in Kenya as a principle of international law and provides as a general principle that states are immune from legal suits in other states. 

However, the court in Ministry of Defence of the Government of the United Kingdom v John Ndegwa [1983] eKLR held that this immunity is not absolute but restrictive. According to the court “the test is whether the foreign or sovereign government is acting in a governmental capacity, under which an action may be brought against it”. 

Generally, the courts in Kenya recognise and enforce both domestic and international awards upon an application by a party under Section 36 of the Arbitration Act. However, Section 37 of the Arbitration Act sets out a list of the following grounds on which a Kenyan court may decline to recognise or enforce an arbitral award, namely:

  • the recognition or enforcement of the arbitral award would be contrary to the public policy of Kenya;
  • the subject matter of the dispute cannot be settled by arbitration under the law of Kenya; 
  • a party to the arbitration agreement was under some incapacity;
  • the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication of that law, under the law of the state where the arbitral award was made;
  • the party against whom the arbitral award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceeding or was otherwise unable to present their case;
  • the award deals with a dispute not contemplated by or not falling within the terms of reference to the arbitration;
  • the composition of the arbitral tribunal or its procedure was not in accordance with the agreement of the parties or, failing any agreement by the parties, was not in accordance with the law of the state where the arbitration took place; 
  • the arbitral award has not yet become binding on the parties or has been set aside or suspended by a court of the state in which, or under the law of which, that arbitral award was made; or
  • the making of the award was induced or affected by fraud, bribery, corruption or undue influence.

In defining public policy, the court in Rwama Farmers Co-operative Society Limited v Thika Coffee Mills Limited [2012] eKLR held that an award would be against public policy if it is immoral, illegal or violates the basic moral principles in Kenya. 

In addition, the court in Kenyatta International Convention Centre (KICC) v Greenstar Systems Limited [2018] eKLR observed that public policy is an indeterminate and fluid principle which fluctuates depending on time and circumstances. However, precedents confirm that an award would contravene public policy if it is inconsistent with the constitution, the laws in Kenya or national interest, or contrary to justice and morality in Kenya.

The Arbitration Act does not explicitly allow for class action arbitration. However, it is arguable that where class members have consented to submit their disputes to arbitration, there should be no basis to exclude such a class of disputes from arbitration unless allowing it would violate other contractual, statutory or constitutional interests. This view is informed by the US Supreme Court decision in Oxford Health Plans LLC v Sutter, 133 S.Ct. 2064 (2013). Accordingly, class action arbitration is not available in Kenya unless clearly permitted under the express terms of the arbitration agreement. 

There are no specific ethical codes and professional standards for arbitrators under the Arbitration Act. Arbitrators are, however, mandated under Section 19 of the Arbitration Act to treat all parties equally. 

However, various arbitration institutions have established codes of conduct that specifically apply to arbitrators appointed within their purview. For instance, the NCIA expects arbitrators appointed by it to observe the ethical standards outlined in the NCIA Code of Conduct for Arbitrator, 2021. 

Where the arbitrators and/or counsels are Kenyan-qualified advocates, or where parties have adopted Kenya law as the governing law or seat of the arbitration, they shall be subject to the provisions of the Advocates Act, Advocate Practice Rules, 1966, and the Code of Standards of Professional Practice and Ethical Conduct, 2016, which frameworks sustain ethical conduct in the legal profession.

While there are no specific rules or restrictions on third-party funders in arbitration, advocates must adhere to certain conditions under the Advocates Act such as avoiding champertous arrangements. Section 46 of the Advocates Act prohibits retention agreements where payment is contingent on the success of the suit. Additionally, advocates are prohibited from purchasing interests or parts of a client’s claim (Section 45 of the Advocates Act). 

Although the Arbitration Act is silent on the issue of consolidation, parties may by consent agree to consolidate proceedings. The court in exercising its supervisory power, cannot intervene and order consolidation where parties have not expressly consented to this (see Hanif Sheikh v Alliance Nominees Limited & 17 others [2014] eKLR). Courts in Kenya have generally been reluctant to grant consolidation of arbitration proceedings in instances where the arbitral agreement is silent on consolidation (see World Vision International v Synthesis Limited & another [2019] eKLR).

See 5.7 Jurisdiction Over Third Parties. Courts in Kenya can intervene and grant interim measures against foreign third parties as provided under Sections 7 and 10 of the Arbitration Act.

Oraro & Company Advocates

ACK Garden Annex
6th Floor
1st Ngong Avenue
Nairobi
Kenya

+254 709 250 000

legal@oraro.co.ke www.oraro.co.ke
Author Business Card

Trends and Developments


Authors



Oraro & Company Advocates is a leading African law firm, established in 1977, specialising in dispute resolution and corporate and commercial law. The firm has 45 lawyers and over 80 staff members, with several of its top lawyers consistently ranked in Chambers Global and other legal directories. It offers specialist legal services in areas such as arbitration, banking and finance, corporate and commercial, and tax, serving local and foreign clients across various sectors. The firm provides local and cross-jurisdictional services through relationships with leading firms globally, including Tanzania’s MWEBESA LAW GROUP, and is a full affiliate member of AB & David Africa (ABDA). This affiliation helps the team offer seamless cross-jurisdictional legal advice. Oraro & Company Advocates is committed to quality legal services through a partner-led approach, combining local knowledge with global perspectives.

Arbitration in Kenya has seen significant growth and evolution, reflecting the dynamic nature of the country’s economic and legal landscape. In particular, the sectors that have especially driven this trend are construction, finance and technology. The construction sector has witnessed a surge in large-scale infrastructure projects, involving international contractors and state-owned agencies. This has led to a rise in construction-related disputes, arising out of delays in project completion, variations in the scope of work, cost overruns and default from the parties.

Although the use of arbitration in lieu of the courts to resolve disputes has been prevalent in the construction industry for many years, in Kenya, the rise of construction arbitration cases has transformed the process and expanded its scope of application further and further. As a result, professionals are able to better assess the risks and opportunities presented by recent developments.

Concurrently, exponential industry growth in the finance and technology sectors, driven by Kenya’s reputation as a global leader in mobile money and digital finance and a regional finance hub, has introduced novel legal challenges and resulted in numerous new disputes. Arbitration, with its capacity for confidentiality and adaptability to technical nuances, has become a critical tool for managing these disputes.

The trends below underscore the evolving role of arbitration and the legal framework governing arbitration in fostering a stable and predictable business environment in Kenya.

The Principle of Finality and the Court of Appeal’s Jurisdiction to Hear Appeals from High Court Decisions on Setting Aside and Enforcement of Arbitral Awards

The High Court of Kenya has been consistent in promoting the finality of arbitral awards as enshrined in, among others, Sections 10 and 35 of the Kenyan Arbitration Act. This has been the case where the court exercises its jurisdiction to set aside or enforce arbitral awards such as in Christ for all Nations v Apollo Insurance Co. Ltd. (2002) EA 366 where the court, in refusing to set aside an arbitral award, held that “the public policy of Kenya leans toward finality of arbitral award and parties to arbitration must learn to accept awards, warts and all, subject only to the right of challenge within the narrow confines of section 35 of the Arbitration Act”.

However, the question of whether appeals to the Court of Appeal from decisions of the High Court touching on arbitration ought to be entertained has remained a longstanding thorny issue. In a recent Court of Appeal decision in Nyutu Agrovet Limited v Airtel Networks Kenya Ltd (Civil Appeal (Application) 61 of 2012) [2024] KECA 523 (KLR) (9 May 2024) (Judgment) the Court lamented that despite the departure of arbitration “from formalities often associated with traditional litigation, offering a simple, more flexible, expedient, cost-effective and confidential avenue for conflict resolution” […] “the practice and experience in this country is a far cry from, and a veritable repudiation of, the ideal situation. Arbitration has morphed into a complex, costly, protracted, catastrophic nightmare for many a party”.

That case involved 17 years and counting of litigation, initially culminating in a Supreme Court decision in 2019 Nyutu Agrovet Ltd. v Airtel Networks Kenya Ltd. & another [2019] eKLR (the “Nyutu 2019 Supreme Court Case”) where the Apex Court conclusively held that there existed a limited right of appeal to the Court of Appeal from High Court decisions setting aside an arbitral award. However, the right of appeal was restricted solely to exceptional circumstances to remedy obvious injustices. The court highlighted possible grounds for such appellate intervention to include “where the High Court, in setting aside an arbitral award, has stepped outside the grounds set out in the said Section and thereby made a decision so grave, so manifestly wrong and which has completely closed the door of justice to either of the parties”. Prior to this decision, there were conflicting decisions issued by the Court of Appeal on whether or not a right of appeal existed, leading to uncertainty and protracted and costly litigation on this issue.

Over the last year or so, courts have continued to clarify the Court of Appeal’s appellate jurisdiction from High Court decisions on arbitration. In Nyutu Agrovet Limited v Airtel Networks Kenya Ltd (Civil Appeal (Application) 61 of 2012) [2024] KECA 523 (KLR) (9 May 2024) (Judgment), the protracted litigation between Nyutu and Airtel returned once again to the Court of Appeal. This time the court sought to determine whether Nyutu had met the threshold for appeal set out in the Nyutu 2019 Supreme Court Case (Supra). The Court of Appeal reiterated the Supreme Court’s previous caution that appellate jurisdiction should be exercised carefully, so as not to open a floodgate of appeals, undermining the very essence of arbitration. The court ultimately declined appellate jurisdiction, holding that the High Court, in setting aside the arbitral award in question, had confined itself to the grounds for setting side set out in Section 35 of the Arbitration Act (which mirror the UNICTRAL Model Law). The award was properly set aside on account of the arbitrator exceeding his jurisdiction and determining matters that were not contemplated by the arbitration agreement.

In Cape Holdings Limited (Under Administration) v Synergy Industrial Credit Limited (Civil Appeal (Application) 81 of 2016) [2023] KECA 1497 (KLR) (8 December 2023) (Ruling) the court was further categorical that a party was not permitted to introduce new allegations on appeal that an arbitral award should be set aside for conflicting with the public policy of Kenya where such arguments were not made before the High Court.

On the question of whether a subsequent appeal lies to the Supreme Court, in Geo Chem Middle East v Kenya Bureau of Standards; SC Petition No 47 of 2019, [2020] eKLR (Geo Chem Case), it was held that where the Court of Appeal accepts appellate jurisdiction and issues a substantive judgment, no further appeal lies to the Supreme Court. The court further clarified that, as a matter of practice, leave to appeal a judgment of the High Court relating to arbitration to the Court of Appeal could only be granted by the Court of Appeal, and not the High Court, and such leave can only be granted after interrogating the substance of the intended appeal.

Finally, the Geo Chem Case (Supra) further limited the Court of Appeal’s appellate jurisdiction by holding that the appellate court does not have the power to interrogate the merits of an arbitral award where the High Court had declined jurisdiction to entertain an application to set aside an arbitral award. In such circumstances, the Court of Appeal must remit the matter back to the High Court for reconsideration and is not permitted to itself determine whether or not to set aside the arbitral award.

Despite initial uncertainty and conflicting determinations, Kenyan courts have, in the past few years, introduced a measure of certainty in clarifying the limited appellate jurisdiction of the Court of Appeal to entertain appeals from decisions of the High Court on setting aside and enforcement of arbitral awards. The line of authorities discussed above indicates the courts’ commitment to upholding the principle of finality of arbitral awards by minimising avenues for appeal. This will only serve to promote arbitration as a simple, flexible, expedient, cost-effective and confidential dispute resolution avenue.

Court Attitudes Towards Interim Measures of Protection Pending Arbitral Proceedings and Alternatives in Emergency Arbitration

The growing recognition and use of arbitration especially in construction disputes has augmented the number of cases that warrant the intervention of courts in arbitral proceedings, including by way of issuing interim measures of protection.

An interim measure of protection is an order given by either the court or an arbitral tribunal with a view to preserving the status quo or preventing the dissipation of assets pending the resolution of the arbitral dispute. These measures have been traditionally sought before courts, usually before the tribunal proceedings have commenced. However, the court’s attitudes towards granting such interim measures of protection, especially in foreign-seated arbitrations, have highlighted the crucial role arbitral tribunals can play (as discussed further below) in issuing urgent interim measures, through Emergency Arbitration Proceedings, in lieu of court action.

Notably, the granting of interim measures of protection is discretionary. It is not as a matter of right, but it is predicated on various conditions being met before a tribunal or a court can grant them. This is particularly important before the courts. The rationale behind this is to ensure that there is caution in the exercise of the courts’ discretion so as not to usurp the role of the arbitral tribunal. One contentious area that arises in this context is court intervention in foreign-seated arbitrations.

The existing law in Kenya is unclear on whether courts can grant interim relief in foreign-seated arbitrations, as there are conflicting decisions on the matter. In some cases, courts have found that they have jurisdiction to grant interim relief, while in other cases, courts have declined to grant interim relief when there is a foreign governing law clause or jurisdiction clause and a foreign seat. At times, Kenyan courts have adopted the position in the case of Skoda Export Limited v Tamoil East Africa Limited [2008] eKLR, in which the courts considered an application brought under Section 7 of the Arbitration Act (on interim measures of protection). Despite the fact that the subject matter of the contracts were in Kenya, the courts upheld the defendant’s preliminary objection to the jurisdiction of the High Court on the basis that the proper law of the contract was the law of England and Wales, and that the seat of the proposed arbitration was London, England. Interim measures were therefore best sought in courts at the seat of arbitration.

In Polyphase Systems Limited v Sterling & Wilson Solar Limited; Malindi Solar Group Limited (Interested Party) [2021] eKLR, the High Court was confronted with an application under Section 7 of the Arbitration Act, where the underlying contract contained a foreign-seated arbitration clause with the governing law specified as that of England and Wales. Although the court ultimately declined to grant the interim measures of protection on the grounds that the applicant failed to meet the required threshold, it notably did not refute its jurisdiction to issue such measures. In fact, the court affirmed its authority to hear and determine the application under Section 7 of the Arbitration Act, notwithstanding the fact that the governing law of the contract in dispute was that of England and Wales.

More recently, the High Court of Kenya in Civicon Limited v Fuji Electric Company Limited & 2 others (Civil Suit E359 of 2022) [2023] KEHC 21373 (KLR) (Commercial and Tax) (15 August 2023) (Ruling) (in which the authors represented Fuji Electric Co. Limited) dismissed two applications seeking interim measures of protection restraining a bank from paying Fuji Electric Co. Limited the proceeds of a USD2.314 million performance bond issued in its favour. In response thereto, Fuji raised a preliminary jurisdictional issue that the court, having stayed the proceedings and directed the parties to submit their dispute to arbitration, was now functus officio and cannot make any further orders in the matter. The court’s ruling agreed with the arguments preferred by Fuji, specifically that the court, having already rendered its decision referring the dispute to arbitration, is now bereft of jurisdiction and cannot make any further orders.

These decisions indicate that while the Kenyan courts have not conclusively settled their position on granting interim relief in foreign-seated arbitrations, there is a discernible trend towards limiting judicial intervention, particularly after arbitration proceedings have been initiated.

This evolving judicial approach underscores the importance of clear contractual provisions and the growing emphasis on respecting the autonomy of the arbitration process. These developments have emphasised the key role to be played by emergency arbitration proceedings in obtaining interim relief pending substantive arbitration proceedings.

Emergency arbitration provides an avenue for parties to urgently approach an arbitral tribunal for interim relief prior to the formal empanelment of an arbitral tribunal to hear and determine the substantive dispute. An emergency arbitrator is usually appointed to hear an application for interim relief pending the substantive arbitration. Key advantages of emergency arbitration over seeking interim measures from courts include maintaining the confidentiality of the proceedings, avoiding the jurisdictional pitfalls in seeking court intervention highlighted above and, in some cases, assuaging the concerns of parties that are apprehensive of obtaining justice from local courts, especially in the case of foreign parties seeking remedies against national governments and their institutions.

There has been increasing interest in emergency arbitration proceedings in Kenya which have seen the adoption of emergency arbitration processes by both the Nairobi Centre for International Arbitration (NCIA) and the Kenya Chapter of the Chartered Institute of Arbitrators (CIArb). CIArb’s rules require an emergency arbitrator to be appointed on application within two days with the emergency arbitrator deciding the issues raised in an application for interim measures as soon as possible, and preferably within 15 days of appointment. However, the emergency arbitrator is required to ensure all parties are afforded, on reasonable notice, an opportunity to be heard.

The NCIA Arbitration Rules (as revised) equally require an emergency arbitrator to be appointed within two days who is required to establish a schedule for considering the emergency arbitration within two days and make an order or award within 15 days from appointment, subject to any extensions as may be agreed by the parties.

It is expected that, going forward, parties will increasingly adopt emergency arbitration in seeking interim measures of protection.

Third-Party Funding

Over the years, international arbitration has been the preferred mode of dispute resolution due to its time and cost efficiencies. However, there is a growing concern that this is not always the case. Lately, the exorbitant cost of sustaining international construction arbitration has become a thorny issue precipitating discussion on alternative financing methods such as “third-party funding”.

Third-party funding is a financing arrangement where a disputant agrees to receive financial support for litigation costs from a third party (funder) who has no prior interest in the litigation. In return, the funder receives a percentage of damages awarded to the disputant as consideration.

In Kenya, the law does not explicitly recognise third-party funding, nor do the various institutional rules. Related arrangements such as champerty are, however, barred under Section 46 of the Kenyan Advocates Act and the Law Society of Kenya Code of Standard of Professional Practice and Ethical Conduct. Accordingly, the legal status of third-party funding remains untested in Kenya. Nonetheless, it arguable that an international investment dispute involving Kenya and a foreign investor under the purview of the International Centre for Settlement of Investment Disputes (ICSID) would permit third-party funding as it is explicitly considered under Rule 14 of the ICSID Rules.

In contrast, regional and comparative jurisdictions like Nigeria have recognised third-party funding through the Nigerian Arbitration and Mediation Act, 2023, viewing it as both an investment opportunity and a catalyst for access to justice. Given Kenya’s progressive Constitution, it is arguable that the country is ready to expressly recognise and enforce third-party funding arrangements, if the right to access justice under Article 48 of the Constitution and fair hearing under Article 50 of the Constitution is anything to go by.

This method of financing has, however, received criticism. Some critics argue that its recognition in Kenya could undermine the very foundation of practice of law in Kenya, which is not seen as a business or investment opportunity, but rather a profession. Others worry that third-party funding could lead to the monetisation of legal claims at the expense of justice, potentially incentivising unmeritorious arbitral claims.

These concerns, in our view, could be addressed through regulation as was emphasised by the Supreme Court of the United Kingdom in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] EWCA Civ 299. The court stated that third-party funding arrangements must meet the mandatory legal requirements to be valid and enforceable. Rather than rejecting third-party funding entirely, we believe that it should be embraced, subject to development of a policy or a code of conduct for the funders to guide its implementation in Kenya.

Oraro & Company Advocates

ACK Garden Annex
6th Floor
1st Ngong Avenue
Nairobi
Kenya

+254 709 250 000

legal@oraro.co.ke www.oraro.co.ke
Author Business Card

Law and Practice

Authors



Oraro & Company Advocates is a leading African law firm, established in 1977, specialising in dispute resolution and corporate and commercial law. The firm has 45 lawyers and over 80 staff members, with several of its top lawyers consistently ranked in Chambers Global and other legal directories. It offers specialist legal services in areas such as arbitration, banking and finance, corporate and commercial, and tax, serving local and foreign clients across various sectors. The firm provides local and cross-jurisdictional services through relationships with leading firms globally, including Tanzania’s MWEBESA LAW GROUP, and is a full affiliate member of AB & David Africa (ABDA). This affiliation helps the team offer seamless cross-jurisdictional legal advice. Oraro & Company Advocates is committed to quality legal services through a partner-led approach, combining local knowledge with global perspectives.

Trends and Developments

Authors



Oraro & Company Advocates is a leading African law firm, established in 1977, specialising in dispute resolution and corporate and commercial law. The firm has 45 lawyers and over 80 staff members, with several of its top lawyers consistently ranked in Chambers Global and other legal directories. It offers specialist legal services in areas such as arbitration, banking and finance, corporate and commercial, and tax, serving local and foreign clients across various sectors. The firm provides local and cross-jurisdictional services through relationships with leading firms globally, including Tanzania’s MWEBESA LAW GROUP, and is a full affiliate member of AB & David Africa (ABDA). This affiliation helps the team offer seamless cross-jurisdictional legal advice. Oraro & Company Advocates is committed to quality legal services through a partner-led approach, combining local knowledge with global perspectives.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.