Arbitration

Case Study Caption

Arbitration in Kenya

The principal legislation governing arbitration is the Arbitration Act, Act No.4 of 1995, which applies to both domestic and international arbitration proceedings, and enforcement of the awards. The Arbitration Act incorporated the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) to provide for recognition of foreign arbitral awards in Kenya. The Arbitration Act (as amended in 2010) is based entirely on the UNCITRAL Model Law. Initially, it was a mirror copy of the Model Law, but with the 2010 amendments, the Act now encompasses recent developments in arbitration practice and procedure, including in particular: Section 16(A) and (B) on withdrawal and immunity of an arbitrator. Section 19(A) on equal treatment of parties. Section 32(A), (B) and (C) on the effect of awards, costs and expenses, and interest. The Constitution of Kenya (Article 159) also encourages the use of alternative dispute resolution as a means to achieve justice.
An arbitrator’s jurisdiction is derived from the parties’ agreement. For an arbitrator to have jurisdiction, all of the following must apply:
  • There must be a binding agreement to arbitrate.
  • The arbitrator must have been validly appointed.
  • There must be a dispute that the parties had agreed to arbitrate.
Jurisdiction can be challenged by attacking the agreement’s validity or on the tribunal’s jurisdiction over certain subject matters, among other challenges.
Section 17 of the Arbitration Act provides for the doctrine of kompetenz-kompetenz. The plea for lack of jurisdiction should be raised before submitting the statement of defence. Where the issue is that the tribunal has exceeded the scope of its authority, the plea must be raised as soon as the matter alleged to be beyond scope is raised during the proceedings. The tribunal decides the matter either as a preliminary question or in an arbitration award on the merits. Any party aggrieved by the ruling can apply to the High Court within 30 days to decide the matter. The High Court’s decision is final and not capable of appeal.
 

An agreement binds the parties to the agreement, under the privity of contract principle (Arbitration Act). A person cannot be bound by a contract to which they are not party, and therefore cannot be joined to arbitral proceedings. However, there are exceptions