FAQs ON ARBITRATION LAW AND PRACTICE IN KENYA

1. What is arbitration?
   Arbitration is an alternative to litigation as a means of resolving disputes. It is a non-judicial process where the arbitrator as an independent third-party makes a binding decision after hearing testimony and examining the evidence in respect of the dispute. The arbitrator’s decision is called an award, and it is final and binding on the parties to the dispute.
2. What laws govern arbitration in Kenya? Article 159(2) of the 2010 Constitution of Kenya provides that, in exercising judicial authority, t he court and tribunals must be guided by the principle that alternative forms of dispute resolution such as arbitration will be promoted. Article 159(2) of the 2010 Constitution of Kenya provides that, in exercising judicial authority, t he court and tribunals must be guided by the principle that alternative forms of dispute resolution such as arbitration will be promoted In Kenya, arbitration is governed by the Arbitration Act, No. 4 of 1995. The scope of the Arbitration Act in Kenya is limited to disputes that are commercial in nature, and it applies to both domestic and inter national arbitrations proceedings as well as enforcement of awards. The Arbitration Act incorporates the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which provides for the recognition and enforcement of foreign arbitral awards in Kenya. The Act also provides for the finality of the arbitral awards which are enforceable through the courts The Act is however not applicable to criminal, land or family disputes.
3. How does arbitration arise? The basis of arbitration is contract. The rights and obligations of the parties to arbitrate their dispute usually arise from a written arbitration agreement they have concluded. Before designating arbitration as the dispute resolution mechanism of a contract, parties must ask themselves the following questions:

• Is arbitration best suited for your particular dispute? Arbitration can have several advantages over litigation such as that arbitration is faster, private, and more procedurally flexible. Arbitration also has a degree of finality as court judgment will very frequently be subject to appeal(s) while the opportunities for appealing or challenging an arbitration award are very limited. However arbitration can be costly. The parties must pay the arbitrators their fees which can vary between USD 150 to USD 800 per hour. Administrative costs, such as arbitral institution’s administrative fees, room hire, travelling and accommodation costs of the parties, their legal team, as well as any witnesses and experts, must also be paid.

• Is it preferable to conduct the arbitration under an arbitral institution or is an ad hoc arbitration better? An ad hoc arbitration is not required to proceed under the auspices of an arbitral institution. The Nairobi Centre for International Arbitration (NCIA) is the main arbitration institution in Kenya, and it is established under the NCIA Act, 2013. The NCIA has its own arbitration rules.

An arbitration clause or agreement should have the following provisions:

• The scope of the arbitration agreement. Parties must clarify whether any and all disputes between them shall be finally resolved by arbitration.
• The number of arbitrators, the procedure for their appointment and, if necessary, replacement. There must be a default procedure to ensure that an appointment can be made when one party will not co-operate. It is vital to ensure that a properly qualified tribunal is appointed without the need for expensive applications to court.
• The place or seat of the arbitration which is the legal place where the arbitration is deemed to be seated.
• The governing law of the arbitration (which may be different than the governing law of the contract).
• Choice of rules that will govern the arbitration proceedings
• The language of arbitration.
• Confidentiality of the arbitration.
• A declaration that the award of the tribunal is final and binding on the parties and may be enforced in a court of competent jurisdiction.

4. Does an arbitration agreement preclude court involvement?
   Not entirely. The principle of party autonomy which states that parties to the arbitration agreement are independent not only to choose laws but also to conduct the arbitration minimizes the extent for intervention by the courts. Instances providing for court intervention in arbitration include applications for setting aside an award, determination of the question of the appointment of an arbitrator, recognition and enforcement of arbitral awards, and other specified grounds such as where the arbitral tribunal rules as a preliminary question.
5. How are arbitration awards enforced?
   Enforcement of an arbitral award is done by way of an application to the High Court for the recognition and enforcement of the award. The Arbitration Act also provides for the recognition and enforcement of foreign arbitral awards in Kenya.
   However, the Act also allows for instances when an award can be set aside or challenged and these instances include include a finding that the award is against Kenyan public policy, a finding that the subject matter of the dispute is incapable of settlement by arbitration under national law, or the appellant providing proof that the award was procured or induced by corrupt means, bribery, undue influence, or fraud.

Should you have any queries or need any clarifications with respect to the above, please do not hesitate to contact WMC Law (info@wanjiramwanikilaw.com).