Arbitration is one of the alternative dispute resolution mechanisms recognized under Article 159 (2) (c) of the Constitution of Kenya.
It has become an essential method for dispute resolution, offering a more flexible, private, and expedient means of settling disputes outside the often slow traditional court system. Kenya’s unique position as a regional hub for trade and commerce has also made it a regional hub for international commercial arbitration, with the establishment of the Nairobi Centre for International Arbitration (NCIA) and the Arbitration Court by an Act of Parliament in 2013, which further cemented Kenya’s role as a promoter of international commercial arbitration in the region. However, despite significant progress in developing Kenya’s arbitral framework, issues still hinder its effectiveness. To solidify Kenya’s position as a preferred arbitration hub in Africa, reforms are necessary to address challenges such as cost barriers, enforcement obstacles and a lack of specialized arbitrators.
This article takes a brief look at Kenya’s arbitral framework and potential for reform.
Legal Framework
Arbitration in Kenya is governed by the Arbitration Act, 1995 (the Act), which recognizes both domestic and international arbitration. Since its enactment in 1995, the Act has been amended through the Arbitration (Amendment) Act of 2009 and the Companies and Insolvency Legislation (Consequential Amendments) Act of 2015 which introduced new provisions in the Act relating to domestic arbitration involving a bankrupt person. Kenya is also a signatory to various international treaties such as the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention) which facilitates cross-border enforcement of arbitral awards in Kenya. Additionally, the Foreign Judgments (Reciprocal Enforcement) Act outlines the procedure for enforcement of foreign arbitral awards through Kenyan courts.
Commencement of Arbitration – The Arbitration Agreement
Arbitration can only be commenced if an arbitration agreement exists between disputing parties. The Act defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Parties can, therefore, submit all or specific aspects of their disputes to arbitration as mutually agreed in the arbitration agreement. The Act states that an arbitration agreement must be in writing and can either be in the form of an arbitration clause in a contract or a separate agreement. The existence of an arbitration agreement is evidence of the mutual consent of the parties to submit their dispute to arbitration and effectively ousts the jurisdiction of courts to determine the dispute. Section 6 of the Act requires a court in which proceedings are brought in a matter which is the subject of an arbitration agreement to stay such proceedings and refer the matter to arbitration.
Extent of Court Intervention
In Kenya, local courts can only intervene in arbitration in limited circumstances as provided in the Act. Section 10 of the Act fortifies the principle of party autonomy by explicitly prohibiting court interference in arbitration except in the following instances:
1. Stay of proceedings – Section 6 of the Act empowers the High Court to grant an order for stay of proceedings in a matter which is the subject of arbitration and to refer the matter to arbitration upon an application by either of the parties. However, the High Court may refuse to refer a matter to arbitration and assume jurisdiction over the dispute if an application for stay of proceedings is not made in time or where it finds that the arbitration agreement is null and void or where the dispute is not within the scope of arbitration.
2. Interim reliefs – Section 7 of the Act gives the High Court power to grant a party to an arbitration agreement, interim reliefs which may be necessary to preserve the subject matter of arbitration pending the outcome of the arbitration. In Safaricom Limited v Ocean View Beach Hotel Limited & 2 others [2010] eKLR, the Court of Appeal affirmed that the High Court could issue orders intended to preserve evidence, to protect assets or in some other way to maintain the status quo during or before the commencement of an arbitration.
3. Appointment of arbitrators – Pursuant to Section 12 (5) of the Act, a party who did not participate in the appointment of an arbitrator may apply to the High Court to have the appointment set aside and the High Court may set aside such an appointment if persuaded that the defaulting party had good reasons for failing to participate in the process of appointment. The High Court can thereafter appoint a sole arbitrator on the request of the parties or upon an application by either of the parties in the absence of consensus.
4. Removal of arbitrators – The High Court can also intervene upon an application by a party to an arbitration agreement for removal of an arbitrator under Section 14 of the Act where they become aware of circumstances giving rise to doubts as to the impartiality and independence of the arbitrator after his/her appointment and after an application seeking the arbitrator to step down, fails.
5. Jurisdictional questions – Pursuant to Section 17 (6) of the Act, an aggrieved party may approach the High Court for recourse to challenge the ruling of an arbitral tribunal on its jurisdiction to determine the dispute between the parties.
6. Taking of evidence – The High Court may also intervene on the request of an arbitral tribunal or a party to an arbitration agreement with approval of the tribunal, to assist with taking evidence.
Recent Developments in Case Law
Setting Aside of Awards
The principle of finality of arbitration, which is enshrined under Section 32A of the Act, provides that an arbitral award is final and binding upon the parties unless otherwise agreed by the parties. Therefore, as a general rule, there can be no recourse against an arbitral award except as provided in the Act or as agreed by the parties. Section 35 (2) of the Act, however, highlights some of the grounds for setting aside of an award by the High Court, including where the award is against public policy or made without regard to the arbitration agreement. In Nyutu Agrovet Limited v Airtel Networks Kenya Limited [2024] KECA 523 (KLR), the Court of Appeal reinforced the principle of finality of arbitration by holding that whereas there exists a right to challenge an arbitral award under Section 35 of the Act to the High Court, such a right does not exist on a second appeal to the Court of Appeal. The Court of Appeal held that Section 35 of the Act allows appeals on specific grounds to address miscarriage of justice as opposed to the merits of an arbitral award and that judicial intervention can only be entertained under exceptional circumstances with leave of the court. This position taken by the Court of Appeal has been reinforced by in other decisions and was also affirmed by the Supreme Court. This position not only recognizes the importance of the principle of finality in arbitration but also recognizes that a decision of the High Court sitting on appeal against an arbitral award is not entirely unassailable but can be challenged by the Court of Appeal, albeit sparingly and under circumscribed circumstances, thereby providing certainty on this area.
Reservation of the Right of Appeal
Whereas the principle of finality requires that an arbitral award be final and binding on parties, Section 39 (1) of the Act allows parties to a domestic arbitration to appeal on points of law to the High Court against an arbitral award if they reserve this right in the arbitration agreement. Additionally, Section 39 (3) of the Act allows a further appeal to the Court of Appeal against the decision of the High Court only if this right of appeal is reserved in the arbitration agreement or if the Court of Appeal grants leave to appeal in matters of general public importance. In a recent decision in SBM Bank (Kenya) Limited v Afrasia Bank Limited [2025] KECA 386 (KLR), the Court of Appeal held that there is no automatic right of appeal to the Court of Appeal from a High Court decision under Section 39 of the Act unless parties expressly reserved this right in the arbitration agreement. In the absence of such express reservation, an appellant must first seek leave of the Court of Appeal to lodge their appeal on the grounds that it raises points of law of general importance. This clarification by the Court of Appeal gives parties to an arbitration the opportunity to mutually agree whether or not they would require further recourse to the High Court or Court of Appeal after delivery of the arbitral award. It aligns with the principle of party autonomy, which dictates that parties are free to agree how to resolve their dispute subject only to public policy safeguards.
Key Areas for Reform
1. One of the main challenges facing arbitration in Kenya is the high costs associated with the process. Whereas arbitration offers an expedient resolution of disputes to the parties, it may be expensive, especially in disputes involving weaker parties, such as employees against established corporations. Arbitrator’s fees, administrative costs as well as the costs of legal representation can weigh down on individuals and small and medium enterprises. In Kenya, it is arguable that there is a need for regulatory reform with respect to different cost structures to accommodate different types of arbitral disputes, such as employment disputes and other domestic disputes, including provision for third-party financing for weaker parties.
2. Enforcement of arbitral awards, especially against government agencies, is also a challenge that needs to be addressed through amendment of laws to provide stricter penalties for non-compliance and to streamline enforcement procedures by minimizing bureaucratic delays. For example, Under Section 21 (1) of the Government Proceedings Act, an order for recognition and enforcement of an arbitral award against the government, which also includes an order for payment of costs, cannot be immediately satisfied until after the lapse of 21 days and after an application has been made to court by the decree-holder for a certificate of the order to be issued.
3. There is also a shortage of specialized arbitrators with expertise in handling complex disputes in fields such as construction, intellectual property, and international investment, thereby affecting the quality and reliability of awards. There is a need for training and accreditation programs for arbitrators to ensure they acquire specialized expertise in these areas. The NCIA provides institutional support in arbitral proceedings, and despite providing training and accreditation programs for mediators and arbitrators, there is no clear visibility of the number of specialized arbitrators in its panel of arbitrators.
Conclusion
Arbitration remains a crucial dispute resolution mechanism in Kenya, but reforms are necessary to improve its credibility, affordability and reliability as an alternative to litigation. Kenya has the opportunity to strengthen its arbitration framework to attract more domestic and international arbitration by addressing the issues of cost barriers, arbitrator specialization and enforcement challenges.
About the Author
Eugene Owiti is an Associate in Clyde & Co’s Nairobi office. He has extensive experience in dispute resolution advising a wide variety of clients on commercial litigation and arbitration across multiple industry sectors. Eugene also advises companies on employment relations and on the regulatory requirements for digital credit providers.
This article was originally published on Daily Jus on Friday 11th of April, with thanks to Jus Mundi & Jus Connect.
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Read the original publication at Clyde & Co.
