Challenges Facing the practice of Arbitration in Kenya

A perfect society is not defined by lack of conflict but by the mechanisms of conflict resolution. Usually, what holds society together is the ability to amicably resolve disputes that makes coexisting with each other easy.

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Introduction

A perfect society is not defined by lack of conflict but by the mechanisms of conflict resolution. Usually, what holds society together is the ability to amicably resolve disputes that makes coexisting with each other easy. A quick and easy mechanism of conflict resolution is necessary that is cost-effective both financially and timely. The courts were the only means to access justice, but constraints such as poverty, corruption, case backlogs and limited judges meant that alternative means were necessary. The necessity to access justice without visiting the courts’ corridors gave birth to the term alternative dispute resolution for which Arbitration was born. Arbitration became the most effective way to solve disputes without incurring the cost and time associated with litigation. As early as 1914, Arbitration has been part of Kenyan laws but has failed to elicit the Kenyan people’s confidence. This begs the question; are there challenges to the process that erodes trust? In his dissertation, James Ngotho Njung’e notes that the level of utilization of this important dispute resolution method is significantly low, and there is an overwhelming paradigmatic shift of emphasis of litigation to Arbitration.1 This implies that Arbitration has failed to live to its expectation due to several challenges that bedevil the process. This article delves into three of the most pertinent issues with arbitration processes in Kenya.

Interference by the court

This a significant challenge given that Section 37 of the Kenya Arbitration Act provides a broad leeway for court’s interference. It provides as follows:

Grounds for refusal of recognition or enforcement

(2) if the High Court finds that-

  1. the subject matter of the dispute is not capable of settlement by Arbitration under the law of Kenya; or
  2. the recognition or enforcement of the arbitral award would be contrary to the public policy of Kenya.

As Nguye Wachira Patrick observes in his dissertation, this section has given the Kenyan courts a wide discretion in the interference and enforcement of the arbitral awards, local or foreign.2 This implies that on the mere grounds of public policy, an aggrieved party may make an application to the High Court to seek a rejection of the award. To limit its use, the Kenya courts have sought to define public policy, but even that hasn’t helped much. This is because, as observed by Nguye, parties in the interpretation of public policy have brought up wide discretion in the definition of public policy.3 Lawyers and advocates in litigation cleverly craft litigation procedures to slow down arbitral processes. They do this through unnecessary court injunctions, which end up increasing costs and causing delays. Njung’e observes that, for example, in Kenya, the arbitral institutions do not allow the arbitrators to issue summons to witnesses or injunctions to restrain continuing events pending the full determination of the dispute, instead they opt for the courts for such orders, which ends up corrupting the whole process of Arbitration.4 The Courts of Kenya have and continue to pose a major challenge to arbitration processes.

Breach of Confidentiality

The main attraction of the arbitration process is its promise of confidentiality. This promise, however, is never realized because of other interested parties in the arbitration process. Confidentiality in Arbitration is a requirement as with all other private matters. Unlike litigation with official law reporting, arbitral awards are, or proceedings are never published without parties approval.5 The argument on confidentiality has been that matters need to be presumed public unless the parties object to its publicity. The argument against confidentiality has always been around the issue of increasing transparency in arbitration processes. The Arbitration Act is interestingly silent on the subject of confidentiality and privacy of arbitration processes. It has always been left to parties to enter into confidentiality agreements to guarantee confidentiality of the matter in dispute. Such scenarios mean that the lack of signatory by the parties exposes the process to public invasion. Rule 8 of the Chartered Institute of Arbitrators Code of Professional and Ethical Conduct for Members provide that a member must abide by the relationship of trust which exists between those involved in the dispute and (unless otherwise agreed by all the parties, or permitted or required by applicable law), both during and after completion of the dispute resolution process, must not disclose or use any confidential information acquired in the course of or for the purposes of the process.6 This implies that arbitrators cannot violate the process’s confidentiality but the users of the arbitration process. When arbitration processes are litigated in public courts to set aside the awards, it affects the process’s confidentiality since it becomes a public matter. This implies that parties are left with no understanding of the advantages of the process and litigation.7. The laws on confidentiality in Arbitration serve to bind the practitioners and not the parties, which explains why parties may expose the matter to public invasion. The practitioners serve a professional purpose as opposed to parties who are in business looking out for their best interests. To one party, confidentiality may serve its objectives to another the lack of it may accomplish their interests. For example, in an arbitration process involving government, Public interest may require openness or accountability to the citizens. Confidentiality is thus a fluid concept as far as parties to Arbitration are concerned since they greatly influence whether the matter will remain confidential or not.

Institutional Capacity to Handle Disputes

A greater focus on capacity building is needed in arbitration institutions in Kenya and Africa. Improvements in the number and quality of training for arbitrators and more funds to facilitate efficient administrative services are necessary to make the process more effective.9 The current setup of institutions lack the capacity needed to handle international commercial arbitration issues. Currently, the Chartered Institute of Arbitrators (Kenya Branch) (the Institute) has only 378 registered members who are qualified arbitrators mostly based in Nairobi and only serve a small
portion of the entire population.10 The Institute lacks a code of conduct and ethics to guide its members in the discharge of their functions efficiently. In addition, members are neither considered as professionals or semi-professionals, and there are no guidelines in the Arbitration Act on the minimum qualification and training of arbitrators.11 There is a need for the amendment of the Arbitration Act to provide immunity for arbitrators, as is the case with judicial officers. In the UK, for example, arbitrators enjoy such provisions meaning they have immunity from civil liability in their functions. The Chartered Institute of Arbitrators must decentralize its operations outside Nairobi to all the 47 counties. With the Devolution of political power and the decentralization of resources to the counties, micro-economies are bound to emerge at the county level.12 This implies that commercial transactions are bound to arise and with them civil disputes. The projected increase of civil disputes requires a large pool of trained and skilled arbitrators to serve the business communities based in counties.

Conclusion

Arbitration is a critical element of the judiciary. It offers alternative means of solving disputes apart from the rigorous litigation procedures. Despite its importance in access to justice, it faces several challenges that hamper its efficacy. The globalization of commerce requires that Kenya, as an economic hub in the continent, should have an efficient and cost-effective means of resolving commercial dispute.13 This, however, cannot be realized if the challenges that plague arbitration processes are not handled. Urgent reforms are needed to improve arbitration institutions in Kenya for the efficient resolution of commercial disputes.

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