KENYA Law and Practice Contributed by: Ken Melly, Moses Kipkogei, Delbert Ochola and Kanyiri Kariuki, G&A Advocates LLP
G&A Advocates LLP Avenue 5 Building 4th Floor Rose Avenue Off Lenana Road Nairobi Kenya
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1. General 1.1 Prevalence of Arbitration
Although litigation before the domestic courts remains the more common form of dispute resolution for purely domestic disputes, the use of international arbitration is steadily increasing in higher-value projects where parties prefer administered proceedings under the auspices of leading arbitral institutions. Despite this continuing preference for litigation in wholly domestic matters, domestic parties readily agree to arbitration where appropriate, and Kenya’s Arbitration Act clearly identifies the circumstances in which an arbitration is regarded as international. The sectors that contribute most significantly to Kenya’s international arbitration caseload include public-private partnership (PPP) infrastructure, con - struction, mining, oil and gas, renewable energy, telecommunications and financial services. These industries account for a substantial proportion of cross-border commercial transactions and foreign direct investment, with contracts frequently provid - ing for arbitration under either institutional or ad hoc rules. Kenya has also been the subject of a number of investor–state arbitrations before ICSID following its ratification of the ICSID Convention and through its network of bilateral investment treaties. In addi - tion, Kenya has increasingly developed as both an enforcement jurisdiction and a prospective arbitral seat through the Nairobi Centre for International Arbi - tration (NCIA), with international arbitral awards being recognised and enforced in accordance with the New York Convention.
International arbitration is expressly recognised under Kenya’s legislative framework, which is largely based on the UNCITRAL Model Law on Arbitration. Parties in both the public and private sectors frequently incor - porate arbitration clauses of an international character into their contracts, leading to a significant increase in the use and prominence of international arbitra - tion, particularly over the past ten years. Rather than serving as the default dispute resolution mechanism across all industries, international arbitration is con - centrated in particular sectors, most notably infra - structure, construction, mining, oil and gas, renewable energy, and financial services. In addition to a sup - portive legislative framework and broad acceptance by contracting parties, the use of international arbi - tration is reinforced by bilateral instruments, project finance agreements and underlying commercial con - tracts, which commonly designate international arbi - tration as the preferred dispute resolution mechanism. The construction sector has been a particularly sig - nificant driver of international arbitration in Kenya. Large-scale infrastructure projects involving interna - tional contractors and state agencies have given rise to disputes concerning delays, variations to the scope of work, cost overruns and contractual defaults. The established role of arbitration in this sector has strengthened further as the number of major infra - structure projects involving international contractors and state-owned entities has continued to increase.
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