KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Asssociates
Dispute Resolution Kenya’s legal framework provides robust mecha- nisms for dispute resolution. The Constitution requires courts and tribunals to uphold principles of access to justice, efficiency and fairness, while also promoting alternative dispute resolution methods such as media- tion and arbitration. Arbitration is governed by the Arbitration Act and the Nairobi Centre for International Arbitration Act, provid- ing a modern and investor-friendly dispute resolution environment. Kenya is a signatory to key international conventions, including: • the New York Convention, enabling the enforce- ment of foreign arbitral awards; and • the ICSID Convention, providing a framework for investor-state dispute settlement. These instruments ensure that foreign investors have access to neutral, enforceable and internationally rec- ognised dispute resolution mechanisms, enhancing investor confidence in Kenya’s power sector. 1.4 Sale of Power Industry Assets Subject to prior approval by EPRA, entities operating within Kenya’s power sector may dispose of assets through a range of mechanisms, including sale, transfer, merger, lease or other restructuring arrange- ments. The disposal of generation, transmission and distribution assets is governed by an integrated legal and regulatory framework that is designed to ensure transparency, market stability and continued service reliability. Under the Energy Act, the Energy (Licensing) Regu- lations and applicable licence conditions, licensees must obtain EPRA approval before undertaking material transactions affecting their assets or corpo- rate structure. This includes any disposal of assets, changes in ownership or capital restructuring. In par- ticular, approval is required where a transaction results in a third party acquiring more than 25% sharehold- ing, a change of control, or any increase or reduction in authorised or paid-up capital. These requirements ensure that EPRA retains oversight over strategic changes that could affect the integrity, performance or financial viability of licensed entities.
The Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2026 further reinforce this framework by introducing operational safeguards that indirectly regulate acquisitions. Although these regula- tions do not impose formal “fit-and-proper” tests on acquirers, they require any participant in the electric- ity market to operate through a licensed entity and comply with all licence conditions. Key commercial arrangements such as bulk power supply agree- ments must be submitted to EPRA for approval prior to implementation. In addition, access to transmission and distribution networks is subject to a multi-stage approval process, including technical evaluation by the relevant network service provider, a “no-objection” from the system operator, and final EPRA approval of the associated wheeling or access agreement. These layered approvals ensure that only technically com- petent and financially capable parties can effectively acquire and operate sector assets. Beyond sector-specific regulation, general corporate and competition laws also apply. The Companies Act governs mergers, amalgamations and share transfers, while the Competition Act requires mandatory notifi- cation to the Competition Authority of Kenya (CAK) for qualifying mergers. CAK assesses whether a pro- posed transaction may substantially lessen competi- tion, and may approve, reject or approve it subject to conditions. Transactions below prescribed thresholds may be exempt from notification. For publicly listed entities, the Capital Markets Act imposes additional disclosure and approval requirements. Where assets are owned by state-owned or govern- ment-linked entities, disposal must comply with the Public Procurement and Asset Disposal Act and the Public Finance Management Act, with oversight from the Public Procurement Regulatory Authority. These laws impose strict procedures to ensure fair value, transparency and accountability in the disposal of public assets. Tax implications also arise under the Income Tax Act, which governs the treatment of gains arising from asset sales, including potential capital gains tax lia- bilities.
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