The Kenya Chapter International Arbitration Review

International
Arbitration
Review
Eighth Edition
Editor
James H Carter
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International
Arbitration
Review
Eighth Edition
Editor
James H Carter
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The International Arbitration Review

Reproduced with permission from Law Business Research Ltd.
This article was first published in The International Arbitration Review, - Edition 8
(published in August 2017 – editor James H Carter)
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BUNDESGERICHTSHOF
ii
CONTENTS
PREFACE�� vii
James H Carter
Chapter 1 THE IMPACT OF CORPORATE TAXATION ON ECONOMIC LOSSES��1

James Nicholson
Chapter 2 AFRICA OVERVIEW��9

Michelle Bradfield, Jean-Christophe Honlet, Liz Tout, Marie-Hélène Ludwig and
Lionel Nichols
Chapter 3 ASEAN OVERVIEW��19

Colin Ong QC
Chapter 4 AUSTRALIA��38
James Whittaker, Colin Lockhart, Timothy Bunker and Samuel Murray
Chapter 5 AUSTRIA��59
Venus Valentina Wong
Chapter 6 BELIZE��70
Eamon H Courtenay SC and Stacey N Castillo
Chapter 7 BOLIVIA��78
Bernardo Wayar Caballero and Bernardo Wayar Ocampo
Chapter 8 BRAZIL��88
Luiz Olavo Baptista and Mariana Cattel Gomes Alves
Chapter 9 CANADA��107
Gordon Tarnowsky, QC, Rachel Howie, Chloe Snider and Holly Cunliffe
Chapter 10 CHINA��119
Keith M Brandt and Michael K H Kan
iii
Contents
Chapter 11 COLOMBIA��128
Ximena Zuleta, Juan Camilo Fandiño, Álvaro Ramírez and Natalia Zuleta
Chapter 12 CYPRUS��137
Alecos Markides
Chapter 13 ENGLAND & WALES��147

Duncan Speller
Chapter 14 EUROPEAN UNION��164

Edward Borovikov, Anna Crevon-Tarassova and Bogdan Evtimov
Chapter 15 FINLAND��174
Timo Ylikantola and Tiina Ruohonen
Chapter 16 FRANCE��184
Jean-Christophe Honlet, Barton Legum, Anne-Sophie Dufêtre and Annelise Lecompte
Chapter 17 GERMANY��194
Hilmar Raeschke-Kessler
Chapter 18 INDIA��209
Shardul Thacker
Chapter 19 INDONESIA��222
Theodoor Bakker, Sahat Siahaan and Ulyarta Naibaho
Chapter 20 IRELAND��231
Dermot McEvoy
Chapter 21 ITALY��247
Michelangelo Cicogna and Andrew G Paton
Chapter 22 JAPAN��266
Christopher Hunt, Elaine Wong, Bree Farrugia and Ben Jolley
Chapter 23 KENYA��277
Aisha Abdallah and Faith M Macharia
Chapter 24 MALAYSIA��289
Avinash Pradhan
iv
Contents
Chapter 25 MEXICO��304
Adrián Magallanes Pérez and Rodrigo Barradas Muñiz
Chapter 26 NETHERLANDS��313
Marc Krestin and Marc Noldus
Chapter 27 NEW ZEALAND��328

Derek Johnston
Chapter 28 NIGERIA��338
Babajide Ogundipe and Lateef Omoyemi Akangbe
Chapter 29 PERU��342
José Daniel Amado and Lucía Olavarría
Chapter 30 PHILIPPINES��352
Jeneline N Nicolas
Chapter 31 POLAND��361
Michał Jochemczak and Tomasz Sychowicz
Chapter 32 PORTUGAL��370
José Carlos Soares Machado
Chapter 33 ROMANIA��377
Tiberiu Csaki
Chapter 34 RUSSIA��388
Mikhail Ivanov and Inna Manassyan
Chapter 35 SINGAPORE��401
Paul Tan and Alessa Pang
Chapter 36 SOUTH AFRICA��421

Jonathan Ripley-Evans
Chapter 37 SOUTH KOREA��434

Joel E Richardson and Byung-Woo Im
Chapter 38 SPAIN��444
Virginia Allan, Jose Luis Terrón and David Ingle
v
Contents
Chapter 39 SWEDEN��457
Pontus Ewerlöf and Martin Rifall
Chapter 40 SWITZERLAND��466
Martin Wiebecke
Chapter 41 TURKEY��484
H Ercüment Erdem
Chapter 42 UKRAINE��493
Ulyana Bardyn and Bohdan Bon
Chapter 43 UNITED ARAB EMIRATES��506

Stephen Burke
Chapter 44 UNITED STATES��515

James H Carter, Sabrina Lee and Stratos Pahis
Appendix 1 ABOUT THE AUTHORS��539

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS��571
vi
Chapter 23
KENYA
Aisha Abdallah and Faith M Macharia1
I INTRODUCTION
i Overview of the legal framework for arbitration in Kenya
The first arbitration law in Kenya was the Arbitration Ordinance 1914, which was a
reproduction of the English Arbitration Act of 1889. This Ordinance accorded courts in
Kenya ultimate control over the arbitration process in Kenya.2
The Arbitration Ordinance was replaced by the Arbitration Act 1968, which was based
on the English Arbitration Act 1950. The intention was to ensure that arbitration proceedings
were insulated from intricate legal court procedures that were seen to hamper efficiency in
dispute resolution and slow down the pace of growth in trade.3
However, the Arbitration Act of 1968 was found to be inadequate for this task as
it provided a considerable amount of leeway for the courts to interfere with arbitration
proceedings. Accordingly, very deliberate steps were taken to reduce the courts’ influence
on arbitration, including the adoption of the United Nations Commission on International
Trade (UNCITRAL) Model Arbitration Law.
This resulted in legal reforms that led to the repeal of the Arbitration Act of 1968 and
its replacement with the Arbitration Act 1995 (Arbitration Act) and the Arbitration Rules
1997, which are currently in force in Kenya. The Arbitration Act and the Arbitration Rules
were subsequently amended in 2009 by the passing of the Arbitration (Amendment) Act
2009.
ii Structure of the Arbitration Act

The Arbitration Act is divided into eight parts:
a Part I: preliminary matters;
b Part II: general provisions;
c Part III: the composition and jurisdiction of the arbitrator;
d Part IV: the conduct of arbitral proceedings;
e Part V: the arbitral award and termination of arbitral proceedings;
f Part VI: recourse to the High Court against the arbitral award;
g Part VII: recognition and enforcement of awards; and
h Part VIII: miscellaneous provisions.
1 Aisha Abdallah is a partner and Faith M Macharia is a senior associate at Anjarwalla & Khanna.
2 Court of Appeal Civil Application No. 61 of 2012 [2015 eKLR].
3 Ibid.
277
Kenya
The courts have held that the Arbitration Act is a self-encompassing (or self-sufficient)
statute. This means that one need not look beyond its provisions to determine questions
relating to arbitration awards or processes. In National Oil Corporation of Kenya Limited v.
Prisko Petroleum Network Limited,4 the Court of Appeal stated that the provisions of the Civil
Procedure Act and Rules did not apply to matters that are subject to an arbitration process
except as provided in the Arbitration Act.5
Similarly, in Anne Mumbi Hinga v. Victoria Njoki Gathara,6 the Court of Appeal observed
that ‘[...] rule 11 of the Arbitration Rules, 1997 had not imported the Civil Procedure Rules,
hook, line and sinker to regulate arbitrations under the Arbitration Act’. It noted that ‘no
application of the Civil Procedure Rules would be appropriate if its effect would be to deny
an award finality and speedy enforcement, both of which are major objectives of arbitration’.
It is only where the Arbitration Act is silent on an issue that recourse can be had to the
Civil Procedure Rules to fill in any gaps, but not so as to conflict with its aims and objectives.
iii Finality of an arbitral award and party autonomy

The adoption of a UNCITRAL Model of arbitration laws had the effect of severely limiting
the instances of court intervention in arbitration proceedings in Kenya. This was consistent
with the concept of party autonomy and the finality of arbitration awards, both of which
were recurrent themes in the Arbitration Act.7
The Arbitration Act sought to promote the finality and binding nature of arbitral
awards by:
a carefully prescribing and limiting the instances when an arbitral award may be set
aside;8
b permitting the courts to sever part of an award that is properly within the remit of the
arbitrator from that which is not;9
c empowering the High Court to suspend proceedings that seek to set aside an arbitral
award so as to provide the arbitrator with an opportunity to rectify any faults that
would otherwise have justified intervention by the courts;10
d prescribing strict time frames within which applications seeking the intervention of the
High Court in arbitral awards must be made;11
e upholding the finality of findings of fact by an arbitrator in relation to interim
measures;12
f giving the arbitrator the right to rule on his or her own jurisdiction;13 and
g the absence of an express right of a party aggrieved by the decision of the High Court
to appeal to the Court of Appeal except in very limited circumstances.
4 High Court (Milimani Commercial Courts) Civil Case No. 27 of 2014 [2014 eKLR].
5 See also Section 11 of the Arbitration Rules.
6 Court of Appeal, Nairobi CA No. 285 of 2008 (UR 187/2008).
7 See Sections 10, 32A and 36 of the Arbitration Act.
8 Section 35(2) and 35(3) and Section 37(1) of the Arbitration Act.
9 Section 35(2) (a) (iv) of the Arbitration Act.
10 Section 35(4) of the Arbitration Act.
13 Section 17 of the Arbitration Act. See also National Oil Corporation of Kenya Limited v. Prisko Petroleum
Network Limited, High Court Milimani Commercial Court, Civil Case No. 27 of 2014.
278
Kenya
iv The distinction between international and domestic arbitration

The Arbitration Act applies to both domestic and international arbitration.14 An arbitration
is domestic if the arbitration agreement provides for arbitration in Kenya and if the following
conditions exist:
a the parties are nationals of Kenya or habitually resident in Kenya;
b the parties are incorporated in Kenya or their management or control is exercised from
Kenya;
c a substantial part of the obligations of the parties’ relationship are to be performed in
Kenya; or
d the place with which the subject matter of the dispute is most closely connected is
Kenya.15
On the other hand, an arbitration is international if the following conditions exist:

a the parties to the arbitration agreement have their places of business in different states;
b the juridical seat or the place where a substantial part of the contract is to be performed
or the place where the subject matter is most closely connected is outside the state in
which the parties have their places of business; or
c the parties have expressly agreed that the subject matter of the arbitration agreement
relates to more than one state.
v Constitutional recognition of arbitration

The passing of the current Constitution of the Republic of Kenya in 2010 (current
Constitution) has had a considerable impact on the legal regime governing arbitration in
Kenya. Of significance is the constitutional recognition of alternative dispute resolution
mechanisms such as arbitration.16 The effect of this is that the courts of Kenya now give
greater importance to arbitration clauses and court-mandated arbitration.17
The Court of Appeal has further clarified that the concept of finality of arbitration
awards must not be seen to be in conflict with the constitutional right of access to the
courts.18 Rather, it should be seen as reaffirming the constitutional obligation of the judiciary
to promote alternative dispute resolution mechanisms.19
In any event, arbitration as a dispute resolution mechanism is not imposed on parties,
and the principle of party autonomy underpinning arbitration is based on the assumption
that parties in a relationship have the right to choose their own means of resolving disputes
without recourse to the courts or by limiting the circumstances under which recourse to the
courts may be had.20
14 Section 2 of the Arbitration (Amendment Act), 2009.

16 Article 159(2) (c) of the Constitution.
17 See Order 46 Rule of the Civil Procedure Rules on Court Mandated Arbitration.
18 Article 50 of the Constitution of Kenya, 2010.
19 Nyutu Agrovet Limited v. Airtel Networks Limited, Court of Appeal Civil Application No. 61 of 2012
[2015 eKLR].
20 Kenya Oil Company Limited & Another v. Kenya Pipeline Company, Civil Appeal No. 102 of 2012.
279
Kenya
vi The structure of the courts in Kenya

The courts in Kenya are organised as follows:
a the resident magistrates’ courts, which have original civil and criminal jurisdiction and
a limited pecuniary and territorial jurisdiction (the Khadhi’s courts,21 the martial courts
and other courts and tribunals established by an act of parliament have the status of a
resident magistrates’ court);
b the High Court of Kenya, which has unlimited original and appellate jurisdiction in
both civil and criminal matters (the Employment and Labour Relations Court and the
Environmental and Land Court, which are specialised courts established under the new
Constitution, have the same status as the High Court);
c the Court of Appeal of Kenya, which hears both civil and criminal appeals from the
High Court; and
d the Supreme Court of Kenya, whose jurisdiction is limited to disputes relating to
presidential elections, county governments, the interpretation and application of the
Constitution, and matters of general public importance.
Disputes that are subject to arbitration will normally end up in the High Court, and on
very rare occasions in the Court of Appeal. Such disputes are, however, unlikely to reach
the Supreme Court due to the very limited jurisdiction of this Court (although see below
for a discussion of the Nyutu case). An appeal may lie from the Court of Appeal to the
Supreme Court only if the appeal involves a matter of general public importance.22 A matter
of general public importance has been defined as one ‘whose determination transcends the
circumstances of a particular case and has a significant bearing on the public interest’.23 It is
considered that commercial disputes are unlikely to meet this test.
vii Local arbitration institutions

There are various local arbitration institutions in Kenya, with the main ones being the
Chartered Institute of Arbitrators, the Nairobi International Arbitration Centre (NIAC), the
Strathmore Dispute Resolution Centre and the proposed Law Society Arbitration Centre.
Of particular interest is NIAC, which is state-sponsored and was established under the
Nairobi Centre for International Arbitration Act No. 26 of 2013 (NIAC Act). NIAC has the
objective of facilitating and administering arbitrations, training and accrediting arbitrators;
fostering and developing investment; and advocacy and networking with other arbitrations
institutions and stakeholders. NIAC’s rules are currently in the process of being amended
with a view to increasing its independence from the national government. NIAC will have an
arbitral court that will have exclusive original jurisdiction and appellate jurisdiction to hear
and determine all disputes referred to it under the NIAC Act.
NIAC held its inaugural conference between 4 and 6 December 2016. The conference
served as a launch for the NIAC and featured regional chief justices, attorney generals, judges,
other judicial officers, prominent international practitioners, professionals and academics.
21 The jurisdiction of the Kadhi’s courts is limited to the determination of questions of Muslim law relating to
personal status, marriage, divorce or inheritance in proceedings in which all the parties profess the Muslim
religion and submit to the jurisdiction of the Kadhi’s courts.
22 Article 163(4) of the Constitution.
23 Tanzania National Roads Agency v. Kundan Singh Construction Limited, Miscellaneous Civil Application No.
171 of 2012 (2013 eKLR), and Herman v. Ruscone [2012 eKLR].
280
Kenya
II THE YEAR IN REVIEW

i Arbitration developments in local courts
As stated above, the principles of finality of the arbitration award and party autonomy are
recurrent themes in the Arbitration Act. In practice, the courts in Kenya will strive to uphold
and promote these principles, as will be seen in the Court of Appeal decision in Nyutu Agrovet
Limited v. Airtel Networks Limited, which is pending appeal.24
There are, however, limited prescribed circumstances in which the courts in Kenya
will intervene in matters or disputes that are subject to arbitral proceedings and processes.
The general trend is to limit such court interventions to those cases where it is necessary to
support the arbitration process or because of public policy.
ii Stay of court proceedings pending a reference to arbitration

The courts in Kenya will, as a matter of course, stay any proceedings filed before them that are
subject to an arbitration clause, unless the agreement is void or incapable of performance or
if there is no dispute between the parties that is capable of being referred to arbitration.25 An
application to stay proceedings must be made before or at the point of entering appearance,
before acknowledging the claim.26
In Niazsons Ltd (Niazsons) v. China Road & Bridge Corporation (CRB),27 CRB entered
an appearance in proceedings filed in the High Court by Niazsons but did not file a defence.
CRB also applied to stay the High Court proceedings on grounds that the dispute was subject
to arbitration. In turn, Niazsons applied for judgment against CRB on grounds that the latter
had not filed a defence to the High Court proceedings, and further argued that the claim was
not disputed. However, the Court of Appeal held that upon filing a stay application, CRB’s
obligation to file a defence was suspended and judgment would not be entered. Of particular
significance, however, was a dissenting judgment of Mr Justice Tonui, who was of the view
that there was no dispute, and that a mere refusal to pay a claim does not necessarily give rise
to a dispute calling for arbitration (he would have refused to stay the proceedings and entered
judgment in favour of Niazsons).
iii Interim measures of protection pending a reference to arbitration

The Arbitration Act allows a party to approach the High Court to obtain interim measures
of protection pending arbitration.28 Such measures include status quo orders, injunctions to
halt an action that would cause irreparable loss or prejudice the arbitration process, or orders
to preserve assets or evidence.
The test for the grant of interim measures of protection involves an analysis of the
following factors: the existence of an arbitration agreement, whether the subject matter of the
dispute is under threat, the appropriate measure of protection to be taken depending on the
circumstance of the case and the duration of the interim measure of protection so as to avoid
encroaching on the arbitral tribunal’s decision-making power.29
24 Civil Application No. 61 of 2012 [2015 eKLR].

25 Section 6 of the Arbitration Act.
26 Ibid.
27 Court of Appeal, Civil Appeal No. 187 of 1999.
29 Safaricom Limited v. Oceanview Beach Hotel, Civil Application No. NAI 327 of 2009 (UR 225/2009).
281
Kenya
There are conflicting decisions regarding the High Court’s jurisdiction to grant interim
measures of protection where the arbitration agreement has a foreign seat of arbitration, and
as a result, this area of law is fairly uncertain. A case in point is that of Skoda Export Limited
(Skoda) v. Tamoil Limited East Africa Limited (Tamoil),30 which concerned an agreement
between the parties to tender a bid for the construction of an oil pipeline in Kenya. A dispute
arose under the agreement and Skoda, which was a wholly owned company of the Czech
Republic, approached the High Court in Kenya for interim measures of protection pending
the reference of the dispute to arbitration. However, the High Court dismissed Skoda’s
application on grounds that the agreement between the parties provided that London would
be the seat of the arbitration, and that any disputes between the parties would be governed
by English law and the English courts. Accordingly, the High Court was of the view that the
High Court in Kenya had no jurisdiction to grant the interim measures of protection sought,
and the said orders ought to have been obtained from the courts in England.
The Court’s decision in Skoda v. Tamoil can be contrasted with that of CMC Holdings
Limited (CMC) & Another v. Jaguar Land Rover Exports Limited (Jaguar),31 where CMC
had sought an interim measure of protection to stop Jaguar from terminating a franchise
and distribution agreement concluded by the parties. As in Skoda v. Tamoil, the distribution
agreement was subject to English law and the English courts, and the seat of arbitration was
London. Accordingly, Jaguar contended that the Arbitration Act was not applicable and the
courts in Kenya did not have jurisdiction to deal with the application for interim measures
of protection. However, the Court, in rejecting this line of argument, held that Article 1(5)
of the Constitution provided that the general rules of international law shall form part of the
laws of Kenya, and as a result conferred jurisdiction on the Court to hear and determine the
matter. Lady Justice Kamau was of the view that no contract could oust the jurisdiction of
the Kenyan courts.
iv Setting aside of arbitral awards by the courts in Kenya

The Arbitration Act prescribes limited scope for the courts in Kenya to set aside an arbitral
award. An arbitral award may only be set aside if one or more of the following grounds are
proved, namely:
a incapacity of a party;
b invalidity of an agreement;
c insufficient notice of appointment of an arbitrator or of the arbitral proceedings;
d where an arbitrator exceeds the scope of his or her reference;
e where an award is induced or influenced by fraud or corruption;
f where the dispute is not capable of being resolved by arbitration; or
g where the arbitral award is against public policy. 32
Accordingly, the courts of Kenya will not set aside an arbitral award even if it is shown to be
affected by an error of fact or an error of law (except where the error of law is apparent on
30 High Court (Milimani Commercial Courts) Civil Case No. 645 of 2007.
282
Kenya
the face of the record).33 Further, an application to set aside an arbitral award must be made
within three months from the date of delivery of the award, which timeline has been strictly
enforced by the courts in Kenya.
In Hinga v. Gathara,34 Hinga applied to set aside an arbitral award on grounds that
he had not been notified of the delivery of the award. However, in rejecting the application
to set aside the award, the Court held that a failure to notify Hinga of the delivery of the
award was not one of the prescribed grounds under the Arbitration Act for setting aside.
Further, the Court held that a party cannot apply to set aside an award after three months of
delivery of the award even if it was for a valid reason. The Court observed that ‘in entering
an arbitration agreement, parties gave up most of their rights of appeal and challenge to the
award in exchange for finality.’
Kundan Singh Construction (Kundan) v. Tanzania National Roads Agency (Agency)35
concerned an application to set aside the award made by two of the three arbitrators
appointed by the Stockholm Chamber of Commerce. The applicant had also appealed the
award in Stockholm. The judge held that the application to set aside should have been made
in Sweden, which had primary jurisdiction as the arbitral seat. He upheld a preliminary
objection raised by the Agency on the basis that Kenya only had secondary jurisdiction under
Section 37 of the Arbitration Act as to recognition and enforcement.
There is fairly wide scope for the courts in Kenya to interfere with an arbitral award
on grounds of public policy due to its undefined nature. In Christ for All Nations v. Apollo
Insurance Co Limited,36 Mr Justice Ringera noted that ‘public policy is a most broad concept
incapable of precise definition’, and he likened it to ‘an unruly horse’ that ‘once one got
astride of it you never know where it will carry you’. The Court was of the view that an
award that is inconsistent with the public policy of Kenya is one that is inconsistent with the
Constitution or other laws of Kenya, inimical to the national interests of Kenya (including
interests of national defence, security, good diplomatic relations with friendly nations and the
economic prosperity of Kenya), and contrary to justice and morality (including corruption,
fraud or an award founded on a contract that is contrary to public morals).
v Enforcement and recognition of arbitral awards

Section 36 of the Arbitration Act provides that a domestic award shall be recognised as
binding upon application in writing to the High Court and shall be enforced subject to
Section 37. Section 37 sets out the limited instances in which the High Court may decline
to enforce an arbitral award. These grounds are similar to the grounds upon which the High
Court may set aside an arbitral award (see subsection iv, supra).
A party may make an application to the High Court to enforce an international or
domestic arbitral award as a decree of the Court if no party has filed an application to set
aside the award within three months. An applicant seeking enforcement of an arbitral award
will be required to provide the original arbitral award or a duly certified copy of it; the
33 Kenya Oil Company Limited & Anor v. Kenya Pipeline Company Limited [2014 eKLR].
34 Court of Appeal Civil Application No. 285 of 2008 (UR 187/2008).
35 High Court (Nairobi Law Courts) Miscellaneous Civil Cause 248 of 2012 [2012 eKLR].
36 [2002] 2 EA 366.
283
Kenya
original arbitration agreement or a duly certified copy of it; and, if the arbitral award or the
arbitration agreement is not made in the English language, a duly certified translation of it
into the English language should be provided.37
However, a court is unlikely to refuse to enforce an award on account of a failure by an
applicant to comply with the foregoing procedural requirements. In Structural Construction
Company Limited v. International Islamic Relief Organization,38 the applicant failed to furnish
the original or a certified copy of the arbitration agreement. The Court held that this omission
was not fatal to the application, and a copy of the arbitration agreement that was annexed to
the applicant’s supporting affidavit was held to be acceptable for purposes of enforcement of
the award.
The High Court will ordinarily recognise and enforce an arbitral award unless a party
demonstrates that the award is affected by one or more of the prescribed grounds for refusal
set out in the Arbitration Act.39 In Kenya Shell Limited (Shell) v. Kobil Petroleum Limited
(Kobil),40 a dispute arose between the parties that was referred to arbitration, and an award
was delivered in favour of Kobil. Shell applied to the High Court to set it aside on the
grounds that the arbitrator had dealt with matters outside the scope of his reference. The
High Court dismissed Shell’s application, and Shell sought leave to appeal the High Court’s
decision. However, the Court of Appeal declined to grant Shell leave to appeal on grounds
that the matter had been pending in court for a considerable period of time, and that ‘as a
matter of public policy, it is in the public interest that there was an end to litigation’. The
Court of Appeal noted that ‘the Arbitration Act under which the proceedings which the
matter was conducted underscores that policy’.
The fact that a party has failed to apply to set aside an award within the three-month
period prescribed in the Arbitration Act does not preclude him or her from objecting to an
application seeking to enforce the award. In National Oil Corporation of Kenya Limited (NOCK)
v. Prisko Petroleum Network Limited (Prisko),41 Prisko opposed an application by NOCK to
recognise an award made against it in respect of an agreement for the supply of automotive
gas oil. NOCK argued that Prisko was precluded from objecting to the enforcement of the
award since it had failed to apply to set aside the award within the three-month limitation
period prescribed in the Arbitration Act. The Court held that the opportunity to be heard on
an application for the enforcement of an award was not lost because the person against whom
the award was to be enforced had not filed an application to set aside the award.
vi Appeals in relation to arbitration proceedings

There is very limited scope for the courts in Kenya to interfere with an arbitral award or
proceeding by way of an appeal process. A right to appeal to the High Court only applies to

38 High Court Nairobi, Miscellaneous Case No. 596 of 2005.
39 See Section 37(1) of the Arbitration Act for a list of the grounds for refusal of enforcement of an award.
40 Court of Appeal of Nairobi, Civil Application No. 57 of 2006.
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domestic awards,42 and is prescribed for specific matters such as a challenge to the appointment
of an arbitrator,43 and the termination, withdrawal and jurisdiction of the arbitral tribunal.44
The right of an appeal to the High Court only exists by agreement of the parties, and
even then only on points of law.45 Similarly, appeals from the High Court to the Court of
Appeal only lie on domestic awards by an agreement of the parties or with leave of the High
Court or the Court of Appeal, and on condition that the Court of Appeal is satisfied that the
appeal raises a point of law of general importance that affects the rights of the parties. This
position was reaffirmed in Hinga v. Gathara, where the Court of Appeal held that there was
no right to appeal a decision of the High Court refusing to set aside an arbitral award.
However, the decision in Hinga v. Gathara was in conflict with the Court of Appeal’s
decision in Shell v. Kobil, where the question for determination was whether the Court of
Appeal had jurisdiction to hear and determine an application for leave to appeal against an
order made in the High Court on an application seeking to set aside an award under Section
35 of the Arbitration Act. The Court of Appeal held that ‘Section 35 of the Arbitration Act
had not taken away the jurisdiction of either the High Court or the Court of Appeal to grant a
party leave to appeal from the decision of the High Court made under that Section’. It further
observed that ‘if that was the intention there was nothing that would have stopped Parliament
from specifically providing in Section 35 that there would be no appeal from a decision made
in the High Court under that Section’.46
In the landmark decision of the Court of Appeal in Nyutu Agrovet Limited (Nyutu) v.
Airtel Networks Limited (Airtel),47 the Court expressly rejected the position in Shell v. Kobil
and reaffirmed that of Hinga v. Gathara. Nyutu v. Airtel concerned a distributorship agreement
between the parties for the distribution of Airtel’s telephony products. An award was made
in favour of Nyutu, and Airtel filed an application in the High Court to set aside the award
on grounds that it dealt with matters outside the parties’ agreement and the arbitrator’s terms
of reference. The application was allowed in the High Court and the award was set aside.
Thereafter, Nyutu appealed to the Court of Appeal against the High Court’s decision to set
aside the award. In a majority decision, the Court of Appeal found that there was no right to
appeal to the Court of Appeal against the High Court’s decision to set aside the award. The
Court of Appeal further noted that such an appeal could only lie if the parties had agreed
to it in their agreement or if the Court of Appeal was satisfied that a point of law of general
importance was involved, the determination of which would substantially affect the rights of
one or more of the parties. Nyutu applied to the Court of Appeal to certify the case as being
42 Tanzania National Roads Agency v. Kundan Singh Construction Limited, Miscellaneous Civil Application No.
171 of 2012 (2013 eKLR).
44 Section 15(2) and 15(3) of the Arbitration Act.
45 Section 39(b) of the Arbitration Act.
46 See also Gitonga Waruguongo v. Total Kenya Limited, CA No. 113 od 1998, Dr Joseph Karanja & Another
v. Geoffrey Ngari Kuira, CA No. 130 of 2002, University of Nairobi v. NK Brothers Limited, CA No. 308 of
2002 and UAP Provincial Insurance Co Ltd v. Michael John Beckett, CA No. 26 of 2007.
47 Civil Application No. 61 of 2012 [2015 eKLR]. See also the recent decision of Tanzania National
Roads Agency v. Kundan Singh Construction Limited, Miscellaneous Civil Application No. 171 of 2012
(2013 eKLR), where the Court of Appeal held that there was no right of appeal to the Court of Appeal
against the refusal of the High Court to recognise an award.
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Kenya
of general public importance, and thereby to obtain leave to appeal to the Supreme Court.
The application was allowed and the matter is now pending before the Supreme Court, which
will make a final and binding decision on this issue.
The High Court decision in Nyutu has been criticised.48,49 The judge in this case was
not convinced that Sections 35 and 39 of the Arbitration Act, separately or together, have the
effect of denying a right of appeal from the decision of the High Court. The judge observed
that the Court in Nyutu, in professing to respect and uphold the finality of the arbitral
process, had inadvertently invested the High Court and not the arbitrator with finality, and
was of the view that the majority decision in Kenya Shell represents the correct position of the
law. This is an indication that there is no congruence among the courts in Kenya on whether
a party in arbitration can appeal from the decision of the High Court.
Despite the criticism of the Court of Appeal, the principles in Nyutu are still being
upheld with the proviso that they remain as good law until overturned by the Supreme Court.
This is as seen in Micro-House Technologies Limited v. Co-operative College of Kenya50and Dhl
Exel Supply Chain Kenya Limited v. Tilton Investments Limited.51
Party autonomy with respect to arbitration proceedings has been promoted by the
courts following Nyutu as seen in such cases as Aftraco Limited v. Telkom Kenya Limited.52 In
this case, there were two separate and parallel arbitral proceedings that were ongoing with
respect to the same suit property. The court was tasked with determining whether it had
jurisdiction to grant orders for consolidation with respect to the arbitral proceedings, and
if indeed it had the jurisdiction, whether there was good cause for ordering consolidation
of the proceedings. The court found that it had jurisdiction to determine the application as
consolidation was not espoused in the Arbitration Act, and thus such an application could
not fall within the limitations of Section 10. The court, however, declined to intervene and
order consolidation of the disputes for determination by a single arbitral tribunal in view of
the consensual nature of arbitral proceedings. It was the court’s view, based on the findings of
the Court of Appeal, that unless consented to by the parties, an order of consolidation would
not meet the ends of justice in this matter.
In a very recent decision,53 the court was called upon to determine an application
under Section 14 of the Act with respect to a challenge to an arbitrator. The applicant in the
matter challenged the impartiality, independence and capacity of a sole arbitrator. The court
found that the issues and grounds raised by the applicant were not sufficiently rebutted by
the respondent, and further found that the arbitrator handled the matter incompetently and
wasted the time of the parties and ought not to be remunerated. The arbitrator was, however,
allowed to keep half of the fees that already paid to him. Ultimately, the award was deemed
void and the challenge by the applicant upheld.
48 Judicial Service Commission and Secretary, Judicial Service Commission v. Kalpana Rawal (2015), delivered
on 29/1/2016.
49 Article 164 (3) of the Constitution.
50 [2017] eKLR.
51 [2016] eKLR.
52 [2016] eKLR.
53 Mistry Jadva Parbat & Company Limited v. Grain Bulk Handlers Limited [2016] eKLR.
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vii Developments affecting international arbitration

The New York Convention54 and other international instruments
Section 37 of the Arbitration Act provides that an international award shall be recognised as
binding and enforced in accordance with the provisions of the New York Convention55 or
any other convention to which Kenya is a signatory and relating to arbitral awards.
Accordingly, an international award may also be enforced in Kenya in accordance with
the provisions of the International Convention on the Settlement of Investment Disputes
(ICSID), the Geneva Protocol on Arbitration Proceedings, 1923, and various bilateral
investment treaties (BITs) that have been signed by Kenya.56
Prior to the coming into force of the current Constitution, Kenya was a dualist state,
which essentially meant that all conventions, treaties or other international instruments that
Kenya had ratified only came into force in Kenya once they went through a domestication
process and were recognised in an act of parliament as part of the laws of Kenya.
However, it has been suggested that Section 2(5) and 2(6) of the current Constitution
dispensed with the requirement for the domestication of conventions, treaties and other
international instruments that Kenya has ratified by providing that such instruments form
part of the laws of Kenya. The effect of this would be that Kenyan courts can now readily
apply the provisions of conventions, treaties and international instruments that have been
ratified by Kenya, including those that deal with arbitration, without requiring that they first
be adopted as an act of parliament through an elaborate and lengthy domestication process.
viii Investor–state disputes

There has been a significant increase in BITs in Africa and, as a result, an increase in foreign
direct investment (FDI). Kenya was ranked as the fifth most suitable FDI destination in
Africa, and Nairobi was ranked as the fastest growing African city for FDI between 2009 and
2012. Kenya’s ranking was informed by, inter alia, investor confidence in settling potential
disputes under arbitration.57 World Duty Free Company Limited v. The Republic of Kenya is one
of the notable ICSID decisions that involved Kenya. It remains to be seen how an application
for enforcement of the ICID award will be dealt with by the courts in Kenya.58
III OUTLOOK AND CONCLUSIONS

It is evident that there is scope for growth in the area of domestic and international arbitration
in Kenya. The constitutional recognition of alternative dispute resolution and development
of a legal regime for mediation,59 and the establishment of NIAC and several local arbitration
centres, are notable developments. The national government is keen to promote the use of
NIAC as part of its efforts to attract foreign direct investment.
54 The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
55 Kenya acceded to the New York Convention with a reciprocity reservation such that it only recognises
convention awards.
56 See the UNCTAD website for a list of BITs that have been signed by Kenya.
57 www.fdiintelligence.com/Locations/Middle-East-Africa/African-Countries-of-the-Future-2013-14.
58 There are also ongoing international arbitrations between Vanoil Energy Limited and Kenya, and between
WalAm Energy Limited and Kenya. The WalAm Energy dispute relates to the revocation of a licence granted
to the Canadian claimant to explore and develop geothermal resources at the Suswa Geothermal Concession.
59 See Sections 59A, 59B, 59C and 59D of the Civil Procedure Act.
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Kenya
However, in spite of the goodwill and commitment of major stakeholders such as

the judiciary, Parliament and the government to promote arbitration and other forms of
alternative dispute resolution mechanisms in Kenya, there remain challenges. These include
the cost of arbitration, lack of local arbitrators, perceived corruption and an overlap of the
functions of arbitration centres. There is also the issue of access to justice raised by the pending
appeal by Nyutu to the Supreme Court. These issues will need to be addressed if Kenya is to
experience real growth in the area of domestic and international arbitration.
288
Appendix 1
ABOUT THE AUTHORS
AISHA ABDALLAH
Anjarwalla & Khanna
Aisha is head of the litigation department and is based at the firm’s head office in Nairobi.
Aisha’s practice focuses on all aspects of commercial litigation, with a particular focus on
land, environment and natural resources. She heads a team of nine lawyers.
Aisha has extensive specialist experience in a wide range of commercial and property
disputes including contractual claims, competition issues, employment disputes, insolvency,
fraudulent land transactions, and landlord and tenant issues. Aisha is also experienced in
alternative dispute resolution including arbitration, multiparty mediation and expert
determination.
Aisha holds an LLM from King’s College London, University of London and an LLB
(hons) from the University of Bristol, England. She is a dual qualified as an advocate of the
High Court of Kenya (2000) and solicitor of England and Wales (2004).
She joined Anjarwalla & Khanna in 2012 from Shoosmiths in the United Kingdom,
and has over 16 years of senior legal experience in commercial litigation, property litigation
and contentious insolvency issues. In January 2013, Aisha became a partner and head of the
Nairobi litigation department, which has grown in strength and size. In July 2016, she took
over the Mombasa litigation department and spreads her time between the two offices
FAITH M MACHARIA
Anjarwalla & Khanna
Faith is a senior associate at the firm and an experienced trial and appellate litigator. Faith’s
practice focuses on commercial litigation including shareholder disputes, corporate fraud,
contentious insolvency matters, employment disputes and land disputes. Faith has also
gained experience in representing big multinational companies in oil and gas disputes in both
the High Court and the Court of Appeal. She has also represented parties, as well as actively
participating in high profile arbitration proceedings before local tribunals and the National
Arbitration Forum in domain name disputes.
Faith was admitted to the Bar in 2010. She was on secondment to Stephenson
Harwood, London, a leading multinational law firm, in 2016. She is also a regular speaker
and writer on arbitration.
539
About the Authors
ANJARWALLA & KHANNA

3rd Floor, The Oval
Junction of Ring Road Parklands & Jalaram Road Westlands
Nairobi
Kenya
Tel: +254 203 640 000
+254 703 032 000
[email protected]
[email protected]
www.africalegalnetwork.com
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Chapter 1 THE IMPACT OF CORPORATE TAXATION ON ECONOMIC LOSSES��1