Arbitration Under the Arbitration Act: Strategic Considerations for Commercial Parties

Arbitration has become a mainstream forum for commercial disputes in Kenya. The Arbitration Act, 1995, together with the constitutional recognition of alternative dispute resolution, gives parties a framework in which court intervention is deliberately limited. Used well, arbitration offers speed, privacy and expertise. Used carelessly, it can add cost and delay.

When arbitration makes sense

Arbitration tends to serve parties best where:

• Confidentiality matters to the business or its reputation
• The dispute is technical and benefits from a specialist tribunal
• The parties want control over procedure and timetable
• A counterparty is outside Kenya and enforcement abroad may be needed

Drafting a clause that holds

Many arbitration disputes begin with a dispute about the clause itself. A well-drafted clause clearly records the agreement to arbitrate, the seat, the number of arbitrators and how they are appointed, any institutional rules, and the language of the proceedings.

Ambiguous or 'hybrid' clauses that refer disputes to both courts and arbitration invite satellite litigation. Clarity at the drafting stage is the cheapest dispute avoidance tool available.

Limited court intervention

Kenyan courts may only intervene in arbitral matters as the Act provides. Grounds for setting aside an award are narrow and largely procedural; a party unhappy with the tribunal's reasoning on the merits will generally not obtain relief. This finality is a feature, and parties should choose their tribunal and present their case accordingly.

Planning for enforcement

An award is valuable only if it can be enforced. Parties should consider early where the counterparty's assets are located and what steps recognition and enforcement will require, both domestically and abroad.