Strengthening the legal and institutional framework of international commercial arbitration in Kenya

130 Pages·2017·2.74 MB·English

STRENGTHENING THE LEGAL AND INSTITUTIONAL FRAMEWORK
OF INTERNATIONAL COMMERCIAL ARBITRATION IN KENYA: THE
CASE OF NAIROBI CENTRE FOR INTERNATIONAL ARBITRATION

BY
MICHAEL I W MUYALA

G62/75105/2014

THESIS PRESENTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
MASTER OF LAWS (LL.M) DEGREE AT THE SCHOOL OF LAW, UNIVERSITY OF
NAIROBI
AUGUST 2017
DECLARATION

By submitting this dissertation I declare that the entire work contained herein is my own original
work and I am the sole author thereof (save to where I have disclosed otherwise) and the same
has never been submitted elsewhere for any qualification.

Student ………………………………………. …………………………………..
MICHAEL I W MUYALA DATE

Supervisor ………………………………………. ……………………………….
L. OBURA ALOO DATE

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ACKNOWLEDGEMENTS

I would like to thank everyone who has contributed to the success of this research.

First of all I give my thanks to God Almighty for the strength to complete this thesis.

I have sincere gratitude to the University of Nairobi for granting me the opportunity to pursue a
Master of Laws (LL.M) degree.
I appreciate my Supervisor Mr. L. Obura Aloo for his guidance and assistance throughout the
work. His valuable support, comments and direction was exemplary in making this work a
success.
My sincere gratitude goes to my parents and relatives for the financial support and
encouragement throughout my academic journey.
Thanks to my friends for their support

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DEDICATION
This work is dedicate this work to my parents Kennedy Muyala and Christine
Wang’anya who always supported me through this academic journey and my siblings Cecilia,
Melvin and Marshall may the Lord bless you all.

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LIST OF ABBREVIATIONS

LCIA -London Court of International Arbitration
NCIA -Nairobi Centre for International Arbitration
ICC -International Chamber of Commerce
KIAC -Kigali International Arbitration Centre
UNICTRAL -The United Nations Commission on International Trade Law Model Law on
International Commercial Arbitration of 1985
HC -High Court
UNCTAD – United Nations Conference on Trade and Development
ICSID –International Centre for Settlement of Investment Disputes
MOU-Memorandum of Understanding

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LIST OF STATUTES AND CONVENTIONS

The Constitution of Kenya 2010

The Arbitration Act (as amended in 2009) and the Arbitration Rules 1997

Arbitration Bill 1995

The Nairobi Centre for International Arbitration Act 2013

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958
The United Nations Commission on International Trade Law Model Law on International
Commercial Arbitration of 1985
International Convention on the Settlement of Investment Disputes

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TABLE OF CASES
1. Boniface Waweru v Mary Njeri & Tai Yun Hwang H.C Misc Application No. 639 of
2005
2. Tononoka Steels Limited v E. A Trade and Development Bank 2(2000) EA 536
3. Structural Construction Company Limited v International Islamic Relief (2006) eKLR
Misc cause no. 596 of 2005
4. Blue Limited v Jaribu Credit Traders Limited (2008) eKLR
5. William Oluande v American Life Insurance Co. (Kenya) Ltd (2006) eKLR
6. Don Wood Co.Ltd v Kenya Pipeline Ltd
7. Sadrin Kurji and another v Shalimar Limited and 2 others (2006) eKLR
8. Ann Mumbi Hinga v Victoria Njoki Gathara (2009) Eklr
9. Transworld Safaris Ltd v Eagle Aviation and 3 others (2003)
10. Pentecostal Assemblies of God v Reverend John Malwenyi and others (2006)
11. Kenfit Ltd v Consolata Fathers (2005) eKLR
12. Kenya Oil Company Limited & another v Kenya Pipeline Company Civil Appeal No.
102 of 2012
13. Prof. Lawrence Gumbe & Another v Hon. Mwai Kibaki & others H.C Misc Application
no. 1025 of 2004
14. Nyutu Agrovet Limited v Airtel Networks Limited (2015) eKLR

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TABLE OF CONTENT
Contents
DECLARATION………………………………………………………………………………..ii
ACKNOWLEGMENTS………………………………………………………………………….iii
DEDICATION…………………………………………………………………………………...iv
LIST OF ABBREVIATIONS…………………………………………………………………..v
LIST OF STATUTES AND CONVENTIONS………………………………………………..vi
TABLE OF CASES……………………………………………………………………………..vii
TABLE OF CONTENT…………………………………………………………………………viii
CHAPTER ONE…………………………………………………………………………………..1
1.1 INTRODUCTION……………………………………………………………………….……1
1.1.1 History of Arbitration Laws in Kenya…………………………………………………….3
1.1.2 History of Formation of Nairobi Centre for International Arbitration……………………4
1.2 STATEMENT OF THE PROBLEM………………………………………………….………7
1.3 JUSTIFICATION OF THE PROBLEM………………………………………………………8
1.4 RESEARCH QUESTIONS…………………………………………………………….……..8
1.5 OBJECTIVES OF THE STUDY………………………………………………………….....8
1.6 HYPOTHESIS………………………………………………………………………………..9
1.7 THEORITICAL FRAMEWORK…………………………………………………………...9
1.8 RESEARCH METHODOLOGY……………………………………………………………11
1.9 ASSUMPTIONS………………………………………………………………………….....11
1.10 LIMITATION OF THE STUDY………………………………………………….…….11
1.11 LITERATURE REVIEW……………………………………………………………......11
1.11.1 History of International Commercial Arbitration in Kenya……………………………...12
1.11.2 The Legal Framework of Nairobi Centre for International Arbitration…………………12
1.11.3 The Structure of Nairobi Centre for International Arbitration………………………….15
1.12 CHAPTER BREAKDOWN…………………………………………………………...19
1.12.1 Chapter one……………………………………………………………………………..19
1.12.2 Chapter two……………………………………………………………………………..19
1.12.3 Chapter three……………………………………………………………………………20
1.12.4 Chapter four………………………………………………………………………..……20
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1.12.5 Chapter five…………………………………………………………………………….20
CHAPTER TWO……………………………………………………………………………….25
2.0 INSTITUTIONAL STRUCUTRE OF NAIROBI CENTRE FOR INTERNATIONAL
ARBITRATION……………………………………………………………………………….21
2.1 Introduction………………………………………………………………………………….21
2.2 Distinguishable features of ad hoc arbitration and institutional arbitration………………….22
2.2.1 Procedural control…………………………………………………………………..……..22
2.2.2 Administration………………………………………………………………………….….23
2.2.3 Flexibility………………………………………………………………………….…..….24
2.2.4 Cost……………………………………………………………………………………….25
2.2.5 Enforcement…………………………………………………………………………........25
2.2.6 Confidentiality……………………………………………………………………..…..…25
2.2.7 Delay………………………………………………………………………………………26
2.2.8 Selection of arbitrators……………………………………………………………………26
2.3 Advantages of Institutional Arbitration……………………………………………..……..27
2.3.1 Arbitration rules……………………………………………………………………………27
2.3.2 Administration……………………………………………………………………………..27
2.3.3 Remuneration of arbitral tribunal……………………………………………………..........28
2.3.4 Award……………………………………………………………………………………....28
2.4 Institutional Structure under the Nairobi Centre for International Arbitration……………..29
2.4.1 Funding…………………………………………………………………………………….29
2.4.2 Independence………………………………………………………………………..……31
2.4.3 Equipment and Facilities…………………………………………………………..……..32
2.4.4 Qualified Staff..........................................................................................................……...35
2.4.5 Reasonable Charges……………………………………………………………………….38
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2.5 Conclusion…………………………………………………………………………………..40
CHAPTER THREE……………………………………………………………………………...41
3.0 AN ASSESMENT OF THE LAWS GOVERNING NAIROBI CENTRE FOR
INTERNATIONAL ARBITRATION……………………………………………………….......41
3.1 Introduction…………………………………………………………………………..………42
3.2 The Constitution of Kenya 2010………………………………………………………….....42
3.3 The Arbitration Act 1995……………………………………………………………….........42
3.4 Nairobi Centre for International Arbitration Act 2013………………………………………46
3.5 Nairobi Centre for International Arbitration (Arbitration) rules 2015…………………….....48
3.5.1 Acceptable to both common law and civil law jurisdiction………………………………..50
3.5.2 Provision for the use of experts……………………………………………………………51
3.5.3 Method for solving delaying tactics………………………………………………………..53
3.5.4 Definition of arbitrators jurisdiction…………………………………………………….....55
3.5.5 Provision for interim measures of protection……………………………………….……..58
3.5.6 The way of introducing additional parties……………………………………………….60
3.5.7 Confidentiality…………………………………………………………………………...63
3.5.8 Supervision of arbitrators…………………………………………………………………63
3.5.9 Supervision of awards…………………………………………………………………….66
3.5.10 Emergency arbitration…………………………………………………………………….68
3.5.11 Relative costs…………………………………………………………………………….70
3.6 Conclusion……………………………………………………………………………..…...71
CHAPTER FOUR……………………………………………………………………….………73
4.0 DATA ANALYSIS AND FINDINGS ON THE LEGAL AND INSTITUTIONAL
FRAMEWORK OF NAIROBI CENTRE FOR INTERNATIONAL ARBITRATION…......73
4.1 Introduction……..…………………………………………………………………………..73
4.2 Data Analysis and findings on institutional framework…………………………………….74
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