A supply agreement expires badly, and one party notices a clause neither of them dwelt on at signing: disputes are to be referred to arbitration in Nairobi. The clause now controls how the disagreement will be resolved. Businesses served with a notice to arbitrate, or considering serving one, should understand the path ahead before positions harden.
When do parties arbitrate?
Arbitration is a contractual choice. Under the Arbitration Act, a dispute is referred to arbitration where the parties have agreed in writing to do so, and the courts are directed to stay proceedings brought in breach of such an agreement. The Act, available through Kenya Law, also supplies default rules where the parties’ clause is silent, on matters such as the appointment of the tribunal and the conduct of the reference.
What are the stages of an arbitration?
- A notice of arbitration setting out the dispute and the claim relied on.
- Appointment of a sole arbitrator or a tribunal, under the clause or the Act’s default procedure.
- Pleadings: the statement of claim, the defence and any counterclaim.
- Directions on documents, witness statements and expert evidence.
- A hearing, followed by the tribunal’s reasoned award.
How is an award enforced?
An award binds the parties and, once recognised by the High Court, is enforceable as if it were a decree of that court. The grounds on which an award may be set aside are limited, which is one reason commercial parties select arbitration: the outcome is reached privately, by a tribunal the parties helped choose, without the extended appellate route that court litigation can involve. Confidentiality and the finality of the award remain the principal attractions, though parties should weigh them against the limited scope for correcting an award that goes against them. Time and cost still deserve attention, since an arbitration is only as efficient as the process the tribunal and the advocates design.
The firm represents parties in arbitrations and in the negotiations that avoid them, through its arbitration and ADR practice, and drafts dispute resolution clauses that hold up in use as part of its contract work.
For guidance on your specific situation, contact CS Advocates LLP , call, WhatsApp, or book a confidential consultation at our Westlands, Nairobi office.