DEFINITION OF ARBITRATION
Arbitration is a form of dispute
resolution in which parties to a dispute agree to a third party who will issue
a binding decision. Arbitration is a process subject to statutory controls,
whereby formal disputes are determined by a private tribunal of the parties’
choosing. It arises where a neutral third party is appointed by the parties or
an appointing authority to determine the dispute and give a final and binding
award. The Arbitration Act, 1995 (2009) (hereinafter Arbitration Act, 1995)
defines arbitration to mean “any arbitration whether or not administered by a
permanent arbitral institution.”3 The definition thus includes all types of
arbitration that can be envisaged in society. However, the Act is not very
elaborate and regard has to be had to other sources for the definition of the
term ‘arbitration
Arbitration is basically a mechanism
for the settlement of disputes, which usually takes place in private, pursuant
to an agreement between two or more parties, under which the parties agree to
be bound by the decision to be given by the arbitrator according to law, or if
so agreed, other considerations after a full hearing, such decision being
enforceable at law.8 The person appointed by the parties to arbitrate between
them and resolve their differences is referred to as an arbitrator. An
arbitrator is defined as a legal arbitrator; a person appointed by two parties
to settle a dispute, arbitrate, and decide by arbitration, judge between two
parties to a dispute (usually at the request of the two parties)
CONSTITUTIONAL AND
STATUTORY BASIS OF ARBITRATION
Arbitration in Kenya is recognized
under the Constitution, the Arbitration Act 1995, the Arbitration Rules, Civil
Procedure Act and the Civil Procedure Rules 201059. The Constitution, under
Article 159, provides that in exercising judicial authority, the courts and
tribunals should be guided by certain principles. One of these principles is
that alternative forms of dispute resolution including reconciliation,
mediation, arbitration and traditional dispute resolution mechanisms should be
promoted provided that they do not contravene the Bill
of Rights, they are not repugnant to
justice and morality nor do they result in outcomes that are repugnant to
justice or morality, and they are not inconsistent with the Constitution or any
written law.60 This has been reaffirmed by the Kenyan Courts in various cases,
such as, Gladys Mwaniki (Regional Club) & 6 others v Gordon Oluoch & 7
others61, where the Court stated that ‘Courts and Tribunals cannot be said to
be promoting alternative dispute resolution mechanisms when they readily
entertain disputes which ought to be resolved in other legal forums…..where
there is an alternative remedy and procedure available for the resolution of
the dispute that remedy ought to be pursued and the procedure adhered to.’62 In
Dickson Mukwelukeine vs. Attorney General & 4 Others63 ,the Court held that
‘alternative dispute resolution processes are complementary to the judicial
process and by virtue of Article 159(2)(c) of the Constitution of Kenya, 2010,
the Court is obligated to promote these modes of alternative dispute resolution
and further that it is not inconsistent with Articles 22 and 23 to insist that
statutory processes be followed particularly where such processes are for the
specific purpose of realising, promoting and protecting certain rights.
Accordingly the Court is entitled to either stay the proceedings until such a
time as the alternative remedy has been pursued or bring an end to the
proceedings before the Court and leave the parties to pursue the alternative
remedy.’ The Constitution has therefore elevated the importance of arbitration
in resolving disputes in the Kenyan context and the policy on management of
conflict is bound to shift to encourage ADR and other traditional means of
conflict management. Section 59 of the Civil Procedure Act64 provides that all
references to arbitration by an order in a suit, and all proceedings there
under, should be
governed in such manner as may be
prescribed by rules. Order 46 of the Civil Procedure Rules, inter alia,
provides that at any time before judgment is pronounced, interested parties in
a suit who are not under any disability may apply to the court for an order of
reference wherever there is a difference
At the national level, in Kenya,
arbitration is enshrined in the Constitution.31 The process of arbitration is
governed by statute, the Arbitration Act, 1995.. Article 159 (2) (c) of the
Constitution which provides that in exercising judicial authority, the courts
and tribunals shall be guided by among others the principles of alternative
dispute resolution including reconciliation, mediation, arbitration and
traditional dispute resolution mechanisms shall be promoted.
The applications of these mechanisms
of traditional dispute resolution mechanisms are not to be used in a way that
:-
- Contravenes the Bill of Rights
- Is repugnant to justice and morality or results in
outcomes that are repugnant to justice or morality
- Is inconsistent with the constitution or any other
written law.
THE ARBITRATION ACT, 1995
the legislation was modelled on the UNICITRAL
model law. The Act does not envisage the application of the arbitration process
in an informal setting, for instance, in
a rural area, with the intention of applying the same to local problems, such
as disputes over land. The Act envisages a highly formalised type of
arbitration since it requires an arbitration agreement to be in writing, and in
essence, to be signed by the parties.32 Thus, while cognisant of the fact that
arbitration may take several forms, including informal ones, the scope of this
book is restricted to the formal type of arbitration as provided for under
Kenya’s Arbitration Act, 1995This is the principle legal instrument governing
arbitration in Kenya.
The Arbitration Act, 1995 contains provisions relating to
arbitral proceedings and the enforcement of the ultimate awards by the court.
The Act further deals with the recognition and enforcement of arbitral awards
irrespective of the state in which it was made subject to certain
limitations.65 The refusal to enforce can be on the grounds of incapacity, lack
of jurisdiction and public policy. The import of this is that arbitration
process is better placed to help parties in different jurisdictions to go round
the national courts and laws in their quest to have disputes amicably settled,
with minimal technicalities and limitations. It can, thus, be seen that
arbitration has vast potential as a conflict management mechanism.
TYPES OF ARBITRATION
There are different types of
arbitration which include: ad hoc, institutional, statutory, look-sniff,
flip-flop, documents–only, domestic and international.33 In every situation,
parties are required to determine which type of arbitration is appropriate or
relevant for their case.34 While it is acknowledged that all the foregoing
types of arbitration have their distinct merits and demerits, this book does
not critically discuss each of them separately but instead looks at the
arbitration process in a general manner, focusing on the common aspects of the
process. Parties to a contract may agree to have their future disputes settled
by an arbitral tribunal operating under the auspices of an arbitral institution
and applying that institution’s procedural rules, or by an independent
arbitrator(s) who may not necessarily be associated with any arbitral
institution. Such an arbitrator conducts the arbitration process under
procedural rules agreed upon by the parties.
Institutional
arbitration.
Institutional arbitration is an
arbitration administered by a specialist institution, where parties incorporate
the rules of the selected institution into their Arbitration hearing by
reference. Such rules are expressly formulated for arbitrations conducted under
the administration of the relevant institution.
Ad hoc
Arbitration
Is one that is not administered by an
institution as the arbitration agreement does not specify an institutional
arbitration, and may encompass domestic or international commercial
arbitration. The parties then have to determine all aspects of the arbitration
like the selection and manner of appointment of the arbitral tribunal,
applicable law, procedure for conducting the arbitration and administrative
support without assistance from or recourse to an arbitral institution. It is,
however, noteworthy that an Ad hoc Arbitration does not necessarily require the
parties to start from scratch and draft their own rules. They can use the rules
of an arbitration institution without submitting the dispute to that
institution. Ad hoc arbitration is mostly used where one of the parties is a
State or Stateentity or parastatal since they are usually reluctant to submit
to institutional arbitration for sovereignty reasons. It has also been observed
that Ad hoc arbitration undoubtedly preceded institutional arbitration since,
long before the emergence of permanent organizations providing professional
services that facilitate arbitration proceedings, Ad hoc Arbitration had been
in existence for hundreds or even thousands of years. However, institutional
arbitration remains more popular especially among business entities, possibly
due to the procedural certainty that comes with institutional affiliation
Each of the above types of
arbitration has their share of advantages and disadvantages. It is thus upon
the parties to agree whether they will engage in institutional or Ad hoc
Arbitration, although they may need expert advice on selecting the most suitable
one, particularly during the drafting of the arbitration clause or agreement.
For instance, it has been argued that Ad hoc Arbitration, is usually done
through the application of the UNCITRAL Model Rules on Arbitration and requires
that the parties establish and manage, as well as participate in, the
arbitration.42 However, such an approach places a substantial burden upon the
parties to cooperate in the circumstances of dispute, which expectation is
likely to be unrealistic
On the other hand, arbitral
institutions are said to have a good professional track record and have
significant experience in the administrative aspects of arbitrations.44
Therefore, unless the parties themselves have substantial expertise in the
arbitration process, institutional arbitration is preferable. 45 Also, an award
rendered under the auspices of a recognized arbitral institution may have a
greater likelihood of enforcement for reasons of institutional reputation,
depending on the choice by the parties
Statutory arbitration
is one that originates from a
mandatory provision in an Act of Parliament, without necessarily requiring a
pre-existing arbitration agreement between the parties. Most of the post-2010
Constitution of Kenya statutes have provisions on the use of ADR mechanisms.The
Constitutional provision that one of the guiding principles in exercise of
judicial authority is encouraging the use of ADR and TDR, may arguably also
give rise to statutory arbitration.
“Look-sniff
arbitration‟ or “quality arbitration‟
Is defined as a combination of the arbitral
process and expert opinion, where the parties select the arbitrator on the
basis of his or her specialized knowledge, expertise and experience in a
particular area of business or trade. The relevant question arising from the
dispute is whether the commodity delivered complies with the quality
specification or agreed sample, and thus, such questions of pure quality are
arguably best resolved by experts in the field by way of an arbitral procedure.
It has been observed that look-sniff arbitrations depend on technical skills in
a particular trade. Further, the procedures are governed largely by the customs
of the trade and there are usually no lawyers, witnesses or arguments. This
type of arbitration can certainly save parties a lot of time and trouble in
hiring an independent expert witness, as would be the case if they decided to
resort to litigation.
Flip-flop arbitration or pendulum arbitration
also known as baseball arbitration
is a type of arbitration where parties formulate their cases beforehand and
then they invite the arbitrator to choose one of the two. The arbitrator then
makes an award in favour of one party and the other must clearly lose. The
award cannot be somewhere in between. The arbitrator is requested to make an
award by adopting, without modification, one of the parties’ respective final
positions, and this is mostly used when the parties differ only over a monetary
amount.
Documents-only
arbitration
is defined as an arbitration that is
based on the Claim Statement, statement of Defence and a written reply by the
claimant, if any. A documents-only procedure is lauded as being most
appropriate where all the evidence relevant to the dispute is contained in
documents, including expert reports, and there is no need for oral testimony
from witnesses. However, it can also be
appropriate where the dispute involves simple issues of fact and opinion.
DOMESTIC ARBITRATION
According to the Arbitration Act,
1995, an arbitration is domestic if the arbitration agreement provides
expressly or by implication for arbitration in Kenya: and at the time when
proceedings are commenced or the arbitration is entered into— where the arbitration
is between individuals, the parties are nationals of Kenya or are habitually
resident in Kenya; where the arbitration is between bodies corporate, the
parties are incorporated in Kenya or their central management and control are
exercised in Kenya; where the arbitration is between an individual and a body
corporate — the party who is an individual is a national of Kenya or is
habitually resident in Kenya; and (ii) the party that is a body corporate is
incorporated in Kenya or its central management and control are exercised in
Kenya; or the place where a substantial part of the obligations of the
commercial relationship is to be performed, or the place with which the subject
matter of the dispute is most closely connected, is Kenya.
International
Arbitration
if the parties to an arbitration agreement
have, at the time of the conclusion of that agreement, their places of business
in different states; one of the following places is situated outside the state
in which the parties have their places of business— the juridical seat of
arbitration is determined by or pursuant to the arbitration agreement; or any
place where a substantial part of the obligations of the commercial
relationship is to be performed or the place with which the subjectmatter of
the dispute is most closely connected; or the parties have expressly agreed
that the subject-matter of the arbitration agreement relates to more than one
state.
ARBITRATION AGREEMENT
For arbitration to ensue there must
exist an agreement to arbitrate between the parties. Typically, parties agree
to arbitrate by executing an agreement or contract which has an arbitration
clause or a stand-alone arbitration agreement. An arbitration agreement is the
basis of all arbitrations. It is basically an agreement whereby the parties
undertake that specified matters arising between them shall be resolved by a
third party acting as an arbitrator and that they will honour the decision
(award) made by that person.1 An arbitration agreement has also been defined as
an agreement to submit present or future disputes to arbitration.2 The
Arbitration Act defines an arbitration agreement as an agreement by the parties
to submit to arbitration all or certain disputes
which have arisen or which may arise
between them in respect of a defined legal relationship, whether contractual or
not.3 As a consequence, therefore, an Arbitration Agreement is a written
contract in which two or more parties agree to use arbitration, instead of the
courts, to decide all or certain disputes arising between. This Agreement may
have been established between the parties as a term of their original
contractual negotiations. Alternatively, the parties may also agree to
arbitrate at the time the dispute arises. In other words, arbitration
agreements may be ad hoc or may relate to a future dispute. In the former case,
the arbitration agreement is sometimes called a submission. Arbitration
conducted under arbitration agreement is sometimes called reference or arbitral
proceedings.
TYPES OF ARBITRATION AGREEMENTS
The first one arises where there is a clause in the contract
in which parties to the contract undertake to submit to arbitration the
disputes that may arise in relation to that contract. This is commonly referred to as an
arbitration clause. An arbitration clause is thus meant to address disputes
which the parties anticipate may arise at the time of entering the contract and
do not exist when the agreement is executed.
The second one arises where the parties to a dispute that
has already arisen submit the dispute to arbitration. This type of an arbitration
agreement is sometimes referred to as a submission agreement. It arises where
there is no binding agreement to arbitrate, the parties to a dispute are
willing to arbitrate and as such enter into an “ad hoc” agreement to have the
dispute arbitrated upon. It applies to conflicts that have already arisen and
entails an accurate description of the subject matters to be arbitrated. In
some cases, the law may require the execution of a submission agreement even
where there is already an arbitration clause in existence. In such cases, one
of the purposes of the submission agreement is to complement the generic
reference to disputes by a detailed description of the issues to be resolved.
Agreements negotiated between the
parties at the time of the original contract may provide for specifics
regarding the Arbitration process. For example, the number, qualification and
process for selecting arbitrators may be defined with particularity. Rules of
procedure, award of fees, rights of appeal and requirements for a written
judgment are also commonly specified in the Agreement. Such Agreements are
enforceable as a matter of contract law. Amendment at the time the dispute
arises typically requires agreement between the parties. Agreements to
arbitration established at the time the dispute arises can address similar
issues and provide the parties with an opportunity to tailor the arbitration
process to the particular dispute.4 An arbitral agreement may incorporate
institutional rules chosen by the parties to be used in the anticipated
arbitration. Where such rules are incorporated, the presumption is usually that
they apply as published at the date of the arbitral proceeding and not those
existing when the agreement is concluded.
The
Arbitration Clause
In most cases, the arbitration agreement is
generally a clause in a larger contract providing that any disputes arising
between the parties will be resolved through arbitration. The disputes may be
about the performance of a specific contract, a claim of unfair or illegal
treatment in the workplace, a faulty product, or just about anything else.
People are free to agree to arbitrate just about anything they could litigate.
Essentially, an arbitration clause requires that disputes arising out of
contracts and transactions thereof be resolved through arbitration. The
arbitration clause must be valid so as to be respected by the parties and the
dispute in question must be within the ambit of the arbitration clause.
In Family Bank Limited versus Kobil Petroleum Limited the contract
between the plaintiff and the defendant provided that “Any dispute with regard
to any matter in connection with this contract...be referred to arbitration”.
The court, noting that the arbitration clause thereof was valid, stated that
where parties have agreed to oust the jurisdiction of the court and rather go
to arbitration, that has to be respected by both of them and the court since it
is they [the parties] who know better how to resolve their disputes and that it
has to be shown that the dispute in question is within the arbitration clause.
Formal Requirements of an Arbitration Agreement
The formal requirements of an
arbitration agreement are outlined in Section 4 of the Arbitration Act. The Act
provides that an arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement. An arbitration
agreement must be in writing. It is in writing if it is contained in a document
signed by the parties; an exchange of letters, telex, telegram, facsimile,
electronic mail or other means of telecommunications which provide a record of
the agreement or an exchange of statements of claim and defence in which the
existence of an agreement is alleged by one party and not denied by the other
party.
COMMENCEMENT OF ARBITRATION
The Kenyan Arbitration Act, 1995
does not stipulate the mode of commencing arbitration. The Kenyan position
seems to draw from the approach taken under the Model Law3 which too does not
set out a form for the notice or demand for arbitration. However, as good
practice, one may follow either the UNCITRAL Rules4 or the rules of one of the
Arbitration process such as the Chartered Institute of Arbitrators so that it
cannot be said that an improper or incomplete notice was given. As per the
Rules of the Chartered Institute of Arbitrators, Kenya Branch, a party wishing
to commence arbitration therein and to have an arbitrator.
Appointed by the Institute is
required to send to the Secretary a written request for the appointment of an
arbitrator. The request for the appointment of an arbitrator shall include or
be accompanied by the names and addresses of all parties to the arbitration. If
the arbitration agreement calls for party nomination of arbitrators, the name
and address (and telephone, telex and fax numbers if known) of the Claimant’s
nominee, copies of the contractual documents under which the arbitration arises
with particular reference to the arbitration clause which is invoked and any
separate submission or reference to any agreement out of, or in relation to,
which the dispute arises. It shall also include a brief statement of the nature
and circumstances of the dispute and an indication of the value of the subject
matter; a statement of any matters on which the parties have previously agreed
as to the conduct of the arbitration; any particular qualification or
experience which the parties wish the Arbitral Tribunal to possess and a
statement that the machinery in the contract document relating to the
appointment of an Arbitrator has been fully complied with.
The party wishing to commence arbitration
under these rules is also required to confirm to the Secretary that copies have
been sent to all the other parties.5 Under the UNCITRAL Arbitration Rules, the
notice of arbitration is to include a demand that the dispute be referred to
arbitration; the names and addresses of the parties; identification of the
arbitration agreement that is invoked; identification of any contract or other
legal instrument out of or in relation to which the dispute arises or, in the absence
of such contract or instrument, a brief description of the relevant
relationship; a brief description of the claim and an indication of the amount
involved, if any; the relief or remedy sought; and a proposal as to the number
of arbitrators, language and place of arbitration, if the parties have not
previously agreed thereon.6 In addition, the notice of arbitration may also
include a proposal for the designation of an appointing authority; a proposal
for the appointment of a sole arbitrator; and a notification of the appointment
of an arbitrator if it is a three person panel.
Appointment of Arbitrators
In most cases, the arbitration agreement will
provide for the mode of appointment and the preferred number of arbitrators.8
The default number as provided under the Act is a single arbitrator.9 However,
with the 2009 Amendment to the Act, where the arbitration agreement provides
for the appointment of two arbitrators, then, unless a contrary intention is
expressed in the agreement, the agreement shall be deemed to include a proviso
that the two arbitrators shall appoint a third arbitrator immediately after
they are themselves appointed.10 The appointment provisions of the 1995 Act all
operate only where there is no agreement to the contrary or where the parties
cannot actually operate what they have agreed. i. Appointment of Arbitrators by
the Parties The law is clear that the parties are free to agree on the
procedure for appointing the arbitrator or arbitrators, including the procedure
for appointing any chairman or umpire. In this case, the parties can agree to
appoint either a sole arbitrator; a tribunal of two arbitrators who then
appoint an umpire in reserve; a tribunal of three arbitrators; or even a
tribunal of more
Appointment of Arbitrators by the Parties
The law is clear that the parties
are free to agree on the procedure for appointing the arbitrator or
arbitrators, including the procedure for appointing any chairman or umpire. In
this case, the parties can agree to appoint either a sole arbitrator; a tribunal
of two arbitrators who then appoint an umpire in reserve; a tribunal of three
arbitrators; or even a tribunal of more than three arbitrators with or without
an umpire.11 The odd number ensures that majority decisions are achievable.12
This is the case even when the arbitration agreement provides for the
appointment of two arbitrators only. In such a case, unless a contrary
intention is expressed in the agreement, the agreement shall be deemed to
include a proviso that the two arbitrators shall appoint a third arbitrator
immediately after they are themselves appointed.13 In arbitration with three
arbitrators, each party is to appoint one arbitrator and the two arbitrators so
appointed are in turn to appoint the third arbitrator. In case of arbitration with
two arbitrators, each party is entitled to appoint one arbitrator. If it is
arbitration with one arbitrator, the parties agree on the arbitrator to be
appointed. Where the parties have not agreed on the procedure for appointment,
there are provisions that apply in default.
ii. Appointment
by an Institution
Where the parties have not agreed on
the appointment modality or there is a breach of the agreement in respect of
appointments, one of the parties may request the appointment of an arbitral
tribunal by an institution, if any is designated, in the arbitration agreement
or agreed upon after the dispute has arisen. Only if this avenue fails or it is
not contemplated in the agreement and/or agreed upon after the dispute arises
may the parties appoint an arbitral tribunal. Indeed, although arbitration is
intended to be a voluntary process, once a dispute has arisen, it is still
possible to see parties disagreeing on the appointment of an arbitral tribunal.
Parties may attempt to obstruct the appointments to delay the arbitration. This
can frustrate the arbitration agreement.
The provision of appointment of arbitrators by
institutions (also called appointing authorities) provides a means of breaking
deadlocks that render agreements inoperable.15 Many arbitration rules provide
for the appointment of arbitrators by institutions if the tribunal is not
constituted within a prescribed period. In this regard, appointment of
arbitrators by institutions is not just a fallback mechanism; it is useful in
several cases which includes where the appointment of sole arbitrators is
necessary under the agreement, or under arbitral rules.
The advantage of this mode of
appointing arbitrators is that such institutions usually have a better overview
of the suitability of arbitrators.17 This is relevant given that a skilled and
experienced arbitrator is a key element in a fair and effective arbitration as
‘arbitration is only as good as the arbitrators’.18 Therefore, the choice must
be made carefully. In order to avoid a deadlock, parties should insist on prior
agreement as to the appointing institution especially in ad hoc arbitrations
where there is no institutional framework to provide for the same.
- Appointment of an Arbitrator by
Court
The role of the Court in appointing
arbitrators has been limited in that it can only grant an application to set
aside an appointment where it is satisfied that there was a good cause for the
failure or refusal by the party in default to appoint his arbitrator in due
time. The jurisdiction here is vested exclusively on the High Court of Kenya.
In essence, the law provides that
where parties to an arbitration agreement are to appoint an arbitrator and one
party defaults in making the appointment by indicating his unwillingness to do
so, or fails to make the appointment within the time allowed under the
arbitration agreement; or fails to do so within a reasonable time, where the
arbitration agreement does not limit the time within which an arbitrator must
be appointed by a party, the other party, having duly appointed an arbitrator,
may give notice in writing to the party in default that he proposes to appoint
his arbitrator to act as sole arbitrator.21 Where the party in default does not
make the required appointment and notify the other party that he has done so,
the other party may appoint his arbitrator as sole arbitrator and in that case,
the award of such arbitrator is binding on both parties as if he had been so
appointed by agreement.22 Nevertheless, the defaulting party may, upon notice
to the other party, apply to the High Court within fourteen days to have such
an appointment set aside.23 The law gives the High Court jurisdiction to grant
the application only if it is satisfied that there was good cause for the
failure or refusal of the party in default to appoint his arbitrator in due time.24
However, if the High Court grants the application, it may, by consent of the
parties or on the application of either party, appoint a sole arbitrator.
The High Court is required to consider the
qualifications, independence and impartiality of the tribunal. The court is
also to take into account the wisdom of appointing an arbitrator other than a
fellow national of the parties or one of the parties.25 The decision of the
High Court in respect of such application is final and not subject to appeal.
Challenge of the Arbitral Tribunal
As a general rule, an arbitrator
cannot be discharged unless doubts have arisen as to their competence,
neutrality or independence. All the same, the parties are free to agree on how
to challenge the arbitral tribunal.
The grounds for challenging arbitrators.
- An arbitrator may be challenged only if circumstances
exist that give rise to justifiable doubts as to his impartiality and
independence
- if he does not possess qualifications agreed to by the
parties
- if he is physically or mentally incapable of conducting
the proceedings
- if there are justifiable doubts as to his capacity to
do so.
in the case of Kenya Pipeline
Company Limited v Kenya Oil Company Limited & another, where the
Applicant sought, inter alia, removal of Arbitrator and stay of proceedings
owing to lack of impartiality in the conduct of the arbitral proceedings. The
Court stated that the circumstances which constitute justifiable doubt as to
impartiality of the arbitrator need not necessarily relate to the substantive
dispute at hand but they should be of such nature as to impeach the integrity
of the arbitrator or would create real apprehension in the eyes of a reasonable
person that justice will not be done by the arbitrator in the dispute at hand.
The Act limits the ability of either
party to challenge the arbitrator(s) whom they have appointed. Thus, neither
party may discharge the arbitrator that it has appointed, or in whose
appointment it has taken part, unless it has discovered a reason to doubt the
arbitrator’s independence after the appointment.44 In other words, a party may
challenge an arbitrator appointed by him, or in whose appointment that party
has participated only for reasons of which he becomes aware after the
appointment. The rationale here is to avoid a situation where a party appoints
an arbitrator intending to challenge him/her later in the course of the
arbitral proceedings as a delaying tactic. There is a need therefore to be
cautious in making an appointment as challenging such an appointment is
restricted by the law.
Procedure in
Challenging the Arbitrator
- An application challenging an arbitrator must be
submitted to the tribunal within 15 days from the date when the applicant
learns of the formation of the tribunal or the reasons justifying such a
challenge.
- The aggrieved party is required to write to the
arbitral tribunal stipulating the reasons for the challenge. If the
challenged arbitrator does not withdraw from office or the other party
agrees to the challenge, the tribunal shall decide the matter.
- If the challenge, whether in the manner agreed by the
parties or after decision by the tribunal, does not succeed, the
challenging party may within 30 days after being notified of the decision
to reject the challenge apply to the High Court for it to determine the
matter.
- The arbitrator who was challenged is entitled to appear
and be heard before the High Court determines the application.
- The High Court may confirm the rejection of the
challenge or may uphold the challenge and remove the arbitrator.
- The decision of the High Court on the challenge shall
be final and is not subject to appeal.
While an application challenging an arbitrator
is pending before the court, the parties may commence, continue and conclude
arbitral proceedings but the award in such proceedings shall not take effect
until the application is decided. Thus, while such decision is pending in the
High Court, the challenged arbitrator may continue the arbitral proceedings and
even make an award. However, such an award shall be void if the application is
successful. But nevertheless, a stay of the proceedings may be granted by the
tribunal.
Jurisdiction and Powers of the Arbitrator under the
Arbitration Act, 1995
There are a number of provisions in
the Arbitration Act, 1995 that talk about the jurisdiction and powers of the
arbitrator. These are:
i.
Perpetual Jurisdiction
of the Arbitrator
The jurisdiction of the arbitrator does not
lapse with the death of the appointing party. Section 8 of the Act provides
that the authority of the arbitrator is not revoked by the death of any party
to the arbitration or the party appointing him. However, if the dispute in
question was in the nature of a personal claim, the jurisdiction of the
arbitrator will clearly expire on the party’s death. The essence of perpetual
jurisdiction of the arbitrator is to ensure that the death of a party does not
unnecessarily halt arbitration against the party to the detriment of other
parties to the arbitration.
ii.
Kompetenz Kompetenz
Section 17 of the Act provides that the
arbitral tribunal may rule on its own jurisdiction or on objection to its own
jurisdiction. In this regard, the arbitral tribunal may, inter alia, rule on
its own substantive jurisdiction, as to whether (a) there is a valid
arbitration agreement (b) the tribunal is properly constituted; and (c) what
matters have been submitted to arbitration in accordance with the arbitration
agreement.
In Safaricom
Limited v Ocean View Beach Hotel Limited & 2 Others16 Nyamu J, in
observing that the principle of kompetenz kompetenz as envisaged in section 17
of the Act gives the arbitral tribunal the power to rule on its own
jurisdiction and deal with the subject matter of the arbitration, gave the
following brief exposition of the section; “The section gives an arbitral
tribunal the power to rule on its own jurisdiction and also to deal with the
subject matter of the arbitration. It is not the function of a national court
to rule on the jurisdiction of an arbitral tribunal except by way of appeal
under Section 17(6) of the Arbitration Act as the Commercial Court in this
matter purported to do. In this regard, I find that the superior court did act
contrary to the provisions of Section 17 and in particular violated the
principle known as “Competence/Competence” which means the power of an arbitral
tribunal to decide or rule on its own jurisdiction. What this means is
“Competence to decide upon its competence” and as expressed elsewhere in this
ruling in German it is “Kompetenz/Kompetenz” and in French it is “Competence de
la Competence”. To my mind, the entire ruling is therefore a nullity and it
cannot be given any other baptism such as “acting wrongly but within
jurisdiction.”
iii.
Issue Interim Protection
Measures
As per section 18 of the Arbitration
Act, the arbitrator may, at the request of a party, order such interim
protection measures as the arbitral tribunal may consider necessary in respect
of the subject-matter of the dispute, with or without an ancillary order
requiring the provision of appropriate security in connection with such a
measure. The arbitrator may also order any party to provide security in respect
of any claim or any amount in dispute or order a claimant to provide security
for costs.17 The jurisdiction of the arbitral tribunal in this regard is
similar to that of the High Court in civil proceedings before it. The
jurisdiction includes the power to issue relevant orders of protection
including injunctions and orders to dispose of perishable goods among others.
iv.
Determination of
Evidence
Under
Section 20(3), the arbitrator has the power to determine the admissibility,
relevance, materiality and weight of any evidence and to determine at what
point an argument or submission in respect of any matter has been fairly and
adequately put or made. In essence, the arbitrator has the power to determine
the applicable rules of evidence in the arbitral process. In exercising this
evidentiary discretion, the arbitral tribunal enjoys freedom from the reins of
the provisions of the Evidence Act22 which ordinarily regulate.
v.
Amendment of Submissions
The arbitral tribunal, like a court of law,
has jurisdiction to determine whether to accept or decline amendments or
supplements to submissions i.e. pleadings in arbitration.23 In essence, the
arbitrator has powers to allow or decline amendment of pleadings in arbitration
unless parties have otherwise agreed. Section 24(3) of the Act gives the
arbitrator power to decline or allow amendments or supplements to pleadings.
vi.
Termination of
Proceedings
As per Section 26 of the Act, the
arbitrator may terminate proceedings for want of prosecution where the claimant
defaults in communicating his/her claim within the period agreed upon by the
parties or determined by the arbitral tribunal. If the respondent is the party
in default, the tribunal is to continue the proceedings without taking the
default as an admission of the claimant’s allegations.24 Thus, the tribunal
will require the claimant to prove its case as against the respondent and
forbid summary awards.
Conciliation
Conciliation
is where an independent third party
referred to as the conciliator, helps people in a dispute to identify the
disputed issues, develop options, consider alternatives and try to reach an
agreement. It is an effort
to reconcile the wishes of the disputing parties. The Black's law Dictionary
defines conciliation as “ the adjustment
and settlement of a dispute in a friendly and unantagonistic manner used in
courts before trial with a view towards avoiding trial and in labor dispute
before arbitration."
The conciliator will generally provide
advice about the issues and options for resolution. However, they do not make a
judgment or decision about the dispute. The conciliator may be a person with professional expertise in the subject matter
The role of conciliators
and mediators are quite similar. However a conciliator may also;
- have specialist knowledge and give you some legal
information
- suggest or give you and the other participants expert
advice on the possible options for sorting out the issues in your dispute
- actively encourage you and the other participants to
reach an agreement.
The conciliator does not;
- take sides or make decisions
- tell you what decision to make, although they may make suggestions
- decide who is right or wrong
- provide counselling.
Conciliation is usually
held face to face, so that you can talk to each other directly. However, you
may also have separate sessions with the conciliator.Sometimes the conciliator
can act as a 'messenger' by talking to you and the other participants separately
and communicating ideas or proposals between you.
.
Instances where conciliation is suitable
Where the disputing parties,
- want to reach an agreement on some technical and legal issues
- want assistance with the process
- want to make the decision with the other participants involved
- want advice on the facts in your dispute.
- Conciliation may also be suitable if you have tried mediation and
still cannot reach agreement with the other participants.
- Have a comparable bargain
- The parties are concerned about the future relationship
- Regarding issues that allow exchange to occur
- There is an urgency or time limit for completion
- The parties do not have long-standing and deep hostility
- Setting a precedent or defending a right is no more important than
solving an urgent problem.
Advantages of conciliation
- The conciliator is usually an expert in their disputed field.
- More cost-effective than taking a dispute to court
- Maintains privacy
Disadvantages
It is not
legally binding
Parties May not take the process
seriously
Reconciliation
Generally means the restoration of
friendly relations. It is mostly used where the disputing parties are large
groups of people i.e communities and ethnic groups.
Tthe Truth, Justice and Reconciliation
Commission was established by the Truth, Justice and Reconciliation Act. One of
the functions of the commission as set out in section 6(s) of the act is to
inquire into the causes of ethnic tensions and make recommendations on the
promotion of healing, reconciliation and co-existence among ethnic communities.
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