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To what extent have Kenyan courts honoured the non-interventionist approach to arbitrations as espoused under the UNCITRAL model law?

Introduction

The law in Kenya that governs matters arbitration is the Arbitration Act, No. 4 of 1995 ("the Arbitration Act"). Arbitration practice in Kenya is also within the scope of the Constitution of Kenya which, at Article 159 (2) (c) recognizes Arbitration as one of the alternative forms of dispute resolution (ADR) that should be promoted by our Courts. It is in keeping with the spirit of the Constitution to promote Arbitration as an ADR, that the Arbitration Act:-

a) At Section 10 limits the extent of the Court's intervention to strictly the parameters allowed in the Arbitration Act.

b) At Section 32A of the Arbitration Act provides for the binding nature of Arbitral Awards.

c) At Section 39, limits the right of appeal to only questions of law arising out of a domestic arbitration and even then, has to be by agreement of the parties to such arbitration.

The foregoing reflects the practice globally and is further enunciated in the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration ("the Model Law"). The purpose of the Model Law is to provide a law acceptable to the States with different legal, social and economic systems and contribute to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations. This purpose is promoted by reflecting worldwide consensus on key aspects of international arbitration practice.

One of these aspects is the non-intervention by the Courts in matters pertaining to Arbitration. To this end, Article 5 of the Model Law limits the extent of the Court's intervention and recognizes the final and binding nature of arbitral awards at Article 35 (1) thereof. Accordingly, the provisions of the Arbitration Act are within the globally acceptable and applicable practices and procedures relating to the non-intervention of Courts in arbitration matters.

However, despite the provisions of the Arbitration Act and the Model Law, there have been manifest contradictions emanating from the High Court and the Court of Appeal on the non-interventionist approach of the Court. On the one hand, there is a body of cases that have upheld the essence of the Arbitration Act and the Model Law and on the other hand, case law has been passed that seriously erodes the same, but before discussing the case law, and to understand the various dimensions of justice, it is important to look at the philosophical foundations of the concept of justice.

Philosophical underpinnings of justice.

Legal formalism

This is a school of thought where legal rules stand separate from other social and political institutions. According to this theory, judges and other decision makers should decide particular cases, to the extent possible, by the mechanical application of existing legal rules.1 There is thus an interlinkage between formalism and judicial constraint because judges are limited to the rote application of existing rules, and are prevented from deciding cases according to "their own predilections" or "preferences."

The rules informing a judge's decision would thus come from inter alia, the Constitution, the Arbitration Act, the Model Law, or statute law. To the extent a judge's decision of a case is dictated solely by the content of an existing rule, that decision is not determined by anything else, including the values or beliefs or preferences of the judge. This school of thought would thus be associated with some of the decisions passed by the Kenyan Courts as will be discussed below.

Legal realism

Legal realism was a movement that came in to criticize and oppose formalism. Legal realists seek to explain what the law really is in terms of practicalities, rather than theory. They seek a common sense approach to the problems relating to law. Their focus is on the actual operation of the law in the social context. According to legal realists, judges do make law. They do this when they interpret the law. As such, what the law is as per statutes and books of law is not really the law until a judicial pronouncement is made on it.2

This theory thus encourages judicial discretion. By not limiting themselves to statutes and books, judges are able to assess facts presented before them, and the practicalities associated with the decisions they make before rendering their judgments. This paper will also highlight cases that have been decided guided by the principles informing this school of thought.

The non-interventionist approach

In the Court of Appeal case of Kenya Shell Limited v Kobil Petroleum Limited, Civ Appli 57 of 2006 [2006] eKLR, the Court of Appeal declined to grant leave to appeal from the High Court against a decision declining to set aside an Arbitral Award. It is worthy of note that in the High Court, the ground stated in support of the prayer to set aside the Award was that the Award went outside the scope of the reference to arbitration. However, the Court found as follows;

"The matter before us has of course nothing to do with section 35 (2) (b) (ii) (supra). But, in our view, public policy considerations may enure in favour of granting leave to appeal as they would to discourage it. We think, as a matter of public policy, it is in the public interest that there should be an end to litigation and the Arbitration Act under which the proceedings in this matter were conducted underscores that policy. Do we think there is a realistic prospect of success of the intended appeal or, put another way, is there a ground of appeal that merits serious judicial consideration? We think not.

The Kenya Shell decision, brings aspects of legal realism where, the Judges exercised their judicial discretion to bring out an issue of public policy, which had not been raised. The application for leave to appeal was thus dismissed and by so doing, this decision supports the non-interventionist approach by the Courts.

In the Court of Appeal case of Anne Mumbi Hinga v Victoria Njoki Gathara, Civil Appeal No. 8 of 2009 [2009] eKLR the Court was categorical that that there is no right for any Court to intervene in the arbitral process or in the award except in the situations specifically set out in the Arbitration Act or as previously agreed in advance by the parties and similarly there is no right of appeal to the High Court or the Court of Appeal against an award except in the circumstances set out in Section 39 of the Arbitration Act. The Court went on to find in favor of the non-interventionist approach of Courts by finding as follows:-

"The concept of finality of arbitration awards and pro arbitration policy is something shared worldwide by the States whose Arbitration Acts such as ours have been modeled on the UNICITRAL MODEL LAW. The common thread in all the Acts is to restrict judicial review of arbitral awards and to confine the necessary review to that specified in the Acts. The provisions of the Act are wholly exclusive except where a particular provision invites the court's intervention or facilitation."

In the Court of Appeal case of Nyutu Agrovet Limited v Airtel Networks Limited, Civil Appeal (Application) No.61 of 2012 [2015] eKLR the Court found that no right of appeal exists to the Court of Appeal against a finding of the High Court on an application to set aside an arbitral award. This matter is however pending before the Supreme Court and it is hoped that the highest Court in the land will address the issue pertaining to intervention by Courts and resolve the same with finality.

The interventionist approach

The Court of Appeal in the case of DHL Excel Supply Chain Kenya Limited v Tilton Investments Limited, Civil Application No. Nai. 302 of 2015 [2017] eKLR held that;

"The fact that section 35 of the Arbitration Act is silent on whether such a decision is appealable to this Court by itself does not bar the right of appeal. The Section grants the High Court jurisdiction to intervene in arbitral proceedings wherein it is invoked. It follows therefore that the decision thereunder is appealable to this Court by virtue of the Constitution."

In so holding, the Court of Appeal in the DHL case not only encouraged and set a precedent for the intrusive nature of Courts, but the decision strongly exhibits the characteristics of legal formalism where judges' decisions are purely derived from enacted law and in this case the Constitution and the Arbitration Act. In keeping with the philosophical school of legal formalism, the Court, when it realized that Section 35 of the Arbitration Act is silent as to whether an appeal can be made to the Court of appeal, proceeded to invoke the provisions of the Constitution in reaching its decision.

Yet another interventionist approach can be gleaned by how the Court made a finding that Arbitration matters are subject to judicial review. Guided by the provisions of the Fair Administrative Action Act, 2015 ("the FAA Act"), which was enacted pursuant to Article 47 of the Constitution, the Court in Sylvana Mpabwanayo Ntaryamira v Allen Waiyaki Gichuhi & another, Judicial Review Application No. 449 of 2015 [2016] eKLR found that;

"An arbitrator is a non-state agency whose action, omission or decision affects the legal rights or interests of the parties before him to whom the arbitral proceedings relate cannot be doubted. It is therefore my view and I so hold that pursuant to the provisions of Article 47 as read with the provisions of the Fair Administrative Action Act, 2015, judicial review orders may where appropriate issue against the decisions of an arbitrator."

The above finding adopts a legal formalism point of view as it interprets the Constitution and the FAA in reaching a decision that arbitration matters are subject to judicial review. The above finding does not reflect the practical position. This is because the Arbitration Act is a complete code as regards to challenge of any procedure pertaining to the arbitration process, and as a result, leaves little or no room for judicial review.

Conclusion

Arbitration is one of the ways in which disputing parties access justice as is provided for in the Constitution. As far as the strict interpretation of the Model Law and the Arbitration Act is concerned as relates to Court's intervention, the Supreme Court in the Nyutu case (supra) in rendering its decision will inevitably set the pace for the course that arbitration matters should take and by extension, which philosophical school of thought will gain eminence in the Kenyan legal system.


  1. Christopher J. Peters, "Legal Formalism, Procedural Principles, and Judicial Constraint in American Adjudication" available at <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2573912> accessed on 29th August, 2018.
  2. Oliver Wendell Holmes Jr., "The Path of the Law," Harvard Law Review, Vol. 10 (1897): 457–78.