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KENYA: An Introduction to Dispute Resolution

Contributors:
Nelson Okeyo Otieno
Margaret Miringu
Munyao Muthama and Kashindi Logo
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OVERVIEW OF DISPUTE RESOLUTION IN KENYA 

Kenyan court structure 

The system comprises of subordinate courts and superior courts. The subordinate courts are supervised by the High Court and other courts of equal status. The Environment and Land Court and Employment and Labour Relations Court are specialized courts with equal status with the High Court. Appeals from the High Court and the specialized courts lie with the Court of Appeal and further appeals (on certain prescribed matters) lie with the Supreme Court. There are particular areas for which Tribunals are established to handle disputes at first instance including tax, public procurement, sports, standards and national environment. Save for exceptional circumstances, the available remedies before the tribunals must be fully exhausted before instituting a complaint in court.

Current trends and changes in practice 

There is drastic change in the practice. The judiciary rolled out the electronic filing system in July 2020, which is currently used in many courts in the country. This system manages lodgement of new cases, filing of documents, and payments of court fees. Court orders can be issued on the system.

Court proceedings are largely conducted virtually. This has improved ease of accessing courts and reduced cost of travel and accommodation. There are however real risks associated with the virtual sessions such as challenge in maintaining courtroom control, derailing the courts’ ability to assess witness credibility and privacy risks but these are being addressed progressively.

Alternative Dispute Resolution (ADR) 

The Kenyan Constitution promotes alternative dispute resolution (ADR) mechanisms. In promoting the ADR process, the courts and tribunals adopt three principal approaches. First is upholding contractual agreements for ADR processes. Second is taking judicial initiatives, on their motion or upon application, to promote out-of-court settlements. Third is referring matters to the alternative fora and channels mandated under various statutes to hear complaints at first instance.

The most popular forms of ADR in Kenya are arbitration and mediation. The Arbitration Act 1995 governs local and international arbitration and one key provision is section 10 which restricts courts’ intervention in arbitration proceedings. Notably, in the case of Nyutu Agrovet Limited v Airtel Networks Kenya Limited [2019] eKLR the Supreme Court of Kenya found that the decisions of the High Court in regards to enforcement or setting aside of an arbitral award are appealable to the Court of Appeal. This decision is perceived to upset the previously long held judicial precedent that had affirmed the principle of party autonomy as a key characteristic of arbitration. The decision continues to attract a lot of attention on what it portends to intervention of courts in arbitration and party autonomy.

Current economic conditions affecting clients or the legal profession

The emergence of the COVID-19 pandemic has caused an unprecedented economic crisis in Kenya. Businesses and litigants are trying to recover from the economic crunch experienced due to the outbreak of COVID-19.

The level of activity, trends and developments in our areas of practice

Businesses are struggling to get on their feet after the easing of some of the restrictions and lockdowns caused by COVID-19. The government waived court filing fees for small claims of below K.Shs.1 million. It is expected that one of the effects of COVID-19 lockdowns will be increased civil claims for breach of contracts.

There is a new normal of remote working and job rotations for many employers. Also, many jobs were lost due to termination of employment during the pandemic. Redundancies, pay cuts, “COVID leave” and forced leave have been on the rise. This has resulted in increased employment disputes.

Litigants have adapted to the new normal of virtual court proceedings which ensured dispensation of justice in the wake of COVID-19 restrictions. Virtual courts have reduced commute time and congestion in the court houses. The courts have issued virtual court management rules for proceedings as well as practice directions for courts for containment of the COVID-19 pandemic.

Generally, there is a huge uptake of internet usage and adoption of technology in homes and offices so as to keep up with the virtual courts. This has been a positive momentum for the ICT sector. Virtual courts are the future!

In terms of jurisprudential development, a key decision coming from the court recently was in respect to the power of courts to issue a structural interdict, which is a supervisory order through which the court controls compliance with its order. The Supreme Court decided in the case of Mitu-Bell Welfare Society v Kenya Airports Authority & Anor [2019] eKLR that structural interdicts may be issued by the court in appropriate cases to address violation of rights under the constitution.

Another key decision was in in the case of Law Society of Kenya v Attorney General & Anor [2019] eKLR in which the Supreme Court settled the uncertainty that has surrounded the process of claiming for work injury benefits. The court clarified that the primary jurisdiction for work injury claims is vested in the Director of Occupational Safety and Health Services and not the courts as had been the case in the past.

New legislation that will have an effect on clients

The government has firmed up its regulatory grip on businesses, tax systems, the organisation of the justice system, savings and credit cooperatives, electronic signatures and data protection. New legislation that will affect clients includes:

• The Companies Act (Beneficial Information Ownership) Regulations, 2020 that requires businesses to disclose the names of their beneficial owners.

• The Tax Laws (Amendment) Act, 2020 now provides the Kenyan Revenue Authority with powers to levy and collect digital taxes regarding services provided through digital platforms where revenue is collected in terms of advertisement.

• The Small Claims Court Act, 2016 was amended to enable them to hear and determine expeditiously disputes involving small and medium size businesses that do not exceed K.Shs.1 million (up from K.Shs.200,000).

• The Sacco Society (Non-deposit Taking Business) Regulations, 2020, now bring the non-deposit taking Saccos under the Sacco Societies Regulatory Authority's control.

• The Data Protection Act, 2019 imposed an obligation on data controllers and processors to protect all data that is identifiable with an individual. The Data Commissioner was appointed in November 2020 and the Act is now being operationalized.

• The Business Laws (Amendment) Act, 2020 now mandates the clients to align with technology advances to provide electronic and advanced electronic signatures for remote signing.

• The Public Procurement Regulations 2020 that will govern procurement disputes filed before the Public Procurement Administrative Review Board and the courts which replaced Regulations made in 2006.

• Amendment of Civil Procedure Rules, Supreme Court Rules and Matrimonial Proceedings Rules to govern attendant proceedings.

Potential hurdles or difficulties faced by clients and how these can be overcome

Politically, the push for constitutional amendments in 2021 under the Building Bridges Initiative. General elections are scheduled for August 2022. Clients need to brace for an intense political campaign period and anticipated effects on the business climate.

In the courts, there is a significant backlog of cases, lack of resources and slow adoption of technology and digitization.

To mitigate these challenges, constitutionally mandated institutions and the private sector should endeavour to put in place better governance and accountability structures. There needs to be political goodwill from the political leaders so that clients, litigants and Kenyans in general do not experience economic surge and the withdrawal of foreign investments from Kenya as previously experienced.

The judiciary on its part deserves an increased and perhaps independent budget to enable it to progress various reforms.

Authors:

George Kashindi – Partner – [email protected]

Margaret Miringu – Partner – [email protected]

Nelson Otieno – Associate – [email protected]