Legal framework and culture with regard to business and commerce
Kenya is based on a 2 tier system of government comprising a national government with delineated all encompassing duties covering the whole country and semi-autonomous county units spread all over the country having specific duties unique to each. This demarcation is constitutionally derived. It has a bicameral national legislature comprising a national assembly and a senate (representing the county) as an upper chamber.
Elaborate legislative, regulatory and institutional structures have been developed that govern business and commercial practices in Kenya. Most commercial disputes are resolved in the system of dispute resolution mechanisms laid down by the laws ranging from formal courts to arbitration, mediation and court supervised negotiation, all of which are clothed with the power of court judgments and are sanctioned by the law. Foreign judgements and arbitral awards are enforced in Kenya where these have been filed in the court system of Kenya and the same are adopted.
How does the judicial system operate with regard to large commercial disputes?
All Commercial disputes whose value exceed USD 150,000 are heard and determined by the Commercial and Admiralty Division of the High Court- a specialised division of the High Court created in Nairobi and Mombasa, or in the High Courts in all other stations where the High Court sits.
All filed cases undergo a mandatory check for mediation or arbitration (provided an arbitral clause exists in the contract) and if qualified, is referred there. This mediation has a limited period of life i.e. 60 days – otherwise the dispute is processed within the normal litigation process.
The Constitution of Kenya provides under Article 159 that Alternative Dispute Resolution should guide the courts as a dispute resolution method. In line with this, Nairobi is an established regional and international centre for dispute resolution. Most commercial agreements have a dispute resolution clause that provide for conciliation and arbitration. Arbitration is viewed as a way to unclog the congested Court system which lacks the capacity to efficiently and speedily adjudicate on commercial disputes. It is also viewed as confidential and faster, and appeals to parties that may require specialists to adjudicate the dispute. The Kenyan Civil Procedure Rules as used within the court legal system have further specifically provided for arbitration as an Alternative Dispute Resolution process and the court in Kenya may either suo moto or on an application by any of the disputants before it refers a matter to arbitration.
This process is actively promoted by professional bodies in Kenya such as in Law Society of Kenya, Architectural Association of Kenya, Institute of Chartered Public Accountants of Kenya, Kenya Pharmacy Medicine and Dentist Union etc. It is for this reason that the Chartered Institute of Arbitration (Kenya),a relic of the British Institute of Arbitration ( London) is very vibrant and active in the region.
Other commonly used methods of dispute resolution which are legally recognised in Kenya include: court annexed mediation, adjudication – especially in construction disputes, reconciliation and conciliation.
How easy is it to enforce a foreign judgement or arbitral award in Kenya?
Foreign judgments and arbitral awards are recognized and enforced in Kenya under the Foreign Judgments (Reciprocal Enforcement) Act ( CAP 43 LAWS OF KENYA)
The definition of ‘Designated Court’ under the Act limits the enforceability of a foreign judgement in Kenya.
‘Designated court’ is defined as:
- A superior court of a reciprocating country that is a commonwealth country,
- A superior court of any other reciprocating country that is specified in an order made under section 13 of the Act, as designated by the minister from time to time, and
- A subordinate court of a reciprocating country that is specified in an order made under section 13 of the Act.
The process requires the registration of the judgement from the foreign court in the High Court of Kenya within 6 months of the date of said judgement. Only valid judgments in the issuing countries are actionable in Kenya.
Foreign arbitral awards to be enforceable in Kenya the local (Kenyan) process of recognizing an award through the local courts must be complied with before the adopted court judgement can be sought to be recognized in Kenya.
The main type of business entity used by foreign investors is a limited liability company. A foreign company may be registered in Kenya under the Companies Act. A different tax rate is applied to foreign companies and a branch of such a company will not qualify to be licenced in industries that require activities to be carried out by a locally incorporated company.
In conclusion
New laws have been crafted and passed in the area of environment law, intellectual property and data protection – all of which take into account current international business practices, realities and technology. A new law on special economic zones and the Business Registration Service Act aimed at smoothing international business into the Kenyan landscape have been enacted and are received warmly by the business community.
The Kenyan business legal framework is considered one of the most friendly and conducive on the African scene, Kenya being a bastion of capitalism in the region with many foreign companies having Nairobi as their business hub.
ACKNOWLEDGEMENTS
The above material is gleaned from publicly available document on the internet. Special reference is made to the article on the same topic by MMAN advocates, FCB MIHRAB, LENANA ROAD, NAIROBI