Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

A project developer must procure an environmental impact assessment license from NEMA at a fee of 0.05 per cent of the total project cost.

Under the Physical Planning Act, development permission must be obtained from the local authorities (now counties). Each county determines its prescribed fees.

PPP projects are approved by the Public Private Partnership Committee and the PPP Unit established under the Public Private Partnership Act (the PPP Act).

Approval from the Kenya Airports Authority (KAA) under the Kenya Airports Authority Act is required where a development is located in the vicinity of land controlled by KAA and is anticipated to cause any obstruction or is otherwise hazardous to aircraft operations.

Other approvals may be required, including approvals from the Kenya Civil Aviation Authority, if a development is anticipated to obstruct gazetted flight paths.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

Financing and project documents are contracts and must therefore comply with the laws and formalities of formation of contracts.

Registration of financing and project documents is not a legal requirement. However, the agreements are required to be stamped under the Stamp Duty Act.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

The Arbitration Act recognises as binding and enforceable international arbitration awards as par the New York Convention.

Kenya is a member of the International Centre for Settlement of Investment Disputes and has enacted the Investment Disputes Convention Act.

Most contractual or commercial disputes are arbitrable save where expressly exempted by statute such as criminal cases.

There are no disputes subject to automatic domestic arbitration.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Project agreements with government or governmental agencies are governed by Kenyan law and all project agreements entered into pursuant to the Public Private Partnerships Act must be subject to the laws of Kenya. Private project agreements are typically governed by the contracts concluded between the participants and are subject to the jurisdiction elected by the parties.

Financing agreements are typically governed by the preferred law of the lender, ordinarily English law or New York law.

Land matters, permit or licence laws and government financial guarantees are subject to domestic law.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

Yes. Talaso Lepalat v Embassy of the Federal Republic of Germany & Two others [2015] eKLR recognised as trite law that when a government enters into an ordinary commercial transaction with a trader, it must honour its obligations like other traders and if it fails to do so, it should be subject to the same laws and answerable to the same tribunals as they are. Therefore, a waiver of immunity is implied in commercial transactions and can indeed be lawfully performed.