The Kenyan economy is heavily dependent on exports - its main exports are agricultural products (coffee, tea, spices, fruit, vegetables, other plants), raw materials (including oil) and clothing. Many other goods, such as machines or means of transport, are imported. In short, there are many opportunities for profitable trade relations with the country on the East African coast, and this contributes to Kenya’s development: The gross domestic product has risen by about 5% in recent years (source). For companies that have relationships with Kenyan business partners, the question of which dispute resolution method - litigation or arbitration - is most promising when things do not go as planned will arise. This depends on whether a court decision or arbitral award could be enforced in the country of the contracting party.
The Legal Framework
Like a large number of common law legal systems, Kenya also has two basic options for recognizing and enforcing foreign court decisions outside of international treaties: on the one hand, registration under the Foreign Judgments (Reciprocal Enforcement) Act and, on the other hand, the action upon the foreign judgment under the common law. A registration is currently only possible for decisions of certain courts in Australia, Malawi, the Seychelles, Tanzania, Uganda, Zambia, the United Kingdom of Great Britain and Northern Ireland or Rwanda. For all other decisions, there is only the way of an action upon the foreign judgment.
The recognition and enforceability of foreign arbitral awards is governed by the Kenyan Arbitration Act No. 4 of 1995. The grounds which may lead to a refusal of recognition or enforcement are largely similar to those set forth in Article 34 of the UNCITRAL Model Law of 1985 and thus also to those set forth in Article V of the New York Convention of 1958, which also applies in Kenya.
Recent Kenyan Court Practice
The positive developments in Kenyan court practice were already discussed in detail elsewhere (Wietzorek, Die Anerkennung und Vollstreckbarerklärung von ausländischen Gerichtsentscheidungen und Schiedssprechen in Kenia, Recht der Internationalen Wirtschaft 2017, pp. 799-804). One may refer to the following two important decisions:
- on the recognition and enforcement of an Ethiopian judgment and on the recognition and enforcement of foreign judgments in general: Jayesh Hasmukh Shah v Navin Haria & Manu Shah, Court of Appeals (Nairobi), 26 February 2016, Civ. App. 147/2009.
- on the recognition and enforcement of a Russian arbitral award: OJSC Zarubezhstroy Technology v Gibb Africa, High Court of Kenya (Nairobi), 31 March 2017, Misc. App. 158/2016.
Since then, a number of other Kenyan court decisions have been published, for example:
- A Ugandan decision was registered in Kenya under the Foreign Judgments (Reciprocal Enforcement) Act and the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (Kenfreight Uganda Limited & Kenfreight East Africa Limited v Tornado Carriers Limited, High Court of Kenya (Mombasa), 16 February 2018, Civ. Suit 52/2016). Upon appeal, this decision was set aside (Tornado Carriers Limited v Kenfreight Uganda Limited & Kenfreight East Africa Limited, 14 February 2019, Civ. App. 63/2018).
- The registration of an Italian decision under the Foreign Judgments (Reciprocal Enforcement) Act was correctly refused, as the Act does not apply to Italian decisions; Kenyan courts regularly do not construe a request under the Act as an action upon the foreign judgment (D U v M M T A, High Court of Kenya (Malindi), 19 April 2018, Misc. Civ. Appl. 2/2018 - see also Accredo AG & 3 others v Steffano Uccelli & another, Court of Appeal (Malindi), 15 December 2017, Civ. App. 36/2015 and 6 December 2018, Civ. App. 43/2018).
- A Slovak divorce decision was recognized under the Kenyan Marriage Act, 2014 (P M v V M, High Court of Kenya (Nairobi), 14 May 2018, Misc. Civ. Appl. 152/2016).
- A Tanzanian default judgment was registered in Kenya. The registration was not cancelled due to a violation of public policy: In Tanzania, the losing party had unsuccessfully made use of the opportunity to challenge the default judgment (UBA Tanzania Limited v Metro Petroleum Tanzania Ltd & others, High Court of Kenya (Nairobi), 13 June 2018, Civ. Case 423/2015).
- In one case, the parties had agreed that if an amicable settlement were to fail, all disputes would be settled in an ICC arbitration in South Africa. After filing an action in a Kenyan court, the parties were ordered to first make an attempt of reaching an amicable settlement (Jatin Shantilal Malde & 9 others v Transmara Investment Limited & 2 others, High Court of Kenya (Nairobi), 20 July 2018, Petition 18/2018).
- An application to set aside an arbitral award in an ICC arbitration in France was correctly rejected as such an application is only admissible with regard to Kenyan arbitral awards (Tracer Limited v SGS Kenya Limited & another, High Court of Kenya (Milimani), 18 October 2017, Misc. Civ. Case 331/2015).
- The decision that is likely to attract the most international attention set aside a Kenyan arbitral award in conflict with the well-known ICSID arbitral award in World Duty Free Ltd. v Republic of Kenya (ICSID Case No. ARB/00/7) (Kenya Airports Authority v World Duty Free Company Limited t/a Kenya Duty Free, High Court of Kenya (Nairobi), 5 October 2018, Misc. App. 67/2013).
The Bottom Line
Both court decisions and international arbitral awards can in principle be recognized and enforced in Kenya. In recent years, a clearly positive development can be observed in Kenyan court practice. It therefore depends strongly on the individual case whether the parties should agree on court proceedings or arbitration.