Arbitration Amendment Act No 11of 2009 - as Plain Text by MWakili

The Arbitration (Amendment) Act, 2009 THE ARBITRATION (AMENDMENT) ACT, 2009 AN ACT of Parliament to amend the Arbitration Act, 1995 ENACTED by the Parliament of Kenya, as follows - Short title and 1.

This Act may be cited as the Arbitration commencement.

(Amendment) Act, 2009 and shall come into operation on such date as the Minister may, by notice in the Gazette, appoint.

Amendment of 2.

Section 3 of the Arbitration Act 1995, in this Act section 3 of No.

referred to as the principal Act, is amended - 4 of 1995.

(a) in subsection (2), by deleting paragraphs (a), (b) and (c) and substituting therefor the following new paragraphs - (a) where the arbitration is between individuals, the parties are nationals of Kenya or are habitually resident in Kenya; (b) where the arbitration is between bodies corporate, the parties are incorporated in Kenya or their central management and control are exercised www.kenyalaw.org in Kenya; (c) where the arbitration is between an individual and a body corporate - (i) the party who is an individual is a national of Kenya or is habitually resident in Kenya; and (ii) the party that is a body corporate is incorporated in Kenya or its central management and control are exercised in Kenya; or (d) the place where a substantial part of the obligations of the commercial relationship is to be performed, or the - 1 - The Arbitration (Amendment) Act, 2009 place with which the subject-matter of the dispute is most closely connected, is Kenya.

(b) in subsection (3), by deleting paragraph (b) (i) and substituting therefor the following new subparagraph- (i) the juridical seat of arbitration is determined by or pursuant to the arbitration agreement; or (c) in subsection (5), by deleting the expression section 31 and substituting therefor the expression section 29.

Amendment of 3.

Section 4 of the principal Act is amended in section 4 of No.

subsection (3) (b) by inserting after the word 4 of 1995.

telegram the words facsimile, electronic mail.

Amendment of 4.

Section 5 of the principal Act is amended - section 5 of No.

4 of 1995.

(a) by deleting the word by appearing immediately after the words, who knows and substituting therefor the word that; (b) by deleting the words shall be appearing immediately before the word deemed and substituting therefor the word is.

www.kenyalaw.org Amendment of 5.

Section 6 of the principal Act is amended - section 6 of No.

4 of 1995.

(a) in subsection (1), by deleting the words files any pleadings or takes any other step in the proceedings and substituting therefor the words or otherwise acknowledges the claim against which the stay of proceedings is sought.

(b) by deleting subsection (2) and substituting therefor the following new subsections - - 2 - The Arbitration (Amendment) Act, 2009 (2) Proceedings before the court shall not be continued after an application under subsection (1) has been made and the matter remains undetermined.

(3) If the court declines to stay legal proceedings, any provision of the arbitration agreement to the effect that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.

Replacement of 6.

The principal Act is amended by repealing section 9 of No.

section 9 and replacing it with the following new 4 of 1995.

section - Receipt of 9.(1) Unless otherwise agreed in written writing between the parties, any communicatio communication made pursuant to or for -ns.

the purposes of an arbitration agreement - (a) being a communication effected by facsimile or electronic mail - (i) is deemed to have been received if it is www.kenyalaw.org transmitted to a facsimile number or electronic mailing address, as the case may be, specified by the addressee as his number or address for service; and (ii) is deemed to have been received on the day on which - 3 - The Arbitration (Amendment) Act, 2009 it is so transmitted; or (b) in any other case - (i) is deemed to have been received if it is delivered to the addressee personally or if it is delivered at his place of business, habitual residence or mailing address; and (ii) is deemed to have been received on the day on which it was so delivered.

(2) Where, after reasonable inquiry, a place of business or residential address specified by the addressee cannot be found, or where such a place or address, or any mailing address, facsimile number or electronic mailing address so specified appears never to have been, or to be no longer, that of the addressee, a www.kenyalaw.org written communication - (a) is deemed to have been received if it is sent to the addressees last known place of business, residential address or mailing address, or last known facsimile number or electronic mailing address, or by any other means that provides a record of the - 4 - The Arbitration (Amendment) Act, 2009 attempt to deliver or transmit the communication; and (b) is deemed to have been received on the date specified in that record.

(3) This section does not apply to the service of documents for the purpose of legal proceedings for which provision is made by rules of court.

Amendment of 7.

Section 11 of the principal Act is amended by section 11 of No.

inserting the following new subsection immediately 4 of 1995.

after subsection (2) - (3) Where an arbitration agreement provides that the reference shall be to two arbitrators, then, unless a contrary intention is expressed in the agreement, the agreement is deemed to include a provision that the two arbitrators shall appoint a third arbitrator immediately after they are themselves appointed.

www.kenyalaw.org Amendment of 8.

Section 12 of the principal Act is amended - section 12 of No.

4 of 1995.

(a) in subsection (2)- (i) by inserting the words and any chairman immediately after the words arbitrator or arbitrators; (ii) by deleting paragraph (b) and substituting therefor the following new paragraphs - - 5 - The Arbitration (Amendment) Act, 2009 (b) in an arbitration with two arbitrators, each party shall appoint one arbitrator; and (c) in an arbitration with one arbitrator, the parties shall agree on the arbitrator to be appointed.

(b) by deleting subsection (3), (4) and (5) and substituting therefor the following new subsections - (3) Unless the parties otherwise agree, where each of two parties to an arbitration agreement is to appoint an arbitrator and one party (the party in default) - (a) has indicated that he is unwilling to do so; (b) fails to do so within the time allowed under the arbitration agreement; or www.kenyalaw.org (c) fails to do so within fourteen days (where the arbitration agreement does not limit the time within which an arbitrator must be appointed by a party), the other party, having duly appointed an arbitrator, may give notice in writing to the party in default - 6 - The Arbitration (Amendment) Act, 2009 that he proposes to appoint his arbitrator to act as sole arbitrator.

(4) If the party in default does not, within fourteen days after notice under subsection (3) has been given - (a) make the required appointment; and (b) notify the other party that he has done so, the other party may appoint his arbitrator as sole arbitrator, and the award of that arbitrator shall be binding on both parties as if he had been so appointed by agreement.

(5) Where a sole arbitrator has been appointed under subsection (4), the party in default may, upon notice to the other party, apply to the High Court within fourteen days to have the appointment set aside.

(6) The High Court may grant an application under subsection (5) only if it is satisfied that there was good cause www.kenyalaw.org for the failure or refusal of the party in default to appoint his arbitrator in due time.

(7) The High Court, if it grants an application under subsection (5), may, by consent of the parties or on the application of either party, appoint a sole arbitrator.

(8) A decision of the High Court in respect of a matter under this section - 7 - The Arbitration (Amendment) Act, 2009 shall be final and not be subject to appeal.

(e) by renumbering subsection (6) as subsection (9).

Amendment of 9.

Section 13 of the principal Act is amended in section 13 of No.

subsection (3) by adding the following words 4 of 1995.

immediately after the word parties appearing at the end thereof or if he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so.

Amendment of 10.

Section 14 of the principal Act is amended by section 14 of No.

deleting subsection (3) and substituting therefor the 4 of 1995.

following subsections - (3) If a challenge under agreed procedure or under subsection (2) is unsuccessful, the challenging party may, within 30 days after being notified of the decision to reject the challenge, apply to the High Court to determine the matter.

(4) On an application under subsection (3), the arbitrator who was challenged shall be www.kenyalaw.org entitled to appear and be heard before the High Court determines the application.

(5) The High Court may confirm the rejection of the challenge or may uphold the challenge and remove the arbitrator.

(6) The decision of the High Court on such an application shall be final and shall not be subject to appeal.

(7) Where an arbitrator is removed by the High Court under this section, the court may make such order as it thinks fit with respect to - 8 - The Arbitration (Amendment) Act, 2009 his entitlement (if any) to fees or expenses or the repayment of any fees or expenses already paid.

(8) While an application under subsection (3) is pending before the High Court, the parties may commence, continue and conclude arbitral proceedings, but no award in such proceedings shall take effect until the application is decided, and such an award shall be void if the application is successful.

Amendment of 11.

Section 15 of the principal Act is amended in section 15 of No.

subsection (1) - 4 of 1995.

(a) by deleting the words act without undue delay appearing in paragraph (a) and substituting therefor the words conduct the proceedings properly and with reasonable dispatch; (b) by inserting the words in writing immediately after the word agree appearing in paragraph (c).

Amendment of 12.

Section 16 of the principal Act is amended - section 16 of No.

4 of 1995.

(a) in subsection (2) - www.kenyalaw.org (i) by deleting the words presiding arbitrator appearing in paragraph (a) and substituting therefor the words the Chairman of the arbitral tribunal; (ii) by deleting the words presiding arbitrator appearing in paragraph (b) and substituting therefor the Chairman of the arbitral - 9 - The Arbitration (Amendment) Act, 2009 tribunal; (b) by inserting the following new subsection immediately after subsection (3) - (4) The Authority of an arbitrator is personal and ceases on his death.

Insertion of 13.

The principal Act is amended by inserting, the sections 16A and following new sections immediately after section 16 - 16B in No.4 of 1995.

Withdrawal of 16A.

(1) Unless otherwise agreed by arbitrator.

the parties, an arbitrator who withdraws from his office may, if prior notice has been given to the parties, apply to the High Court - (a) to grant him relief from any liability thereby incurred by him; and (b) to make such order as the court thinks fit with respect to the his entitlement (if any) to fees or expenses or the repayment of any fees or expenses already paid.

(2) Where the High Court is satisfied www.kenyalaw.org that, in the circumstances, it was reasonable for the arbitrator to resign, it may grant relief on such terms as it may think fit.

(3) The decision of the High Court shall be final and shall not be subject to appeal.

Immunity of 16B.

(1) An arbitrator shall not be arbitrator.

liable for anything done or omitted to be done in good faith in the discharge or purported discharge of his functions as an - 10 - The Arbitration (Amendment) Act, 2009 arbitrator.

(2) Subsection (1) shall extend to apply to a servant or agent of an arbitrator in respect of the discharge or purported discharge by such a servant or agent, with due authority and in good faith, of the functions of the arbitrator.

(3) Nothing in this section affects any liability incurred by an arbitrator by reason of his resignation or withdrawal.

Amendment of 14.

Section 17 of the principal Act is amended - section 17 of No.

4 of 1995.

(a) in subsection (1), by deleting the words independent agreement appearing in paragraph (a) and substituting therefor the words agreement independent; (b) in subsection (8), by deleting all the words appearing immediately after the words High Court and substituting therefor the following words the parties may commence, continue and conclude arbitral proceedings, but no award in such proceedings shall take www.kenyalaw.org effect until the application is decided, and such award shall be void if the application is successful.

Amendment of 15.

Section 18 of the principal Act is amended by section 18 of No.

deleting subsection (1) and by substituting therefor 4 of 1995.

the following new subsection - (1) Unless the parties otherwise agree, an arbitral tribunal may, on the application of a party - - 11 - The Arbitration (Amendment) Act, 2009 (a) order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute, with or without an ancillary order requiring the provision of appropriate security in connection with such a measure; or (b) order any party to provide security in respect of any claim or any amount in dispute; or (c) order a claimant to provide security for costs.

Amendment of 16.

Section 19 of the principal Act is amended by section 19 of deleting the words be given full opportunity of No.

4 of 1995.

presenting his case and substituting therefor the words and the expression subject to section 20, be given a fair and reasonable opportunity to present his case.

Insertion of 17.

The principal Act is amended by inserting the section 19A in following new section immediately after section 19 - No.4 of 1995.

General duty 19A.

The parties to arbitration shall www.kenyalaw.org of parties.

do all things necessary for the proper and expeditious conduct of the arbitral proceedings.

Amendment of 18.

Section 20 of the principal Act is amended - section 20 of No.

4 of 1995.

(a) by deleting subsection (2) and substituting therefor the following new subsection - (2) Failing an agreement under subsection (1), the arbitral tribunal may conduct the arbitration in the manner it considers appropriate, having regard to - 12 - The Arbitration (Amendment) Act, 2009 the desirability of avoiding unnecessary delay or expense while at the same time affording the parties a fair and reasonable opportunity to present their cases.

(b) in subsection (3), by adding the following words immediately after the word evidence appearing at the end thereof and to determine at what point an argument or submission in respect of any matter has been fairly and adequately put or made; (c) by inserting a new subsection immediately after subsection (4) as follows - (5) The tribunal may direct that a party or witness shall be examined on oath or affirmation and may for that purpose administer or take the necessary oath or affirmation.

Amendment of 19.

Section 21 of the principal Act is amended - section 21 of No.

4 of 1995.

(a) in subsection (1), by deleting the words place of arbitration and substituting therefor the words juridical seat of www.kenyalaw.org arbitration and the location of any hearing or meeting; (b) in subsection (3), by deleting the word place and substituting therefor the word location.

Amendment of 20.

Section 26 of the principal Act is amended - section 26 of No.

4 of 1995.

(a) in paragraph (c), by deleting the words any party which and substituting therefor the words a party; - 13 - The Arbitration (Amendment) Act, 2009 (b) by inserting the following new paragraphs immediately after paragraph (d) - (e) a party fails to comply with any order or direction of the tribunal, the tribunal may make a peremptory order to the same effect, prescribing a time for compliance with the order; (f) a party fails to comply with a peremptory order of the tribunal to provide security for costs, the tribunal may make an award dismissing his claim; (g) a party fails to comply with any other peremptory order, the tribunal may - (i) direct that the party in default shall not be entitled to rely on any allegation or material that was the subject-matter of the order; (ii)draw such adverse inferences from the non- compliance as the circumstances justify; www.kenyalaw.org (iii) proceed to an award on the basis of such materials as have been properly provided to it; (iv) make such order as it thinks fit as to the payment of costs of the arbitration incurred as a result of the non- compliance.

Amendment of 21.

Section 27 of the principal Act is amended - section 27 of No.

- 14 - The Arbitration (Amendment) Act, 2009 4 of 1995.

(a) in subsection (2), by deleting the word so appearing immediately after the words if a party; (b) in subsection (3), by deleting the word was appearing before the words provided to him and substituting therefor the word were.

Amendment of 22.

Section 30 of the principal Act is amended in section 30 of No.

subsection (2), by deleting the words a presiding 4 of 1995.

arbitrator and substituting therefor the words the Chairman.

Amendment of 23.

Section 32 of the principal Act is amended - section 32 of No.

4 of 1995.

(a) in subsection (2), by deleting the words is stated and substituting therefor the words are stated; (b) in subsection (4), by deleting the word place wherever it occurs and substituting therefor the words juridical seat; (c) in subsection (5) by inserting the words subject to section 32 B immediately www.kenyalaw.org before the word after; (d) by deleting subsection (6) and substituting therefor the following new subsection - (6)An arbitral tribunal may, at any time, make a partial award by which some, but not all, of the issues between the parties are determined, and the provisions of this Act applying to awards of an arbitral tribunal shall, except in so far as a contrary intention appears, apply in respect of such partial - 15 - The Arbitration (Amendment) Act, 2009 award.

Insertion of 24.

The principal Act is amended by inserting the sections 32A, following new sections immediately after section 32 - 32B, and 32C in No.4 of 1995.

Effect of 32A.

Except as otherwise agreed by the award.

parties, an arbitral award is final and binding upon the parties to it, and no recourse is available against the award otherwise than in the manner provided by this Act.

Costs 32B.

(1) Unless otherwise agreed by the and parties, the costs and expenses of an expenses.

arbitration, being the legal and other expenses of the parties, the fees and expenses of the arbitral tribunal and any other expenses related to the arbitration, shall be as determined and apportioned by the arbitral tribunal in its award under this section, or any additional award under section 34 (5).

(2) Unless otherwise agreed by the parties, in the absence of an award or www.kenyalaw.org additional award determining and apportioning the costs and expenses of the arbitration, each party shall be responsible for the legal and other expenses of that party and for an equal share of the fees and expenses of the arbitral tribunal and any other expenses relating to the arbitration.

(3) The arbitral tribunal may withhold the delivery of an award to the parties until full payment of the fees and expenses of the arbitral tribunal is received.

- 16 - The Arbitration (Amendment) Act, 2009 (4) If the arbitral tribunal has, under subsection (3), withheld the delivery of an award, a party to the arbitration may, upon notice to the other party and to the arbitral tribunal, and after payment into court of the fees and expenses demanded by the arbitral tribunal, apply to the High Court for an order directing the manner in which the fees and expenses properly payable to the arbitral tribunal shall be determined.

(5) The fees and expenses found to be properly payable pursuant to such an order shall be paid out of the moneys paid into court and the balance of those moneys, if any, shall be refunded to the applicant.

(6) The decision of the High Court on an application under subsection (4) shall be final and not subject to appeal.

(7) The provisions of subsections (3) to (6) have effect notwithstanding any agreement to the contrary made between the parties.

www.kenyalaw.org Interest.

32C.

Unless otherwise agreed by the parties, to the extent that the rules of law applicable to the substance of the dispute permit, an arbitral award may include provision for the payment of simple or compound interest calculated from such date, at such rate and with such rests as may be specified in the award.

Amendment of 25.

Section 34 of the principal Act is amended - section 34 of No.

4 of 1995.

(a) in subsection (1) - - 17 - The Arbitration (Amendment) Act, 2009 (i) by deleting the words may request and substituting therefor the words may, upon notice in writing to the other party, request; (ii) by deleting paragraph (b) and substituting therefor the following new paragraph - (b) a party may, upon notice in writing to the other party, request the arbitral tribunal to clarify or remove any ambiguity concerning specific point or part of the arbitral award.

(b) by deleting subsection (2) and substituting therefor the following subsection - (2) If the tribunal considers a request made under subsection (1) to be justified it shall, after giving the other party 14 days to comment, make the correction or furnish the clarification within 30 days whether the comments have been received or not, and the correction or clarification shall be deemed to be part of the award.

www.kenyalaw.org (c) in subsection (4), by inserting the words upon notice in writing to the other party immediately after the words a party may.

Amendment of 26.

Section 35 of the principal Act is amended - section 35 of No.

4 of 1995.

(a) in subsection (2) - (i) by deleting the words law of Kenya appearing in subparagraph (a)(ii) and substituting therefor the words laws of Kenya; - 18 - The Arbitration (Amendment) Act, 2009 (ii) by inserting the following new paragraph immediately after paragraph (v) - (vi) the making of the award was induced or affected by fraud, bribery, undue influence or corruption; (b) in subsection (3), by deleting the expression section 36 and substituting therefor the expression section 34; (c) in subsection (4), by inserting the word if immediately after the words appropriate and.

Replacement of 27.

The principal Act is amended by repealing section 36 of No.

section 36 and replacing it with the following new 4 of 1995.

section - Recognition 36.

(1) A domestic arbitral award, shall be and recognized as binding and, upon application enforcement www.kenyalaw.org of awards.

in writing to the High Court, shall be enforced subject to this section and section 37.

(2) An international arbitration award shall be recognised as binding and enforced in accordance to the provisions of the New York Convention or any other convention to which Kenya is signatory and relating to arbitral awards.

- 19 - The Arbitration (Amendment) Act, 2009 (3) Unless the High Court otherwise orders, the party relying on an arbitral award or applying for its enforcement must furnish- (a) the original arbitral award or a duly certified copy of it; and (b) the original arbitration agreement or a duly certified copy of it.

(4) If the arbitral award or arbitration agreement is not made in the English language, the party shall furnish a duly certified translation of it into the English language.

(5) In this section, the expression New York Convention means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations General Assembly in New York on th the 10 June, 1958, and acceded to by Kenya th on the 10 February, 1989, with a reciprocity reservation.

Amendment of 28.

Section 37(1) of the principal Act is amended in section 37 of No.

paragraph (a) by inserting the following new 4 of 1995.

www.kenyalaw.org subparagraph immediately after paragraph (vi) - (vii) the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence.

Amendment of 29.

Section 39 of the principal Act is amended - section 39 of No.

4 of 1995.

(a) in subsection (2), by deleting the words may, as appropriate appearing immediately after the words the High Court and substituting therefor the - 20 - The Arbitration (Amendment) Act, 2009 word shall; (b) in subsection (3) - (i) by deleting the word and appearing at the end of paragraph (a) and substituting therefor the words prior to the delivery of the arbitral award; or; (ii) by deleting paragraph (b) and substituting therefor the following new paragraph - (b) the Court of Appeal, being of the opinion that a point of law of general importance is involved the determination of which will substantially affect the rights of one or more of the parties, grants leave to appeal, and on such appeal the Court of Appeal may exercise any of the www.kenyalaw.org powers which the High Court could have exercised under subsection (2).

Transitional 30.

The amendments made to the principal Act by provision.

this Act shall not affect any arbitral proceedings commenced before the commencement of this Act, but shall have effect in relation to any such proceedings afterward commenced, whether the arbitration agreement that gave rise to them was entered into before or after the commencement of this Act.

- 21 - The Arbitration (Amendment) Act, 2009 www.kenyalaw.org - 22 -.