Mudavadi pushes for Nairobi to be hub of commercial dispute resolution

Prime Cabinet Secretary Musalia Mudavadi has called for a change of the Nairobi Centre for International Arbitration to make it a world-class dispute resolution that appeals to the local, regional and international business community.

Speaking during the 19th Ambassadors Conference Gala Dinner, Mudavadi said there was an opportunity to make Kenya a dispute resolution hub if the law were made to make it an independent body.

Mudavadi said that, worldwide, the business community was reluctant to resolve disputes arising from the composition of Alternative Dispute Resolution (ADR) to make it attractive and to make Kenya a hub for dispute resolution.

“The business community is primarily concerned with getting a business solution to a commercial dispute, rather than being dragged into municipal courts with lengthy and protracted procedures. Today, the bulk of international commercial disputes are increasingly being resolved by arbitration in the various international arbitration centres,” said Mudavadi.

The PCS said Kenya was recognised as the commercial and business hub of Eastern Africa, with a robust investment and trade environment on the African continent.

“In this unique and singular position, Kenya requires a world-class dispute resolution service that appeals to both the regional and international business and commercial community. There are tremendous opportunities and great benefits that an international arbitration service brings to a country,” said Mudavadi.

He said that Kenya had an opportunity to make Kenya a hub for alternative dispute resolution, but to achieve this, the country must change the law to make it attractive for any commercial arbitration to consider our ADR.

Mudavadi said ADR needs to be promoted in Kenya and globally, positioning it as vital for reducing court backlogs, easing prison overcrowding, and promoting a business-friendly environment through arbitration.

He championed revamping arbitration practices to build trust among international investors and position Nairobi as a leading African arbitration hub.

“The Judiciary, however, needs to relook at the law on ADR. We want to make Kenya a hub, but let us resolve its formation,” said Mudavadi.

Mudavadi said the government was keen to strengthen legal frameworks to support ADR and improve the efficiency of resolving trade and investment disputes.

The PCS said that the function of an international commercial arbitration centre is to provide efficient international dispute resolution services that support and serve international business seeking to resolve commercial disputes.

“Leading arbitration institutions are primarily, private entities established to provide international commercial arbitration services. Their management structures focus on efficiency and business orientation, with minimal governmental involvement in the management and operations of the institution,” he said.

The institutions, he said, have put in place arbitration rules of procedure that meet international best practices to guide the conduct of arbitration proceedings held under the auspices of the institution.

As a country, therefore, Kenya has, in place, a modern law that has domesticated the fundamental international arbitration, however he raised concerns on the Arbitration Act, 1995 (Cap. 49).

Mudavadi said that the members of the ADR, mainly coming from the government side, made the organisation look more like a parastatal, thus making it unattractive to any businesspeople who wanted to pursue such an option.

Chief Justice Martha Koome agreed with the PCS that the composition of the ADR was not attractive.

She said she would suggest legislation to make the team responsive and adept at handling local and international commercial disputes.

“I have heard, and I acknowledge the merits of making the composition independent and not almost everyone coming from the government. I will recommend the legislation to the law so that we can move forward,” said Koome.

The Chief Justice said she was amazed to meet Kenyan top legal minds practicing in the South Korean ADR, including the former Attorney General Prof. Githu Mungai.

“If indeed we have Kenyans practising there, why don’t we have the ADR in Nairobi, where we can attract everyone across the world. We don’t need to have people going to foreign cities to solve their matters; they can do it here in Nairobi,” said Justice Koome.