b ADR Lecture- 18th March CAT on 26th March at 6 p.m.

-Thursday Principles of Natural Justice in Relation to ADR proceedings It is a fundamental requirement of justice in deciding a dispute between two or more parties, Firstly that the arbitrator or the tribunal must be and must be s een to be disinterested and unbiased. Secondly, every party must be given a fair opportunity to prese nt his case and to answer the case of his opponent. The first principle is embodied in section 13 of the Arbitration A ct which provides that when a person is approached for appoint ment as an arbitrator he must disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or indepen dence. That duty on the part of the arbitrator is a continuing dut y right from the time that he is approached through to the time he accepts appointment, conducts the reference, and renders hi s award. So under section 13(2) the arbitrator is obliged through the arbi tral proceedings to disclose without delay such circumstances. The arbitrator must be on his guard with respect to connections with a party or connections in the subject matter of dispute or c onnections with the nature of the dispute. And the test that the arbitrator must always bear in mind is whether a reasonable per son not being a party to the dispute would think that the connec tion was close enough to cause the arbitrator to be biased. So there are three elements there of connections.--party --subject matter

--nature of the dispute The arbitrator has an obligation to conduct the reference impart ially in both actions and words and to decide each issue put bef ore him fairly and impartially. And whatever the provocation, ea ch decision must be made impartially. There is therefore an over riding duty to work fairly and dispassionately even if one of the parties, for example, provokes the arbitrator by making the wild est of accusations. The arbitrator should also take pains not to associate with one p arty of his representative more than with the other. He should, f or example, never have lunch with one party during a hearing or in the course of the reference in the absence of the other party. He should also try to avoid even casual conversation with one si de in the absence of the other. For his confidence in his own pro bity may not be shared by a party who does not know him. Each party must also be given a fair opportunity to present their case and to know the opposing case and to meet the opposing c ase. Under section 19 of the Arbitration Act, for example, parties mu st be treated with equality and each party given full opportunity of presenting their case. Section 21 is perhaps also relevant in this regard in that if parti es have not agreed on the place of arbitration, the tribunal must determine the place having regard to the circumstances of the c ase and the convenience of the parties. The arbitrator is doing a balancing act. Under Section 21 the parties have the right to agree on the ven ue, failing which section 21 (b) intervenes. Section 24 provides for exchange of statements of claim and sta tements of defence: To inform parties of the case they are to me et: natural justice. Section 25 provides that the arbitral tribunal must hold oral hea rings unless the parties have agreed that no hearing shall be hel d. For the same reason an arbitrator should not receive oral evi dence or arguments from one party in the absence of the other. Neither should the arbitrator receive any document from one pa rty without ensuring that the other party receives a copy. It is i mportant to make it clear to the parties that all correspondence with the arbitrator must be copied to the other party. This shoul d be in the agenda of the preliminary meeting.

The arbitrator, if there is to be a hearing, must fix hearing dates so far as practicable convenient to both parties. Other provisions in the Arbitration Act that you may want to loo k at: Section 27, where a tribunal appoints an expert if it has the pow er to do so. The report must be available to the parties and they must have the opportunity to examine that expert and to presen t their own expert on the subject. Section 29: obligation on the part of the tribunal to decide the d ispute in accordance with the rules agreed upon by the parties What happens when an arbitrator uses his knowledge and exper ience to determine the matter? Should the parties have right to influence the judges mind? That is where the arbitrator is empo wered by the parties to use his own expertise, he should grant t he parties an opportunity to comment on his views and so on. Section 35 deals with the setting aside of an award. If a party w as not afforded an opportunity to be heard, notice not served, a ppointment of arbitrator, etc. Under section 26 an arbitrator has powers to decide on a hearin g date unless otherwise agreed by the parties. Any party that fa ils to attend a hearing, the hearing could go on, etc. In summary, the principles of natural justice must be observed i n the arbitral process. Go through the Arbitration Act in your own time and see what s ections have a bearing on natural justice. ALTERNATIVE DISPUTE RESOLUTION LECTURE 2 FEBRUARY 2004 When drafting the substantive contract it is important to point o ut that in case of any dispute the matter is to go before arbitrati on. This can be part of the substantive contract or just a clause. Invariably almost all insurance companies include arbitration cla uses in all their policies. THE ARBITRATION AGREEMENT

Arbitration is a process in which a third party neutral or an odd numbered panel of neutral persons render a decision on the mer its of a case. The statute that deals with arbitration in Kenya is the Arbitratio n Act (1995) Act No. 4 of 1995 Cap 49 Laws of Kenya. This statu te commenced on the 2nd of January 1996 by virtue of Legal Noti ce No. 394 of 1995. This date is important because prior to this statute we had an Arbitration Act that was based on different le gal principles for instance under the repealed or previous Acts, t he courts had a wider role in Arbitration than they do under the current Act. Parties to Arbitration under the previous statute h ad recourse to the High Court more than they do under the curr ent Act. For instance under the old Arbitration Act a party could challenge an award of an arbitrator on the grounds that the arbi trator has misbehaved in the course of arbitration. Misbehaviou r on the part of an arbitrator suggested that it was a ground on which the award could be challenged which is not the case unde r the current law. Some cases may suggest that one might have recourse to the High Court when it is not so. Under the current Act the situations where one can go to court to complain after a rbitration are limited. The current Arbitration Act is based on a Model of the United Na tions Commission on International Trade Law (UNCITAL) which w as adopted in 1985 with a view to encouraging arbitration and p rocesses that would have global recognition. United Nations ca me up with a model of a statute that has been adopted by many countries. The essence of the Act is that it provides for very bro ad party autonomy in fashioning the Arbitration process. This m eans that parties who enter into an arbitration agreement are to a large extent at liberty to determine the process of adjudicatio n of the disputes that will go to arbitration. Autonomy for exam ple in deciding who the arbitrator will be, the venue of arbitratio n, the substantive law that will apply to that agreement or arbit ration. Once a dispute has arisen, they also have autonomy wit h regards to how the arbitral process itself will be conducted. T o a large extent, the Arbitration Act provides the default positio n in very many respects so that if parties in an arbitration agree ment have not provided the number of arbitrators, then the stat ute will tell you that the default position is the presumption that the parties intended for one arbitrator. WHAT IS AN ARBITRATION AGREEMENT?

According to Section 3 of the Arbitration Act Arbitration Agreem ent means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise bet ween them in respect of a defined legal relationship whether co ntractual or not. A distinction is made or liberty is given to the parties to choose that only certain types of disputes will go to a rbitration and not all of the disputes that arise will go to arbitra tion. An example is where you have a tenancy agreement betwe en a tenant and a landlord which provides that there will be revi ew of rent after every two years of the term under the tenancy and the tenancy agreement may proceed to say that at the time of review the margin by which rent will be increased will be by a greement of the two parties. It may proceed to state that if ther e is a dispute as to what the margin should be, then the matter should be referred to arbitration. Effectively what those two parties have done is to select certain type disputes that would arise under that agreement and decide that they are the only two that would go to arbitration if they ar ose. Parties are at liberty to select certain disputes and agree t hat those should go to arbitration while others may remain for d etermination by the courts. The other important distinction made by the statutory definition is that parties can anticipate disputes and parties can also decid e to go into arbitration after disputes have already arisen i.e. an agreement to arbitrate may be made in respect of existing dispu tes between the parties or in respect of disputes that may occur in the future and in each of these cases that agreement to refer either existing or future disputes to arbitration is an arbitration agreement. Traditionally an agreement to refer future disputes to arbitratio n was referred to as an Arbitration Agreement whilst an agreem ent made after disputes have arisen was traditionally referred t o as a submission or a submission agreement. But in light of th e statutory definition that distinction between submission and a greement is no longer relevant. Section 2 - except as otherwise provided in a particular case the provisions of the Act shall apply to both domestic and internatio nal arbitration. WHAT ARE THE FORMALITIES/ WHAT ARE THE FORMAL REQUIREMENTS This is dealt with under Section 4 of the Arbitration Act.

The formal requirements under the Arbitration Act are set out u nder Section 4 of the Arbitration Act and the first thing the stat ute provides for is that an arbitration agreement may be in the f orm of an arbitration clause in a contract or it may be in the for m of a separate agreement all together. So for example in a con tract between the government and a building road contractor, t he contract will set out what the works are and the instructions from the engineer and one of the clauses in that agreement may simply be the clause that says any or all the disputes arising fro m this contract shall be referred to Arbitration. That is one opti on. The other option is where the contract is silent on whether it sh ould bind the parties to arbitration. An Arbitration Agreement shall be in writing, it is a requirement that it be not oral. Section 4 (3) an arbitration agreement is in writing if it contains a written document by the parties; an exchange of letters; telex, telegram or other means of teleco mmunications which provide a record of the agreement; an exchange of statements of claim and defence in which the ex istence of the agreement to arbitrate is alleged by one party an d not denied by the other party. Section 4 (4) the reference in a contract to a document con taining an arbitration clause shall constitute an arbitration agre ement if the record is in writing and the reference is to make th at arbitration clause part of the contract. This is talking of incor poration of an arbitration agreement by reference. CONSTITUENTS OF A PROPERLY WORDED ARBITRATION CLAUSE In practice not both parties to an agreement are as keen to have the dispute resolved. The disputants are usually at different po sitions. So if you have a clause that facilitates a bbbbbbbbbbbb bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb bbbbbbbbbbbbbbbbbprotraction of the process then the Respon dent will capitalise on it since he is not interested in having the matter resolved. It is thus advisable that a basic arbitration agr eement or clause should provide some essential details. For if a n arbitration clause simply provides that disputes to be settled by arbitration questions would arise as to how the arbitrator is t o be appointed, what qualifications the arbitrator should have, where the arbitration should take place, how many arbitrators, what substantive law is to apply to that contract, what procedur al law is to apply to that contract etc.

Is there a distinction between the law governing the contract an d the law governing the arbitration? There is a distinction between the law governing the contract an d the law governing arbitration. For instance if a contract stipul ates that in case of a dispute the substantive law to apply will b e Kenyan law, then any other arbitration law will apply. It is im portant if one is to avoid conflict in basic matters that the arbitr ation clause should be as clear in these matters as possible. WHAT ARE THE ESSENTIAL INGREDIENTS 1. RS PROVISION WITH REGARD TO THE NUMBER OF ARBITRATO

Section 11 of the Arbitration Act provides that the parties are fr ee to determine the number of Arbitrators and section 11(2) faili ng a determination by the parties on the number of arbitrators, the number shall be one. The nature of the dispute should dicta te how many arbitrators to go for. 2. METHOD OF APPOINTMENT

A lot of time can be spent and wasted between parties on this q uestion once a dispute has arisen. The default position is that if the parties do not agree on the method of appointing then they can apply to the court to appoint Section 12 of the Arbitration A ct. There is a drawback in doing that, firstly time is of the essen ce and you will lose so much time like a few months. Then there is the question of the costs to be paid to court over the process. So if the procedure for appointment had already been provided f or in the arbitration clause one can avoid the delay and the cost Parties will choose an institution if they are not agreeable on a n arbitrator, they can approach another institution i.e. the chart ered institute of arbitrators to appoint. They can for example d ecide if there is a dispute as to method the chairman of LSK bec omes the appointing authority. 3. CHOICE OF THE RULES TO APPLY IF ANY

The Arbitrator has power to control the preparations for hearing. He is obliged to exercise that power and to do so by reference to demanding standards. Also an arbitrator is involved in each c ase during its interlocutory stages. If he makes proper use of hi s powers he can and should shape the preparations so as to eli minate unnecessary costs. In particular he can direct the advoc ates, the experts and even the parties to get to grips with identi fying what the issues really are and how best to present them. He can decide a preliminary issue quickly; or it may be enough if he merely indicates his provisional views. In this way both the i ssues themselves and the costs that have to be incurred in prep aring for them, can be greatly reduced. 4. TIME FRAMES

Time frames are matters that should be spelt out in the Arbitrati on Agreement for the following: the time limit for the giving of the notice of claim the time limit for giving of notice to appoint an arbitrator; and the time limit for the commencement of arbitration. Time frames give certainty in any industry and a time frame wit hin which the parties should agree is essential. 5. REMUNERATION:

Parties may decide how the arbitration costs are to be shared, whether the loser in the dispute bears the cost or both parties p rovide for the costs. Section 12 of the Arbitration Act provides that parties are free t o agree on procedure of appointment and failing such agreemen t where parties have provided for 3 arbitrators the presumption is that each party shall appoint one arbitrator each and the thir d one is to be appointed by those two. There is a common misconception that in situations where you h ave 3 and each party appoints one that the arbitrators are the a gents of the respective parties, they are not, arbitrators must al ways remain impartial. In arbitrations where provision is made for one arbitrator then t he parties should agree on the person to be appointed failing w hich an application is then to be made to the High Court. Section 12 of the Arbitration Act - to read No person shall be precluded by reason of that persons nationa lity from acting as an arbitrator, unless otherwise agreed by the parties. 8

(2) The parties The Chartered Institute of Arbitrators has published rules and it is open to parties to an arbitration agreement to provide in that agreement that for instance the Arbitration Rules of the Charter ed Institute of Arbitrators shall apply. For instance these rules will provide for how parties to an arbitration agreement can app roach the institute to appoint an arbitrator where the parties ar e unable to agree. They also provide the procedure to be adopt ed by the arbitrator upon appointment. To a large extent the ru les in arbitration are influenced by the rules of pleadings in a civ il process e.g. the Chartered Institute of Arbitrators Rules provi de that the claimant should make a statement for a claim withi n 21 days, 21 days to file defence and 14 days to file a reply.. It also provides for what is to happen if one of the parties does not comply. WHAT HAPPENS WHERE PARTIES HAVE AGREED THAT DISPUTES WILL GO TO ARBITRATION BUT ONE PARTY RENEGES AND FILES A SUIT IN COURT? The party is in breach of the agreement in so long as they have

ALTERNATIVE DISPUTE RESOLUTIONS 4.9.03

Lecture 1

Alternative Dispute Resolution - Alternative to what? Litigation or Dispute resolution mechanisms that are alternative to litigation Arbitration Negotiation - meet and sit down and try and arrive at a conflict r esolution without help of a third party Mediation - facilitated negotiation there is a neutral third party who assists the parties in dispute resolution. Other Books of reference Getting to Yes by Roger Fisher and William Ury Getting past NO - Negotiating with difficult people by William Ur y You can negotiate Anything by Herb Cohen Mediation Why People fight and how to help them to stop by Mic hael Williams

Alternative Dispute Resolution refers to processes for resolving disputes other than litigation. The distinction between the vari ous types of dispute resolution processes, they can be arranged from the perspective of the level of control the disputants have over the process the more formal they get the less control the p arties have. Dispute Prevention Negotiation Mediation; Hybrid between mediation and arbitration (Medarb) Hybrid between arbitration and mediation (Arbmed) Arbitration Litigation or the trial itself. There are other mechanisms or processes that exist; there are many trials and early neutral evaluations. As we examine these processes the following features emerge a. The more formal the process, the higher the level of involv ement by a third party in the process. Parties do not have a say in the process itself but they are bound by rules of procedure w hich they have to follow so compared to other processes like arb itration the element of party participation in arbitration is highe r because the parties are at liberty to decide which rules of proc edure to apply or the venue etc. b. As you approach the more formal processes like litigation, the process is increasingly formal from the dress that the partie s wear, i.e. wigs an gowns in litigation or judicial process, mann er of address, references to magistrates and Judges as my lord a nd your honour, the requirement as to pleadings and the format that they have to meet etc, c. The more formal the process, the more the danger or likeli hood of potentially damaging the relationship between the disp utants. The decision that is reached after the result of a trial is an imposed decision and carries consequences for not complyin g with it. Secondly the parties have not voluntarily submitted t o that process. For example in a matrimonial dispute where a hu sband is forced to pay alimony to the wife, that kind of decision cannot endear the parties to each other, the more formal it is th e likelihood of destroying the relationships. d. Arguably the more the formal the processes the more expe nsive it is, arguably because arbitration can be expensive as wel l, getting the disputes through the process is very expensive in terms of court fees, lawyers fees etc.

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The standard practice in arbitration is that the arbitrator is paid on an hourly basis that is not to say that the arbitrator is not at liberty to value his services with that value of the dispute, he is at liberty to adopt a method of charging that best suits him. e. The process of litigation tends to take longer. From comm encement to the stage of the dispute resolution the amount of ti me taken is a lot longer. Rules of procedure in li tigation are rigid and they tend to make a case to last longer th an it should. There is also the backlog and the volume of work that the judiciary have to go through, its a lot. f. Finally the more formal the structure is, the higher the foc us on the disputants rights as opposed to their interests. The d istinction between interests and rights is that interests of partie s are usually in having a continuous relationship and when parti es litigate their interests are destroyed by virtue of enforcing th eir legal rights. Dispute Prevention One mechanism for preventing disputes is by providing dispute resolution training. Training that provides people with skills to prevent unnecessary disputes. If you take a typical case of a hu sband and wife, how would training come in to prevent disputes arising? Training maybe in better communication skills. Second method of dispute resolution is partnering. This require s disputants involved in a project to meet to discuss how to reso lve any conflict which may arise. If for instance there is a buildi ng contract that involves, employer, QS engineer building contr actor etc. these people can meet at their own set of this project and decide that should conflict arise we will deal with it in this f ashion that is partnering. They can agree for instance that the decision of the architect will be the final decision. The other form of dispute prevention is systems design which in volves determining in advance what process would be used for h andling conflicts which arise. NEGOTIATION Negotiation is any form of communication between two or more people for the purpose of arriving at a mutually agreeable soluti on. In a negotiation the disputants may represent themselves o r they may be represented by agents and whatever the case, wh ether they are represented or not represented, they have contro l over the negotiation process. When attempts are made to sett le matters out of court involves negotiations 11

There are two extreme styles of negotiating. there is what is ref erred to as the competitive bargaining style and there is the cooperative bargaining style or hard bargaining and soft negotiati ng. The competitive negotiators are so concerned, with the substan tive results, that they advocate extreme positions. They create false issues, they mislead the other negotiator, they even bluff t o gain advantage. It is rare that they make concessions and if t hey do, they do so arguably, they may even intimidate the other negotiator. Cooperative negotiators are more interested in developing a rel ationship based on trust and cooperation they are therefore mor e prepared to make concessions on substantive issues in order t o preserve that relationship. Is negotiation a dispute resolution mechanism that can be appli ed in all kinds of situations? Are there disputes that will not be necessarily resolved by negotiations? There are certain dispute s that negotiations would not perhaps assist. In as far as hard bargaining is concerned, the perceived advanta ges would be The hard negotiator is likely to get a better substantive especial ly in circumstances where such a negotiator is negotiating with a co-operative negotiator; If a negotiator is a professional negotiator i.e. one who is called upon to negotiate on behalf of parties, he is likely to develop a r eputation which will be useful in future negotiations; The competitive negotiator is not open to easy manipulation; A negotiator of that style is also likely to take initiative and to t ake a lead role in negotiations; Disadvantages The solution that comes out of such hard negotiations is likely t o be a fragile one and therefore not long lasting so the other pa rty is likely to come out of the negotiations feeling like maybe t hey gave too much and this may create ill feelings; The competitive or hard negotiator may by reason of his approa ch fail to take an opportunity to reach a good deal because of th e attitude that he must have his way and a good deal may be pu t on the table which he does not look at as he does not want to compromise.bbb It may harm the relationship; it may also create misunderstandi ng by the fact that the interests of the party maybe compromise d. 12

The competitive bargainer or negotiator is unlikely to be aligned to the concerns of the other party because the emphasis is no c ompromise. SOFT NEGOTIATING STYLE ADVANTAGES Sustaining relationships or good long term relationships; A deal or compromise will be reached when there is a deal to be made; From the perspective of a professional negotiator, it is more like ly that people will want to deal with you. A compromise is likely to be reached sooner and to work quickly either to agree or disagree. DISADVANTAGES A good deal may be lost or the opportunity for a good deal may be lost because the negotiator by the end of the process may fe el that they give more than they should have; There is the possibility of manipulation by the other party. The negotiator may be taken advantage of by the other party; The party may want to get out of the deal later so he may feel s orry and try to get out of the deal. In the case of a professional negotiator, a cooperative negotiato r may not get a very good name e.g. compromises too much whi ch may not be good for business. In each of these two styles and based on the mentioned disadva ntages, the negotiators are more focussed on their respective p ositions than with their interests and to try and reap the advant ages of both the cooperative and competitive bargaining style, Roger Fisher and William Ury came up with a project at Harvard Law School and developed what they referred to as principled n egotiations. Principled negotiations require negotiators to focus on the inter ests of each of the disputants with the goal of creating satisfact ory options for resolution which may be assessed by objective cr iteria. Principled negotiation seeks to take advantage of both cooperat ive and competitive styles and avoid the pitfalls or the disadvan tages of the two styles. MEDIATION:

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Mediation is a non-binding process in which an impartial third party facilitates the negotiations process between the disputants and it is that impartial third party who is called the mediator. The mediator has no decision making power, he has no decision making power and the parties maintain the control over the substantive outcome of the mediation. However, the mediator with the assistance of the parties will co ntrol the process and he will with the consent of the parties set and enforce the ground rules for the mediation process. If in th e dispute the two examples that we have looked at we now brin g in a third party as the mediator, he will probably get an overvi ew from both parties as to what their contentions are. He will t hen agree with the parties that each party will be given an oppo rtunity to state their case, they could also agree that when one party is stating their case, the other party shall not interrupt. T he role of the mediator is not to impose his own solutions and n ot to even suggest solutions but that the solutions should be su ggested and agreed upon by the parties themselves. Story telling - the disputants communicate with the mediator to tell their story. The mediator then assures them that he has he ard the story by re stating what each party has told you and lett ing them state whether those are the facts as they have stated t hem. You re narrate the story. You may then ask them to sugg est the way forward and both parties can state how they want t o proceed. Lay down the rules. The mediator should not descend to the arena but should let the disputants decide how to conduct the negotiations. ARBITRATION AND MEDIATION Arbitration is a process in which a third party neutral, or an odd number panel of neutrals render a decision based on the merits of the case. The Hybrid of mediation or the hybrid between med iation and arbitration which is a very rare sort of scenario is tha t the third party neutral commences the process in the role of a mediator and if that does not yield or result in a resolutions the mediation ceases and the mediator assumes or becomes an arbi trator who then makes a binding decision. In the arbitration me diation hybrid (arbmed) the disputants present their respective cases to the third party neutral who prepares or makes a decisio n, he does not however share that decision or release that decis ion to the parties but he keeps it away and then assumes the rol e of a mediator. If a result of the mediation, the parties reach a resolution, he destroys his decision but if the mediation does no t resolve in a resolution then he releases his decision to the part ies. 14

OMBUDSMAN An ombudsman is a person who investigates complaints and att empts to assist the disputants to reach a decision. Usually this i s an independent officer of the government or a public or quasipublic body. An ombudsman can be classified as an alternative dispute resolution. ADR Lecture 8 POWERS OF THE ARBITRATOR REMUNERATION OF AN ARBITRATOR AWARD GROUNDS UPON WHICH THE AWARD CAN BE SET ASIDE. POWERS The principal source of the powers of an arbitral tribunal is the a rbitration agreement itself and therefore the mandate of the tri bunal stems from the agreement of the parties. The arbitration agreement may confer powers on the arbitral tri bunal expressly for instance if the arbitration agreement itself s tipulates expressly that the tribunal or the arbitrator will have p ower to give an interim or provisional relief. If the arbitration a greement provides that the Arbitration Act will apply then the e xtensive powers given under that Act again will be available to t he Arbitrator. The powers are stemming from the Agreement of the parties. T he parties are the ones conferring the powers on the arbitrator t hrough the arbitration agreement i.e. powers to determine proc edure, powers to determine the venue, power to give the award, power to rule on jurisdiction. If the agreement incorporates the rules of an institution for inst ance the arbitration rules of the chartered institute of arbitrator s again the powers that are conferred under those rules would b e available to the tribunal. 22nd April 2004

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Under Clause 16 of Chartered Institute of Arbitrators Rules, the tribunal has jurisdiction to determine the extent, validity or exis tence of an agreement which is essentially an adoption of Sectio n 17 of the Arbitration Act. There is power under that clause to allow an amendment of the arbitration agreement itself. If for i nstance the arbitration agreement has an error, tribunal has po wer to rectify such error. Under the same clause there is power to decide on questions of law. there are powers to decide on qu estion of dishonesty, fraud or bad faith arising in the dispute, th ere is power to order parties to furnish further details of claims, there is power to make an order for conservation of property, p ower to order parties to make interim payments towards the cos t of arbitration. Power to order payment of interest etc. To a large extent the rules summarises the powers found in the Arbitration Act but the overriding principle is that the tribunal h as those powers conferred on it by the parties. REMUNERATION OF THE ARBITRATOR THE EXPRESS CONTRACT FOR REMUNERATION It is highly desirable in an ad hoc arbitration that an arbitrator who regards remuneration as important should make an express agreement in writing with the parties as to his remuneration. Id eally, this should be done before he accepts the appointment. B ut in many cases he knows very little about either the sums in is sue or the magnitude of the task involved. So in practice he oft en accepts the appointment and leaves the subject of fees to be dealt with at or shortly after the preliminary meeting. In doing so, he takes a risk. Having accepted the appointment he is not entitled to insist on specific arrangements and can only ask for t hem. If one of the parties is difficult, then his only option is to g o on without more or to resign forthwith. Of course in that even t, he may have to repay any fees that he has managed to secure. REMUNERATION OF THE ARBITRATOR The fees of arbitration should be proportionate to the substance of the case. The parties, tribunals or institutions should look for and encoura ge the use of fee structures that encourage speed and efficiency. EXPRESS AGREEMENT

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In many cases, the fee or basis of remuneration is expressly agr eed before or immediately upon appointment so that the questi on of what right of remuneration is implied does not arise. Many arbitrators now include for interim payments in their terms, whi ch is likely to bring unhappiness on the part of the parties about the costs of the tribunal to the surface at an early bstage. PAYMENT THROUGH AN INSTITUTION In arbitrations administered by some institutions, the tribunals fees are channelled through the institution, thus to a considerab le degree insulating the tribunal from the concerns of the partie s about the tribunal costs. And the institutions are usually safe from much in the way of complaint, since they will have establis hed some basis for paying the tribunal in advance. THE LIEN The practice of requiring payment before issue of the award ma y reduce the enthusiasm of a party for a dispute about fees, whi ch are anyway likely to be one of the smaller bills that the arbitr ation will generate. While there is a mechanism for dealing with this problem, it involves a trip to court and thus yet further fees. The 1996 Act has now addressed Under S. 28, the express contr actual position (which is the most usual arrangement) is preserv ed. Absent of an agreement, the parties are jointly and severall y liable for such reasonable fees and expenses (if any) as are a ppropriate in the circumstances. The concept of such reasonabl e fees and expenses as are appropriate in the circumstances is picked up when it comes to payment of the costs of the arbitrati on. Section 64 defines the costs(for purposes of payment as bet ween the parties) as including only such reasonable fees and ex penses of the arbitrators as are appropriate in the circumstance s. Thus what the arbitrators can recover from the parties, in a s ituation where there was no express agreement between the pa rties and the arbitrators, should match exactly what is recovera ble between the parties when the final word on costs is known. Where there is an agreement between the arbitrators and the p arties, the inevitability of a match is lost. If the difference prov es to be substantial, with the contractual rates at the high end, an arbitrator may find difficulty in obtaining payment, if he has not been paid in advance. Section 32 (5) there is power on the part of the tribunal to order as to who becomes responsible for costs. THE AWARD 17

Section 29 (3) to Section 34 (3) Order XX a judgment is required to acquire a particular format which is not the case with an award. Order XX is to effect that t he court needs to set some facts, the decisions and reasons for decisions Section 32 of the Arbitration Act which stipulates the formal req uirements of an award provides that the award should be in writ ing, it must be signed by the arbitrator or arbitrators and it mus t be signed by all arbitrators in the event that there is more tha n one arbitrator, and if it is not signed by all of them, reasons m ust be stated for the omitted signatures. There is a requiremen t under this Section that the reasons for the award should be st ated unless the parties have agreed that a reasoned award will not be required. Or if an award is as a result of a settlement on agreed terms under Section 31. To meet the requirements as to reasons for the award, it is suffi cient for the arbitrator to say that for example on issue Number A I find in favour of the claimant for the reasons that the eviden ce of Claimant A was more credible. The other formal requirement is that the award should have a d ate and the place where the award is made. The date is import ant as there is a time limit within which any party can apply to h ave a suit set aside Section 35. The place is also significance where there is an application for setting aside. An award under this section may be set aside if the Arbitration Agreement is not valid under the law to which the parties have subjected it. Secti on 35 (II) a. The award must make it clear that due process was observed so there would perhaps be a recital to that award that will recite th e agreement to arbitrate, it would state or refer to the documen t under which the tribunal was constituted, it would allude to th e fact whether a hearing was conducted, and if no hearing was c onducted whether it was by the agreement of the parties. It wo uld perhaps briefly state what the facts are, the issues in conten tion, the tribunals findings on those issues with the reasons an d a summary of the award itself. SECTION 35 - SETTING ASIDE AN AWARD - RECOURSE TO COURT AGAINST AN AWARD When a party states that they were not heard -

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Section 26 - if a claimant fails to submit his statement of claim, the tribunal should terminate the proceedings. If the Responde nt fails to submit his statement of defence the tribunal shall con tinue with the proceedings, but there is nothing like a default ju dgment. And if a party fails to appear after hearing or to produ ce evidence the tribunal may continue with the proceedings and make an award on the evidence that is before it. It very well co uld be that a party has been given an opportunity to present the ir case but they have not presented their evidence and an award has been given. What must be established is that the party or all the parties wer e afforded the opportunity to present their case, they have noti ce of the hearing etc. John Adero v. Ulinzi Sacco H.C.C. 1879 of 1999 Milimani Commer cial Court In this case Justice Onyango Otieno as he then was allowed an a pplication under Section 35 of the Arbitration Act on grounds th at there was no evidence of Notice having been given in a matte r which had proceeded before an Arbitrator ex-parte. In taking t hat view, Justice Otieno said one thing seems to be clear to me and that is that no evidence exists to confirm that the Applicant was aware of the Hearing Date. The matter was heard ex parte and a decision made without the Applicants input. It is now set tled law that no one can be condemned unheard, the Applicant i n this case was indeed condemned unheard and this was not pro per. He concludes by saying that the award is for that reason se t aside and the matter remitted back to the same tribunal for a f ull hearing. This ruling raises the question that if the High Court finds under Section 35 that an award should be set aside, what follows? It i nvalidates the agreement of the parties. If the award deals with a matter which was not in contemplation by not falling within the terms of the reference to arbitration. HFCK V. Gitutho Associates & Another Civil App. 76 of 2000 In this case the Plaintiff applied to set aside an award under S. 35 (2) (a) (ii) on the basis that jurisdiction was exceeded, but on the facts of this case the Judge Justice Mbaluto dismissed the Ap plication of the Plaintiffs action and said

19

that having carefully considered the evidence and the law appli cable to the matter, I cannot see any justification for claiming th at the award dealt with a dispute not contemplated by or not fal ling within the terms of the reference to arbitration nor for that matter can I see any basis for finding that the decisions of the A rbitrator are on matters beyond the scope of the reference. He proceeded to dismiss the application. Express Kenya Limited v. Peter Titus Kanyago Civil App. 963 0f 2 002 This was an application under Section 35 seeking to set aside an award in which the arbitral tribunal had granted the respondent an award of 5.4 million as a consultancy fee in terms of a consul tancy services agreement. The dispute in that respect did not s tem or was not covered under the Arbitration Clause but the Arb itrator Found that the matters that the parties had agreed to ref er to Arbitration under the Arbitration Agreement were inextric ably linked to the matter stemming from the consultancy servi ces agreement and proceeded to make the award of the 5.4 Milli on. Whilst the arbitration agreement was contained in a share h olders agreement which then Justice Ringera found to have bee n outside the scope of the arbitration agreement. Ringera J. as he was then known arrived at the conclusion that t he arbitrator had exceeded or gone outside the scope of the ref erence and set aside part of the award. The High Court may set aside an award if the High Court finds t hat the award is in conflict with public policy of Kenya Christ for All Nations v. Appollo Insurance Civil Case 499 of 1999 An application under Section 35 to set aside an arbitral award o n grounds that the award was in conflict with public policy. Justice Ringera after reciting Section 35 (2) (b) went on to say a s follows As far as I know the above provision has not received judicial i nterpretation in our courts. He then goes to India and is guided by an Indian decision in the case of Renu Saghar Power Co. v. G eneral Electric where the Indian Supreme Court identified 3 patt erns of the operation of the doctrine of public policy. In the fiel d of enforcement and recognition of foreign arbitral awards. Th ose 3 patterns he says are That an award will not be given effect if it is contrary to the fun damental policy of the Indian Law i.e. if the award involves a vio lation of the Indian Laws on non-compliance with a courts order; If the enforcement of the award would be contrary to the intere sts of India and 20

If the award would be contrary to justice and morality. He adopts these principles and then says I am persuaded by the logic of the Supreme Court of India and I take the view that although public policy is a most broad conce pt incapable of precise definition or that as the common law jud ges used to say, it is an unruly horse. An award could be set asi de under Section 35 (2) (b) of the Arbitration Act as being incon sistent with public policy of Kenya if it was shown that it was eit her Inconsistent with the constitution or other laws of Kenya wheth er written or unwritten; Inimical to the national interests of Kenya, Contrary to Justice or morality. In the latter category he gives an example of awards induced by corruption or fraud or awards founded on contracts contrary to public morals. In the second category of national interests he gives examples o f national defence and security, economic prosperity of Kenya a nd good diplomatic relations with friendly nations. But he is qui ck to observe that that list is not inexhaustible. Incapacity - ie. If the party entered into an agreement when the y were insane, minors. Composition - if the composition of the tribunal or the procedur e did not accord with the agrs eement. Where for instance par ties have agreed that there will be a hearing and the tribunal de parts from that agreement. Where arbitration agreement provides for 3 arbitrators and the reference is determined by one. Time Frame Section 35 (3) Time frame within which the application must be made - the aw ard may not be made 3 months have elapsed from the date on w hich the party making that application had received the arbitral award or if a request had been made4 under section 36 from the date on which that request had been disposed of by the arbitral award. Justice Onyango Otieno in the case of APV Hall Equitorial Ltd V. Mistri Jagva Pagbat Civil App 39 1999 Milimani

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In this matter an application to set aside an award under Sectio n 35 was made after the expiry of the 3 months and the advocat e for the applicant sought to argue or argued that the provision s of Section 35 (3) conferred a discretion on the court to admit a n application to set aside. Apparently the language used was th at an application for setting aside an award may not and the jud ge ruled that the mere use of the word may in that section cann ot be taken to mean that a party to arbitration proceedings can ignore that provision as to time limit with impunity. In his view it is still a provision that must be complied with and on complia nce with it is clearly at the detriment of the party failing to com ply and he then upheld the Respondents submissions that the a pplication was incompetent having been made after 3 months. Section 36b Section 37 - essentially repeats the provisions of section 35 to a very large extent as it sets out the grounds for refusal to recogn ise an award being similar to the grounds under Section 35.

ADR Lecture 7 CONSTITUTING THE TRIBUNAL MISCELLANEOUS MATTERS OF JURISDICTION

15th April 04

If parties to an arbitration have failed to agree, where they appl y to the court and the court appoints an arbitrator, and one part y alleges that the arbitrator is not impartial is this a matter of ju risdiction? If one is appointed an arbitrator and one party says that part of the matters agreed to be covered by the arbitration agreement is outside the scope of arbitration agreement is that a jurisdiction question? Case law It is important that one is clear in terms of how they want to str ucture an arbitration agreement. Barlany Car Hire Services Ltd v. Corporate Insurance

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In this case an application was made under Section 6 of the Arbi tration Act to Stay Proceedings. There was also a point taken o n a preliminary basis that no claim could be made under an arbit ration agreement in that case because a claim had not been rais ed within the time limit of 12 months. The relevant arbitration c lause or arbitration agreement was to the effect that all differen ces under the policy should be referred to the decision of an arb itrator to be appointed by the parties. And if they cannot agree on a single arbitrator then each party was required to appoint a n arbitrator within one calendar month of the request to do so a nd the two arbitrators would then appoint an umpire who would sit with the arbitrators and preside at their meetings. The claus e also provided that if the company disclaimed liability the claim should then be made or commenced within 12 months from the date of disclaimer. In this case the insured vehicle was stolen a claim was made on the insurance company which repudiated liability on the 9th Aug ust 1994. There was an attempt to appoint an arbitrator in April of 1995 which did not materialise. An application was then mad e to the Court under Section 12 of the Arbitration Act for the Co urt to appoint an Arbitrator. That application was dismissed by the Court as being premature and finally, no arbitrator was ever appointed and the insured then decided to go to court to try and pursue its claim there and that was well after the 12 months ha d lapsed. The court essentially upheld the argument that parties under an arbitration agreement are at liberty to contract a shorter limitat ion period than that which is prescribed under the limitation of actions Act. The other important point that the court makes is t hat the Plaintiff had not complied with the Agreement as set out in the arbitration clause as to how or as to the manner of appoin ting an arbitrator. According to the High Court, the Arbitration Agreement provided 4 steps for the appointment or for the cons titution of the Tribunal. Once the insurance company repudiated liability the parties wer e then to agree or attempt to agree on a single arbitrator; If a single arbitrator was not agreed upon, either party could giv e a 30 days notice to the other side for the appointment of own arbitrator and to require the other party to appoint its own arbit rator; If the parties appoint their respective arbitrators then those t wo arbitrators are required to appoint the umpire. If either party fails to appoint then an application can then be m ade under Section 12 to the Court to appoint. 23

The important points that emerge from this decision are that the drafting of the arbitration clause is a very important task once parties have agreed on a process of appointment includin g time limits the courts will honour that agreement and a party may easily protract the process of commencing arbitrati on and again an advocate can avoid some of these consequence s in provided a well considered properly worded arbitration agre ement. Section 11 of the Arbitration Act stipulates that parties are free to determine the number of arbitrators. Usually an arbitration a greement will provide for either a sole arbitrator or two arbitrat ors with an umpire as has been demonstrated by the clause in B arlany or three arbitrators. But theoretically speaking, Section 11 permits parties to have any number of persons as arbitrators which means one can appoint even numbers. Important when drafting the arbitration agreement one is alive t o most of these issues so that one does not provide for two arbi trators and one can run into serious problems. An even number is undesirable. Section 11 (2) provides that where the Arbitration Agreement d oes not stipulate the number of arbitrators, the presumption is t hat one arbitrator is intended and indeed in practice the provisi on for a single arbitrator is the norm. By the time the parties are seeking arbitration, there are alread y differences and therefore it is difficult for them to sit down an d agree on one arbitrator where the clause provides for one arbi trator. It would be helpful to provide that the parties go to the Chartered Institute of Arbitrators in case of dispute. One of the problems that is involved or arises in constituting th e tribunal in a sole arbitrator scenario is (i) After the dispute has arisen, the task of agreeing on an ar bitrator becomes difficult because in the atmosphere of differen ce the parties are hardly in a position to agree on many things; this is a difficulty. (ii) Section 12 then says that if the parties fail to agree they make an application to court and when this happens the court w ill disregard the proposed arbitrators and even if the proposed a rbitrators were experts in that certain field, the court will decid e and name other arbitrators.

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(iii) Where a dispute has arisen and your client asks you to pro pose names for the persons to put forward as likely arbitrators, how is one to do this? It is safer to approach the chartered inst itute for them to assume that responsibility lest you name an ar bitrator and the client loses and continues to blame you for your choice of arbitrator. Firstly the parties may not have the reserv oir of information with regard to who should be nominated as su itable arbitrators. An institution may be better placed to do tha t and secondly the parties advisers are usually reluctant to sug gest names. What procedure would one employ to come up wit h one name? you could agree to pick lots, elimination method with a criteria i.e. must be an architect, Q.S etc. Section 12 (3) permits you to agree on a procedure. All these disputes can be avoided by substantially suggesting a name in advance as by nominating the arbitrator in advance e.g. should disputes arise they should referred to arbitration by Mr. Onyango. Problems with two or more arbitrators 1. The cost, where an arbitration agreement stipulates two or more arbitrators, it is a costly arrangement. The difficulties in d oing this would be, the two arbitrators may not agree on a third, when this happens Section12 (3) kicks in. The advantage is that the party who one party nominates does not require consultatio n. Another problem would be that constituting a 3 panel tribuna l is a time consuming exercise. When it comes to charging, ther e are problems, how do you justify paying more to one arbitrato r for a certain job to the parties who are paying. There are how ever advantages, if you have a dispute that cuts across industri es i.e. you have an engineer, lawyer, architect, then you are wel l equipped with the expertise from all the fields. When it comes to the final decision if all arbitrators cannot agree, then there is a problem. But Section 30 provides for a majority decision. Wh en it comes to writing the award, there are still problems in ter ms of logistics, if the arbitrators live in different cities or town, how do you get 3 people together to expeditiously deliver the a ward. All these go back to the initial step of when one is drawin g the original agreement and all these matters have to be consi dered. There is a distinction between a tribunal of 2 arbitrators and an umpire and a tribunal of 3 arbitrators. The umpire usually come s in to break ties between the two arbitrators and in the case of 3 arbitrators they are all substantive in the sense that they all h ave an input.

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Assuming that grounds have arisen to challenge an arbitrator a nd one of the parties wants to challenge or to ask for the remov al of that arbitrator. How is this effected? The current arbitrati on Act in an effort to limit bbbthe numbers of avenues that one can use to challenge an arbitrator. Section 13 imposes the arbitrator once approached to declare in terest. S 13(3) an arbitrator may be challenged only if . Or do es not possess qualification agreed to Section 4 a party may challenge an arbitrator appointed by him only for reasons that he becomes aware after the appointme nt. Case law on bias The Elissar Case (1984) 2 Lloyds LR 84 What test do you apply when dealing with a question of whether an arbitrator is biased or not biased. That is suggested by Justi ce Ackner in Elissar case that in answering that question the t est should be Do there exist grounds from which a reasonable person would f eel that there was a real likelihood that the arbitrator could not or would not fairly determine the issue on the basis of the evide nce and arguments to be adduced before him. It seems to me t hat that is the satisfactory way of expressing the objective test. To suggest that the mere lack of confidence which no reasonabl e person would in the relevant circumstances experience should be a basis for removal of an arbitrator seems to be quite unacce ptable. The test here is one of a reasonable person and the existence of a real likelihood of bias. Mere lack of confidence is not sufficient. The Bremer v. Ets Soules [1985] 1 Lloyds LR 84 This case was based on a provision where an arbitrator could be removed on grounds of misconduct. Mustill J. discussed what he considered to be 3 material situations Actual Bias; Implied Bias; Conduct that would have justified removal of an arbitrator.

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Section 13 and 14 of the Arbitration Act are relevant provisions i n this regard. Section 14 specifically deals with the challenge p rocedure where the impartiality of independence of an arbitrato r arises. Section 14 (1) says that parties are free to agree on pr ocedure and 14(2) says that if they dont agree on procedure a party intending to challenge an arbitrator send a written statem ent of reasons for the challenge within 15 days after becoming a ware of the composition of the Tribunal and if the arbitrator wh o has been challenged does not withdraw, then the Tribunal is r equired to make a decision on that challenge. In practical terms there is a situation where a dispute has arisen and the parties do not agree on choice or arbitrator and the clau se says that the institution will appoint and goes ahead and app oints and then you realise that the arbitrator has interest in the matter which he does not declare. This is what Section 14 is tal king about. You write to the arbitrator requesting him to withdraw to the off ice for the following reasons. Section 14 (3) provides for the procedure if the challenge is not successful. The competent authority has been gazetted under L egal Notice No. 64 of 2001. in other words if you ask the tribun al to make a decision on the challenge and they say they dont c onsider that there are grounds for them to remove themselves, then one can go to court. Mustill says there are 3 material situations in which the High Co urt has power to remove an arbitrator under Section 23 of the A rbitration Act 1950. (It is important to note that this decision w as based on that Section) Mustill says that Where it is proved that the Arbitrator suffers from what may be called actual bias, then he may be removed; and what the com plaining party needs to satisfy the court is that the arbitrator is predisposed to favour one party or conversely to act unfavourab ly towards him for reasons peculiar to that party. He then says that prove of actual bias entails prove that the arbitrator is in fa ct incapable of approaching the issues with the impartiality requ ired. Where the High Court may remove an arbitrator is where the rel ationship between the arbitrator and the parties or between the arbitrator and the subject matter of the dispute is such as to cre ate an evident risk that the arbitrator has been or will in future be incapable of acting impartially. In this case prove of actual b ias is not necessary. The concern here is the manifest risk of pa rtiality. This is what is referred to as imputed bias. 27

Conduct which it is doubtful that cabbbbbbbbbbbbbbbbbbbbbbb bbbbbbbn be raised under our section 13 is where the conduct o f the arbitrator is through lack of talent, experience, diligence o r incapability of conducting the reference in a manner in which t he parties are entitled to expect. Section 15 of the Act shall terminate if the parties agree to term inate his mandate. These are not grounds you can challenge un der Section 13. DEGREE OF CARE TO BE EXERCISED IN DRAWIN THE ARBITRATIO N AGREEMENT How do you move the court under Section 14 (3)? Look it up. Is it open for a party to submit to an arbitrator and say that you are not constituted? These grounds can be raised and an object ion brought under Section 17. Doctrine of Kompetenz Kompetenz and the doctrine of Separabil ity. These are both covered under Section 17 (1) Where the law says that we can separate the agreement from th e main contract that sets out the rights and obligations. Even t hough one may argue that substantive contract is void the tribu nal is competent to arbitrate in that decision 17. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purposeAn arbitration clause which forms part of a contract shall be tre ated as an independent agreement of the other terms of the con tract; and A decision by the arbitral tribunal that the contract is null and v oid shall not itself invalidate the arbitration clause. Where one of the parties says that the agreement is void for wh atever reason and argues that the agreemebbbbbbbbbbbbbbbb bnt is void, if the agreement is taken up and the arbitration agr eement is a clause within that agreement, is the arbitration itsel f void? The arbitrator has power to rule on this particular point, so wha t happens if the arbitrator rules that the agreement is void. s. 17 is a reaction to the logic of common law. 28

Christopher Brown Limited v. Genossenschaft

ADR Lecture 5 arch 11, 2004 SECTION 6 -STAY OF LEGAL PROCEEDINGS

The concern of Section 6 is that if you have two parties who hav e entered into an agreement that contains an arbitration agree ment clause and one party ignores the arbitration clause and fil es in court, what is open to the other party if the party would lik e the dispute to be referred to arbitration. This is what Section 6 is dealing with. It is a provision that enables the courts to force parties to go to Arbitration where that mode of dispute resolution is the mode o f choice. Section 6. (1) A court which before proceedings are brou ght in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than the time when that part y enters appearance or files any pleadings or takes any other st ep in the proceedings, stay the proceedings and refer the partie s to arbitration unless it finds--That the existence of an Arbitration Clause or Arbitration Agree ment in a contract is not an impediment to resolving disputes in court if neither party objects which means that parties can still i gnore the arbitration clause and file the proceedings in court. H owever, if one of the parties to the Arbitration Agreement goes to court but the other party wishes to enforce the Arbitration Ag reement, then it is for that latter party to seek an order from co urt under Section 6 of the Arbitration Act 1995 staying the court proceedings and if the order is granted it leaves the initiator of the court proceedings with no option but to follow the provision s of the Arbitration Agreement if he wishes the dispute to be res olved. Under Section 6 a party wishing to enforce the Arbitratio n Agreement in a situation where the other party has initiated c ourt proceedings must apply to court not later than the time wh en that party enters appearance or files any pleadings or takes any other step in the proceedings. That is to say that the applic ation for stay under S. 6 must be made at the correct time. The correct time

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Section 6 (1) it appears that once summons to appear are serve d on the defendant, if the defendant wishes to enforce the agre ement, he must not later than the time he enters appearance fil e for stay. Section 6 appears to suggest that this option is open but we shall look at case law that says if you file a defence you have lost your right. Another judge says that even after you file your defence you can still go to arbitration. We shall find which view is correct. Once the application for stay under Section 6 is made at the cor rect time, whatever the correct time might be, the courts obliga tion under Section 6 is clear. It must stay the court proceedings and refer the parties to Arbitration. There are however 2 provis os The court shall not stay the proceedings if the Arbitration Agree ment is null and void; if for instance it is inconsistent with the la w i.e. if it is illegal. The Arbitration Agreement is inoperative or incapable of being p erformed; The second part of Section 6 is to the effect that the court shall not stay proceedings if there is not in fact a dispute between th e parties with regard to the matters that are agreed to be referr ed to arbitration. Where an Arbitration Agreement says that an award of an arbitr ator shall be a condition precedent to the right of any party to t hat agreement to seek court relief, meaning parties are not at li berty to go to court whatsoever unless they firstly go to arbitrat ion It would read as follows or have a provision in these terms Where by this clause any dispute or difference is to be referred to arbitration the making of an award shall be a condition prece dent to any right of action by either party against the other. This provision is generally referred to as the Scott v. Avery clau se following a very old English case which recognised and gave effect to such a provision in an arbitration agreement. In other words the English courts have for a long time recognised that w here parties contract to refer disputes to arbitration effect will be given by the courts to such a contractual provision. The effect of Section 6 is really to say that whether or not an ar bitration clause contains such a stipulation, the court will give it effect.

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How do you move the court for a stay of proceedings as per Sect ion 6 of the Arbitration Act. Rule 2 of the Arbitration Rules 1997 being the rules made by the Chief Justice under Section 40 of the Arbitration Act provides th at an Application under Section 6 shall be made by summons in the Suit. In some instances judges have said that if you move th e court using a wrong procedure, you may lose your right to reli ef so that where the rules say you should move the court by su mmons and you do it by notice of motion, you may be thrown ou t of court. But one might add that there are conflicting decision s on that point.

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI CIVIL CASE NO. 210 OF 2004 X Y . PLAINTIFF . DEFENDANT

SUMMONS (Under Section 6 of the Arbitration Act and Rule 2 of the Arbitration Rules 1997) LET ALL PARTIES concerned attend before the Honourable Judge (court) on of 2004 at 9.00 oclock in the for enoon or soon thereafter as the Advocates may be heard on the Hearing of an Application by counsel for the Defendant for order s that:that the proceedings in this suit be stayed That the dispute between the parties be referred to arbitration; That the costs of this Application be borne by the Plaintiff. Which Application is based on the grounds:(a) That the parties under an Arbitration Agreement to refer t he matters in controversy in this suit to Arbitration; (b) That the dispute has not been referred to Arbitration; The Application is supported by the Affidavit of Y sworn herein. 31

Dated at Nairobi this 2004.

day of

Kairu & McCourt Advocates ADVOCATES FOR THE DEFENDANT Drawn & Filed by: If any party served does not appear at the time and place Order L imposes that the summons should have a notice at the b ottom Prepare an Affidavit to accompany summons CASE LAW ON SECTION 6 TM AM Construction Group Africa v. The Attorney General Civil C ase 236 of 2001 at the High Court Milimani Commercial Courts Decision by Honourable Justice Mbaluto In this case, the Plaintiff instituted suit against the Attorney Ge neral on the 21st February of 2001. The Attorney General entere d appearance on the 15th March 2001. On the 25th April 2001 the Attorney General then made an Application under Section 6 of t he Arbitration Act and Rules 2 of the Arbitration Rules 1997 see king orders that the suit be stayed and that the Dispute be refer red to Arbitration. The Application for stay under Section 6 of t he Arbitration Act having therefore been filed on the 25th April 2 001 was 41 days after the Memorandum of Appearance. The Plaintiff opposed the Application for stay on grounds that it was out of time under Section 6; That there was in fact no dispute within the meaning of Section 6 (1) (b) to refer the matter to Arbitration. Justice Mbaluto upheld the two grounds. On the question of time Justice Mbaluto cited a passage from th e Court of Appeal decision of Corporate Insurance Company v. L oise Wanjiru Wachira Civil Appeal NO. 151 of 1995. the decision was based on an arbitration clause before the enactment of the current Act 32

In the present case, the Appellant did more than just ent er an appearance. It delivered a defence which is of course a p leading. The Appellant made no Application for Stay of Proceedi ngs. The Appellant was a party to an Arbitration Agreement wit hin the meaning of Section 6 of the Act. Arbitration Clause in th is case are known as Scott v. Avery Arbitration Clauses named a fter a leading case decided by the House of Lords in 1856 in whi ch their efficacy was considered and have long been accepted a s valid. These clauses do more than provide that disputes shall refer to Arbitration. They also stipulate that the award of an Ar bitration is to be a condition precedent to the enforcement of a ny rights under the Contract so that a party has no cause of acti on in respect of a claim falling within the Arbitration Clause unle ss and until a favourable award has been obtained. In the prese nt case, if the Appellant wished to take the benefit of the clause it was obliged to apply for a Stay after entering appearance and before delivering any pleading. By filing a defence the Appellan t lost its right to rely on the clause. Justice Mbaluto applied that passage to the case in TM and held that the attorney General had lost the right to rely on the Arbitr ation Clause because if the AG was to rely on it, he was obliged to make the application under Section 6 not later than when he entered appearance. In other words if you file a Memorandum o f Appearance today and you do not file for an application for sta y, tomorrow is too late. On the question of whether there was a dispute or not, it had be en argued for the Plaintiff that the Attorney General was in fact making an application under Section 6 of the Arbitration Act as a delaying tactic because it was submitted that there was not in fact a dispute about the claim. Justice Mbaluto cited another passage from the case of London and Northwestern Joint Railway v. JH Bilington Limited (1899) A. C. 79 Lord Halsbury is cited as having said the following A condition precedent to the invocation of the Arbitrator on whatever grounds is that a difference between the parties sh ould have arisen and I think that must mean a difference of opin ion before the action is launched either by Plaint or writ. Any c ontention that the parties could when they are sued for the pric e of the services raise for the first time the question whether or not the charges were reasonable, and that therefore they have a right to go to an arbitrator seems to me to be absolutely unte nable. If there is no dispute, the court will not stay the proceedings. 33

HYPOTHETICAL CASE Definition of arbitration agreement entitles parties to select dis putes that will go to arbitration and others that will not. Refer t o Section 3 of the Arbitration Act A and B are business partners. In the year 2000 A and B entere d into an agreement where A would lease a fleet of vehicles to B. A had the obligation to maintain and repair those vehicles at B s cost. During the lease arrangement, A would introduce custo mers to B for which a commission was payable. In the year 200 2 the parties entered into a formal agreement under which B ag reed to purchase outright from A the fleet of vehicles. That agr eement provided for payment of the purchase price by instalme nts. It also provided that should B default in the repayment of t hose instalments, A could repossess the vehicles. A claims that B defaulted in those instalments and as a result exercised his ri ght to repossess the vehicles and indeed repossessed them. B o n his part claims that the purchase price has been paid, there ha s been no default and A has no business repossessing the vehicl es. The purchase agreement of 2002 provides for Arbitration an d so B has invoked the Arbitration Clause, has referred the matt er to Arbitration seeking two orders 1. A declaration that repossession by A is wrongful; 2. An order directing A to give possession of those vehicles t o B. before the Arbitrator, A has counter-claimed against B for maint enance costs incurred by him under the lease arrangement that pre-dated 2002. when the matter comes up for hearing before t he Arbitrator, B takes an objection to jurisdiction with respect t o As counterclaim and argues that As claim on maintenance ch arges does not arise from, neither is it related to the purchase a greement of 2002. The Arbitration Clause in the 2002 purchase agreement provides any disputes or differences arising from or relating to this agree ment shall be referred to Arbitration. The question is does the Arbitrator have power, jurisdiction with respect to the counterclaim? The Arbitrator has said he has no power to rule on the matters o f a counter claim. Tropical Food Products International v. The PTA Bank H.C.C. NO. 1534 OF 2001 MILIMANI H C NAIROBI \MWELA J. 34

The judge interprets Section 6 with regard to timing in a very lib eral fashion. In his view Section 6 does not impose the time limit. the court would wish to comment on Section 6 of the Arbi tration Act. He then reproduces Section 6 and sums his position as follows accordingly, this court is not of the view that a party is li mited as to when it can apply to go to arbitration in a matter su bject of an arbitration agreement. He hinges that view on Secti on 6 (2) Notwithstanding that an application has been brought u nder (1) and the matter is pending before the court arbitral proc eedings may be commenced or continued and an arbitral award may be made. That this provision says that 6 (2) that it does not matter that an Application has been brought under Section 6 (1) and a suit is pending before the court. Arbitral proceedings can still b e brought and an award made. Under Rule 2 you make application by summons but Mbaluto J. where an objection was taken as to form, in another case where similar objection was said that application did not conform with rule 2 he ruled that it could be overruled.

Arbitration Lecture 4 Arbitration Clauses (Samples)

4th March 2004

Any dispute arising between the parties and all claims or matte rs in such disputes not otherwise mutually settled between the parties shall be referred to arbitration by single arbitrator to be appointed by agreement between the parties or in default of suc h agreement within 14 days of the notification of such dispute b y either party to the other upon application by either party to th e chairman for the time being of the Kenya Branch of the Charte red Institute of Arbitrators. Every award made under this claus e shall be subject to and in accordance with the provisions of th e arbitration Act 1995 or other Act or Acts for the time being in f orce in Kenya in relation to arbitration. To the extent permissibl e by law the determination of the arbitrator shall be final and bi nding upon the parties.

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Arbitration proceedings shall take place in Nairobi Kenya. The l aw which is to apply to the contract and under which the contra ct is construed is Kenyan law. The law governing the procedure and administration of any arbitration instituted pursuant to this clause is Kenyan law. Section 12 of the Arbitration Act moves in to prescribe what hap pens if this clause is not adhered to Section 12. (1) No person shall be precluded by reason of that persons nationality from acting as an arbitrator, unless otherwi se agreed by the parties. The parties are free to agree on a procedure of appointing the a rbitrator or arbitrators and failing such agreement(a) in an arbitration with three arbitrators, each party shall ap point one arbitrator and the two arbitrators so appointed shall a ppoint the third arbitrator; (b) in an arbitration with one arbitrator, the parties shall agre e on the person to be appointed. If(c) in the case of three arbitrators, a party fails to appoint the arbitrator within 30 days of receipt of a request to do so from th e other party or if the two arbitrators fail to agree on the third a rbitrator within 30 days of their appointment; or (d) In case of one arbitrator, the parties fail to agree on the ar bitrator; The appointment shall be made, upon application of a party, by the High Court. This clause does not say who will appoint the umpire if there is disagreement. Chief Justice published rules under Legal Notice 58 to the effect that the application will be by way of Originating Summons and will be served upon the parties within 14 days. The above clause makes a distinction between the law of contra ct and the law of governing procedure and arbitration. The subs tantive rights under the contract will be adjudicated based on s ubstantive law of Switzerland while the procedural law is that of Kenya. In this situation of an employee in Kenya with employer in Switzerland, it means that one may utilise the Arbitration Act in matters of appointing the Arbitrator but in terms of the subst antive law the Swiss law shall apply.

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Following arbitration sample is plucked out of an Insurance Polic y all differences arising out of this policy shall be referred to th e decision of an arbitrator to be appointed in writing by the part ies in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators one to be appointed in writing by each of the parties within one calendar month after having b een required in writing so to do by either of the parties or in the case the arbitrators do not agree of an umpire appointed in writ ing by the arbitrators before entering upon the reference. The umpire shall sit with the arbitrators and preside at their meetin gs and the making of an award shall be a condition precedent to any right of action against the company. If the company shall d isclaim liability to the insured, for any claim hereunder and such claim shall not within 12 calendar months from the date of such disclaimer have been referred to arbitration under the Provision s herein then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable. The following clause is extracted from an oil operators licence c ompany between an oil company and a petrol station owner. if any dispute or difference shall arise between the parties hereto touching on their respective rights, duties or liabilities under thi s agreement, the same shall be referred for determination to an d shall be determined by an advocate of the High Court of Kenya, to be agreed upon by the parties within 30 days of sending of a written notice to the other by the party seeking the determinati on of the matter in dispute. In default of agreement such advoc ate shall be nominated by the chairman for the time being of th e Law Society of Kenya. If either party is not satisfied with the decision of such advocate, an objection must be filed within 10 days of the date of the decision and copies thereof forwarded to both the Advocate and the other party and within a further 30 d ays from the date of the objection the objecting party shall file proceedings in the High Court of Kenya. Provided that if the obj ection is not made or proceedings are not filed as aforesaid with in the stipulated period the decision of the Advocate shall be fin al and binding on both parties.

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One of the problems with this clause is with the language becau se firstly is the advocate who is appointed under this clause to d etermine the claim as an arbitrator? The other question is, if th at advocate is to determine the dispute as an arbitrator under t he arbitration act, what type of objections can either of the part y take as against the advocates determination? That question i s to be considered in the context of Section 35, 36, 37 and 39 of the Arbitration Act. Under the Arbitration Act there are limited g rounds under which you can challenge an arbitration agreement this is an illustration of how not to draft an arbitration clause be cause it will raise many problems. The language is important i.e the first line of the clause, is it possible that there will be other types of disputes that could arise under the agreement that are not resolvable by arbitration. You want finality in the dispute re solution process and you do not want the loser to go on challeng ing the decision. An example of a clause that combines arbitration with other alte rnative dispute resolution processes such as negotiation as a m eans of settling failing which it provides for mediation and failin g which it provides for arbitration. If any dispute or difference shall arise between the parties to this agreement from or in con nection with this agreement or its performance construction, or interpretation the parties shall endeavour to resolve it by agree ment through negotiations conducted in good faith. If they are unable to agree the issues shall in the first instance be dealt wit h by mediation with a mediator to be chosen jointly by them. Bo th parties reserve all their rights in the event that no agreed res olution shall be reached in mediation. If the dispute has not bee n resolved by mediation within dash days of initiation thereof or such extended period as the parties may agree the dispute shall be referred to Arbitration by a single arbitrator in accordance wi th the provisions of the Arbitration Act 1995 or any amendments thereto whose decision in relation to such dispute or difference shall be final and binding on the parties.

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The use of language or phrases is important from the perspectiv e of covering the types of disputes that you want referred. Expr ession or words like arising out of or words like claims or diff erences or disputes or words used in connection with or in rel ation to or in respect of or with regard to may pose problems o f interpretation with regard to the qbuestion of the scope of the matters that parties have agreed to refer. It is a danger that a person drafting an arbitration agreement should be alive to or s hould guard against. For instance under Section 35 of the Arbit ration Act an arbitral award may be set aside if it deals with a di spute not contemplated by the parties or not falling within the t erms of the reference. It is also important to note that an arbitr ator or an arbitral tribunal has so much power as the parties con fer. In other words the jurisdiction of an Arbitrator or of an arbi tral tribunal is defined in the context of what the arbitration agr eement or the arbitration clause mandates. When a question arises as to whether an arbitrator or an arbitra l tribunal acted within his jurisdiction, that question will in turn hinge on the wording or particular forms of wording that are em ployed in the arbitration agreement. In construing arbitration a greements courts have adopted 3 broad principles The courts will make the prima facie assumption that the partie s intended all disputes relating to a particular transaction to be resolved by the same tribunal. It will be assumed that unless the words of an arbitration clause are clearly intended to limit the arbitrators powers then it will be taken that the parties intended that the arbitrator should ha ve all the powers which will be exercisable by a court. Words of a broad import used in an arbitration clause for examp le words such as in connection with this agreement should be gi ven their natural meaning in the context in which they are found. So if e.g in one case a court has interpreted all disputes arising in relation to in a limiting way, that is not to say that that sam e interpretation should be given wherever those words appear i n other cases. Section 6. (1) A court before which proceedings are brought ADR Lecture 3 4 Rules of the Chartered Institutes of Arbitrators Clause 1 39 26th February 0

Rule 16 - deals with jurisdiction and powers of a tribunal. It stip ulates that by submitting to Arbitration under these rules the pa rties submit themselves to these rules. Is the Agreement that contains the Arbitration Agreement valid? The Arbitral tribunal has powers to determine any question Section 17. Competence of arbitral tribunal

17. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purposeAn arbitration clause which forms part of a contract shall be tre ated as an independent agreement of the other terms of the con tract; and A decision by the arbitral tribunal that the contract is null and v oid shall not itself invalidate the arbitration clause. Where one of the parties says that the agreement is void for wh atever reason and argues that the agreement is void, if the agre ement is taken up and the arbitration agreement is a clause wit hin that agreement, is the arbitration itself void? The arbitrator has power to rule on this particular point, so wha t happens if the arbitrator rules that the agreement is void. There are 3 related principles Doctrine of Kompetenz Kompetenz - tribunal has power to rule o n its own jurisdiction Separability - when the arbitration agreement is part of the cont ract agreement you can sever _ Heyman v. Darwins Limited - thi s case seemed to suggest that what Section 17 is trying to say i s not achievable. Section 7 of the 1996 Act, Unless otherwise agreed by the parties, an arbitration agreem ent which forms or was intended to form part of another agreem ent (whether or not in writing) shall not be regarded as invalid, non-existent or ineffective because that other agreement is inva lid, or did not come into existence or has become ineffective, an d it shall for that purpose be treated as a distinct agreement.

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The arbitration provision is to be treated as wholly distinct from the host contract. Consequently it is unaffected by the fact, if s uch it be, that the host contract is or was invalid, or non-existen t or has, at the time the issue arises, become ineffective. These flaws in the host agreement do not percolate down or otherwise infect the arbitration agreement. The issue is simply whether it can be established that there was an arbitration clause that was in fact part of a host agreement (however flawed) or whether it can be established that such a clause was intended to become part of the host agreement. If the tests are met, there is a prima facie an arbitration agreem ent between the parties. One consequence of this is that, insofa r as proceedings in court were started in apparent breach of thi s agreement, they would be expected to be subject to the mand atory stay provided for in Section 9 and discussed above. Kompetenz Kompetenz The related doctrine of Kompetenz Kompetenz, namely the abilit y of the tribunal to decide upon its own jurisdiction has the effe ct of statutorily conferring on the putative tribunal a limited juri sdiction - namely the jurisdiction to determine whether it, the tr ibunal, has a jurisdiction under the arrangements that the parti es have made. The resultant proceedings are no less an arbitrat ion than they would have been had they arisen under an expres s agreement, whether or not the resultant decision is in favour o f a party determined jurisdiction or against it. The award in whi ch the position is declared binds the parties; it may also make a n order for costs, which can be enforced in the usual way. Accor dingly, the tribunal, the arbitration and the award will be subjec t to the provisions of the Act in the usual way. As a general proposition, this entitlement of the applicant to a s tay would be valid even if the jurisdiction of the arbitrator was c hallenged. This is the result of the introduction into English stat utory law of a form of the doctrine of Kompetenz Kompetenz. S ection 30 of the 1996 Act provides for arbitrators to determine t heir own jurisdiction, while S. 31 makes consequential provision s. They are as follows: Competence of tribunal to rule on its own jurisdiction (1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to(a) whether there is a valid arbitration agreement; (b) whether the tribunal is properly constituted, and (c) what matters have been submitted to arbitration in accord ance with the arbitration agreement.

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(2) Any such ruling may be challenged by any available arbitra l process of appeal or review or in accordance with the provision s of this Part.l The doctrine is a legal fiction essential to the efficient working o f the arbitration process. It was developed in England in a long l ine of cases starting with the landmark decision of the House of Lords in Heyman v. Darwins and it culminated in the decision of the Court of Appeal in Harbour Assurance v. Kansa which for the first time established the principle as now enshrined in Section1 7. Heyman v. Darwins Ltd [1942] AC 356 This case decided that an accepted repudiation or frustration, w hile it might bring the contract to an end in the sense of dischar ging the parties from further performance of their primary oblig ations, did not affect the enforceability of an arbitration clause. The House of Lords arrived at this decision by looking at the pur pose of the rule that accepted repudiation or frustration dischar ges the parties from further obligations and asking whether the arbitration clause should for this purpose be regarded as imposi ng an obligation. In one sense it obviously did. In the context o f the repudiation or frustration rules, however, there was no rea son to treat the obligation to submit to arbitration as discharge d, and such a conclusion would have severely reduced the value of the clause. Harbour Assurance v. Kansa The quotation from the Judgment of Hoffman L.J Mr. Longmores argument is extremely simple. He says t hat the question raised on the pleadings is whether the retroces sion agreement was void ab initio. The arbitration clause forme d part of the retrocession agreement. There the issue must invo lve the validity of the arbitration clause itself.

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Mr. Longmore calls this logic. I call it over-simplification. The flaw in the logic, as it seems to me, lies in the ambiguity of the proposition that the arbitration clause formed part of the r etrocession agreement. In one sense of course it did. It was cla use 12 of a longer document which also dealt with the substanti ve rights and duties of the parties. But parties can express wor ds that two separate agreements are intended. Or the question of whether the document amounts to one agreement or two may have to be answered by reference to the kind of provisions it co ntains. In any case, it is always essential to have regard to the r eason why the question is being asked. There is no single conce pt of forming part which will provide answer in every case. For some purposes a clause may form part of an agreement and for other purposes it may constitute a separate agreement. One m ust in each case consider the terms and purpose of the rule whic h makes it necessary to ask the question. In explaining why he refused to categorise an arbitration clause as a contractual obligation for the purposes of the repudiation o r frustration rules Lord Macmillan said at pp 373-374 I venture to think that not enough attention has been dir ected to the true nature and function of an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses set out the obligations which the parties must undertak e towards each other hinc inde, but the arbitration clause does not impose on one of the parties an obligation in favour of the o ther. It embodies the agreement of both parties that, if any dis pute arises with regard to the obligations which the one party h as undertaken to the other, such dispute shall be settled by a tri bunal of their own constitution. Likewise Lord Wright said at pp 377 an arbitration agreement is collateral to the substantia l stipulations of the contract. It is merely procedural and ancillar y, it is a mode of settling disputes, though the agreement to do so is itself subject to the discretion of the court. All this may be said of every agreement to arbitrate, even though not a separat e bargain, but one incorporated in the general contract. The proposition that at least for some purposes the arbitration c lause may be treated as severable or separable or autonomous has become orthodox doctrine. In the case of Bremer Vulkan Sc hiffbau und Maschinenfabrik v. South India Shipping Corporatio n Ltd [1981] AC 909, 980 Lord Diplock said without further expla nation: The arbitration clause constitutes a self-contained contract coll ateral or ancillary to the shipbuilding agreement itself. 43

Lord Scarman also said that an arbitration clause in a contract was in strict analysis, a separate contract, ancillary to the mai n contract. The other power conferred on the Tribunal is the power to amen d or to allow amendments. The arbitrator may also use his own knowledge to resolve a conflict. The rules of the arbitral institution will set out the provisions in detail and outline the powers of the arbitrator. If one opts to adopt the rules of the chartered institute into an a greement then the arbitration clause should provide the followi ng: That any dispute arising out of or in connection with this contr act shall be referred to and finally resolved by arbitration under the rules of the Chartered Institute of Arbitrators Kenya Branch which rules are deemed to be incorporated by reference into thi s clause. The advantage of that clause is that one avoids setting out in th e arbitration clause or the essentials that need to be incorporat ed. Instead of a lengthy arbitration clause the mere reference t o the Chartered Institute addresses all the essentials that need to be included in the Agreement. Other arbitral institutions that have their rules. The Chartered Institute of Arbitrators is a representative body f or arbitrators in the UK founded as early as 1915. It has branch es throughout the UK and also in countries such as Kenya, India, Cyprus, Malaysia etc. the principal object of the Chartered Instit ute of Arbitrators is to promote and facilitate the determination of disputes by arbitration. Recently, it has expanded that objec t to include Mediation. It also performs other functions namely i t appoints suitably qualified persons to act as arbitrator on requ est. It also maintains and provides upon requests names and C Vs of suitably qualified persons to act as arbitrators or as medi ators. It also sometimes provides facilities for Arbitration Refer ences. The Kenya Branch is just a branch of that body. Other arbitral institutions

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London Court of International Arbitration - previously called the London Court of Arbitration. It is one of the oldest Arbitral Insti tutions in the World and was inaugurated in 1892. It aims to pr ovide a comprehensive service of arbitration, conciliation and m ediation for settlement of international commercial disputes of any nature and parties are at liberty to appoint or nominate the London Court of International Arbitration as the appointing auth ority in the even of the parties not agreeing on an arbitrator an d they also have arbitration rules which again parties are at libe rty to incorporate for purposes of their references. International Court of Arbitration of the International Chamber o f Commerce (ICC) International Court of Arbitration - this was es tablished in 1923 and deals with disputes relating to Internation al Trade and it has rules of arbitration that one can adopt. It is i mportant that one is cautious about the fees structure one is co mmitting to before adopting this. For instance if a reference is t o be adjudicated on the basis of these rules there will be the arb itrators fees which are pegged to the value of the subject matte r and other fees. The International Centre for Settlement of Investment Disputes (ICSID) This was established by the convention on the settlemen t of disputes between the States and Nationals of other States a nd was signed in Washington in 1965. It provides facilities for c onciliation and Arbitration of investment disputes between cont racting parties and Nationals of other States. The Permanent Court of Arbitration established by the Hague co nventions. American Arbitration Association (AAA) - this is the principal arb itral institution in the USA. Hong Kong International Arbitration International Centre All these institutions basically discharge the following functions They are involved in the promotion of arbitration in general. Th ey do this by holding seminars, publish newsletters and basicall y spread the gospel of arbitration. They administer arbitrations: like they can appoint arbitrators at the request of the parties, they ensure strict observance of th e rules of arbitration, they make arbitration. Publication of Arbitration Rules Training of Arbitrators - Award writing calls for skills and these i nstitutions should give guidelines on award writing that is both i ndependent and objective, principles of natural justice. They provide a forum for research and information and publicati on of periodicals and so on. Order for Directions is something to the effect that you docume nt the proceedings of the day and put them in writing and state the following for example Claimant will submit to the arbitrator and to the other party a st atement of claim or points of claim or a summary of the claim by a certain date. 45

The second direction will be the Respondent to submit its points of defence to the arbitrator and to serve on the claimant by a ce rtain date. Each party to prepare and submit to the other a bundle of docu ments for use at the hearing on or before 15th April. Arbitrators fees are agreed at KShs. 10,000 an hour, each party to pay an initial deposit to the Arbitrator of Kenya Shillings 20,0 00/- before At the onset you need a direction stating that the arbitrator will not release the award unless and until all arbitrators fees are p aid. At the meeting you should address how costs will be handled i.e the cost of arbitration including the arbitrators fees and expens es shall be borne by the unsuccessful party. Costs shall follow t he events. To safeguard against one party writing to you while the other pa rty does not know, you direct that all communication with the ar bitrator must be disclosed and copied to the other party. The hearing of the reference will take place on the 1st June com mencing at 10.00 a.m until 5 pm at the Professional Centre or w hatever venue is agreed upon. You are then supposed to date t he Order the Date you met or the date when all this was agreed and send it to both parties. There is a statutory obligation when you are approached to be a n arbitrator to make full disclosure of any circumstances that m ay give rise to justifiable doubts as to your impartiality or indep endence. Section 13 - when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circ umstances likely to give rise to justifiable doubts as to his impar tiality or independence. (2) from the time of his appointment and throughout the procee dings the arbitrator shall without delay disclose any such circum stances to the parties unless the parties have already been infor med of them by him. Some advantages of choosing the rules of an arbitral institution: one of the advantages of incorporating institutional rules is that the reference to an arbitral institution as the appointing authori ty will ensure that an arbitrator is appointed without the need t o refer the matter of appointment to court under Section 12 of t he Arbitration Act for example. The adoption of the rules of that institution will ensure that the proceedings are conducted in a relatively predictable fashion. The powers and jurisdiction of the Arbitrator are defined and thi s avoids a situation where the arbitrator has to seek the express agreement of the parties on sticky points at a later stage. If an institution provides for administration of the reference the n the parties are able to utilise those resources. Separability and Jurisdiction: 46

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