ARBITRATION
Advantages Of
Administered Arbitration
By Wachia Kilei
A
rbitration is a form of dispute
resolution
mechanism
where
parties to a contract agree to
refer disputes arising out of the contract
to a neutral third party for determination
whose decision or award will be binding
to both parties, the arbitration process may
be administered or ad-hoc. Administered/Institutional
arbitration
on the other hand is a predetermined
process of arbitration whereby an Arbitral
Institution develops rules and guidelines
for the administration of disputes referred
to Arbitration. Parties only therefore need
to adopt the rules of the institution for
the same to apply.
The Arbitration Act, Chapter 49 of the
Laws of Kenya provides that the Act
will apply to Arbitrations that are either
administered (by a permanent arbitral
institution) or ad-hoc. An ad-hoc
arbitration is one where the parties develop
the framework for the arbitration by
deciding the type of tribunal, composition
of tribunal, applicable rules, law, seat,
venue, language, nature of admissible
evidence and form of award. The Nairobi Centre for International
Arbitration (NCIA) is an Arbitral
Institution established vide Act no. 26
of 2013 to administer international
commercial arbitration and other dispute
resolution mechanisms. To facilitate
administration of disputes referred to
arbitration, NCIA published the NCIA
Arbitration (2015) rules: (www.ncia.
or.ke/downloads)
In Ad-hoc arbitrations, parties are required
to identify an institution that will appoint
the arbitrator (appointing authority) in
the event that the parties fail to agree.
The appointing authority responsibilities
expire upon appointment and parties
cannot revert back to it to determine issues
arising from the appointment.
The NCIA Arbitration (2015) rules
provide numerous advantages to counsel
and their parties such as, adoption of a
model clause to suit the contractual needs
and legal relationship of the parties. The
NCIA model clause allows parties and
their counsel to reduce the time it would
have taken to develop an Arbitration
Clause. Further, adoption of the clause
Arbitration is a form of dispute resolution mech-
anism where parties to a contract agree to refer
disputes arising out of the contract to a neutral
thir d party for determination whose decision or
award will be binding to both parties: the arbitra-
tion process may be administered or ad-hoc.
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ensures that the dispute resolution clause
is clear and concise.
Additionally, adoption of NCIA sample
clauses reduces the risk of uncertainty and
delay in determining intention behind
inadequate or overly complex dispute
resolution clauses. The sample clauses are
versatile and can be incorporated into
different types of contracts as well as being
adopted in a subsequent agreement, where
the initial contract did not sufficiently
provide for dispute resolution.
Furthermore, adoption of the NCIA
Arbitration (2015) rules ensures that the
Arbitral process is managed in a timely
manner as the rules provide for definite
timelines for the nomination of experts
to sit in the tribunal by the parties and
further provides for a saving provision in
the event of failure or refusal of parties to
nominate members of the tribunal or agree
on a sole arbitrator.
The procedural guidelines set in Rule 5
and 6 of the NCIA Arbitration rules,
provide direction on how to submit a
request for arbitration and the response
thereto together with the relevant
documentation, providing parties with
relevant information on the dispute to
enable them seek appropriate instructions
from Counsel and respond adequately. Ad-
hoc arbitrations on the other hand only
require parties to serve a notice of dispute
to commence an arbitration process, which
notice lacks the requisite information to
enable the preparation of the Response or
facilitate the appointment of a tribunal by