An International Centre for Arbitration is to be established in Nairobi.

A new law that defines the functions and operations of the Centre — the Nairobi International Centre for Arbitration Act (No 26 of 2013) — has been enacted to facilitate the process.

Arbitration is one of several alternative dispute resolution mechanisms, mainly used in settlement of commercial disputes. It involves the use of an arbitrator agreed upon by the parties or appointed with their concurrence, instead of a court judge, in deciding their dispute.

The arbitrator’s decision is enforced in the same way as a judgment of the court.

The new centre for arbitration is expected to help in securing speedy resolution of commercial disputes, especially those involving regional and international investors.

It is expected to overcome the uncertainty of judicial proceedings in national courts where a backlog of cases has discouraged many investors keen on a quick disposal of commercial disputes.

The expansion of regional trade and the revival of the East African Community are expected to increase the number of commercial disputes that require speedy resolution.

“Effective and reliable application of international commercial arbitration has the capacity to encourage investors to carry on business with confidence, knowing their disputes will be settled expeditiously.

"This can enhance economic development for Kenya and the region,” said Dr Kariuki Muigua, chairman of the Kenya branch of the Chartered Institute of Arbitrators.

The enactment of the International Centre for Arbitration Act is expected to create legal safeguards that will enable Nairobi to become an attractive destination for foreign investors seeking the services of international institutional arbitrators.

In the past, the lack of a developed legal and institutional framework on arbitration created room for excessive court interference in arbitration matters, which limited the potential advantages of this mechanism.

The centre will have exclusive original and appellate jurisdiction to hear and determine all disputes referred to it.

Its decision will be final and hence not subject to further interference or interpretation by mainstream national courts through appeals.