Arbitration is a form of Alternative Dispute Resolution (ADR) in which disputes or conflicts between parties are resolved by a neutral third party, known as an arbitrator, rather than through the court system.
Arbitrators may be appointed by:
- The parties to the dispute
- A third party as agreed to by the parties
- The High Court on application
Powers of the arbitrator
- a) To determine whether it has jurisdiction to hear the dispute.
- b) To provide interim relief or remedies where necessary.
- c) To demand security from either party.
- d) To determine the admissibility of evidence.
- e) To administer oaths.
- f) To examine persons on oath.
Advantages of arbitration
- It is more informal faster and cheaper compared to courts.
- Privacy / confidentiality: Arbitral proceedings are conducted in private free from public scrutiny. The parties enjoy the requisite confidentiality.
- Parties can fix a convenient time and place for hearing the proceedings.
- The arbitrator chosen is likely to apply specialized knowledge to the disputes.
- The main objective of arbitration is harmony between the parties after the disputes have been dissolved.
- Flexibility: Arbitral tribunals are not bound by previous decisions. This affords them the necessary room to explore.
- It tones down acrimony: Arbitral proceedings are less acrimonious and parties generally leave the proceedings closer than they would have been in the case of a court of law.
Disadvantages of arbitration
- It is believed that when the dispute is related to a question of law, the arbitrator may not have sound legal knowledge.
- It does not create uniformity and will settle rules of law as the reward given is not recorded in the law reports and therefore no reference is available for future arbitrators.
- It is limited in scope because it only applies to matters of a civil nature but not crimes.
- It is arbitrary because each arbitrator decides his disputes in his own way and is not bound to refer to any other award even if the dispute looks similar.
- It may lead to injustice due to its informal nature because no regard is made to legal processes.
Award
It is the final decision of the arbitrator in arbitration proceedings
It is entitled to the same respect as those enjoyed by judgments in the court of law
The award will be set aside if the court is satisfied that:
- One of the parties to the arbitration agreement had no capacity to enter into it.
- The arbitration agreement was invalid in law.
- The party was not offered sufficient notice for the appointment of a arbitral tribunal.
- The arbitral tribunal was not constituted in accordance with the terms of the agreement.
- The award relates to a dispute not contemplated by the agreement.
- The award is contrary to public policy of Kenya.
- The dispute is incapable of resolution by arbitration.