When a foreign company signs a supply, distribution, or services contract with a Kenyan counterparty, the arbitration clause is usually drafted in a hurry after the commercial terms are settled. That is a mistake. The clause is a separate agreement within the contract, and if it is drafted loosely, the company can win an arbitration years later and still struggle to enforce the award. This article sets out the drafting choices, seat, institution and rules, governing law, arbitrator appointment, language, and scope, that determine whether an arbitration clause in a Kenya-facing supply contract will actually produce an enforceable outcome.
Seat Versus Venue: Why the Legal Seat Determines Enforceability
The single most consequential drafting decision is the legal seat of the arbitration, routinely confused with the physical location of hearings. The seat fixes which country’s courts have supervisory jurisdiction (to hear a jurisdictional challenge or a challenge to the award, for example), and it fixes the “nationality” of the resulting award for enforcement purposes. The venue is simply where the tribunal physically meets, which can differ hearing to hearing without changing the seat.
Kenya’s own law recognises this distinction. Section 21(1) of the Arbitration Act, 1995 (as amended by the Arbitration (Amendment) Act, 2009) provides that “the parties are free to agree on the juridicial seat of arbitration and the location of any hearing or meeting,” treating the two as separate concepts in the same sentence. If the parties do not agree a seat, section 21(2) leaves the tribunal to determine it, which is not a position a foreign party wants to be in once a dispute has arisen. The clause should name a specific seat, not just a region or an institution’s headquarters city, since an institution can administer a case seated elsewhere.
Choosing the Institution and Rules: NCIA, ICC, LCIA, or UNCITRAL Ad Hoc
The contract should name an arbitral institution and its rules, or specify ad hoc arbitration under a defined rule set such as the UNCITRAL Arbitration Rules. Each choice fills gaps differently if the parties leave them, which is why the gaps should be closed in the drafting instead.
The Nairobi Centre for International Arbitration (NCIA) is a genuine option where the contract has a real Kenyan nexus. It was established as a body corporate by section 4 of the Nairobi Centre for International Arbitration Act, No. 26 of 2013, with functions under section 5 including administering domestic and international commercial arbitration and other alternative dispute resolution from Nairobi under its own rules. NCIA arbitration seated in Nairobi can work well for a foreign party, provided the seat and governing law are pinned down expressly and the enforceability point below is kept in mind.
The major international institutions fill gaps differently. Absent party agreement, the ICC Court appoints a sole arbitrator unless the dispute warrants three (Article 12(2)), fixes the seat itself (Article 18), and leaves the tribunal to set the language (Article 20). Under the LCIA Rules, the default is likewise a sole arbitrator unless the parties or the LCIA Court say otherwise (Article 5.8), and the default seat is London (Article 16.2). None of these defaults may suit a Kenya-facing contract: naming the institution is not enough; the clause must still fix the seat, the number of arbitrators, and the language.
The Governing Law Trap: Contract Law Versus Arbitration Agreement Law
A recurring error is assuming one governing law clause covers everything, when the law governing the substance of the contract and the law governing the arbitration agreement itself are distinct questions that can point to different countries.
This is a consequence of separability. Section 17(1) of Kenya’s Arbitration Act, in confirming the tribunal’s competence to rule on its own jurisdiction, provides that “an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract,” and that a finding that the contract is null and void does not itself invalidate the clause. Because the arbitration agreement is distinct, it can in principle be governed by a different law than the surrounding contract, and Kenyan legislation supplies no default rule on which law that is. The LCIA Rules show how institutions handle this gap: Article 16.4 makes the law applicable to the arbitration agreement the law of the seat, absent contrary written agreement. Where the contract’s governing law clause names one country’s law but the seat sits in another, a tribunal can end up applying two systems of law to two questions in one dispute, an outcome parties rarely intend. The fix: state the governing law of the contract and, separately, the law governing the arbitration agreement, ordinarily the law of the seat.
Arbitrators, Language, and the Scope of the Clause
Three further points deserve deliberate drafting rather than a recycled boilerplate clause. First, fix the number of arbitrators and the appointment mechanism, including a fallback appointing authority if a party refuses to nominate. Second, fix the language; leaving it to the tribunal, as the ICC and LCIA defaults do, invites delay if the parties operate in different languages. Third, use broad scope wording, typically “any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination,” rather than a narrow list of claim types, so related disputes are not carved out and left to Kenyan courts.
Finally, remember the reciprocity reservation Kenya made under Article I(3) of the New York Convention on acceding on 10 February 1989, recorded in UNCITRAL’s official status information for the Convention: Kenya limits enforcement to awards made in the territory of another contracting state. The seat should therefore be in a Convention state (Kenya included, if NCIA arbitration is chosen) so the award qualifies for Convention enforcement wherever the counterparty holds assets. For how that enforcement process itself works, see our companion article on enforcing foreign arbitral awards in Kenya.
How We Can Help
Clay & Associates Advocates drafts and negotiates arbitration clauses for foreign companies entering supply, distribution, and services arrangements with Kenyan counterparties, aligning seat, governing law, institutional rules, and scope with the client’s actual enforcement objectives. We also act in the resulting disputes, including stay applications and, once an award exists, its recognition and enforcement, covered in our article on enforcing foreign arbitral awards in Kenya. See our Litigation & Dispute Resolution practice page, or our overview of arbitration in Kenya, for more.
Sources: Arbitration Act, 1995 (Cap. 49, as amended 2009), sections 3, 4, 17, 21 and 29, Kenya Law; Nairobi Centre for International Arbitration Act, No. 26 of 2013, sections 4 and 5, Kenya Law; New York Convention, Article I(3) and Kenya’s reservation, UNCITRAL status page; ICC Arbitration Rules 2021, Articles 12, 18 and 20, ICC; LCIA Arbitration Rules 2020, Articles 5.8 and 16, LCIA.
Frequently asked questions
Can we simply name Kenya as both the seat and the venue and leave it there?
State it expressly rather than leaving it to be inferred, and separately confirm the law governing the arbitration agreement. Kenya is a New York Convention state, so an NCIA arbitration properly seated in Nairobi is enforceable both in Kenya and, under the Convention, in other contracting states.
Does choosing ICC or LCIA rules mean the arbitration must be seated in Paris or London?
No. Institutional rules govern procedure; the seat is a separate choice made in the clause. Both institutions regularly administer arbitrations seated elsewhere, including Nairobi, provided the clause says so.
What happens if our clause is silent on the number of arbitrators?
The rules fill the gap, usually with a sole arbitrator by default. Silence is not fatal, but it hands the decision to the institution rather than the parties, worth avoiding on higher-value contracts.
Should the clause carve out any disputes from arbitration?
Generally no. Narrow or carved-out clauses invite satellite arguments over whether a dispute falls inside or outside them. Broad “arising out of or in connection with” wording, combined with a clear seat and governing law, gives the more reliable path to an enforceable outcome.
