By Rebecca Andeso[1]
Introduction
Arbitration's design, structure, and architecture serve as an alternative to litigation, offering a private and flexible way to resolve disputes. Judicial intervention in arbitration has historically been circumscribed to specific domains, including the appointment of arbitrators, issuance of stay proceedings, grant of interim measures, determination of points of law, and enforcement or annulment of arbitral awards. The imperative underpins this restrained approach to safeguard the principle of party autonomy, which lies at the heart of arbitration.
This blog explores the role of national courts in the early stages of arbitral proceedings by analysing the landmark case of Technoservice Limited v Nokia Corporation & International Chamber of Commerce (Technoservice Case).[2] It begins by engaging with the two competing perspectives in arbitration jurisprudence: the interventionist approach, which supports judicial oversight in arbitration, and the non-interventionist approach, which advocates for minimal court interference to uphold party autonomy. Next, the blog delves into the Technoservice case, examining how Kenya's judiciary has positioned itself within this debate. The blog concludes by reflecting on the broader implications of this decision for arbitration practice in Kenya and the lessons it offers to businesses, legal practitioners, and policymakers.
Role of Courts in Kenya: Interventionist or Non-Interventionist?
The role of courts in arbitral proceedings has been the subject of two competing schools of thought. The first school of thought advocates for minimal or no court intervention, except to enforce awards as it does with any other rights and obligations agreed upon by the parties. In other words, arbitration should be a method of dispute resolution without the court.[3] This view is succinctly captured in Lord Saville's lecture, where he remarks:
"It can be said that if parties agree to resolve their disputes through the use of a private rather than a public tribunal, then the court system should play no part at all… to do otherwise is unwarrantably to interfere with the parties right to conduct their affairs as they choose."[4]
This perspective finds statutory support in section 10 of the Kenya Arbitration Act 4 of 1995, which states, "Except as provided in this Act, no court shall intervene in matters governed by this Act." A literal interpretation of this provision suggests that parties are barred from seeking judicial intervention outside specific instances as outlined in the Act. Consequently, even where constitutional rights are undermined, recourse to judicial review appears to be foreclosed under this strict interpretation.[5] The underlying rationale for this position is to preserve the sanctity of arbitration as an autonomous dispute resolution mechanism and to prevent judicial interference.[6] As a corollary, after the enactment of the Fair Administrative Action Act and the Constitution of Kenya 2010,[7] it has been argued that courts can intervene when cardinal rules of natural justice are breached through judicial review. Justice Odunga, in the case of Sylvana Mpabwanayo Ntaryamira v Allen Waiyaki Gichuhi & Richard Waweru Njoroge[8], echoed the stance of the courts as non-interventionist by stating:
In my view, a person who has willingly agreed with an arbitration clause ought not to be permitted to fall back on the Constitution in order to avoid his obligation to refer the disputes that properly fall within the arbitration clause to the agreed alternative dispute resolution mechanism. Where a party challenges how the arbitral proceedings are being conducted, the same ought to be in accordance with the terms of the arbitration or the legislation guiding the arbitration process, and he ought not to resort to judicial review proceedings as the first port of call.
Conversely, the second school of thought argues for judicial intervention in arbitration when necessary to ensure that justice is upheld in private as well as public tribunals.[9] Section 77(9) of the Constitution of Kenya 1963 provided a safeguard that a party to arbitration could use to approach the court. Section 6 of the Kenya Arbitration Act No 4 of 1995 provides that courts can intervene if the arbitration agreement is null and void, inoperative, or incapable and if there is, in fact, no dispute between the parties with matters regarding arbitration.[10] This implies that the presence of an arbitration clause in a contract does not prevent the dispute from being resolved in court, provided neither party objects. [11] However, if one party initiates court proceedings while the other seeks to uphold the arbitration agreement, the latter must apply for a court order to stay the proceedings.[12]
Analysis of the Technoservice Case
The role of the national court is dependent on various factors, including lex abtri, parties' agreement, and institutional rules in place. National Courts have a role at the beginning of the arbitration, during arbitral proceedings, and at the end of the arbitration.[13] This blog narrows down to the role of courts at the beginning of arbitration, which occurs in at least three situations: first, at the stage of enforcement of the arbitration agreement; second, at the constitution of the tribunal; and lastly, challenges to the jurisdiction of the tribunal.
The case of Technoservice Limited v Nokia Corporation and International Chamber of Commerce (Interested Party)[14] is an important case to examine the role of the national court in enforcing an arbitration agreement. Technoservice Limited had entered into a Frame and Repair Service agreement dated 5 August 2019 with Nokia Corporation.[15] Technoservice Limited alleged that Nokia Corporation breached this agreement when it sold its business to Microsoft Corporation in 2014 without seeking its consent.[16] Technoservice Limited sought, among other things, a compensation of KES 150 million for loss of earnings after a number of service centers allegedly established jointly between it and Nokia Corporation were transferred to Microsoft Corporation without its consent.[17] Technoservice Limited filed a case in the Commercial & Admiralty Division of the High Court of Kenya at Nairobi regarding the performance of the contract.[18] Nokia Corporation entered appearance but filed no defense but instead made an application that pursuant to section 6 of the Kenya Arbitration Act 1995, the matter be referred to arbitration.[19] In a ruling delivered on 23October 2023 by Hon. Lady Justice Freda Mugambi ruled that Nokia's Application had met the test of section 6 of the Kenya Arbitration Act 1995 and referred the matter for arbitration.
The arbitration clause, specifically clause 22.2 of the Frame and Repair Service Agreement, provided for the lex abtri or the arbitral seat, the law governing the procedure of the dispute as the Rules of the International Chamber of Commerce.[20]The arbitral language to be English, and the place of arbitration to be Helinski, Finland.[21] The arbitration proceedings had stalled by dint of the fact that Technoservice Limited had tried all means to stop the arbitration, with its actions being similar to 'hitting a brick wall.' It was the averment of Aapo Saarikiv, a partner in the law firm of Roschier, Attorneys Limited, who was representing Nokia Corporation, that Technoservice Limited did not pay arbitration fees and failed to pay the arbitration deemed the arbitration being withdrawn.[22]
Technoservice Limited appealed the ruling delivered by Judge Mugambi. Technoservice applied, and judges Mumbi Ngugi and D.K Masinga delivered a ruling dated 11th October 2024, which is the basis of this piece. In their application, Technoservice Limited sought an order of stay of execution pending a hearing of the application and an intended appeal. The grounds pertinent to this blog are that it claimed the judge erred based on the following grounds: first, failing to consider that Nokia influenced the ICC because high-ranking officials had prominent positions within the ICC. Second, the arbitration agreement was null and void as Nokia Corporation had committed tax fraud against the Kenyan Law. The judges realised the breach of the negative obligation and ruled that the parties were bound by their agreement as they had already chosen the forum and method of resolving the dispute. They gave the remedy for breach of the negative obligation by dismissing the application.
This decision reinforces Kenya's pro-arbitration stance by upholding the principle of party autonomy, as established in Nyutu Agrovet Limited v Airtel Networks Kenya Limited and another [2019] eKLR.[23] In the Nyutu case, the Supreme Court emphasised that judicial intervention in arbitration should be limited to instances where statutory provisions explicitly allow it. Similarly, in the Technoservice case, the Court of Appeal rejected attempts to sidestep arbitration by challenging the impartiality of the International Chamber of Commerce (ICC), affirming that courts must respect the dispute resolution mechanisms contractually chosen by parties unless exceptional circumstances—such as fraud, illegality, or public policy violations—are demonstrated.
Moreover, this ruling enhances the predictability and efficiency of arbitration by reinforcing the finality of arbitral awards, a principle upheld in Christ for All Nations v Apollo Insurance Co Ltd [2002] EA 366, where the court limited grounds for setting aside awards.[24] By dismissing Technoservice's claims that the ICC arbitration was biased and prohibitively expensive, the Court of Appeal signaled that cost or alleged institutional bias does not constitute sufficient grounds to invalidate a valid arbitration clause. This precedent safeguards the integrity of arbitration in Kenya, discourages frivolous attempts to evade arbitration clauses, and strengthens Kenya's attractiveness as a regional arbitration hub. It further underscores that national courts serve a supportive rather than interventionist role in arbitration.
Conclusion
The ruling in Technoservice Case serves as a crucial reminder for businesses, legal practitioners, and policymakers to prioritise well-drafted arbitration agreements that clearly define the governing rules, the seat of arbitration, and enforcement mechanisms. Given the court's firm stance on enforcing arbitration clauses, companies entering cross-border contracts must conduct thorough due diligence on the arbitral institutions they choose and anticipate potential enforcement challenges. Additionally, Kenyan courts should continue fostering a pro-arbitration legal environment by ensuring consistent application of arbitration principles while maintaining a delicate balance between enforcing party autonomy and preventing abuse of arbitral mechanisms. Legal professionals should also advocate for institutional reforms within arbitration bodies like the ICC to enhance accessibility, transparency, and cost efficiency, thereby addressing concerns such as those raised in this case. Ultimately, Kenya's judiciary, arbitration institutions, and legal fraternity must work collaboratively to strengthen arbitration as a preferred mode of dispute resolution, reinforcing the country's position as a leading arbitration hub in Africa.
[1] The Author is an Advocate of the High Court of Kenya, a Certified Secretary, a Certified Professional Mediator with a growing expertise in International Commercial Arbitration. She is currently an associate at Umsizi LLP. She graduated from Kabarak University with First Class Honours and was the valedictorian of her class.
[2] Technoservices Limited v Nokia Corporation and another, Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR].
[3] Chinwe A Mordi, 'An analysis of national courts involvement in international commercial arbitration; Can international commercial arbitration be effective without national courts?' 6 (2) Journal of Political Science (2016) 95-104.
[4] Lord Saville, 'Arbitration and the courts' Denning Lecture, (1995) 157.
[5]Kiragu, 'Expanding the limits of court intervention in arbitration through Judicial Review, The Constitution of Kenya 2010 and the Fair Administrative Action Act',15.
[6] Kiragu, 'Expanding the limits of court intervention in arbitration through Judicial Review, The Constitution of Kenya 2010 and the Fair Administrative Action Act',15.
[7] Constitution of Kenya (2010), Article 47.
[8]Sylvana Mpabwanayo Ntaryamira v Allen Waiyaki Gichuhi & Richard Waweru Njoroge, Judicial Review 449 of 2015, Ruling of the High Court at Nairobi, 20 July 2016 [eKLR].
[9] Alan Redfern, 'International commercial arbitration: Jurisdiction denied: The pyramid collapse' Journal of Business Law (1986) 15.
[10] Kenya Arbitration Act (No. 4 of 1995), Section 6.
[11] Ronald Bernstein, 'Handbook of arbitration practice', London: Sweet & Maxwell in conjunction with the Chartered Institute of Arbitrators, 1987, 38-39.
[12] Bernstein, 'Handbook of arbitration practice', London: Sweet & Maxwell in conjunction with the Chartered Institute of Arbitration, ' 39.
[13]Angualia Daniel, 'The role of domestic courts in international commercial arbitration' SSRN, 10 September 2010 — < [14] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR].
[15] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR], para 1.
[16] Sam Kiplagat, 'Court declines to stop arbitration of contract breach against Nokia' Business Daily, 22 October 2024—<[17] Zintle, 'Nokia Kenya dodges a $260,000 fine in service centre contract feud' African Arbitration Association, 18 April 2022 —< [18] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR], para 4.
[19] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR], para 4.
[20] International Chamber of Commerce Rules of Conciliation and Arbitration, 1975, Publication ICC No. 447-3.
[21] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR], para 1.
[22] Civil Application E610 of 2023, Ruling of the Court of Appeal at Nairobi, 11 October 2024 [eKLR], para 8.
[23] Nyutu Agrovet Limited v Airtel Networks Kenya Limited and another, Petition 12 of 2016, Judgement of the Supreme Court, 6 December 2019 [eKLR].
[24] Christ for All Nations v Apollo Insurance Co Ltd [2002] EA 366.