Absence of community-based regime for the enforcement of awards

A major goal of economic integration is to promote trade and investment within an economic bloc. The EAC sets this as one of its objectives in article 5 of the Treaty for the Establishment of the East African Community, 1999 (EAC Treaty).Footnote ⁷ Parties often select arbitration as a principal means for resolving disputes that arise from their cross-border economic transactions. As such, parties arbitrating their disputes are always concerned about the enforcement of the eventual award; indeed, this is the case with all parties undertaking any dispute resolution process. As Lord Bingham of Cornhill once observed in the context of court judgments, but equally apposite for arbitral awards: “[a]s many a claimant has learned to his cost, it is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant. But an unenforceable judgment is at best valueless, at worst a source of additional loss”.Footnote ⁸

Save with one exception discussed below, the EAC Treaty contains no express provisions dealing with arbitration or the enforcement of arbitral awards. There has also not been any EAC initiative to institute or enact a community law based regime for the enforcement of arbitral awards. A comparative examination of regional economic treaties in other parts of Africa and elsewhere in the world suggests that the EAC is not unique in this respect. The lack of an express treatment of arbitration in the EAC Treaty or community law on the subject does not negate the importance of having a robust regime for enforcing foreign arbitral awards within the context of regional economic integration. As economic integration progresses and there is an intensification of regional economic transactions or commercial dealings, one can expect the number of disputes to rise and for parties to resort more frequently to dispute resolution mechanisms, including arbitration.

To a large extent, regional economic communities around the world have not prioritized a regional regime for the enforcement of arbitral awards due to the dominance of the New York Convention. Apart from the Organization of American StatesFootnote ⁹ and the Organization for the Harmonization of Business Law in Africa (OHADA),Footnote ¹⁰ no other regional community has adopted an instrument for the enforcement of arbitral awards. In fact, the Organization of American States and OHADA are not properly regional economic communities. Within the Caribbean community, member states are expected to harmonize their laws with respect to commercial arbitration,Footnote ¹¹ but a member state that has implemented the New York Convention shall be deemed to have provided appropriate procedures in its legislation to ensure the recognition and enforcement of arbitral awards.Footnote ¹²

Within the European Union, article 220 of the Treaty establishing the European Economic Community 1958 (EEC Treaty) enjoined member states to, “in so far as necessary, engage in negotiations with each other with a view to ensuring for the benefit of their nationals … the simplification of the formalities governing the reciprocal recognition and execution of judicial decisions and of arbitral awards”. Pursuant to article 220, the EEC adopted the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters in 1968. However, no such convention was adopted in respect of arbitration awards due to the adoption of the New York Convention in 1958, that is, almost at the same time that the EEC Treaty was adopted. It is also worth recalling that, in 1961, the European Convention on International Commercial Arbitration was concluded under the auspices of the UN Economic Commission for Europe. Although it is not a European Union instrument, the convention's principal objective was to promote “the development of European trade by, as far as possible, removing certain difficulties that may impede the organization and operation of international commercial arbitration in relations between physical or legal persons of different European countries”.Footnote ¹³ Thus, the convention clearly recognized the interrelationship between trade and dispute settlement.Footnote ¹⁴

Another reason for the EAC's lack of initiative to institute or enact a community law based regime for the enforcement of arbitral awards is that relatively few cases exist with respect to the EAC partner states’ judicial history of enforcing foreign arbitral awards, with even fewer regarding foreign awards coming from other partner states.Footnote ¹⁵ This suggests that courts in EAC partner states have limited experience of presiding over matters related to the enforcement of foreign arbitral awards. Indeed, the very few decided cases on the subject are also difficult to access.

Enforcement of EACJ arbitration awards

One of the principal institutions of the EAC is the EACJ. The EACJ has jurisdiction to determine cases that are referred to it by persons (the community, its institutions or individuals) who select it as the forum for the arbitration of disputes.Footnote ¹⁶ Judges presiding over such arbitrations sit as the court and not as individuals. The arbitral jurisdiction is conferred on the court, not on individual judges. In other words, when the EACJ arbitrates a dispute, it sits as a supranational court that has accepted the parties’ designation to act as an arbitral tribunal. Both inter-state and commercial arbitrations are covered by the EACJ's arbitral jurisdiction. Indeed, article 32 of the EAC Treaty specifically refers to an arbitration clause in “a commercial contract or agreement”. It provides:

To date, there has been only one reported award or claim in which the EACJ's arbitral jurisdiction has been invoked.Footnote ¹⁷ In Nayebare Alice v East Africa Law Society,Footnote ¹⁸ the claimant's claim was for a total sum of USD $48,387, which constituted payment for various employment benefits covering salary emoluments, leave and repatriation allowances, sundries and other termination benefits. In addition, the claimant prayed for an order that “the Respondent clears and / or signs the requisite [National Social Security Fund (NSSF)] forms to enable the claimant [to] access her NSSF savings”. The arbitral claim was heard and an award given on 9 May 2014 to the effect that the claimant was entitled to a monetary award of USD $8,534 plus interest on the amount at the Tanzanian rate from 9 May 2014 until payment in full and that the respondent should, within 7 days of the award, remit USD $724.50 to NSSF as its contribution for the claimant, covering a period between September and December 2004.Footnote ¹⁹

Notwithstanding the fact that the EACJ's arbitral jurisdiction has been invoked only once, it is an important jurisdiction for the court to possess. The EACJ's arbitral jurisdiction provides parties with a forum in which they can settle disputes that may have arisen from their transactions within the EAC. Individuals are therefore enabled to participate actively in the EAC's economic integration process. For people who transact commercially within the EAC and seek a neutral, expedited and “party controlled” forum for dispute settlement, the EACJ's arbitral jurisdiction may be equally useful. For partner states, rather than resorting to international arbitration in the well-heeled streets and offices of London, Washington DC, Geneva, The Hague or Paris, the EACJ's arbitral jurisdiction may be invoked to resolve their disputes with foreign individuals, firms and corporations with which the partner states have transacted. Indeed, arbitrations before the EACJ can facilitate dispute resolution in bilateral investment treaties into which the partner states enter.Footnote ²⁰

For all these reasons, it is submitted that parties transacting within the EAC should be encouraged to use the EACJ as the forum for the settlement of their commercial disputes. It is a less costly and more accessible means of dispute settlement than the services offered by arbitral institutions abroad. Admittedly, for parties to prefer the EACJ to other regional or international arbitral institutions, the EACJ will have to develop further its capacity for commercial arbitration both in terms of training for EACJ judges, as well as the development of the necessary physical infrastructure. In this regard, coordinating with and drawing on the experiences of other regional centres of arbitration, such as the Kigali International Arbitration Centre, will be useful.

An important question that remains regarding the EACJ's arbitral jurisdiction relates to the enforcement of awards resulting from the exercise of that jurisdiction. Of particular interest is the extent to which principles developed in the context of enforcing foreign arbitral awards could be extended to awards from the EACJ. While the EAC Treaty is silent on the enforcement of awards from the EACJ, rule 36(3) of the EACJ Arbitration Rules 2012 provides that the “enforcement of arbitral awards shall be in accordance with the enforcement procedures of the country in which enforcement is sought”. Accordingly, one must turn to the national laws of the partner states on the enforcement of foreign arbitral awards to examine whether arbitral awards from the EACJ can be effectively enforced, especially considering the economic integration context and the EACJ's role and status within the EAC.

As discussed below, the enforcement of foreign arbitral awards is mainly regulated in the partner states by statute.Footnote ²¹ If an award does not qualify for enforcement under statute, many of which operate on the basis of reciprocity,Footnote ²² it may be enforced at common lawFootnote ²³ or, as discussed below, as a foreign judgment. As noted above, all the partner states, except South Sudan, are parties to the New York Convention. Subject to specified limitations, under the New York Convention the enforcement of an arbitral award should be “in accordance with the rules of procedure of the territory where the award is relied upon”.Footnote ²⁴ Equally important for the enforcement of arbitral awards from the EACJ may be the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law),Footnote ²⁵ based upon which Kenya, Rwanda and Uganda have enacted legislation.

A perennial issue concerning the enforcement of foreign arbitral awards is the extent to which the enforcing court may refuse to enforce an award. This power exists under the statutes of various African states that deal with the enforcement of foreign awards. For example, under sections 35 and 36 of Kenya's Arbitration Act 1995, the court may, on application of a party or of its own accord, set aside or refuse to enforce an arbitral award. No exceptions have been made for awards from the EACJ. Indeed, depending on whether one characterizes an EACJ arbitral award as a foreign or domestic award, a national court may also have jurisdiction to set aside the award. Arbitral awards from the EACJ do not enjoy any privileged status in the arbitration legislation of EAC partner states. This is an important issue in the context of economic integration and with a view to ensuring vertical community-state relations. If national courts can review, set aside or refuse to enforce EACJ awards, this will upset the vertical relations that should exist between community and national courts. Generally, this will undermine the utility of the EACJ's arbitral jurisdiction.

National statutes on the enforcement of foreign awards usually codify the grounds of non-enforcement contained in the New York Convention and the UNCITRAL Model Law. The New York Convention and the UNCITRAL Model Law provide grounds for non-enforcement that must be decided under “the law of the country where the award was made” or “in accordance with the law of the country where the arbitration took place”.Footnote ²⁶ From a relational perspective and in the context of economic integration, this raises two difficulties. The first is the possibility that the award may be denied recognition, with the consequence that a judicial act of the EACJ (an arbitral award) is rendered ineffective within a partner state. The second is that an EACJ arbitral award will be invalidated in a partner state using a national law instead of a community law. The non-enforcement of an EACJ award on grounds of non-compliance with national law will upset vertical community-state relations. Let us assume, for example, that the High Court of Kenya refuses to enforce an EACJ award because the EACJ did not apply Tanzanian law, the governing law of the contract between the parties. Such a position will mean that the Kenyan court gives precedence to the law of a partner state rather than a decision of the EACJ. At the very least, an application to enforce such an EACJ award will put the Kenyan court in the invidious position of choosing between upholding a decision of the EACJ and ensuring that the law of a partner state is correctly applied.

Admittedly, one can argue that, especially in the context of claims involving two private persons that are arbitrated by the EACJ, community law or interests are not engaged as such, and an award resulting from such claims should be treated as “any other foreign arbitral award”. It is likely that a significant number of arbitral claims that are submitted to the EACJ would fall into this category. Most of these private commercial claims are unlikely to engage EAC law or garner interest to any significant extent. The difficulty with such a case-by-case approach is deciding which institution (the EACJ or the enforcing national court) should be responsible for determining whether a claim is a purely private commercial claim or one that engages community law or interest. It is recommended that an enforcement regime for EACJ arbitration awards must not allow national courts to review, set aside or refuse to enforce such awards. Parties that transact in the EAC are more likely to arbitrate their disputes at the EACJ if it possesses a robust enforcement regime that prevents national courts from reviewing or setting aside its awards.

A model regime akin to what is proposed above can be found in articles 53 and 54 of the ICSID Convention. Under article 54(1), each contracting state is obliged to recognize an award rendered pursuant to the ICSID Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that state. Article 53 provides that, “[t]he award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention”. This provision prevents national courts from modifying or setting aside an ICSID award. In other words, there can be no external review of an ICSID award. The ICSID Convention has its own self-contained procedures for reviewing awards. A party to an ICSID proceeding cannot initiate an action before a national court to set aside or review the award; the court of a state that is party to the ICSID Convention is obliged to dismiss any such action. This distinct feature of the ICSID Convention is important for the finality of ICSID awards. It provides a clear advantage over other international arbitration fora.Footnote ²⁷

As noted above, all the EAC partner states are parties to the ICSID Convention. Indeed, some partner states have enacted legislation implementing the ICSID Convention.Footnote ²⁸ Significantly, and compared with other statutes for the enforcement of foreign awards, none of the statutes implementing the ICSID Convention contains a provision allowing the court enforcing an ICSID award to refuse to enforce it on any ground. Consistent with the provisions of the ICSID Convention, the enforcing court should stay the enforcement proceedings for the parties to return to ICSID to settle their differences as they pertain to the award.

It is submitted that, if the partner states are willing to give precedence to awards from an institution that is not of their creation and sits in a far-away place such as Washington DC, they should be more willing, or at least less reluctant, to give similar precedence to awards emanating from the EACJ, an institution of their own creation, which sits on their doorstep and whose judges are chosen by them. This is especially so in claims involving a private person and a partner state. National or EAC legislation comparable to article 53 of the ICSID Convention will have the advantage of ensuring that an award from the EACJ will not be subject to national law in a manner that will undermine its effectiveness or enforceability or upset vertical community-state relations. Also, such privileged status for EACJ awards might improve the chances of individuals choosing the EACJ as the forum to settle their disputes.

This does not deny that there are unique aspects of ICSID and its enforcement regime that differ significantly from the EACJ. For instance, ICSID has an internal award review mechanism, the award-debtor is often a state that may exert influence on its courts to set aside awards, and the ICSID regime only deals with international investment disputes. These differences, however, do not negate the central point stated above that the enforcement of arbitral awards from the EACJ, a supranational regional court, should be insulated from review by national courts, regardless of the nature of the dispute or the parties involved.

Enforcement as New York Convention awards

Within a regional economic bloc such as the EAC, the enforcement of awards from partner states facilitates cross-border economic transactions. This raises the question of when the non-enforcement of awards from a partner state can amount to a breach or violation of the EAC Treaty or EAC law. In other words, can a decision of a court in a partner state not to enforce an award from another partner state amount to a violation of the EAC Treaty or EAC law?

It is certainly the case that a decision of a national court may be subject to a treaty challenge if that decision is deemed to infringe provisions of community law. For example, within the European Union (EU), the EU Court of Justice (EUCJ) has affirmed that member states could be held liable for breaches of EU law committed by their respective judiciaries.Footnote ²⁹ There is no provision in the EAC Treaty that exempts decisions of courts in the partner states from a treaty challenge. Accordingly, national judicial decisions, including decisions relating to the enforcement of awards from partner states, should not be immune from the scrutiny of EAC law. That being said, at present, it is difficult to contemplate many situations in which a decision by a court in a partner state not to enforce an arbitration award from another partner state may amount to a violation of the EAC Treaty or other EAC laws. The EACJ is likely to decline jurisdiction in respect of such an application given the court's jurisprudence, and has insisted, rightly so, that it does not sit in appeal in respect of national court decisions.Footnote ³⁰

More likely are the domestic legal challenges that an individual award-creditor with an award from a partner state may face in attempting to enforce the award in another partner state.Footnote ³¹ These challenges can significantly threaten cross-border commercial transactions within the EAC. Nevertheless, the fact that all but one of the partner states are parties to the New York Convention is very promising. Under article III of the convention:

This provision illustrates the importance of national law to the enforcement of foreign arbitral awards, in this instance awards from partner states. The New York Convention has been implemented in the national laws of most of the partner states that are parties to it. In Tanzania's case, although the New York Convention came into force in the country on 1 January 1965, Tanzania has yet to implement it domestically. As a dualist state, this means the New York Convention does not have the force of law within the Tanzanian legal system. Indeed, unlike the arbitration statutes in other African countries, Tanzania's Arbitration Act 2002 does not contain any special provisions for the enforcement of arbitral awards from countries that are parties to the New York Convention.Footnote ³² The non-implementation of the New York Convention can pose significant problems for the enforcement of awards in partner states.

Although Tanzania has not implemented the New York Convention domestically, the Protocol on Arbitration Clauses 1923 (Geneva Protocol)Footnote ³³ and the Convention on the Execution of Foreign Arbitral Awards 1927 (Geneva Convention)Footnote ³⁴ do have the force of law in Tanzania as they are implemented by the Arbitration Act 2002. Interestingly, given that Tanzania is a party to the New York Convention, the Geneva Convention has “ceased to have effect” between Tanzania and other contracting parties by virtue of article VII(2) of the New York Convention. The current legal framework on arbitration in Tanzania poses challenges that were captured in a speech by Justice Mohamed Chande Othman, former chief justice of Tanzania, in which he noted:

The situation on the legislative front in Tanzania may be contrasted with that in Burundi, Kenya, Rwanda and Uganda, where the New York Convention has the force of law in the respective national legal systems. In Kenya and Uganda, which are dualist states, implementing legislation makes special provision for the recognition and enforcement of foreign arbitral awards from countries that are parties to the New York Convention. For example, under section 35(2) of Kenya's Arbitration Act 1995, “an international arbitration award shall be recognised as binding and enforced in accordance to the provisions of the New York Convention or any other convention to which Kenya is signatory and relating to arbitral awards”. Similarly, under section 41 of Uganda's Arbitration and Conciliation Act 2000, “any New York Convention award which would be enforceable under this Part shall be treated as binding for all purposes on the persons as between whom it was made”.

Regarding the enforcement of foreign arbitral awards, it is worrying that legislation in some countries that have implemented the New York Convention goes beyond the scope of the New York Convention and includes additional grounds upon which recognition and enforcement may be denied. This is exceptional, even though jurisprudence from other countries such as Canada suggests that the grounds on which the recognition and enforcement of the award may be refused as provided in article V of the New York Convention are not exhaustive.Footnote ³⁶ The additional grounds on which recognition and enforcement of the award may be refused are arguably vague and somewhat laden with nationalistic undertones. They could potentially undermine the enforcement of arbitral awards from partner states. For example, under section 37(1)(a)(vii) of Kenya's Arbitration Act 1995, recognition and enforcement of an award may be refused “at the request of the party against whom it is invoked if that party furnishes to the High Court proof that … the making of the arbitral award was induced or affected by fraud, bribery, corruption or undue influence”. To date, there appears to be no reported case in which this ground has been raised in defence. Similarly, under Tanzania's Arbitration Act 2002, for a foreign arbitral award to be enforceable, it must not be made contrary to the principles of Tanzanian law.Footnote ³⁷

The partner states of the EAC's arbitration statutes and jurisprudence reveal other sources of diversity in their respective legal regimes for enforcing foreign arbitral awards. This may not be beneficial in the context of economic integration, especially as it relates to the enforcement of awards from other partner states. An example of this diversity is the absence of a right of appeal from decisions of the High Court of Kenya with respect to the enforcement of foreign arbitral awards. In other words, the High Court of Kenya has the final word on this issue.Footnote ³⁸

The state of affairs on the legislative front is somewhat mitigated when one turns attention to case law on the recognition and enforcement of foreign arbitral awards in the partner states. Courts have been faced with how to strike the right balance and reconcile the multiple interests that are often at issue when determining whether to enforce foreign arbitral awards. It can be argued that, while existing jurisprudence provides some evidence that the courts are in favour of enforcing awards, they are equally sensitive to ensure that justice is not denied to persons against whom awards are made if there are legitimate grounds for not enforcing an award.

Writing in 2013 on the legal regime in Rwanda, Kayihura observed that, “in the few cases of enforcement of foreign arbitral awards to date, courts have generally shown themselves willing to enforce the awards”.Footnote ³⁹ A manifestation of the court's pro-enforcement stance can be found in Tanzania National Roads Agency v Kundan Singh Construction Limited,Footnote ⁴⁰ in which the Kenyan High Court held that the only grounds upon which the court may decline an application for the recognition and enforcement of an award are those set out in section 37 of the Arbitration Act 1995. In some jurisdictions, it has been held that the courts retain a residual discretion to enforce a foreign arbitral award even where one of the statutory or New York Convention defences is established.Footnote ⁴¹ However, in Kenya, it has been held that “the court cannot therefore overlook these defences altogether in favour of a pro-recognition residual discretion. The grounds are cast in statute and override residual judicial discretion”.Footnote ⁴² In Tanzania, the High Court was prepared to register an award in favour of a foreign investor against a state-owned entity in a highly politicized transaction and claim.Footnote ⁴³ The court declined to review issues of law and fact that had already been presented to and decided by the tribunal.Footnote ⁴⁴ The court also held that Tanzania's public policy ensured the “finality of disputes and arbitral commercial awards”.Footnote ⁴⁵ Interestingly, both the High Court and the Court of Appeal dismissed the state-owned entity's application for a stay of execution of the award pending their appeal.Footnote ⁴⁶

More recently, in Open Joint Stock Company Zarubezhstroy Technology v Gibb Africa Limited, Justice Onguto noted:

These welcome pronouncements provide parties with certainty regarding the grounds for challenging the enforcement of awards. That being said, the application of the public policy defence gives cause for concern. There have been a few cases of questionable grounds for refusing the recognition of foreign awards.Footnote ⁴⁸ Admittedly, this is an unsettled defence as it is very difficult to define its scope of application. As was observed in BCB Holdings Limited and the Belize Bank Limited v Attorney General of Belize:

Courts within the EAC have struggled to define the scope of the public policy defence. In Tanzania National Roads Agency v Kundan Singh Construction Limited,Footnote ⁵⁰ the High Court of Kenya held that the fact that an arbitral tribunal constituted under the rules of the Stockholm Chamber of Commerce failed to apply Tanzanian law to a contract governed by Tanzania law rendered the enforcement of the decision inconsistent with Kenyan public policy. This is a remarkable decision, especially given that a Swedish court, which was the court of the seat of the arbitration, had earlier declined to set aside the award on similar grounds.Footnote ⁵¹ A Kenyan court had also earlier dismissed an application to set aside the award on the ground that only the Swedish court had jurisdiction to make such a determination.Footnote ⁵² Notwithstanding the respondent's successful use of the public policy defence to attack the merits of the award, there is comparative jurisprudence from other countries and academic opinion to the effect that a court before which enforcement of an arbitral award is sought may not review the merits of the award.Footnote ⁵³ It is even more remarkable that, when the case was appealed, the Court of Appeal struck out the appeal for lack of jurisdiction.Footnote ⁵⁴ The court reasoned that, under section 36 of the Arbitration Act 1995, only the High Court is vested with jurisdiction to determine applications for recognition and enforcement of international awards, and no further right of appeal is provided in respect of decisions relating to international awards.Footnote ⁵⁵

In yet another expansive view of public policy, Justice Mutava held in Foxtrot Charlie Inc v Afrika Aviation Handlers Limited, that arbitral awards should be subject to “judicial filtration to re-confirm that the awards are consistent with written Kenyan law as well as the country's basic notions of justice and morality”.Footnote ⁵⁶ He further reasoned that “this filtration … extends beyond a mere ‘gloss over’ and binds the court to ask itself whether the conclusions reached by the arbitral tribunal would have been consistent with a decision of the court had the same facts of the underlying dispute been placed before the court for determination”.Footnote ⁵⁷

By their decisions in Tanzania National Roads Agency and Foxtrot Charlie, the Kenyan courts are unwittingly reviving article 1(e) of the Geneva Convention, which provided that, to obtain recognition or enforcement of a foreign award, it had to be demonstrated that “the recognition or enforcement of the award is not contrary … to the principles of the law of the country in which it is sought to be relied upon”. The New York Convention removed this requirement.

It is submitted that the very expansive application of the public policy defence that occurred in Tanzania National Roads Agency and Foxtrot Charlie should be avoided. Indeed, as Justice Onguto recently cautioned in Open Joint Stock Company Zarubezhstroy Technology v Gibb Africa Limited, “[i]t would also be apt to note that due to a risk of local manipulation to avoid international awards, it is essential that, when raised to resist recognition or enforcement, public policy is interpreted in a restrictive manner. It cannot be generalized but rather a party seeking to rely on it must show a well-settled and clear public policy so that a losing party is not seen to be merely engaged in a retaliatory exercise”.Footnote ⁵⁸

In this case, the respondent's contention that it would be contrary to article 50 of the Constitution of the Republic of Kenya,Footnote ⁵⁹ and hence against public policy, for the Russian award to be enforced, was rejected. The respondent's allegation that it did not participate in the Russian proceedings was found to be misplaced as it had initiated those proceedings, was afforded the opportunity to be heard and was in fact heard. It appears that, having initiated the action, the respondent revoked the power of attorney of the lawyers representing it but the claim was prosecuted on its behalf by the respondent's parent company.

Enforcing arbitral awards as foreign judgments

In Kenya and Uganda, the statutory regime for enforcing foreign judgments can be used to enforce foreign arbitration awards.Footnote ⁶⁰ Such awards are treated as foreign judgments. Legislation provides that the award must, under the laws in force in the country where it was granted, have become enforceable in the same manner as a judgment given by a court in that country (the arbitration award - foreign judgment provisions). Section 3(1)(f) of Kenya's Foreign Judgments (Reciprocal Enforcement) Act 1984 provides that the act applies to “an award in arbitration proceedings, if the award has, under the laws in force in the country where it was made, become enforceable in the same manner as a judgment given by a designated court in that country”. Similarly, section 8(2) of Uganda's Foreign Judgment (Reciprocal Enforcement) Act 1961 defines judgment to include judgment of an “award in proceedings on an arbitration if the award has, in pursuance of the law in force in the place where it was made, become enforceable in the same manner as a judgment given by a court in that place”.Footnote ⁶¹

The existence of these provisions opens another avenue for enforcing awards from other partner states, at least in principle. The arbitration award - foreign judgment provisions that exist in other African countriesFootnote ⁶² pre-date the New York Convention. They appear to have been instituted to create a regime for enforcing foreign arbitration awards akin to that which enforced foreign judgments within the British colonial empire. Even though in many respects arbitration awards sometimes sit uncomfortably in the statutes drafted with “foreign judgments” in mind, as Patchett has observed, “there seems to be little doubt that the criteria in the statutes must be fulfilled mutatis mutandis in respect of the award before registration can be finalized”.Footnote ⁶³ In other words, an application to register a foreign arbitration award is treated as an application to enforce a foreign judgment.

There has been no case in Kenya or Uganda in which a party has sought to enforce a foreign arbitral award using the foreign judgment route. Indeed, it is very unlikely that an award-creditor with an award from a partner state will resort to the arbitration award - foreign judgment provisions in Kenya and Uganda to enforce its award. One reason for this is that the statutes under discussion contain an extensive list of defences and mandatory currency conversion rules, compared with the regime provided by the New York Convention. This could be disadvantageous to the award-creditor. For example, the award-debtor of an award of which enforcement is sought as a foreign judgment in Kenya may, by relying on section 10(3) of the Foreign Judgment (Reciprocal Enforcement) Act 1984, apply to “set aside the [award] to the extent that its enforcement would require payment of sums in excess of monetary limits upon liability imposed by any statute of Kenya which applies under the rules of private international law of Kenya”. Such a defence is not open to an award-debtor under the New York Convention.

Similarly, the award-creditor is compelled to convert and register the award in local currency. This is because section 6(4) of Kenya's Foreign Judgment (Reciprocal Enforcement) Act 1984 provides that, “where a judgment for the payment of a sum of money is satisfied in part by payment in a currency other than the currency of Kenya, the extent to which the registered judgment has been satisfied shall, for the purposes of subsection (3), be calculated on the basis of the rate of exchange prevailing at the date or dates of payment of the relevant sum or sums”. However, currency conversion is not mandated under the New York Convention or legislation in the partner states governing the enforcement of foreign arbitral awards.

The arbitration award - foreign judgment provisions were developed at a time when there was no robust international regime for enforcing foreign arbitration awards. The regime was deemed relevant to the British colonial empire: it facilitated the enforcement of awards in the colonies. With the adoption and near-worldwide acceptance of the New York Convention and the demise of the colonial empire, the provisions have outlived their usefulness and should be repealed, given that Kenya and Uganda are parties to the New York Convention. Indeed, applying the statutory regime for enforcing foreign judgments to the enforcement of foreign arbitration awards could, in some instances (such as the Kenyan example noted above), amount to a breach of an international obligation. It is recommended that, if the provisions in Kenya and Uganda are not repealed, they should be restricted to awards from countries that are not parties to the New York Convention. Relying on article III of the New York Convention, it can be argued that applying the regime created by the arbitration award - foreign judgment provisions to New York Convention awards from a partner state imposes “substantially more onerous conditions … than are imposed on the recognition or enforcement of domestic arbitral awards”.Footnote ⁶⁴

Although there has been no case in Kenya or Uganda in which a party has sought to enforce a foreign arbitral award using the foreign judgment route, the recent Ugandan case of In a Matter of Sterling Civil Engineering Limited Footnote ⁶⁵ demonstrates how the foreign judgment and foreign arbitral award regimes may interact. In that case, Sterling Civil Engineering Limited successfully obtained an arbitration award against the Tanzanian government in an arbitration that was seated in Dar es Salaam under the European Development Fund Rules. Sterling Civil Engineering Limited successfully registered the award at the Queen's Bench Division Commercial Court, United Kingdom, and then sought to enforce the English judgment as a foreign judgment under Uganda's Reciprocal Enforcement of Judgments Act 1922 (cap 21). The Ugandan High Court declined the application to register the English judgment. The court reasoned that it has discretion to decide whether or not in the circumstances of the case it is just and convenient that a judgment should be enforced in Uganda. The court found that:

The court rejected the idea that “once an arbitral award is recognized in the United Kingdom of Great Britain and Northern Ireland it then becomes a judgment made in the UK and therefore effectively ceases to be an arbitral award from Tanzania”.Footnote ⁶⁷ The court went on to suggest that the appropriate procedure the applicant should have followed was to seek enforcement of the Tanzanian award under the Arbitration and Conciliation Act 2000.

Interestingly, in this case, the arbitral award in favour of the applicant had already been registered in Tanzania against the defendant.Footnote ⁶⁸ Accordingly, this was a classic case of an award that had “in pursuance of the law in force in the place where it was made, become enforceable in the same manner as a judgment given by a court in that place”.Footnote ⁶⁹ Thus, the award could have been enforced in Uganda as a foreign judgment if the foreign judgment enforcement route, described above, was what the applicant wanted. There was no need for the applicant to travel to England to register the award before seeking to enforce it as a foreign judgment in Uganda.

This discussion on the national regimes for enforcing foreign arbitral awards, including awards from partner states, raises the question whether the EAC should develop a supranational framework on arbitration. Such a supranational framework is likely to be more predictable and efficient, and hence conducive to the conduct of intra-regional and international business with partner states. Under such a supranational framework for arbitration within the EAC, the EACJ's current arbitral jurisdiction could be expanded.

Although, as noted above, OHADA is not properly a regional economic community, it has adopted supranational instruments on arbitration, and the role of the OHADA Common Court of Justice and Arbitration (CCJA) provides an interesting comparator in this respect.Footnote ⁷⁰ Under the OHADA arbitration framework, parties of OHADA member states that are either conducting business with each other or with foreign businesses have the option to arbitrate under two separate regimes, both of which were updated with new texts adopted by the Council of Ministers that entered into force in March 2018.Footnote ⁷¹ First are the Revised Rules of Arbitration of the CCLA, 2017 (CCJA Rules). These rules are similar to the rules of international arbitral institutions such as the Court of Arbitration of the International Chamber of Commerce or the London Court of Arbitration (LCIA). Second is the Uniform Act on the Law of Arbitration, 2017 (Uniform Act), which is directly applicable in all OHADA member states. Parties may commence an ad hoc arbitration or institutional arbitration administered by an institution other than the CCJA under the Uniform Act. Under the CCJA Rules, the CCJA operates as a traditional institutional arbitration administrator (such as the International Chamber of Commerce or LCIA) and, uniquely, as a supranational court that has competence to rule on challenges to the validity or enforcement of awards. This African-developed approach to international arbitration is worth serious consideration by the EAC.

The EACJ's jurisdiction and enforcement of awards in the courts of partner states

This section examines the potential links between the jurisdiction of the EACJ and national regimes for the enforcement of arbitration awards. In most instances, challenges to the enforcement of foreign arbitral awards are made before national courts. However, one recent case suggests that the prospect of a regional court such as the EACJ becoming embroiled in an action to enforce a foreign arbitral award is far from remote. As developments within the Caribbean Community suggest, this will be especially so if an appellate jurisdiction is conferred on the EACJ from decisions of national courts: a jurisdiction it currently does not possess.

In 2013, the Caribbean Court of Justice (CCJ), in the exercise of its appellate jurisdiction, heard an appeal from a decision of the Belize Court of Appeal that refused to enforce an arbitration award made under the auspices of the LCIA.Footnote ⁷² The CCJ upheld the decision of the Belize Court of Appeal not to enforce the award on the ground that enforcing the award would be inconsistent with Belizean public policy. However, in a more recent case that also involved the enforcement of an arbitral award made under the auspices of the LCIA, the CCJ granted the applicant's application to enforce the award against the government of Belize. The CCJ arrived at its conclusion, despite the Belize Court of Appeal having earlier held that it would be contrary to public policy to recognize and enforce the award because the transactions underlying the award were tainted with illegality, having been concluded without the authorization of Parliament and contrary to section 114 of the Constitution of Belize.Footnote ⁷³

Another potential means by which the EACJ may become seized with a matter relating to enforcement of a foreign arbitral award in a partner state is through a preliminary reference.Footnote ⁷⁴ Article 34 of the EAC Treaty provides that, “[w]here a question is raised before any court or tribunal of a partner state concerning the interpretation or application of the provisions of this Treaty or the validity of the regulations, directives, decisions or actions of the Community, that court or tribunal shall, if it considers that a ruling on the question is necessary to enable it to give judgment, request the Court to give a preliminary ruling on the question”.

In respect of this procedure, the EACJ has only rendered one decision in the exercise of its jurisdiction.Footnote ⁷⁵ It is possible for a respondent to argue that the enforcement of an arbitral award would be inconsistent with the public policy of the enforcing forum because aspects of the award violate EAC law. A comparative case in point is the EUCJ decision in Eco Swiss China Time Ltd v Benetton International.Footnote ⁷⁶ In this case, a preliminary reference by the Supreme Court of the Netherlands, the EUCJ decided that article 85 of the EEC Treaty may be regarded as a matter of public policy justifying a national court's refusal to recognize and enforce an arbitration award under article V(2)(b) of the New York Convention.Footnote ⁷⁷