Proper cost management and well-structured arbitration agreements can keep expenses reasonable. But beyond these traditional approaches lies a funding mechanism that could improve access to justice.
Picture this: you’re a mid-sized Kenyan company with a legitimate commercial dispute. Your lawyers confirm you have a strong case. Yet you hesitate. Why? The arbitration process could cost you a lot of money upfront.
This scenario plays out across Kenya’s business landscape daily. Companies abandon valid claims, not because they lack merit, but because they lack the financial muscle to pursue them.
Many turn to the courts instead, believing litigation is cheaper. They often discover otherwise, facing lengthy delays and unexpected costs while their disputes play out in public view.
Third-party funding offers a different approach entirely. Here’s how it works: an external investor, typically a specialised funding company, pays your arbitration costs in exchange for a portion of any eventual award. You pursue your case without depleting your cash flow. The funder only profits if you win.
This isn’t some experimental concept. Singapore has embraced it fully. The UK has refined it over the decades. Australia has integrated it into their dispute resolution ecosystem.
Even South Africa has begun exploring regulatory frameworks to accommodate it. These jurisdictions recognise what Kenya has yet to fully grasp: access to justice shouldn't depend solely on the depth of your pockets.
Kenya’s legal landscape presents genuine challenges to third-party funding. Our Advocates Act contains provisions that could potentially restrict such arrangements. The common law doctrines of champerty and maintenance, historical prohibitions against third parties stirring up litigation, still cast shadows over our legal system.
But here’s the critical question: do these centuries-old doctrines serve justice in today’s reality? Champerty was designed to prevent powerful nobles from backing lawsuits for personal gain, not to stop legitimate businesses from accessing dispute resolution mechanisms.
Modern common law jurisdictions have found ways to balance these concerns with contemporary needs. They’ve crafted exceptions, created regulatory frameworks and distinguished between harmful interference and legitimate funding arrangements. The legal obstacles aren't insurmountable. They require thoughtful navigation.
Consider Kenya’s small and medium enterprises. They drive our economy, create jobs and fuel innovation. Yet when they are wronged, many lack recourse.
Traditional arbitration, while faster than courts, remains expensive. Legal fees, expert witnesses, arbitrator costs and administrative expenses add up quickly.
Third-party funding could democratise dispute resolution. It would enable smaller players to pursue legitimate claims against better-resourced opponents.
The funding market would naturally filter out weak cases. Investors won't back losing propositions. This creates a quality control mechanism that benefits the entire system.
Kenya aspires to become East Africa’s premier arbitration destination. We’ve invested in institutions, trained arbitrators and created enabling legislation. Yet we’ve overlooked a crucial element: making arbitration genuinely accessible.
Regional competitors are moving ahead. If we remain static while others innovate, we risk losing our competitive edge. Third-party funding could attract international disputes to Kenya, knowing that both sides have genuine access to justice regardless of their financial positions.
The economic multiplier effects are significant. More arbitrations mean more work for local lawyers, arbitrators, expert witnesses and support services. The legal services sector grows, supporting broader economic development.
Critics raise valid concerns. Will third-party funding encourage frivolous litigation? Might it compromise the integrity of arbitral proceedings? Could it create conflicts of interest?
These concerns deserve serious consideration, not dismissal. Proper regulation can address them. Disclosure requirements ensure transparency. Ethical guidelines protect the arbitral process. Professional oversight maintains standards.
Other jurisdictions have developed sophisticated frameworks addressing these very issues. We can learn from their experiences rather than reinventing solutions.
Kenya stands at a crossroads. We can maintain the status quo, where arbitration remains accessible primarily to well-funded parties. Or we can embrace innovation that serves justice while strengthening our arbitration sector.
This requires honest dialogue among stakeholders. The Law Society of Kenya, our judiciary, arbitration institutions, and the business community must engage constructively. We need regulatory clarity, not prohibition.
The conversation should focus on “how,” not “whether.” How do we create safeguards? How do we ensure ethical compliance? How do we protect the integrity of arbitral proceedings while expanding access?
Kenya’s legal system has evolved continuously since independence. We've adapted to new realities, embraced beneficial innovations and discarded outdated approaches. Third-party funding represents the next logical step in this evolution.
The question isn’t whether we can afford to embrace third-party funding. It’s whether we can afford not to. Every day we delay, legitimate claims go unpursued, injustices remain unaddressed, and our arbitration sector falls further behind international standards.
What if the solution to arbitration accessibility challenges does lie outside the courtroom? Perhaps it's time we seriously explored that possibility.
The writer is a Partner and Head of Dispute Resolution, Maina & Onsare Partners Advocates.
