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Kenya’s foreign trade disputes costly - experts

The Star | 25 April 2019

Kenya’s foreign trade disputes costly - experts


Kenya spends at least Sh500 million in defending a single case filed by investors at international courts under the Bilateral Investment Treaties, according to a regional trade negotiation institute.

The Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) and EcoNews Africa said the provisions under the treaties are very risky.

The two bodies said the funds used in legal protection and which mostly are not recovered, could be directed in state-led development.

BITs are agreements between countries for the reciprocal promotion and protection of investments.

However, according to the institutions, BITs have increasingly protected foreign investors, with the capital-exporting countries using the agreements to further their market liberalisation.

“With the funds used in protection of these legal risks, then we can really begin to question whether it is necessary to sign them. If we cannot reject the BITs then we need to make sure they are free of ambiguity,” EcoNews Africa Edgar Odari said.

Kenya has signed 19 BITs with countries including China, Finland, Germany, Iran, Japan, UK and Netherlands. Out of this, 11 treaties are in force.

BITs with France and Switzerland expire on July 10 and May 26 respectively and will be automatically renewed.

According to Odari, the Kenya- France treaty is in French language, capable of raising a legal implication.

If the government does not submit a renegotiation deal, then the treaty will be renewed for 10 years.

SEATINI’s Uganda country director Jane Naluga said there is need to adopt the recently approved East Africa Community model investment treaty to redefine the bilateral agreements.

She said while it is assumed such action would discourage investment, Ethiopia has not signed BITs with India, USA, UK and Qatar which are its four main with Foreign Direct Investors

Kenya has so far faced three disputes at the International Centre for Settlement of Investment Disputes.

The disputes involved a service and trade company, World Duty free company limited and an electric power and energy company, WaIAM Energy.

The recently concluded case in October 2018 involved Cortec Mining Kenya, Cortec (Pty) Limited and Stirling Capital Limited amounting to Sh200billion.

The firm claimed that the government’s move to cancel its license had breached the UK-Kenya Bilateral Investment Treaty’s obligation to treat them fairly and equitably.

The tribunal however dismissed the claimants’ plea but declined to grant the respondent’s claim costs of Sh650 million, reducing the award by 50 per cent.

The respondent, Kenya was entitled to recover costs in the sum of Sh320 million.

 source: The Star