By Prof. Kenneth Wyne & Buke Halkano
As Kenya advances its development agenda under Vision 2030 and its climate commitments under the Paris Agreement, the energy and construction sectors have become central to this transformation. These industries are not only key contributors to Kenya’s GDP, which is estimated at USD 131.67 billion, but are also closely tied to the achievement of several United Nations Sustainable Development Goals. These include clean energy, sustainable cities, climate action, and infrastructure innovation.
While these sectors hold enormous promise, they also face growing scrutiny due to their environmental and social impacts. Large-scale energy and construction projects often encounter complex challenges related to land use, environmental degradation, regulatory compliance, and stakeholder engagement. These challenges can give rise to disputes that require resolution frameworks that are efficient, fair, and responsive to sustainability concerns. In this context, arbitration is increasingly being recognized as a vital mechanism. It not only resolves disputes but also supports the enforcement of environmental and governance standards in infrastructure development.
Arbitration offers confidentiality, procedural flexibility, and the ability to appoint expert panels. These features make it well suited for resolving disputes that involve technical issues and environmental considerations. A notable example is a major dam project in which construction defects, including micro-fissures and sedimentation problems, led to significant ecological damage. The dispute was resolved through arbitration, and the process highlighted the importance of integrating environmental awareness and technical expertise into the proceedings. This case demonstrated how arbitration can address not just contractual and technical claims, but also the broader sustainability and community impacts of infrastructure projects.
Kenya’s arbitration framework is built on solid international legal foundations. The country has adopted the UNCITRAL Model Law and is a signatory to the New York Convention. These instruments ensure that arbitral awards are enforceable in over 170 countries. This legal architecture offers investors confidence that their rights will be protected and that climate-aligned contractual commitments will be honored. Additionally, Kenya is a contracting member of the International Centre for Settlement of Investment Disputes. This allows for the resolution of disputes involving foreign investors in public-private partnerships, particularly in renewable energy and infrastructure development.
At the global level, frameworks such as the Paris Agreement, the ICC Arbitration Rules, and the Greener Arbitrations Campaign are shaping modern practices in dispute resolution. These tools promote the inclusion of climate commitments and sustainability benchmarks within contract terms and arbitration procedures. As a result, arbitration is increasingly reflecting environmental stewardship and long-term social responsibility, alongside commercial efficiency.
Despite this progress, several challenges remain. There is still limited awareness among stakeholders, particularly small and medium-sized enterprises, about arbitration’s potential to manage environmental, social, and governance risks. The cost and complexity of arbitration can act as barriers, and there is a need for more arbitrators who possess expertise in areas such as environmental law, engineering, and sustainability. Addressing these gaps will require targeted reforms, including professional training, institutional capacity building, and the creation of green arbitration protocols that are tailored to Kenya’s development context.
As Kenya continues to position itself as a regional hub for sustainable development, arbitration should be seen not only as a dispute resolution tool but also as a mechanism for advancing accountability, transparency, and climate resilience. By embedding environmental and social principles into every stage of the arbitration process, Kenya’s legal and investment communities can strengthen the country’s path toward inclusive and sustainable growth. Ultimately, arbitration is more than a legal mechanism. When aligned with green development goals, it becomes a governance strategy that supports Kenya’s vision of environmental justice, economic stability, and prosperity for future generations.
