News & Analysis

The Tax Procedures (Settlement of Tax Disputes Out of Court or Tribunal) Regulations, 2020

Published

2 years ago

January 28, 2022

Admin

By Dr. Kariuki Muigua, PhD (Leading Environmental Law Scholar, Policy Advisor, Natural Resources Lawyer and Dispute Resolution Expert from Kenya), Winner of Kenya’s ADR Practitioner of the Year 2021, ADR Publication of the Year 2021 and CIArb (Kenya) Lifetime Achievement Award 2021*

The Cabinet Secretary for the National Treasury and Planning on 17th June 2020, pursuant to section 112 of Tax Procedures Act, 2015 (the Act), enacted The Tax Procedures (Settlement of Tax Disputes Out of Court or Tribunal) Regulations, 2020 (which were gazetted on 9th July 2020) to make provision for Alternative Dispute Resolution after tax appeal has been lodged either with the Tax Appeals Tribunal (TAT) or Court of Law whether High Court or Court of Appeal. The regulations apply where a tax dispute has been permitted to be settled out of court or tribunal in accordance with section 55 of the Act and section 28 of the Tax Appeals Tribunal providing for out of Court and out of Tribunal settlement.

The regulations provide that a party to a tax dispute may apply to the court or tribunal to settle the tax dispute out of court or tribunal as the case may be. However, the parties to a tax dispute have to agree voluntarily to settle the dispute out of court or tribunal and the party seeking to settle the dispute out of court or tribunal has to obtain the consent of the other party as proof before applying to the court or tribunal. In any case, the parties must be committed to the settlement process. Even where parties agree, there are tax disputes that cannot be settled out of court or tribunal. These include disputes whose settlement would be contrary to the Constitution, the tax law or any other written law; tax dispute involving the interpretation of the law or where there is evidence that the taxpayer has committed fraud in relation to tax.

Further, if the parties to the tax dispute have previously failed to settle the dispute out of court or tribunal, the matter cannot be referred to out of court settlement again. In essence, this provision appears to limit the discretion of the Court or Tribunal to allow referral of disputes that had previously failed to reach settlement under ADR process. This is key given that the parties to a tax dispute are required to conclude the settlement process within ninety days from the date the court or tribunal grants permission to settle the dispute out of court or tribunal. This is the same time stipulated by the Act. Thus, if the parties do not reach a settlement agreement within the stipulated 90 days, the tax dispute shall be referred back to the court or tribunal and it is not possible for parties to agree to extend the time for settlement except with the permission of the court or the tribunal to extend the time.

Once the court or tribunal has permitted the parties to a tax dispute to settle the dispute out of court or tribunal, a facilitator is to be nominated, with the consent of the other party to the dispute. In this regard, the Commissioner may recommend a facilitator from amongst the staff of the Authority or the taxpayer may propose one from a list of mediators accredited by an institution recognized in Kenya. Clearly, this means a taxpayer is not bound to choose a Court Accredited Meditator as is the case in the Court Mandated Mediation. The nomination of a facilitator has to be done within fourteen days after the court or tribunal has granted the parties to a tax dispute permission to settle the dispute. The facilitator is to be notified in writing of the nomination by the Commissioner.

In the interest of impartiality and neutrality, a facilitator must not have been involved in any way in the matter which is the subject to the tax dispute or be a practicing tax agent or represent or have represented the taxpayer in any matter or have any interest in the tax dispute. Further, the facilitator has to disclose in writing to the parties to the tax dispute any conflict of interest which may arise before the commencement of the proceedings for the settlement of the tax dispute or which may arise during the proceedings. In that regard, upon the disclosure of a conflict of interest by a facilitator, the facilitator is required to immediately recuse himself or herself from dealing with the tax dispute and another facilitator shall be nominated. This is needlessly too stringent and may lead to undue delays in settlement of tax disputes. The best option would have been to allow both parties to decide whether to continue with the facilitator or press for recusal.

In facilitating the resolution of tax dispute, the Facilitator is bound to hold such number of meetings as may be appropriate, guide the parties to the tax dispute in the settlement of the dispute, promote and protect the integrity, confidentiality, fairness and efficiency of the process; act independently and avoid circumstances that may result in a conflict of interest; and employ the procedures necessary for the expeditious resolution of the dispute. At the same time, the facilitator has to convene the first meeting between the parties to the tax dispute within fourteen days of being notified of nomination. At the first meeting, the parties identify the issues for settlement; agree on a schedule of meetings; decide on the service of documentary material relevant to the tax dispute; agree on the conduct of the meetings; and agree on any other issues necessary to facilitate the settlement of the tax dispute.

Once the settlement meetings commence, the parties to the tax dispute or the parties’ appointed representatives are forbidden from communicating with the facilitator in the absence of the other party and any communication with the facilitator shall only be in relation to the tax dispute. During meetings convened by the facilitator, the parties or their appointed representatives are required to maintain confidentiality and uphold decorum; uphold integrity and fairness; make full disclosure of material facts and documents relevant to the tax dispute; and strictly adhere to the agreed timelines. If a party to a tax dispute is unable to meet any timelines agreed upon at a meeting convened by the facilitator, that party has to notify the facilitator and the other party in writing of the inability and specify the reasons for the inability. In event of failure by a party or their representative is without justifiable cause to attend a meeting convened by the facilitator, the facilitator may appoint another date for the meeting or terminate the process.

The regulations provide for the reasons for settlement proceedings including where a party to the tax dispute opts to terminate the proceedings and notifies the other party, the court or tribunal in writing of the intention to terminate the proceedings or where both parties to the tax dispute mutually agree to terminate the proceedings and notify the court or tribunal in writing. Further, the settlement proceedings may terminate where a party fails to attend three consecutive meetings convened by the facilitator without any justifiable cause or where the ninety days’ timeline required to resolve the dispute has lapsed and an extension of time by the court or the tribunal has not been granted. (2) Upon the termination of settlement proceedings, the facilitator is to send a notice of termination in writing to the parties and the matter stands referred back to the court or the tribunal.

The settlement agreement constitutes the decision between the parties and has to be dated and signed by the parties or their appointed representatives and witnessed by the facilitator. It forms the basis for preparation of tax a dispute resolution consent for filing before the court or tribunal and is binding to both parties. Such agreement is considered to be the full and final settlement of the dispute save where the parties have expressly specified otherwise in the Agreement. The agreement is also confidential and entered into on a “without prejudice” basis and does not form the basis for judicial precedent. If the parties fail to reach a settlement agreement, the tax dispute shall be referred back to the court or tribunal, as the case may be, for determination.

In case a tax dispute is settled wholly or partially a consent agreement between the parties to a tax dispute setting down the terms of the settlement agreement shall be filed with the court or tribunal, as the case may be. Such consent agreement between parties to a tax dispute shall be recorded by the court or tribunal as an order of the court or tribunal. Where a party to a tax dispute violates the terms of a settlement agreement between the parties, the other party may apply to the court or the tribunal for enforcement of the agreement. Each party is to bear its own costs for the settlement of the tax dispute out of court or the tribunal and pay any expert witness they call. Where a taxpayer nominated a facilitator, they shall bear any cost that may be payable to the facilitator. The Commissioner provides a venue for the meetings but where the other party prefers a different venue, that party shall bear the costs of that different venue.

*This article is part of developing series on Specialized Alternative Dispute Resolution in Kenya by Dr. Kariuki Muigua, PhD, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Publisher of the Year 2021 and ADR Lifetime Achievement Award 2021 (CIArb Kenya). Dr. Kariuki Muigua is Kenya’s foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert. Dr. Kariuki Muigua is a Senior Lecturer of Environmental Law and Dispute resolution at the University of Nairobi School of Law and The Center for Advanced Studies in Environmental Law and Policy (CASELAP). He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Dr. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Africa Trustee of the Chartered Institute of Arbitrators and the Managing Partner of Kariuki Muigua & Co. Advocates. Dr. Muigua is recognized as one of the leading lawyers and dispute resolution experts by the Chambers Global Guide 2022.

References

The Tax Procedures (Settlement of Tax Disputes Out of Court or Tribunal) Regulations, 2020; Available at: http://kenyalaw.org/kl/fileadmin/pdfdownloads/LegalNotices/2020/LN123_2020.pdf (accessed on 28/01/2022).

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News & Analysis

Way Forward in Applying Collaborative Approaches Towards Conflict Management

Published

1 month ago

March 24, 2024

Admin

By Hon. Prof. Kariuki Muigua, OGW, PhD, C.Arb, FCIArb is a Professor of Environmental Law and Dispute Resolution at the University of Nairobi, Member of Permanent Court of Arbitration, Leading Environmental Law Scholar, Respected Sustainable Development Policy Advisor, Top Natural Resources Lawyer, Highly-Regarded Dispute Resolution Expert and Awardee of the Order of Grand Warrior (OGW) of Kenya by H.E. the President of Republic of Kenya. He is the Academic Champion of ADR 2024, the African ADR Practitioner of the Year 2022, the African Arbitrator of the Year 2022, ADR Practitioner of the Year in Kenya 2021, CIArb (Kenya) Lifetime Achievement Award 2021 and ADR Publisher of the Year 2021 and Author of the Kenya’s First ESG Book: Embracing Environmental Social and Governance (ESG) tenets for Sustainable Development” (Glenwood, Nairobi, July 2023) and Kenya’s First Two Climate Change Law Book: Combating Climate Change for Sustainability (Glenwood, Nairobi, October 2023), Achieving Climate Justice for Development (Glenwood, Nairobi, October 2023), Promoting Rule of Law for Sustainable Development (Glenwood, Nairobi, January 2024) and Actualizing the Right to a Clean and Healthy Environment (Glenwood, Nairobi, March 2024)*

It is necessary to embrace and utilize collaborative approaches in managing conflicts. These techniques include mediation, negotiation, and facilitation. These mechanisms are effective in managing conflicts since they encourage parties to embrace and address disagreements through empathy and listening towards mutually beneficial solutions. Collaborative approaches also have the potential to preserve relationships, build trust, and promote long term positive change. They also ensure a win-win solution is found so that everyone is satisfied which creates the condition for peace and sustainability. These approaches are therefore ideal in managing conflicts. It is therefore important to embrace collaborative approaches in order to ensure effective management of conflicts.

In addition, it is necessary for third parties including mediators and facilitators to develop their skills and techniques in order to enhance the effectiveness of collaborative approaches towards conflict management. For example, it has correctly been observed that mediators and facilitators should listen actively and empathetically in order to assist parties to collaborate towards managing their dispute. Therefore, when a dispute arises, the first step should involve listening to all parties involved with an open mind and without judgment. This should entail active listening, which means paying attention to both verbal and nonverbal cues and acknowledging the emotions and perceptions involved.

It has been observed that by listening empathetically, a third party such as a mediator of facilitator can understand each person’s perspective and start to build a foundation for resolving the conflict through collaboration. In addition, while collaborating towards conflict management, it is necessary to encourage and help parties to focus on interests and not positions. It has been pointed out that focusing positions can result in a standstill which can delay or even defeat the conflict management process. However, by identifying and addressing the underlying interests parties can find common ground and collaborate towards coming up with creative solutions towards their conflict.

Mediators and facilitators should also assist parties to look for areas of agreement or shared goals. Identifying a common ground can build momentum and create a positive environment for resolving the conflict. Further, in order to ensure the effectiveness of collaborative approaches in conflict management, it is necessary to build strong collaboration. It has been asserted that strong collaboration can be achieved by establishing a shared purpose, cultivating trust among parties, encouraging active participation by all parties, and promoting effective communication.

Strong collaboration enables parties to develop trust between and among themselves and strengthen communication channels between the various parties. It also helps to generate inclusive solutions that arise from wider stakeholders’ views. Therefore while applying collaborative approaches, it is necessary for parties to foster strong collaboration by identifying common goals, building trust, ensuring that all stakeholders are involved, and communicating effectively in order to come up with win-win outcomes.

Finally, while embracing collaborative approaches in conflict management, it is necessary for parties to consider seeking help from third parties if need arises. For example, negotiation is always the first point of call whenever a conflict arises whereby parties attempt to manage their conflict without the involvement of third parties. It has been described as the most effective collaborative approach towards conflict management since it starts with an understanding by both parties that they must search for solutions that satisfy everyone.

It enables parties to a dispute to come together to openly discuss the issue causing tension, actively listen to each other, and come up with mutually satisfactory solutions. However, it has been correctly observed that negotiation may fail especially if the conflict is particularly complex or involves multiple parties due to challenges in collaborating. In such circumstances, where negotiation fails, parties should consider resorting to other collaborative approaches such as mediation and facilitation where they attempt to manage the conflict with the help of a third party. A mediator or facilitator can assist parties to collaborate and continue with the negotiations and ultimately break the deadlock.

*This is an extract from Kenya’s First Clean and Healthy Environment Book: Actualizing the Right to a Clean and Healthy Environment (Glenwood, Nairobi, January 2024) by Hon. Prof. Kariuki Muigua, OGW, PhD, Professor of Environmental Law and Dispute Resolution, Senior Advocate of Kenya, Chartered Arbitrator, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Lifetime Achievement Award 2021 (CIArb Kenya), African Arbitrator of the Year 2022, Africa ADR Practitioner of the Year 2022, Member of National Environment Tribunal (NET) Emeritus (2017 to 2023) and Member of Permanent Court of Arbitration nominated by Republic of Kenya and Academic Champion of ADR 2024. Prof. Kariuki Muigua is a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. Prof. Kariuki Muigua teaches Environmental Law and Dispute resolution at the University of Nairobi School of Law, The Center for Advanced Studies in Environmental Law and Policy (CASELAP) and Wangari Maathai Institute for Peace and Environmental Studies. He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Prof. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Managing Partner of Kariuki Muigua & Co. Advocates and Africa Trustee Emeritus of the Chartered Institute of Arbitrators 2019-2022. Prof. Muigua is a 2023 recipient of President of the Republic of Kenya Order of Grand Warrior (OGW) Award for his service to the Nation as a Distinguished Expert, Academic and Scholar in Dispute Resolution and recognized among the top 5 leading lawyers and dispute resolution experts in Band 1 in Kenya by the Chambers Global Guide 2024 and was listed in the Inaugural THE LAWYER AFRICA Litigation Hall of Fame 2023 as one of the Top 50 Most Distinguished Litigation Lawyers in Kenya and the Top Arbitrator in Kenya in 2023.

References

Bercovitch. J., ‘Conflict and Conflict Management in Organizations: A Framework for Analysis.’ Available at https://ocd.lcwu.edu.pk/cfiles/International%20Relations/EC/IR403/Conflict.ConflictManagementinOrga nizations.pdf (Accessed on 01/03/2024).

Bercovitch. J., ‘Mediation Success or Failure: A Search for the Elusive Criteria.’ Cardozo Journal of Conflict Resolution, Vol. 7, p 289.

Bloomfield. D., ‘Towards Complementarity in Conflict Management: Resolution and Settlement in Northern Ireland,’ Journal of Peace Research., Volume 32, Issue 2.

Burrell. B., ‘The Five Conflict Styles’ Available at https://web.mit.edu/collaboration/mainsite/ modules/module1/1.11.5.html (Accessed on 01/03/2024).

Demmers. J., ‘Theories of Violent Conflict: An Introduction’ (Routledge, New York, 2012).

Diana. M., ‘From Conflict to Collaboration’ Available at https://www.pmi.org/learning/library/conflict-collaboration-beyond-projectsuccess-1899 (Accessed on 01/03/2024).

Food and Agriculture Organization., ‘Collaborative Conflict Management for Enhanced National Forest Programmes (NFPs)’ Available at https://www.fao.org/3/i2604e/i2604e00.pdf (Accessed on 01/03/2024).

International Organization for Peace Building., ‘Natural Resources and Conflict: A Path to Mediation.’ Available at https://www.interpeace.org/2015/11/naturalresources-and-conflict-a-path-to-mediation/ (Accessed on 01/03/2024).

Isenhart. M.W., & Spangle. M., ‘Summary of “Collaborative Approaches to Resolving Conflict” ‘ Available at https://www.beyondintractability.org/bksum/isenhart-collaborative (Accessed on 01/03/2024).

Kaushal. R., & Kwantes. C., ‘The Role of Culture and Personality in Choice of Conflict Management Strategy.’ International Journal of Intercultural Relations 30 (2006) 579– 603.

Leeds. C.A., ‘Managing Conflicts across Cultures: Challenges to Practitioners.’ International Journal of Peace Studies, Volume 2, No. 2, 1997.

May. E., ‘Collaborating Conflict Style Explained In 4 Minutes’ Available at https://www.niagara institute.com/blog/collaborating-conflict-style/ (Accessed on 01/03/2024).

Miroslavov. M., ‘Mastering the Collaborating Conflict Style In 2024’ Available at https://www.officernd.com/blog/collaborating-conflictstyle/#:~:text=It’s%20one%20of%20the%20strat egies,their%20underlying%20needs %20and%20interests. (Accessed on 01/03/2024).

Muigua. K & Kariuki. F., ‘ADR, Access to Justice and Development in Kenya.’ Available at http://kmco.co.ke/wp-content/uploads/2018/08/ADR-access-tojustice-and-development-inKenyaRevised-version-of-20.10.14.pdf (Accessed on 01/03/2024).

Muigua. K., ‘Alternative Dispute Resolution and Access to Justice in Kenya.’ Glenwood Publishers Limited, 2015.

Muigua. K., ‘Reframing Conflict Management in the East African Community: Moving from Alternative to ‘Appropriate’ Dispute Resolution.’ Available at https://kmco.co.ke/wpcontent/uploads/2023/06/ Reframing-ConflictManagement-in-the-East-African-CommunityMoving-from-Alternative-toAppropriate-Dispute-Resolution (Accessed on 01/03/2024).

Muigua. K., ‘Resolving Conflicts through Mediation in Kenya.’ Glenwood Publishers Limited, 2nd Edition., 2017.

Quain. S., ‘The Advantages & Disadvantages of Collaborating Conflict Management’ Available at https://smallbusiness.chron.com/advantagesdisadvantages-collaborating-conflict-management-36052.html (Accessed on 01/03/2024).

Samuel. A., ‘Is the Collaborative Style of Conflict Management the Best Approach?’ Available at https://www.linkedin.com/pulse/collaborative-style-conflictmanagement-best-approach-samuel-ansah (Accessed on 01/03/2024).

United Nations., ‘Land and Conflict’ Available at https://www.un.org/en/landnatural-resources-conflict/pdfs/GN_ExeS_Land%20and%20Conflict.pdf (Accessed on 01/03/2024).

Weiss. J., & Hughes. J., ‘Want Collaboration?: Accept—and Actively Manage— Conflict’ Available at https://hbr.org/2005/03/want-collaboration-accept-andactively-manage-conflict (Accessed on 01/03/2024).

News & Analysis

Opportunities and Challenges of Collaborative Conflict Management

Published

1 month ago

March 24, 2024

Admin

One of the key collaborative approaches that can be applied in conflict management is mediation. Mediation has been defined as a method of conflict management where conflicting parties gather to seek solutions to the conflict, with the assistance of a third party who facilitates discussions and the flow of information, and thus aiding in the process of reaching an agreement.

Mediation is usually a continuation of the negotiation process since it arises where parties to a conflict have attempted negotiations, but have reached a deadlock. Parties therefore involve a third party known as a mediator to assist them continue with the negotiations and ultimately break the deadlock. A mediator does not have the power to impose a solution upon the parties but rather facilitates communication, promotes understanding, focuses the parties on their interests, and uses creative problem solving to enable the parties to reach their own agreement.

Some of the core values and principles guiding mediation as a collaborative approach towards conflict management include impartiality, empathy, valued reputation, and confidentiality. It has also been pointed out that mediation has certain attributes which include informality, flexibility, efficiency, confidentiality, party autonomy and the ability to promote expeditious and cost effective management of dispute which makes it an ideal mechanism for managing disputes.

Mediation is an effective mechanism that can foster collaboration due to its potential to build peace and bring people together, binding them towards a common goal. Mediation can also foster effective management of conflicts by building consensus and collaboration. It has been argued that mediation can enhance collaboration towards conflict management due to its emphasis on the need for a mediator who listen to the wants, needs, fears, and concerns of all sides. Therefore, for mediation to be effective in fostering collaboration, the approach must be mild and non-confrontational because the goal is to make all parties feel comfortable expressing their views and opinions.

Another key collaborative approach towards conflict management is negotiation. It has been defined as an informal process that involves parties to a conflict meeting to identify and discuss the issues at hand so as to arrive at a mutually acceptable solution without the help of a third party. Negotiation is one of the most fundamental methods of managing conflicts which offers parties maximum control over the process66. It aims at harmonizing the interests of the parties concerned amicably. Negotiation has been described as the process that creates and fuels collaboration.

Negotiation fosters collaboration since it involves all parties sitting down together, talking through the conflict and working towards a solution together. Negotiation has been described as the most effective collaborative approach towards conflict management since it starts with an understanding by both parties that they must search for solutions that satisfy everyone. It enables parties to a dispute to come together to openly discuss the issue causing tension, actively listen to each other, and come up with mutually satisfactory solutions. If negotiation fails, parties may resort to other collaborative approaches such as mediation and facilitation where they attempt to manage the conflict with the help of a third party.

Facilitation is another key collaborative approach towards conflict management. Facilitation entails a third party known as a facilitator who helps parties to a conflict to understand their common objectives and achieve them without while remaining objective in the discussion. A facilitator assists conflicting parties in achieving consensus on any disagreements so that they have a strong basis for future action.

It has been pointed out that facilitation is effective in fostering collaboration in conflict management particularly in conflicts which are complex in nature or those that involve multiple parties. In such conflicts, it is necessary to seek outside help from a neutral third party to facilitate the discussion as parties work towards mutually acceptable outcomes.

Applying collaborative approaches towards conflict management offers several advantages. It has been pointed out that collaborating results in mutually acceptable solutions. Such solutions can therefore be effective and long lasting negating the likelihood of conflicts reemerging in future. Collaborating signifies joint efforts, gain for both parties and integrated solutions arrived at by consensual decisions.

Collaborating is also very effective when it is necessary to build or maintain relationships since it focuses on the needs and interests of all parties in a dispute. It has been observed that collaborative approaches emphasize trust-building, open communication, and empathizing with each other’s perspectives which goes beyond resolving conflicts to facilitate deeper understandings of each other. Collaborative approaches can therefore lead to better interpersonal connections.

Collaborating can also result in constructive decision-making since encouraging active engagement and open dialogue helps others think outside of the box and explore innovative paths towards conflict management. Further, by encouraging the participation and involvement of all stakeholders, collaboration ensures that everyone feels heard, valued and understood which is very essential in managing conflicts.

In addition, collaborating sets the tone for future conflict resolutions since it gives those involved the shared responsibility to resolve their problems. However, collaborative approaches towards conflict management have also been associated with several drawbacks. For example, it has been observed that collaborative approaches may not be easy to implement since they involve a lot of effort to get an actionable solution. It has been observed that thorough discussions, active participation, and exploring multiple perspectives as envisaged by collaborative approaches take time.

Collaborating may therefore require patience and dedication to ensure all voices are heard and meaningful resolutions are reached. Achieving consensus through collaborative approaches can also be difficult since conflicting opinions, varying conflict goals, and emotional variables can make the consensus-building process challenging and time-consuming. As a result of these challenges, it has been asserted that collaborative approaches towards conflict management are frequently the most difficult and time-consuming to achieve.

Further, it has been argued that over use of collaboration and consensual decision-making may reflect risk aversion tendencies or an inclination to defuse responsibility. Despite these challenges, collaborative approaches towards conflict management are ideal in ensuring win-win and long lasting outcomes. It is therefore necessary to embrace and apply collaborative approaches towards conflict management.