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 phrase alternative dispute resolution refers to all dispute resolution mechanisms and processes other than litigation including but not limited to negotiation, enquiry, mediation, conciliation, expert determination, arbitration and others. It has, however, been argued that the term “alternative dispute resolution” is a misnomer as it may be understood to imply that these mechanisms are second-best to litigation which is not true. Article 33 of the Charter of the United Nations outlines these conflict management mechanisms and is considered the legal basis for the application of alternative dispute resolution mechanisms in disputes between parties whether States or individuals. It provides that the parties to any dispute shall, first of all seek a solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice. Alternative Dispute Resolution (ADR) is now recognized in the Kenyan legal framework including under the Constitution which has elevated status of ADR from being merely a convenient private arrangement for resolving disputes between parties to an access to justice mechanism with applicability to a wide array of disputes including tax dispute resolution.
Promotion of Alternative Dispute Resolution
Article 159(2) of the Constitution provides that in exercising judicial authority, the courts and tribunals shall be guided by the following principles (c) alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted,…” In essence, article 159 of the Constitution makes promotion of ADR a key principle of exercise of judicial authority in Kenya. In turn, courts and tribunals are called upon to promote the use alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms as long as they do not contravene the Bill of Rights and are not repugnant to justice or inconsistent with the Constitution or any written law.
Further, the scope for the application of ADR has also been extensively widened by the constitution with Article 189 (4) stating that national laws shall provide for the procedures to be followed in settling intergovernmental disputes by alternative dispute resolution mechanisms, including negotiation, mediation and arbitration. These are the key provisions that form the constitutional basis for the application of ADR in dispute resolution in Kenya. The import of these provisions is that ADR can apply to all disputes and enjoys broad applicability now more than ever. It is also a clear manifestation of the acceptance of ADR as a means of conflict resolution in all disputes.
Public Finance and No Taxation without Legislation
The principles of public finance under the constitution include “openness and accountability” and the need to “promote an equitable society, and in particular ensure “the burden of taxation shall be shared fairly.” In turn, the Constitution gives the National Government power to impose taxes and charges which include income tax, value-added tax, customs duties and other duties on import and export goods and excise tax. In addition, parliament may enact laws authorizing the national government to impose any other tax or duty. On its part, the county may impose property rates, entertainment taxes and any other tax that is authorize by an Act of Parliament. Important for tax dispute resolution, Article 210(1) of the Constitution on imposition of tax provides that “no tax or licensing fee may be imposed, waived or varied except as provided by legislation.” This means that any resolution or settlement of tax disputes which has the effect of imposing, waiving or varying taxes must be pursuant to provision of legislation to be valid.
Fair Administrative Action and Access to Justice
In addition to the provisions of the Constitution on authority and principles of public finance, the right to fair administrative action and access to justice are also relevant to tax dispute resolution given that some aspects of it are administrative in nature such as objection decision and the decision by KRA officials to accept request to refer disputes to ADR or request for settlement out of court or tribunal. In that regard, taxpayers enjoy the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair. Given that most of tax administrative decisions affect the right or fundamental freedom of a person including right to property, taxpayers have the right to be given written reasons for the action.
Further, the provision for fair administrative action is the basis for review of KRA decisions by Court or impartial tribunal. The question that begs is, can the Court refer for settlement an application for review of administrative action of KRA referred to it by a taxpayer to an ADR Facilitator who is a KRA employee given the requirement of “independent and impartial tribunal”? Further, the State is enjoined to ensure access to justice for all persons and, if any fee is required, it shall be reasonable and shall not impede access to justice. This raises the question, whether requiring where taxpayer opts for an Independent ADR facilitator who is not an employee of KRA that they pay for them may be considered an impediment to access to justice. In any case, the Tax Procedures (Settlement Out of Court or Tribunal) Regulations, 2020 have to be considered from the perspective that they are offering an alternative to Court-Annexed Mediation which allows parties access to an Independent Mediator.
*This article is part of an ongoing 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 a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. 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
Constitution of Kenya, Laws of Kenya, Government Printer, 2010.
Fenn, P., “Introduction to Civil and Commercial Mediation”, in Chartered Institute of Arbitrators, Workbook on Mediation, (CIArb, London, 2002), pp. 50-52.
United Nations Charter, Chapter VI: Pacific Settlement of Disputes.