THE AUTHOR:
Luisa Cetina, Partner at ALN Kenya
Alex Layde, Partner at ALN Kenya
Natalia Mouzoula, Principal Associate at ALN Kenya
Introduction: A New Phase in Kenya – UAE Economic Relations
The United Arab Emirates (“UAE”) has become one of Africa’s most important economic partners, with growing involvement across trade, infrastructure, energy, technology, and large-scale development projects. Against this backdrop, economic ties between Kenya and the UAE have strengthened significantly in recent years. The UAE is now Kenya’s third-largest trading partner worldwide, according to Kenyan government announcements.
In January 2025, Kenya and the UAE signed a Comprehensive Economic Partnership Agreement (“CEPA”), with the ambition to strengthen existing economic and political ties between the two countries and establish a free trade area with the East African Community. CEPA aims to stimulate investment between the parties and promote opportunities for trade liberalisation of goods and services, as well as strengthen the development of the digital economy, infrastructure, and Micro, Small and Medium-sized Enterprises (“MSMEs”). Although it has not yet entered into force, its conclusion reflects the two countries’ shared ambition to deepen long-term economic integration.
Supportive of this expanding trade and investment relationship, the Agreement between the Government of the Republic of Kenya and the Government of the United Arab Emirates on the Promotion and Protection of Investment (2014) (“BIT”), which entered into force in 2017, provides a key framework for the protection of cross-border investments. CEPA expressly reaffirms the existing BIT, but also records an intention to revise the BIT to provide more “comprehensive” coverage. As we await any revisions to the current BIT, Kenyan and UAE investors with existing or planned investments in the other jurisdiction should ensure they have a solid understanding of the treaty and the protections it currently offers.
This article provides a practical overview of the BIT, including who qualifies as an “investor”; what assets qualify as a protected “investment”; the core substantive protections offered; the treaty’s duration, scope, and survival provisions; and the dispute resolution mechanisms available to investors.
The BIT’s Definition of “Investment” and “Investor”
Article 1 of the BIT contains broad definitions of the terms “investment” and “investor”.
The definition of “investment” follows the classic asset-based model and extends to “every kind of asset” invested in the territory of the host state. This includes movable and immovable property, shares and other forms of equity, debt instruments, contractual rights with economic value, intellectual property, concessions, licences and permits. Only natural resources are explicitly excluded. By adopting such a broad scope, the BIT ensures that the overwhelming majority of commercial assets will qualify for treaty protection.
The broad language inevitably invites interpretation and challenge. The meaning of a protected “investment” under the BIT was recently tested in a novel way in Spentech Engineering Limited v. United Arab Emirates (ICSID Case No. ARB/24/16, Award, 28 July 2025). The claimant, a company incorporated in Kenya, alleged that construction works carried out at the UAE Embassy in Somalia qualified as an investment “in the territory” of the UAE. The claimant argued that its activities under the relevant contracts also had a sufficient connection to the UAE on the basis that certain technical experts were based in the UAE, meetings were held there, and other project-related activities took place within UAE territory. This was a novel interpretation of territorial nexus, which had previously been raised in obiterhypothetical comments in SGS v Philippines (ICSID Case No. ARB/02/6, Decision on Jurisdiction, 29 January 2004, para. 99) but expressly rejected.
In Spentech, the respondent applied for a summary dismissal of the claim under Rule 41(5) of the International Centre for Settlement of Investment Disputes Arbitration Rules, 2022 (“ICSID Arbitration Rules”). In response, the claimant sought to reframe its case, shifting away from an emphasis on the infrastructure projects themselves in Somalia and instead characterising its investment as comprising “intangible contractual rights” under contracts that, it argued, promoted the economic development of the UAE (para 85). Neither version of the claimant’s case proved persuasive to the Tribunal. On 28 July 2025, the Tribunal declined jurisdiction and dismissed the claims as manifestly without legal merit under Rule 41 of the ICSID Arbitration Rules, finding that the claimant had failed to establish the necessary territorial nexus with the UAE required under the BIT.
The Tribunal further accepted the respondent’s position (relying on Lotus Holding Anonim Şirketi v Republic of Turkmenistan, ICSID Case No. ARB/17/30, Award, 6 April 2020) that a Rule 41(5) application must be assessed solely against the claim as pleaded in the Request for Arbitration, and not against any subsequently reformulated claims. It found that the claimant had impermissibly attempted to shift its case post-filing by materially altering its description of the investment (paras 209-222). Nevertheless, the Tribunal still considered the amended case and confirmed that it would nevertheless fail under Rule 41(5), concluding that the claim was “fundamentally flawed” and “nothing could emerge at a later stage of these proceedings that could change that conclusion” (paras 222 and 240).
The claimant subsequently applied for annulment of the award on 8 December 2025. As of the date of this article, the annulment decision has not yet been issued, but a stay on enforcement of the award has been ordered.
This case highlights two key lessons for investors. First, from a practical perspective, while investment treaties frequently extend protection to a wide range of assets, it is essential to demonstrate a clear and credible nexus to the host state. This may be established through factors such as a physical presence, local assets, or operations within the host state, supported by contemporaneous documentation evidencing relevant activities carried out there. Second, ICSID tribunals will apply Rule 41(5) strictly to the claim as originally pleaded in the Request for Arbitration. Attempts to cure jurisdictional defects by reframing the claim at a later stage are unlikely to succeed. In cases where jurisdiction depends on a contentious characterisation of the investment, parties must take particular care to frame their request comprehensively and strategically from the outset.
The definition of “investor” under the BIT is similarly broad. It covers both natural persons who are nationals of a contracting state and legal entities incorporated or otherwise constituted under that state’s laws, provided they have a registered office, central administration, or principal place of business there. Notably, unlike many more modern investment treaties, the BIT does not require investors to demonstrate substantial business activities in their home jurisdiction. This makes it relatively straightforward for businesses to structure their investments through a Kenyan or UAE entity – whether a holding company or a special purpose vehicle – and benefit from treaty protection.
Substantive Protections Available to Investors
The BIT contains a comprehensive suite of investor protections that align with traditional, investor-friendly treaty models. These include:
- Full Protection and Security (“FPS”): Article 3 obligates each Contracting Party to promote investments by investors of the other Contracting Party and to accord them “full protection and security” in accordance with domestic law and international law.
- Non-arbitrariness and non-discrimination: Article 3(2) further requires that neither Contracting Party impair the management, maintenance, use, enjoyment or disposal of investments through arbitrary or discriminatory measures.
- Fair and Equitable Treatment (“FET”): Article 4(1) requires each Contracting Party to accord investments of investors of the other Contracting Party “fair and equitable treatment”.
- National treatment: Article 4(2) provides that the treatment afforded to investors of the other Contracting Party shall be no less favourable than that accorded to its own investors.
- Most-Favoured-Nation (“MFN”) treatment: Article 4(2) also requires that each Contracting Party afford treatment no less favourable than that accorded to investors of any third state. The BIT expressly excludes the application of MFN to procedural or judicial matters, which is a notable clarification, as parties in investment arbitration often argue that MFN clauses allow the importation of more favourable procedural or dispute resolution provisions from third-party treaties.
- Compensation for losses in emergencies: Article 6 provides protection for losses suffered due to war, armed conflict or other national emergencies, ensuring compensation and treatment no less favourable than that granted to the host state’s own investors or to investors of third states.
- Expropriation: Article 7 prohibits expropriation (direct or indirect) except for a public purpose, on a non-discriminatory basis, in accordance with due process of law, and against “prompt and full” compensation calculated at fair market value.
- Free transfer of funds: Article 8 guarantees the free transfer of payments related to investments in freely convertible currency, without undue delay or restriction, and at the prevailing spot exchange rate.
Taken together, these protections address core political and regulatory risks that investors may face, particularly in emerging markets where legal frameworks continue to evolve. That said, beyond investor-state protections, investors should also remain alert to broader legal and compliance risks. In jurisdictions where regulatory regimes are complex or subject to frequent change, it is important to ensure ongoing compliance with host state laws and to monitor legal developments as part of a broader risk management strategy. Continued tracking of regulatory changes in both jurisdictions can help avoid inadvertent breaches. At the same time, investors should remain mindful that certain regulatory changes, if inconsistent with treaty protections, may themselves give rise to investor-state claims. Viewing legal and regulatory developments through both a compliance and treaty lens can thus reduce risk and protect long-term investment value.
Duration, Scope and Survivability of the BIT
The BIT was signed on 23 November 2014 and entered into force on 5 June 2017.
Under Article 2, the BIT applies to investments made both before and after its entry into force, provided that any dispute did not arise prior to that date. This retroactive reach increases its utility for long-term investors whose assets may have been structured before 2017. The treaty remains in force for an initial ten-year period and automatically renews for successive ten-year terms, unless one of the contracting states gives written notice of termination at least one year before the expiration of the current term.
Importantly, Article 16 provides that investments made before any notice of termination enjoy a further ten years of protection through the BIT’s survival clause. This guarantees continued treaty protection even in the event of a later decision by either state to withdraw from the agreement. From a commercial perspective, the survival clause offers valuable predictability for long-term investments.
The BIT’s Dispute Resolution Framework
Article 10 of the BIT provides a tiered dispute resolution mechanism that begins with a requirement for amicable settlement. If the dispute is not resolved through negotiation within six months, the investor must bring the dispute before the host state’s competent courts or arbitration centres for a six-month period. While this mandatory local-remedies stage may appear burdensome, it is relatively modest compared to treaties requiring full exhaustion of local remedies. However, this mandatory local-remedies stage requires planning for potential litigation in the host state before arbitration. It is recommended that BIT-based dispute clause be included in contracts and that appropriate budgeting be made for potential ICSID proceedings.
If the dispute remains unresolved after this period, the investor may refer the dispute to international arbitration before the International Centre for Settlement of Investment Disputes (“ICSID”). Investors may therefore benefit from ICSID’s robust enforcement regime, under which awards are automatically recognised and enforceable in all ICSID member states, without review by domestic courts, and subject only to the limited annulment mechanism provided for under the ICSID Convention. However, investors should remain alert to the fact that initiating ICSID proceedings triggers a second jurisdictional threshold under Article 25 of the ICSID Convention (commonly assessed by reference to the Salini criteria) which must be satisfied in addition to the jurisdictional test governing material jurisdiction under the BIT.
Kenya ratified the ICSID Convention in 1967, and the UAE in 1981. Neither state has notified any territorial exclusions under Article 70 of the ICSID Convention (1965). As such, the Convention applies across the entire territory of both Kenya and the UAE.
Conclusion: A Strategic Instrument for a Growing Investment Corridor
The BIT offers a comprehensive and strategically significant framework for protecting cross-border investments at a time when economic engagement between the two states is expanding rapidly. Its broad definitions of investment and investor make it accessible to a wide range of commercial structures, including holding companies and special purpose vehicles. Its substantive protections follow a robust, traditional model that protects against political and regulatory risks, and its dispute-resolution mechanism allows access to ICSID arbitration.
As of early 2026, CEPA’s role in enhancing investor protections remains undefined. While it reaffirms the BIT and signals an intention to make the framework more “comprehensive”, it is not yet clear on how this will be achieved, whether through new investor rights, procedural safeguards or enforcement mechanisms. For now, the 2017 BIT remains the operative instrument for managing legal risk in Kenya–UAE investments but changes to the existing regime have now been foreshadowed by CEPA.
As investment flows continue to grow in both directions, and especially in the areas of infrastructure, energy and technology, the BIT and any future successor BIT will remain an increasingly important instrument in cross-border investment planning. A clear understanding of the mechanisms and substantive protections provided will be essential for businesses seeking to navigate and capitalise on the evolving commercial and investment ties between Kenya and the UAE.
ABOUT THE AUTHOR
Luisa Cetina is a key member of the Dispute Resolution and Forensics & Investigations teams at ALN Kenya, and co-heads the firm’s International Trade practice. She is a seasoned litigator and investigator, acting as lead counsel on complex cross-border matters, including international arbitrations, complex investigations, and commercial litigation. Luisa is particularly recognised for her expertise in managing crises in volatile environments. Prior to joining ALN Kenya, Luisa spent almost a decade as a corporate litigator at White & Case in New York where she represented clients in multi-jurisdictional civil and criminal antitrust matters, complex business disputes and international arbitration proceedings. Luisa is admitted to the New York State Bar as well as the U.S. District Courts for the Southern and Eastern Districts of New York.
Alex Layden is a barrister and leads ALN’s Middle East disputes practice. His practice focuses on international arbitration and common law litigation, with particular experience in complex cross-border disputes across the Middle East and Africa. He acts for financial institutions, investors, corporates and high-net-worth principals on commercial, regulatory and sovereign disputes. Before joining ALN, he practised as a barrister in independent practice and was part of the international disputes team at Al Tamimi.
Natalia Mouzoula is a Principal Associate in the Dispute Resolution team of ALN UAE. Her practice focuses on high-value cross-border disputes, including commercial and investor-State arbitration, common law litigation, and asset recovery. She acts for clients in a wide range of matters across several sectors, such as oil and gas, construction and infrastructure, commodities and agribusiness, banking, and shareholder disputes. She is an EU-qualified lawyer, registered with the Athens Bar Association, and her experience includes working with Sidley Austin LLP (Geneva), Three Crowns LLP (Paris), and Quinn Emanuel Urquhart & Sullivan (Zurich).
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
