Strengthening The Regulatory And Institutional Framework In Kenya To Curb Corruption In Foreign Direct Investment

Abstract

Traditionally, BITs have been faulted for their imbalanced approach in apportioning rights and obligations on investors and the host state. This imbalance created dissatisfaction in capital-importing states necessitating the need for a decisive break from the past. This development fueled the urge for reform and progressively, BITs and IIAs with a more balanced approach became a priority wish by many capital-importing states. As a result of this, BITs and IIAs concluded post 2000 have strived to incorporate a balance between rights and obligations of the host state and the investors. The devastating effects of corruption in governance cannot be overemphasized. The effects of corruption are inter-generational and the earlier the vice was dealt with, the better. Corruption has permeated investments by foreign investors making it a key concern for international investment law. The challenges of neutrality and difficulty in proving corruption have presented hurdles in tackling this problem and a nightmare in investment arbitration. The existence of corruption in investment and the extensive use of corruption as a defence in investor-state arbitration places corruption as a subject of direct address by international investment law. This research examines whether BITs signed by Kenya have been responsive in dealing with corruption. This case study is relevant in Kenya being a hot-bed of corruption and consequently experiencing the adverse effects of corruption in FDI attraction. The study therefore bears the burden of advocating for a BIT regime that incorporates direct provisions on anti-corruption in Kenya following the experience of other BITs and IIAs which harbor strong and progressive anti-corruption provisions.