Page 67 - ITU-T Focus Group Digital Financial Services – Consumer Experience and Protection

ITU-T Focus Group Digital Financial Services
Consumer Experience and Protection

Box 6: Mandatory arbitration

Kenya Legal & Regulatory Provision: Consumer Protection Act section 88 (1)

Any term or acknowledgment in a consumer agreement or a related agreement that requires or
has the effect of requiring that disputes arising out of the consumer agreement be submitted to
arbitration is invalid insofar as it prevents a consumer from exercising a right to commence an action
in the High Court given under this Act.

Comment:

The contracts reviewed in Kenya (M-PESA & M-Shwari) mandate arbitration: the language “shall be
referred to Arbitration” is employed. If the contract drafter intended to offer arbitration only as a first
option, then it should be specified and clearly explained that arbitration is available as one option
to resolve consumer disputes, in addition to the judicial mechanisms available. There is a risk that
unqualified arbitration language could mislead consumers regarding their rights.

2.4.3 Legal fees indemnity

Half of the provider contracts reviewed contain a clause requiring the consumer to indemnify the provider for
any legal fees incurred in pursuing a legal matter related to their offer of service to the consumer. This clause
is written so broadly as to cover the providers’ own legal costs for defending itself against a potentially valid
consumer complaint. Thus, consumers, presuming they understand the meaning of the indemnity clauses,
could be required to pay the legal fees of the provider even if the consumer had a founded complaint: this is
a lose-lose scenario for the consumer and a barrier to accessing justice.

Such provisions are unfair to consumers, especially those from low-income backgrounds, as they may shy
away from instituting legal proceedings against providers on account of a fear of fees that they could accrue
as a consequence.

Figure 10: Legal fees indemnity

59