Kenya Bankers Association (KBA) is betting on lawyers to help mediate bank-customer disputes that have locked up over Sh10 billion from the economy.
According to KBA Chairman Habil Olaka, going for mediation instead of lengthy litigation processes, would ensure the backlog of cases before the courts are cleared.
Speaking yesterday during a joint session between KBA and Judiciary, Olaka appealed to banks to take the lead in referring customers to arbitration bodies.
“The solution lies in sensitising our staff. If the banks stood out as the ones referring cases to mediation centre instead of leaving it to customers, the process will pick up,” he said.
Creating value
In the event themed ‘Creating value through mediation,’ principal judge, Justice Richard Muongo said that about a quarter of cases filed in the Commercial and Tax division are usually bank-related.
Last year alone, Muongo said, out of the 660 cases that were registered in this division, 159 involved banks and had a value of Sh8.05 billion. By May this year, he added, the commercial division had registered additional 249 files with 60 (24 per cent) touching on banks and involving Sh2.01 billion.
According to him, since family division cases were not monetised, the figure could be higher.
“This amount is extremely large. Imagine the investment opportunities that would be available to the country if this cash was returned back into the economy,” explained Muongo.
While terming litigation as expensive, difficult and time consuming, Muongo reached out to lawyers to embrace mediation when handling clients’ cases. He played down the talk that alternative dispute resolution will lower lawyers’ returns.
Both KBA and Judiciary have piloted the process of mediation. In February last year, the retired Chief Justice Willy Mutunga created the Mediation and Accreditation Committee to come up with guidelines for successful mediation.
According to the committee’s Chairman Alnashir Visram, who was in charge of Court Annexed Pilot project for mediation, only arbitration can ensure that both parties in dispute maintain fruitful relationship in the end.
“Mediation will lead to happy clients. Happiness is the ultimate solution for any conflict. Unfortunately, in litigation, we (lawyers) do not care what happens to the loser,” said Visram.
KBA has successfully finished its pilot phase of mediation that involved Barclays, Equity, Family, Gulf African Bank and Housing Finance. The body’s Director Nuru Mugambi said the pilot has shown that court process is expensive.
“Banks spent between 0.5 million to Sh1 million per court case while customers pay Sh100,000 to 200,000 on litigation. For banks, even when we win, we still pay client’ fee because we want to maintain the relationship,” she said.
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According to Ms Mugambi, most prevalent cases touch on credit terms followed by branch activities and human resource disputes. Based on this, Justice Muongo is calling on bank lawyers to include mediation clauses in their contracts with customers to ensure than even after a dispute, cordial relationship is maintained.
“The Judiciary has no intention of turning back. We are mandated by Constitution to ensure it succeeds,” said the upbeat Muongo.