Drafting Contracts: Which East African Law Applies?

A contract may be signed in Kigali, performed in Nairobi, paid from Kampala and supplied by a company based in Dar es Salaam. If the deal later fails, the question "which country's law applies?" cannot safely be answered by pointing to the place where the signatures happened to be added.

Cross-border contracts work best when the parties make three choices deliberately: the law that governs the substance of the agreement, the forum that will hear a dispute, and the method of dispute resolution. Those choices are connected, but they are not the same thing.

Governing law answers what rules control the contract

A governing-law clause identifies the legal system the parties want applied to questions such as interpretation, performance, breach and contractual remedies. A simple clause might choose Kenyan, Ugandan, Tanzanian or Rwandan law. In a genuinely international transaction, parties may also select another legal system where local conflict-of-laws rules permit that choice.

The value of an express clause is predictability. Without one, a court or arbitral tribunal may have to determine the law through conflict-of-laws principles by looking at factors such as the transaction's closest and most real connection, the parties, performance and subject matter. That preliminary fight can become almost as expensive as the underlying dispute.

Jurisdiction is a separate question

A clause choosing the law of one country does not automatically say which court will hear the case. That distinction has long been important in East African litigation. A contract can, for example, choose English law but still leave a Ugandan court to decide whether it has jurisdiction. Conversely, a contract can select a foreign court without making that court's domestic law the governing law.

Kenya's High Court revisited this distinction in Centric Limited v SAP East Africa Limited in February 2026. The agreement chose South African law and Johannesburg as the exclusive jurisdiction. The court restated the general approach that exclusive jurisdiction clauses ordinarily deserve respect, although it found strong practical reasons on the facts to retain the Kenyan dispute. The decision is useful because it shows that a forum clause is serious contractual drafting, not decorative wording.

An arbitration clause creates a different forum

If the parties agree to arbitration, they are ordinarily choosing private adjudication rather than an ordinary national court for disputes within the clause. The agreement should state clearly whether arbitration is institutional or ad hoc, the seat of arbitration, the number of arbitrators, language and any chosen procedural rules.

The seat is particularly important. It links the arbitration to a legal system whose courts exercise supervisory functions. It should not be confused with the physical room or video platform where hearings take place. A hearing can occur in a different country without changing the legal seat if the arbitration agreement and applicable rules permit it.

Uganda's Arbitration and Conciliation Act, 2024 provides that an arbitral tribunal decides the dispute according to the rules of law chosen by the parties and, absent a choice, applies the law determined through the appropriate conflict principles. Rwanda's arbitration law takes a similar party-autonomy approach in Article 40. Tanzania's Arbitration Act, 2020 and Kenya's Arbitration Act likewise place substantial weight on the parties' arbitration agreement.

Place of performance still matters

Choosing foreign law does not make the place of performance irrelevant. A construction contract performed in Rwanda may still have to comply with Rwandan licensing, land, tax, labour, safety and public-law requirements. A distribution contract carried out in Kenya may trigger Kenyan competition, consumer, tax or regulatory rules even if the parties chose another law for their private contractual relationship.

This is the limit of the phrase "freedom of contract." Parties can make many private choices, but they cannot necessarily contract out of mandatory legislation, public policy or regulatory powers that the relevant state applies to activities within its territory. The same is true of professional licensing, employment protection, immovable property and other fields where the law may impose mandatory local rules.

Write the three clauses so they work together

A cross-border contract should not say in one place that disputes go exclusively to a national court and in another place that every dispute must be arbitrated. Nor should it select two different governing laws in different schedules without explaining which document prevails. These contradictions are common in contracts assembled from several templates.

The drafting should answer three separate questions in compatible language. What law governs? Where will a court proceeding be filed if court litigation is intended? If arbitration is intended, what disputes are covered and what is the seat and procedure? The clauses should then be checked against termination, notices and enforcement provisions elsewhere in the agreement.

Kenya and Uganda show why wording matters

Kenyan courts have repeatedly treated exclusive foreign-jurisdiction clauses as relevant contractual commitments while retaining a judicial discretion where strong reasons justify departure. Centric v SAP illustrates that practical connection to Kenya, including parties, performance, witnesses and subject matter, can matter in the analysis.

Ugandan authority also shows that governing law and forum should not be collapsed into one idea. In Eastern and Southern African Trade and Development Bank v Oparin and another, the Supreme Court considered a contract's foreign-law elements and jurisdiction separately. More recent Ugandan litigation has likewise given real significance to express exclusive-jurisdiction wording. For a drafter, the lesson is more useful than memorising one case: if exclusivity is intended, say so clearly; if it is not intended, do not accidentally create it.

Tanzania and Rwanda also recognise party choice in arbitration

Tanzania's Arbitration Act, 2020 modernised the mainland arbitration framework and recognises party autonomy within the statute. For international business, the arbitration clause should be reviewed together with the governing-law clause and any mandatory Tanzanian rules arising from the actual performance of the contract.

Rwanda's Law on Arbitration and Conciliation in Commercial Matters is particularly clear in Article 40: the tribunal applies the rules of law chosen by the parties to the substance of the dispute. If no law is designated, the statute directs the tribunal to Rwandan law and applicable ratified international conventions. The tribunal must also decide in accordance with the contract and, where necessary, relevant trade usages.

Think about enforcement before choosing the forum

A forum is useful only if its result can be enforced. Before selecting a distant foreign court, ask where the other party's assets are likely to be. A judgment may require a separate recognition procedure in the country holding those assets. An arbitral award may benefit from the New York Convention framework where applicable, but arbitration brings its own cost and procedural choices.

The same practical test applies to small contracts. A sophisticated international arbitration clause may be disproportionate for a modest local supply agreement. A clear local court clause may be easier. For a major cross-border project, neutral arbitration may be worth the additional structure. The appropriate clause depends on the transaction rather than on fashionable drafting.

The contract should remove uncertainty, not manufacture it

The point of a governing-law clause is not to display legal sophistication. It is to make the consequences of the bargain more predictable. The point of a jurisdiction or arbitration clause is to stop the parties from spending the first year of a dispute arguing about where the dispute belongs.

Before signing, read these provisions together and ask whether they match the commercial reality of the deal. A contract that identifies the applicable law but ignores the forum, mandatory local regulation and eventual enforcement has answered only part of the cross-border problem.

Source note. This article is based principally on Kenya's Arbitration Act and Centric Limited v SAP East Africa Limited [2026] KEHC 2612, together with Kenyan authority on exclusive jurisdiction and proper law; Uganda's Arbitration and Conciliation Act, 2024 and Ugandan case law distinguishing governing law from forum choice; Tanzania's Arbitration Act, 2020; Rwanda's Law No. 05/2008 on Arbitration and Conciliation in Commercial Matters, especially Article 40, and Law No. 45/2011 governing contracts. It is prepared for general legal education. Mandatory rules, public policy and specialised statutes can restrict contractual choice in a particular transaction.

Suggested citation:

Ronald Serwanga, “Drafting Contracts: Which East African Law Applies?” East Africa Legal Insight (12 September 2026).