Challenges of bilateral investment treaties on the Kenya-South Korea economic relations

Abstract

Kenya and South Korea have maintained diplomatic and economic relations since 1964, engaging through trade, investment, and bilateral cooperation. However, their trade relationship remains asymmetric, with Kenya primarily exporting agricultural commodities and raw materials while importing manufactured products, including vehicles, electronics, machinery, and steel products. This pattern raises questions about the contribution of bilateral investment treaties to economic diversification, domestic enterprise development, and technological upgrading in Kenya. This study examined the challenges associated with Bilateral Investment Treaties in Kenya–South Korea economic relations, focusing on regulatory policy space, dispute settlement, institutional capacity, and stakeholder participation. The study adopted a descriptive research design and purposive sampling to select stakeholders with relevant knowledge of investment treaty governance. The target population included government officials, diplomatic representatives, international trade and diplomacy experts, academics, legal practitioners, and representatives of Korean companies operating in Kenya, Kenyan traders engaged in bilateral commerce, private-sector organisations, and officials from relevant regional and international institutions. The study used quantitative and qualitative approaches to analyse stakeholder perspectives. Quantitative data were summarised using frequencies and percentages, while qualitative data were examined thematically. Power theory guided the analysis of asymmetries in bargaining power, institutional resources, and influence over investment governance. The findings reveal substantial concerns about bilateral investment Treaties governance and implementation. Low public participation in treaty negotiations attracted the highest agreement, with 192 respondents 64.7% identifying it as a challenge. Furthermore, 62.6% of the respondents considered investment treaty disputes potentially costly and lengthy for Kenya. Respondents also perceived that investor–state dispute settlement provisions favour South Korean investors 56.2%, monitoring and evaluation of Bilateral Investment Treaties impacts are limited 55.6%, and Kenya lacks adequate legal infrastructure to support treaty implementation 53.2%. Additionally, respondents 57.9% perceived that Bilateral Investment Treaties may disproportionately benefit Korean firms relative to Kenyan enterprises, while 49.8% expressed concern that treaty obligations could contribute to unequal treatment of domestic and foreign firms. The study concludes that the perceived challenges associated with Bilateral Investment Treaties in Kenya–South Korea economic relations are linked to disparities in institutional capacity, limited stakeholder participation, and concerns about protecting domestic policy priorities. However, these perceptions do not independently establish that Bilateral Investment Treaties provisions cause unequal economic outcomes. The study recommends that Kenya establish a well-resourced specialised unit within the Office of the Attorney General to coordinate investment treaty implementation, assess legal and economic risks, monitor compliance with applicable Kenyan law, and strengthen the prevention and management of investor–state disputes. Enhanced public participation, systematic treaty-impact evaluations, and stronger legal and technical capacity are also necessary to align investment governance with Kenya’s long-term development objectives.