By Matt Ash
Mauritius is taking centre stage in the contest to become Africa’s centre for international dispute resolution, thanks to two ‘watershed’ events which have taken place in the last few years.
The bold practical steps Mauritius has taken to establish itself as a regional centre for resolving cross-border disputes match its ambition to become a regional business hub and an international financial centre. It can preserve regional connection to matters, where appropriate, and address African perceptions of Eurocentric international arbitration as inherently biased and costly. At the same time they seek to reassure foreign parties of the legitimacy of the alternative process proposed.
The country’s ambitions to establish itself as a seat of international arbitration began to materialise in April 2007 when it was agreed that a regional dispute resolution centre for determining cross-border disputes within the South African region should be set up and run by the private sector. Administrative structures were then established to support Mauritius in attaining its objective to manage international arbitration disputes with an African element. These encompass commercial disputes between African litigants and investment disputes in Africa, including those involving the many foreign companies based in Mauritius which invest in India or China.
The attractions of Mauritius as an arbitral seat are numerous, among them its stable democratic government and mature political and social institutions with colonial origins in France and England.
Mauritius is number one in the Ibrahim Index of African Governance, which ranks 53 African countries according to delivery of public goods and services by the state and NGOs to citizens.
The country has a mature legal system influenced by both the common law and civil law traditions and it is supported by good infrastructure, particularly in logistics and communications. Its business environment is considered sound, stable and supported by a reasonably sophisticated financial and banking system: the World Bank’s 2010 “Doing Business” report ranked Mauritius first in Africa and 20th worldwide and the Wall Street Journal’s Economic Freedom Index ranks it 12th in the world.
The extensive network of double taxation agreements between Mauritius and a large number of investors and developing nations has attracted significant international investment; Mauritius is now the primary investment conduit into India. Underpinning this position is the country’s enviable reputation for neutrality as demand grows from within Africa for a non-Euro/American-centric mechanism and framework for dispute adjudication which is not perceived as exclusionary or partisan. Demand from foreign developers, sponsors and financiers for an alternative to domestic courts to resolve disputes is rising in step with investment in Africa.
However, the development of Mauritius as a regional arbitration centre was hindered by the absence of a bespoke arbitral law and the absence of a credible arbitration centre. The process initiated in 2007 stalled, especially after South Africa decided to proceed with its own programme. But the following year, the situation moved on. The Mauritian International Arbitration Act (MIAA) was adopted in 2008, based on the UNCITRAL Model Law on International Commercial Arbitration. The legislation has adopted best-practice modifications and improvements drawn from the English Arbitration Act, UNCITRAL’s work on the Arbitration Rules, and from the experiences of other Model Law jurisdictions, according to those who drafted it.
Notable features of the MIAA include:
- provision that all court applications made under the MIAA go directly to a panel of three Supreme Court judges, with a direct and automatic right of appeal to the Judicial Committee of the Privy Council. This is designed to give international users confidence that interlocutory issues will be determined swiftly and decisively.
- an amended form of article 34 of the Model Law, following the Singaporean principle, to allow for an award to be set aside in the event of a breach of the rules of natural justice during the arbitral proceedings or the rights of a party being substantially prejudiced by an award.
- specific provisions for the doctrine of competence-competence, where the legislation stipulates that a court of law must refer the parties to arbitration where one party asserts that the dispute is subject to arbitration, unless an opposing party is able to show a very strong probability that the agreement to arbitrate may be “null and void, inoperative, or incapable of being performed” (thereby avoiding the penchant of domestic courts to decide jurisdiction for themselves, and so nullifying the competence-competence principle).
- a unique mechanism that disconnects the arbitral process from the domestic courts by granting jurisdiction for all appointments and several administrative functions to the Permanent Court of Arbitration at the Hague (PCA).
The conclusion in 2009 of a host country agreement with the PCA, and the creation in Mauritius this year of a permanent PCA presence in Port Louis under the auspices of the MIAA, was the second watershed development. And to address concern about the PCA’s ability to adequately fulfil an arbitral role, the LCIA Mauritius International Arbitration Centre was set up in July 2011 through an agreement with the London Court of International Arbitration. The infrastructure for international arbitration in Mauritius now exists – all it needs are referrals of disputes.
The infrastructure for international arbitration in Mauritius now exists – all it needs is referrals of disputes.
Comparisons between Mauritius and other contenders to lead Africa-based international dispute resolution are inevitable. South Africa, for one, has the most sophisticated infrastructure and financial and legal systems on the African continent. However, it has missed the opportunity because its system and jurisprudence on international arbitration lag far behind most other international jurisdictions, according to a report published by the South African Law Commission (now the South African Law Reform Commission) in 1998.
South Africa has not yet adopted the Model Law. And Africa ADR, a cross-border arbitral administration in South Africa which counts the Mauritian Chamber of Commerce and Industry as a founding member, does not appear to have conducted any international arbitrations since it opened in 2009.
Clearly Mauritius has decided to go it alone, first ensuring that the legal framework is in place for the adjudication of cross-border disputes through arbitration under a regime familiar and acceptable to the international community. This, together with the country’s promise of neutrality and lower costs, means it is well placed to become the region’s seat of arbitration.
Arbitration in Africa
We will be publishing a second edition of our manual Arbitration in Africa in 2012, a practical guide to arbitration across the continent. Matt Ash has recently updated the chapter on South Africa and we are grateful to Dr. Samir Abdelly of Abdelly & Associés Maghreb for updating the chapter on Tunisia. These country guides to arbitration can be found in our online global arbitration manual www.nortonrose.com/arbitrationmanuals