Arbitration in Africa
A review of recent regional initiatives
Global | Publication | septiembre 2019
Traditionally, Africa’s civil and common law jurisdictions have relied on court litigation to resolve disputes. However, arbitration has gained a real foothold in Africa, and in the last few years there has been continued growth in the acceptance of arbitration as a viable option for settling disputes, not only between private parties but also disputes involving States. A number of regional initiatives, discussed below, have given impetus to this growth.
Recent regional initiatives
The African Continental Free Trade Area Agreement (AfCFTA) has now been ratified by 22 of the 49 signatories and accordingly came into effect in April 2019. The AfCFTA seeks, amongst other things, to create the world’s largest free trade area covering the entire African continent. The AfCFTA includes dispute settlement mechanisms for any disputes that arise between member States. It provides that a dispute settlement body will hold consultations between the parties and, if consultations fail, a dispute settlement panel will be set up to hear the dispute and issue a binding decision. That decision is subject only to an appeal to the AfCFTA disputes settlement appeal body whose decision is final. No rules are yet in place regarding the process to be followed, but it is anticipated that it will include both mediation and arbitration phases.
Many African countries are parties to bilateral investment treaties (BITs), most of which provide for arbitration to resolve investment disputes between foreign investors and host States. In addition, 49 of the 54 African States are contracted to or signatories of the International Convention on the Settlement of Investment Disputes (ICSID Convention) which provides for conciliation and arbitration procedures.
According to ICSID’s recent caseload statistics focussed on Africa, as of May 31, 2017 approximately 22 per cent of cases registered under the ICSID Convention and Additional Facility Rules involved an African State party, of which 21 per cent were Intra-Africa disputes (i.e. also involving African investors). However, of all ICSID cases, only 5 per cent involved African investors.
In addition to BITs, a significant proportion of ICSID cases involving African State parties or investors were based on investment contracts between foreign investor and host-state, or investments law of a host-state.
Turning to commercial arbitration, in the last five years alone, an additional seven African States have acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) which reflects the growing importance that African States attach to upholding international commercial arbitration agreements and the enforcement of foreign arbitral awards. This leaves 17 African countries that are not signatories to the New York Convention, including the active economies of Ethiopia, Namibia, and the Seychelles.
The Mauritian International Arbitration Centre, launched in late July 2018, competes with a number of other regional international arbitration centres, including the Lagos Court of Arbitration, the Cairo Regional Centre for International Commercial Arbitration and the Common Court of Justice and Arbitration in the Ivory Coast. These initiatives are driven in part by the Organisation for the Harmonisation of Business Law in Africa which adopted a uniform law on arbitration applicable to its 17 member States. Statistics are not currently published by these centres, but, anecdotally, they seem to be attracting more disputes.
The Arbitration Foundation of South Africa established in 1996 is the leading facilitator of ADR in South Africa with branches in most major centres. AFSA has a number of specialist divisions including one for cross border disputes and for domain name disputes. They have also established, in conjunction with the Shanghai International Arbitration Centre, a China Africa Joint Arbitration Centre (CAJAC) in Johannesburg and in Shanghai to provide arbitration services to China/ Africa disputants.
The Maritime Law Association of South Africa is in the final stages of establishing a maritime law arbitration centre which is anticipated to be modelled on the London Maritime Arbitration Association (LMAA). It will initially seek to attract domestic maritime disputes, but it ultimately intends to target disputes that occur in South Africa’s massive commodity export and transport sectors.
South Africa’s International Arbitration Act which incorporates most of the UNCITRAL Model Law came into force on December 20, 2017. A South African court of first instance has already refused an application to join a foreign party to South African court proceedings on the basis that the parties had agreed to refer disputes to arbitration in London (Atakas Ticaret Ve Nakliyat AS v Glencore International AG and Others KZD 20-04-2018 case no A42/2014). It is anticipated that this decision will be confirmed on appeal.