Stemming The Flight of Arbitral Disputes In Africa

Africa boasts a record 72 arbitral institutions, which have construed their respective arbitration laws in line with international standards. However, despite these developments, the seat of African arbitration disputes are fixed in either in Paris, London, New York, and so on. We take a look at some of the reasons behind this.

With development comes disputes. The origin and basis of arbitration is the commercial necessity for urgent, confidential, autonomous and flexible dispute resolution, without the inherent complexities and technicalities associated with court proceedings.

Apart from the natural resources that have been the major source of income to the continent, Africa has a large untapped industry that cuts across Fintech, Telecommunications, and major infrastructure projects. Alternative Dispute Resolution such as Arbitration, Conciliation, and Mediation have fast become the trusted method for dispute settlement for investors as opposed to traditional litigation.

The driving force for commercial arbitration in Africa is modeled on the UNCITRAL Model Law of 1985 and the New York Convention of 1958. Africa boasts a record of 72 arbitral institutions, with major functioning arbitration centers that include; Kigali, Lagos, Cairo, and Maputo, which have construed their respective arbitration laws in line with international standards to meet the efficiency of award recognition and prompt enforcement. However, despite these developments, the seat of African arbitration disputes are fixed in either in Paris, London, New York, Geneva etc. rendering the continent’s facilities for dispute resolution almost obsolete.

FACTORS THAT SHOULD BE CONSIDERED TO DETERMINE THE CAUSE OF THE PROBLEM

Judicial System

Africa’s judicial procedure and substantive law derive from legal systems established during the pre-colonial and colonial era. Generally speaking, the legal systems across the continent are heavily influenced on either Common law or the codified Civil law systems of the former Colonial powers; elements of Customary and Islamic law are also very influential in jurisdictions within the continent. This, coupled with other common procedural problems in arbitration such as; lack of structured pleadings, frequent abuse of the discovery process, excessive emphasis on oral testimony and lengthy debate by lawyers in final submissions and argument. The failure of the arbitral tribunal to address these problems effectively is a contributory factor that keeps the door open for frequent judicial intervention which in turn diminishes the confidence and authority of the arbitral tribunal to assume absolute control of the proceedings. This, in turn, gives out a negative collateral effect on investors to fix a more favorable judicial climate to seat their arbitration proceedings.

Lack of global reach for African Arbitrators

Native African arbitrators are not perceived to have the cutting-edge skill and expertise to preside over international commercial arbitration proceedings, due to the notion that Alternative Dispute Resolution is underdeveloped in Africa and accordingly African arbitrators cannot be trusted to conduct proceedings in an organised and effective manner. Some parties, therefore, refer complex issues such as international investment and large commercial disputes to reputable and recognised international institutions such as ICSID, ICC and LCIA. 

Judicial hostilities

“The courts owe it as an overriding public duty in the interest of the users of arbitration and as strategy for justice solution as a product in the overall machinery of dispute resolution to promote arbitration.” Arbitration in Africa is a deeply rooted concept, the first legislation with application to Lagos was the Arbitration Ordinance of 1914 and recourse to arbitral methods has both a natural and modern flavour in Nigeria. African judiciaries have a trend of suspicion of international arbitration as a product of western conspiracy represented by multi-lateral corporations operating in the African continent. “In the 1986 case of Kano State Urban Development Board v. FANZ Construction Co. Limited. Akpata JCA betrayed the concept of ADR at the Court of Appeal when he referred to “foolhardy” references to arbitration and described the decisions of arbitrators as “rough and ready”. 

Language Barrier 

The language barrier is not generally considered a hindrance for making Africa a seat in African related arbitral proceedings due to the concept of ‘Party Autonomy’. Parties are allowed to choose what language they want their proceedings to be administered. However, from a practical perspective where English speaking parties to a matter are in a French jurisdiction, and the arbitral institution only operates in French, it is almost inevitable that parties will choose a language friendly jurisdiction abroad. For example, CRCICA in Egypt only administers proceedings in English and Arabic; it does not cater to French, Spanish, or Portuguese speakers. Similarly, CCJA in the Ivory Coast only accepts French as the language of arbitral proceedings in the institution.

Political Uncertainty 

Many African countries have an unpredictable political environment that is usually tied to the success of the State’s economic performance and infrastructure projects. This is particularly crucial to Investment Arbitrations and Bi-lateral Treaties where investors need a guarantee that disputes between them and the host States will be presided by independent and qualified arbitrators who will solve the dispute and render an enforceable award regardless of the ruling Political Party. Statistics show that parties involved in high-value transnational disputes generally favour reputable institutions such as the International Centre for Settlement of Investment Disputes (ICSID). 

Difficulty in Enforcement of Arbitral Awards

A prevailing and pervasive view of Africa is that enforcing arbitral awards in the continent is difficult. There is however insufficient data to corroborate this claim as there has been a mixture of good and bad precedence set. African courts have upheld arbitral awards, even against state-owned companies. A high profile example of this is the Tanzanian court’s enforcement of a $65million award against the Tanzanian Electric Supply Company (TANESCO). Between 2011 and 2014, the Kigali International Arbitration Centre (KIAC) issued three arbitral awards against government parties and not a single one of these were challenged in the Rwandan courts. Furthermore, the exclusion of the public policy argument as a ground on which to refuse enforcement of a foreign arbitral award in the arbitration laws of Nigeria and Tanzania show a strong commitment to honoring arbitral awards.” In Christ For All Nations v Apollo Insurance Co, the Kenyan High Court rejected a public policy defense, and held that parties to arbitrations should accept the finality of the award. However, in Kenya Shell v Kobil Petroleum (2006) the Court of Appeal upheld the right to appeal in the context of enforcement proceedings on the basis that the domestic legislation did not prohibit a right of appeal or limit the supervisory jurisdiction of the courts.