BY JACOB MUTEVEDZI
High value international commercial arbitration is, for the most part, the preserve of foreign arbitral institutions like the International Chamber of Commerce’s International Court of Arbitration (ICC), the London Court of International Arbitration (LCIA) and the Hong Kong International Arbitration Centre (HKIAC). Most African lawyers actually advise their clients to shun local arbitration institutions. It is not uncommon for African commercial lawyers to advise their clients to settle for a dispute resolution clause which stipulates that disputes will be resolved by a foreign arbitration institution, usually a European one. Generally, African lawyers advise their high value clients to choose a non-African country as the venue and seat of arbitration.
In plain language, Africa is perceived to be “not arbitration friendly”. The practice of international commercial arbitration in Africa is considered to be undeveloped. The attitude of African courts towards international arbitration is perceived to be hostile and unsophisticated. Consequently, the prevalent view is that Africa is not ready to handle high value international commercial arbitration matters. Hence, African countries are not trusted as suitable seats or venues of international commercial arbitration. Similarly, African arbitrators and counsel are rarely appointed to handle high value international commercial arbitration hearings. It is assumed that there is a glaring dearth of expertise in the region.
Ironically, this is happening at a time when Africa is enjoying exponential economic growth. Africa’s burgeoning economy and the corresponding massive scale of investment has pushed international arbitration to the foreground of dispute resolution in the region. This acute upsurge in arbitration involving African parties has neither translated into an increase in the appointment of African arbitrators and African law firms nor spurred the popularity of African countries as venues and seats of arbitration.
African governments have been blamed for not lending adequate support to international commercial arbitration and, consequently, the perception prevails that it is difficult to enforce arbitral awards in African jurisdictions. Furthermore, parties do not trust African courts to render sufficient supervision over arbitrations seated within their jurisdictions.
Despite these negative perceptions, it appears that the reality on the ground tells a totally different narrative. In contemporary times, we have witnessed a rapid increase in the number of international commercial arbitration institutions based in Africa. These institutions include, among others, the Arbitration Foundation of Southern Africa (AFSA), the Cairo Regional Centre for International Commercial Arbitration (CRCICA), the Kigali International Arbitration Centre (KIAC), the Lagos Court of Arbitration (LCA), and the Nairobi Centre for International Arbitration (NCIA). In 2020, the AFSA Sadc Division launched the inaugural Sadc Panel of International Commercial Arbitrators. The panel comprises experienced arbitrators nominated by the 15 Sadc Bar Associations.
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One can argue, therefore, that African governments are acutely aware not only of the global preference for arbitration as a means for resolving disputes, but also of the huge economic potential of arbitration emanating from legal fees, the hospitality sector and conference facilities. Most African countries have realised the economic potential of international commercial arbitration as an industry and are taking noticeable efforts to facilitate and nurture that growth.
These efforts are commendable indeed but a lot still needs to be done to enhance the attractiveness of Africa as a global arbitration hub. Like moths to light, investors are inexorably drawn to countries with comprehensible and predictable laws that regulate a chosen sector of investment. A predictable regulatory environment in which the rule of law prevails accompanied by an efficient, impartial and independent judicial system are the essential elements which usually characterize a suitable venue for the resolution of high value commercial disputes.
African states will definitely benefit from embracing and facilitating best practices in international commercial arbitration. Municipal courts are not always the preferred or appropriate method of dispute resolution for international or domestic investors. Once it is accepted that commercial disputes can be effectively resolved outside the sphere of domestic courts and governments take positive steps to facilitate alternative dispute resolution, a country will almost always be classified as “both arbitration and investor friendly”. Once a country gains notoriety for being “arbitration-friendly” it will have no difficulty in attracting international commercial disputes from across the globe accompanied with the much sought-after FDI.
There are several hallmarks which point to arbitration-friendliness. For example, some resource rich states have the tendency to disallow arbitration in disputes involving international companies and the state. Such countries always prescribe municipal litigation as the preferred dispute resolution method. Allowing domestic or international arbitration between international investors and the state is always a positive sign. Secondly, signing and ratifying the New York Convention thus facilitating the enforcement of arbitral awards is a clear indication that a state is arbitration-friendly.
State initiatives meant to promote and encourage arbitration as the dispute resolution method of choice are another favourable indication. For instance, training judicial officers to support and facilitate arbitration. Additionally, the state can also promulgate modern domestic and international arbitration legislation. For example, in 2017 South Africa passed the International Arbitration Act 15 of 2017 which incorporates the UNICITRAL Model Law. The International Arbitration Act of 2017 replaced the old Act 42 of 1965.
Ultimately, nothing is more indicative of a positive environment than striving to be both a safe seat and venue of arbitration. Investors derive great comfort from knowing that travelling in and out of the country which is the venue of arbitration is uncomplicated and hassle-free. The need for quality hospitality infrastructure and other supportive facilities such as modern conference centres and transcription services cannot be overemphasized.
Finally, the resolute support of the local courts and a reputation of judicial non-interference in arbitral proceedings are invaluable attributes. Few things increase the attractiveness of a country as both a venue and seat of arbitration than a judiciary which is pro-arbitration. A judiciary which only intervenes to facilitate as opposed to disrupting and frustrating arbitration is more precious than diamonds.
- Jacob Mutevedzi is a commercial lawyer and partner at Clairwood Chambers Attorneys and writes in his personal capacity. He can be contacted at +263775987784 or at jmutevedzi@gmail.com