The Future of Arbitration in Africa: Overcoming Challenges and Embracing Opportunities

A recent survey by the SOAS Arbitration and Dispute Resolution Centre at the University of London (the SOAS Survey), reveals that despite the continent hosting over 90 arbitral institutions, most African-related disputes are resolved outside the continent. As defined by the United Kingdom Ministry of Justice, Africa-related disputes involve at least one African party, the subject matter of the contract or its performance in an African country, or a contract governed by the law of an African nation.

Why Africa-Related Disputes Are Resolved Outside the Continent

1. Preference for Foreign Law and Stability
   Foreign investors and states involved in commercial, construction, and energy projects often insist on foreign law governed contracts, particularly English law. Known for its stability and predictability, English law offers a sense of confidence to investors dealing with complex disputes. This preference typically necessitates London as the seat of arbitration, and appointing English-qualified lawyers familiar with such laws. Further, international law firms that advise on large African transactions prefer to use foreign laws and seats.
2. Reliance on Standard Contract Forms
   There is a marked preference for specialist contract forms among foreign parties and funders. The SOAS survey notes that the FIDIC Forms of Contract, widely used in Africa, include a standard ICC arbitration clause that designates Paris as the default seat of arbitration. Although parties can select another seat, the reliance on these standard forms often defaults disputes to be resolved in Paris.
3. Bargaining Power Dynamics
   In her article titled, “Africa and the Rising Powers: Bargaining for the ‘Marginalized Many’,” Brendan Vickers discusses how African countries often have weak bargaining power against foreign investors. In negotiations involving significant capital, African governments may have to make concessions, including agreeing to foreign arbitration seats selected by the non-African contracting party. To illustrate, the SOAS survey indicates that for public law projects, while African states may impose their governing law, non-African parties often insist on arbitration outside Africa.
4. Trust and Experience in Arbitral Institutions
   The 2022 SOAS Arbitration in Africa Survey Report highlights a lack of trust in African arbitral institutions, many of which are newly established compared to seasoned entities like the ICC and LCIA. These institutions have a proven track record of efficiency in administering complex arbitrations, which African institutions are still striving to achieve. However, countries like Kenya and Rwanda are making significant strides in modernising their arbitration centres to meet global standards.
5. Misconceptions about Expertise
   There is a misconception that African arbitrators lack the technical expertise to handle complex disputes. A paper by Jonathan Ripley titled “The Rise of African Arbitration,” addresses this myth, noting that African legal practitioners partly perpetuate this misconception by often advising their clients to appoint foreign arbitrators even where specialist skills are not required. He argues that there is currently a large pool of skilled African arbitrators capable of managing complex disputes. Increasing diversity through the appointment of African arbitrators by institutions such as the LCIA and ICC is crucial.
6. Corruption Concerns
   Concerns about compromise and corruption in Africa have led to the preference for foreign arbitrators who are generally perceived to be more ethical. However, this assumption overlooks the reality that corruption may also exist among foreign arbitrators as well.

Optimism remains that as African arbitral institutions build a strong track record in administering disputes, more Africa-related disputes will be resolved within the continent. With many experienced and skilled African arbitrators available, there is an opportunity to enhance the credibility and trust in African seated arbitrations, fostering a more self-reliant and robust arbitration environment in Africa.

Should you have any questions about this legal alert, do not hesitate to contact Aisha Abdallah. 

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Contributors
1. Vianney Sebayinga – Associate
2. Hazel Taiti – Intern