Inside Africa blog

Legal developments around Africa

Where is the diamond? A review of dispute credentials of Sub-Saharan Africa

Ayaz Rafael Ibrahimov

“Better a diamond with a flaw than a pebble without one”

Which African nation’s legislative landscape and judiciary best facilitates and supports the timely resolution of disputes? In this mini-blog series, we will aim to locate the jewel in Africa’s crown. This instalment focuses on the enforcement of foreign arbitral awards, which according to the World Bank is a key factor for investors considering potential markets in which to invest.

Enforcement

The New York Convention 1958

Any analysis on enforcement would be incomplete without considering the New York Convention (the Convention). The Convention represents the engine to the imaginary speedboat of enforcement, without which, at least in some cases, one simply bobbles back and forth, awaiting rescue.

 The Convention places the courts of Contracting States under an obligation to recognise and enforce arbitral awards made in other Contracting States, subject to only limited exceptions. The table below lists some of the signatories to the Convention as well as some notable omissions:

Country

Signatory to the Convention

Angola

X

Botswana

Guinea

Mozambique

South Africa

Sierra Leone

X

Tanzania

Ethiopia

X

National Arbitration Laws

What matters just as much as the ratification of the Convention is the national arbitration law (NAL) used to implement it. This legislation typically sets out the process for enforcement as well as the circumstances in which enforcement may be declined by local courts.

Most of the continent’s NALs are based on either the:

  1. UNCITRAL Model Law (the Model Law);
  2. OHADA Uniform Arbitration Act (the Uniform Act); or
  3. Older arbitration legislation.

Each NAL has its own idiosyncrasies on enforcement. Under the Model Law, the enforcement of an award may be declined where it can be shown to conflict with the public policy of the jurisdiction in which enforcement is sought. The scope of the public policy exception is ambiguous and can vary across jurisdictions, e.g. in Rwanda, courts may refuse to enforce where an award conflicts with “public security”.

Correspondingly where the NAL is based on the Uniform Act, a competent judge must first grant an enforcing party an exequatur of the award, by means of which the award is converted into a judgment of the domestic court. 

Issues also arise where the NAL is based on older arbitration legislation. The South African NAL is based on the English Arbitration Act 1950 and introduces 4 additional defences to enforcement beyond those specified within the Convention. Further legislative hurdles come in the form of the Protection of Businesses Act which provides that no arbitral awards made outside South Africa may be enforced in South Africa without Ministerial consent if the award arose from a transaction 'connected with the mining, production, importation, exportation, refinement, possession use or sale of or ownership to any matter or material, of whatever nature whether within, outside, into or from [South Africa]'.

Ghana represents a good example of an arbitration friendly sub-Saharan Contracting State, which in 2010 adopted a new and robust arbitration law which clarified the position on the enforcement of foreign arbitral awards. The 2010 NAL does not include an explicit exemption to enforcement on the grounds of public policy, which leaves open the possibility of local courts enforcing a foreign award even where enforcement could contravene public policy.

Ultimately enforcing an arbitral award in sub-Saharan Africa will always present challenges. It is therefore crucial that investors appreciate precisely how their awards may be received, treated and enforced by local courts well in advance of any dispute, as failure to do so could have lengthy and costly consequences.

 

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Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.

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