The African Continental Free Trade Area: Facilitating Dispute Resolution in Africa

Posted in Southern Africa Blog post

If the African Continental Free Trade Area Agreement (AfCFTA) enters into force later this year, it will give member states a mechanism to resolve disputes and promote trade.

AfCFTA needs 22 ratifications before it enters into force.[1] Currently 19 of the 49 signatories have ratified it and a further nine ratifications are expected in 2019. When it comes into force, it will not automatically replace other regional trade agreements across the continent. The levels of regional integration between member states of regional trade agreements will remain.[2]

AfCFTA will, amongst other things, provide a dispute settlement mechanism between states in accordance with certain rules and procedures. As African states do not generally sue each other, AfCFTA will introduce an alternative dispute resolution process to facilitate consultations and negotiations rather than a strictly judicial procedure. The agreement will do so by establishing a Dispute Settlement Body (DSB) to facilitate disputes between states.

If a dispute arises, in the first instance, states will hold consultations to find an amicable resolution. Any requests for a consultation should be channelled to the other state through the DSB.[3] These consultations will be confidential and without prejudice to the rights of the involved state.[4]

Where consultations fail, the DSB will establish a Dispute Settlement Panel for formal resolution. The DSB (through the Panel) will then make a final and binding decision. This decision can be appealed to the Appellate Body (to be established by the DSB).

Interestingly, state parties to a dispute may mutually and voluntarily agree to refer the matter for conciliation, mediation or arbitration as alternatives to referring it to the DSB. If the parties agree on arbitration, they will need to agree on the arbitration procedures. It is likely that the Model Law of the United Nations Commission on International Trade Law will feature in many of these arbitrations.

The DSB will also keep tabs on state parties’ implementation of their (or the Appellate Body’s) rulings and recommendations. Failing compliance, the DSB may impose temporary measures including compensation and the suspension of concessions. Article 25 provides that compensation is voluntary and, if granted, shall be consistent with the AfCFTA.

It appears that only state parties will have the standing to make use of the dispute settlement mechanism under AfCFTA. It remains unclear as to whether a dispute can be referred by a non-State entity (or by any other interested party) should this be necessary. By means of comparison the SADC tribunal also does not allow any private parties to approach it with cases. Nevertheless, the mechanism to settle inter-state disputes is welcomed as it should facilitate trade between member states, which promotes the general overarching goal of the AfCFTA.

A similar approach that should be adopted is that of the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) Courts of Justice. These organisations require the exhaustion of all local and possible internal remedies (within a state) but thereafter do allow an issue to be put forward by private parties.

We are enthusiastic about the prospects of the AfCFTA. Having such wide-ranging discretion for states to settle disputes through alternative dispute resolution procedures, and not simply a strict judicial process, is likely to facilitate and encourage resolutions and pave the way for further partnerships between states.

 

[1] Article 23(1) of the AFCFTA

[2] Article 19(2) of the AFCFTA

[3] Article 6 of the Protocol on Rules and Procedures on the Settlement of Disputes of the AFCFTA

[4] Article 7 of the Protocol on Rules and Procedures on the Settlement of Disputes of the AFCFTA

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