The growth of arbitration centres in Africa

Posted in Eastern Africa Western Africa Central Africa Southern Africa Northern Africa Blog post

As foreign investment and trade in Africa increases, so too has the use of international arbitration as an effective means of resolving commercial disputes and this has seen a proliferation of African-based arbitration centres to administer those disputes.

Whilst international parties have traditionally sought to refer Africa-related disputes to arbitration in London, Geneva or Paris, typically under the auspices of the London Court of International Arbitration (LCIA) or the International Chamber of Commerce (ICC), there has been a gradual trend in recent years towards the promotion and use of Africa-based arbitration centres.

The Organisation pour l’Harmonisation en Afrique du Droit des Affaires (OHADA) established a Common Court of Justice and Arbitration (CCJA) in 1998 which administers arbitrations from its headquarters in Abidjan, in the Ivory Coast. Although this was initially seldom used, French-speaking parties from Western and Central Africa are increasingly starting to include CCJA arbitration clauses in their contracts.

Elsewhere, the Cairo Regional Centre for International Commercial Arbitration (CRCICA) in Egypt is widely regarded as the leading arbitral institution in North Africa, having administered over 1,100 cases since its inception. In East Africa, the Kigali International Arbitration Centre (KIAC) in Rwanda has had some success in persuading parties to adopt its rules, having handled 68 cases since it was established in 2012. The Nairobi Centre for International Arbitration (NCIA) in Kenya has also seen a gradual increase in its caseload since it was established in 2013 and has recently signed a cooperation agreement with the Permanent Court of Arbitration in the Hague to establish a framework for promoting arbitration in the region.

Another recent initiative was that of the Arbitration Foundation of Southern Africa (AFSA), based in South Africa, which teamed up with the Shanghai International Arbitration Centre in 2015 to create the China-Africa Joint Arbitration Centre (CAJAC) for the purpose of resolving disputes between Chinese and African parties.

Mauritius has also taken steps to establish itself as an offshore hub for resolving African-based disputes, setting up a new arbitration centre in 2011 in conjunction with the LCIA, known as the LCIA-MIAC Arbitration Centre. Mauritius subsequently became the first African country to host the prestigious International Council for Commercial Arbitration Congress in 2016.

Whilst it remains to be seen how successful these various African-based arbitration centres will ultimately be in competing with London, Geneva and Paris, we have undoubtedly seen a rise in African counterparties (including state entities) seeking to negotiate the use of local arbitral institutions in arbitration agreements.

For investors considering whether to agree to such a nomination, there are a number of factors to assess, including:

  • the rules of the institution and whether these are suitable for the particular project;
  • whether the investor is comfortable with arbitrations being administered in the counterparty’s home state rather than a neutral venue;
  • whether there are issues of political instability in the host state;
  • whether the local law and courts of the arbitral seat are supportive of international arbitration (in the same way that, for example, English law and the English courts are);
  • whether the institution will have the capacity and experience to administer high-value and complex international arbitrations; and
  • whether the choice of arbitral seat has any implications on enforcement (e.g. is the country a party to the New York Convention, OHADA and/or the Riyadh Arab Agreement for Judicial Cooperation (RAAJC) and where are the counterparty’s assets based?)

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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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