The School of Oriental and African Studies recently published the third iteration of its Arbitration in Africa Survey Report in October 2022 (here) (2022 survey). The results reveal increasing engagement with and enthusiasm for arbitration among African practitioners, particularly in the booming construction and infrastructure sector. Strong participation from practitioners in jurisdictions with active arbitral institutions points to the key role that arbitral institutions on the continent play in fostering an active community of arbitration practitioners.
The 2022 survey also suggests increasing confidence by African practitioners in selecting African laws to govern commercial contracts and African seats for Africa-related arbitrations. Pan-African cooperation is high on the agenda: there exists broad support in principle for a standing African International Commercial Court to deal with disputes expected to arise in connection with the nascent Africa Continental Free Trade Area (AfCTA) Agreement – although the difficulties seen in implementing similar standing multilateral forums in the EU suggest its execution may be more complicated.
The 2022 survey explores the impact of the Covid-19 pandemic, climate change, the AfCTA Agreement and the increase in infrastructure projects on arbitration in Africa. The first edition, launched in 2018 (2018 survey), sought to create a platform for African practitioners to express their views of domestic and international arbitration, and to provide evidence of their knowledge and expertise. It concluded that the perception that African arbitration practitioners lack expertise and skills in arbitration is baseless. The second edition in 2020 (2020 survey) focused on identifying the top African arbitral centres and cities to conduct arbitration in Africa.
Nigeria, South Africa and Egypt have consistently had the largest number of respondents among African countries in all three of the SOAS surveys. The prominence of these jurisdictions is also reflected in the ICC Dispute Resolution Statistics for 2018, 2019 and 2020 which record high participation in ICC arbitrations from South African, Nigerian and Egyptian parties.
It is perhaps no coincidence that these three countries are home to active arbitral institutions. The Arbitration Foundation of South Africa (AFSA), Cairo Regional Centre for International Commercial Arbitration (CRCICA), and the Lagos Court of Arbitration (LCA) were identified as amongst the top five preferred arbitral centres in the 2020 survey. Johannesburg, Lagos, Cairo, Cape Town and Durban were selected as the top five African cities to host arbitrations, attesting to the importance of the institutions in developing new arbitral centres.
Choice of law
The 2022 survey confirmed that arbitration is the preferred dispute resolution mechanism for construction and infrastructure disputes, which have grown exponentially as the sector has boomed in recent years. There was also an increase in references to dispute adjudication boards and mediation.
73% of the respondents who answered the question suggested that parties to these contracts primarily choose the laws of African states as the governing law. However, survey responses make clear that African governing laws tend to be chosen for domestic contracts or contracts where a State is a party, while international contracts tend to be governed by foreign laws (often English or New York law). The trend towards selecting local governing laws may continue as arbitration on the continent develops, and in line with the aims of decolonization and global equality.
AfCFTA and Dispute Resolution in Africa
The AfCFTA provides for the resolution of inter-State disputes by a Dispute Resolution Body and the Appellate Body, but does not contain a dispute resolution mechanism for disputes between commercial parties or between commercial parties and States.
78% of respondents to the 2022 survey considered that trading under the AfCFTA will lead to more intra-Africa business and that this will in turn lead to an increase in commercial disputes. While 49% of respondents thought that such intra-Africa disputes should be resolved by arbitration; only 11% thought litigation should be used.
40% considered that intra-Africa disputes should be solved by mediation, reinforcing the openness to mediation on the continent. The concept of mediation is preferred in many cultures across the continent, as African philosophical and political thinking largely favours the approach of conciliation and mediation of disputes over the adversarial approach of Western cultures. Mediation may provide a greater scope for solutions which account for the context of the dispute, and can provide greater fairness (or perceived fairness) in outcomes. There is room for significant growth in the adoption of mediation for commercial disputes in African disputes.
Interestingly, 70% respondents supported the establishment of an African International Commercial Court to address intra-African cross border disputes. While standing investment courts, born out of multilateralism, are frequently welcomed in principle, such proposals face hurdles in their execution. Similar calls for a standing Multilateral Investment Court were made within the EU several years ago, but soon faced disagreements between Member States on financing, enforcement and composition. Respondents to the survey raised the same issues as potential roadblocks to an African International Commercial Court. It remains to be seen whether this proposal will gain any traction.
The 2022 survey found that, for the most part, participants continued their involvement in arbitrations during the pandemic virtually. Nearly a quarter of respondents referred to or used virtual hearing protocols such as the ICC Checklist for a Protocol on Virtual Hearings and the CIArb Guidance Notes on remote dispute resolution proceedings. However, a majority of the respondents were not aware of the African Arbitration Academy Virtual Hearing Protocol (AAA Protocol) which was developed specifically for use in Africa-seated disputes.
Most respondents to the 2022 survey were conscious of the impact of climate change on their arbitration practices, and some are taking steps to mitigate and adapt to climate risk. It will be interesting to see if parties on the continent view arbitration as a suitable tool for resolving disputes related to climate change. This will be an area to watch given the increasing prevalence of such disputes around the world.
Awareness of climate change on the continent and moves towards reducing the causes and impact of climate change may well increase following the recently concluded 2022 United Nations Climate Change Conference (COP 27), especially considering that Africa contributes less than 4% of global emissions but is on the frontlines of some of the worst consequences of climate change.
The survey reveals that arbitration in Africa enjoys a thriving present and a promising future. Arbitral institutions are playing an important role in developing regional centres, which will be key to meeting the growing need for dispute resolution services on the continent.
For further information, please contact Jonathan Ripley-Evans, Partner, Marco de Sousa, Senior Associate, or your usual Herbert Smith Freehills contact.
The authors would like to thank Tanesha Singh for their assistance in preparing this blog post.