Authors: Peter Leon, Ernst Muller and Natasha Rachwal

Negotiators have an opportunity to fashion a regime that supports modern investment policies by promoting sustainable development. 

With less than three months before the expected conclusion of negotiations on the African Continental Free Trade Area’s (AfCFTA) protocol on investment increasing attention is being paid to the protocol’s likely investment protections and rights of recourse for investors in Africa.

While it should establish a pragmatic framework for investment across the continent, the effect of the global Covid-19 pandemic on Africa and the concomitant economic uncertainty underscores the need for a predictable, fair regulatory environment.

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Authors: Bertrand Montembault and Louis de Longeaux

Dans un contexte où l’Afrique s’apprête à faire face à une raréfaction considérable des investissements directs étrangers, une attention particulière doit être portée à tout facteur susceptible d’affecter le climat des affaires.

Au rang de ceux-ci, la réglementation des changes risque de jouer un rôle non négligeable dans les pays africains de ce qu’il était convenu d’appeler jusqu’à présent la « Zone Franc ».

L’UMOA et l’UMAC se sont dotées à l’orée des années 2000 d’une réglementation se substituant aux réglementations nationales prévoyant notamment un encadrement de l’ouverture des comptes en devises et une obligation pour leurs résidents de rapatrier leurs recettes d’exportation.

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Authors: Nila Wilde, Martin Kavanagh, Rebecca Major and Joanne Elson

For Africa-focused developers and sponsors in the renewable energy market, ESG is likely in the forefront of your minds and it is important to show knowledge of what is expected in the responsible investing market in order to ensure swift project development and to enhance bankability. This handy guide profiles the key factors relating to ESG which may impact your business. We hope that this guide provides you with a better understanding of the ESG expectations in the responsible investment market. We are keen to speak with you about your approach to ESG and how we can help you achieve your strategic goals in the Africa renewable energy space.

You can download the English/French version of the brochure below.



For more information, please contact any of the lawyers below or your usual Herbert Smith Freehills contact:

Stephane Brabant
Stephane Brabant
Partner, Paris
+33 1 53 57 78 32
Antony Crockett
Antony Crockett
Of Counsel, Hong Kong
+852 210 14111
Oliver Elgie
Oliver Elgie
Senior Associate, London
+44 20 7466 6446
Joanne Elson
Joanne Elson
Senior Associate, London
+44 20 7466 2802
Martin Kavanagh
Martin Kavanagh
Partner, London
+44 20 7466 2062
Rebecca Major
Rebecca Major
Partner, Paris
+33 1 53 57 78 31
Elsa Savourey
Elsa Savourey
Avocat, Paris
+33 1 53 57 76 79

Nila Wilde
Nila Wilde
Avocat, Paris
+33 1 53 57 65 50


Author: Jenna Cavanagh


In collaboration with G3, HSF is hosting a breakfast roundtable discussion on ‘Digital transformation in Africa’ on 12 March in our London office. The discussion will be led by Rohan Isaacs, Martin Kavanagh and Charlie Morgan along with Darcie Allen from G3 and will centre around the opportunities arising from digitalisation in Africa and the practical, regulatory and legal risks that investors need to navigate them.

For more information or to register for the event, please contact Jenna Cavanagh or your usual Herbert Smith Freehills:

Jenna Cavanagh
Jenna Cavanagh
Senior Business Development Executive, London
+44 20 7466 2301


Authors: Paul Morton and Bertrand Montembault 

Herbert Smith Freehills is a sponsor of the MSGBC Basin Summit and Local Content Forum taking place in Dakar on 28-30 January 2020. Paris-based Partner Bertrand Montembault will be joining a panel discussion on the business and regulatory environment for operations in the MSGBC Basin, and the event will also be attended by Johannesburg-based Of Counsel Paul Morton. Further details of the event, which is being hosted by the Oil & Gas Council, can be found here. The following article was first published on the Oil & Gas Council website on 21 January 2020.

Herbert Smith Freehills is pleased to participate once again in the annual MSGBC Summit. Now in its fourth year, the event and the region are now firmly established on the African oil and gas agenda. Ahead of the gathering in Dakar this year, we wanted to share some observations from across the continent and the oil and gas sector globally.

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Authors: Peter Leon, Ernst Muller and Natasha Rachwal

Evolution of the AfCFTA 

A significant milestone has been reached in the economic integration of Africa, with the creation of the African Continental Free Trade Area (“AfCFTA”). Opened for adoption at the African Union (“AU”) Summit in Kigali in March 2018, the Agreement establishing the AfCFTA (“AfCFTA Agreement”) has been signed by 54 of the 55 AU member states (tiny Eritrea being the lone exception), and ratified by 28, including major economies such as Egypt, Ghana, Kenya and South Africa, but not Nigeria. AfCFTA entered into force in May 2019, a month after the requisite 22 states deposited their instruments of ratification with the Chairperson of the AU Commission (satisfying the minimum requirement for the Agreement’s entry into force). For trading purposes, however, the AfCFTA only becomes operational on 1 July 2020.

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Author: Peter Leon

Peter Leon’s notes delivered during the EAST AND CENTRAL AFRICA MINING FORUM.



The African continent is endowed with abundant natural resources, including about thirty per cent of the world’s mineral reserves.

Historically, however, most resource-rich African countries have been categorized as low income countries. In fact, analysts have observed a negative impact of resource abundance—particularly mineral resources—on long-term economic growth.

To establish the key drivers of the long-term negative impact, analysts have studied the growth in per capita income in forty-seven African countries from 1990 to 2014 and compared it with each country’s primary resource (agriculture, fisheries, forestry and hunting) as well as oil and mineral resource production during the same period.

The results of their analysis indicates that the phenomenon, known as the resource curse, is primarily owing to market related factors (especially commodity price fluctuations) which, in turn, are aggravated by political factors that relate to institutional quality and rent-seeking.

The most significant and insidious effect of resource abundance is often the destabilising effects suffered by other economic sectors when a country becomes overly dependent on exports of a single natural resource.

Studies indicate that there tends to be a direct correlation between commodity prices and gross domestic product (“GDP“).

The fluctuations in commodity prices in turn affect the GDP of the country if the country is largely dependent on the commodity in question. African countries where this trend was recently observed include the Democratic Republic of Congo, Gabon, Sudan and Nigeria.

The effect of fluctuating commodity prices is exacerbated in countries where little economic diversification has taken place, and the economy thus remains overly dependent on the income derived from exports of specific raw commodities.

A leading example is Zambia, where economic development has been hamstrung by over-reliance on copper exports, accounting for over 60 per cent of export earnings in 2018, and insufficient reinvestments of the income from the depletion of its natural capital.

Despite the economic causes underlying the paradox, the impression that African states are not reaping the benefits of their mineral wealth also gives rise to a growing discontentment with the disparity between the profits which foreign investors receive through the exploitation of the mineral resources and the poverty in which the citizens live.

This has given rise to various disputes. Recent examples include those between Acacia Mining plc and Tanzania, First Quantum Mining and Zambia, Vedanta Resources Holdings Limited and Zambia as well as the Gerald Group and Sierra Leone.

In an attempt to address this, a number of African governments have embarked on sweeping mineral law and fiscal reform. As part of the process, the governments often:

  • introduce higher royalties and windfall profit taxes;
  • issue significant new tax assessments;
  • introduce or increase compulsory minimum quotas for:
  • shareholding and board representation by the host state or its citizens;
  • local beneficiation, often through export restrictions;
  • procurement of local goods and services (including financial services);
  • recruitment and promotion of local personnel; and
  • importantly, renegotiate investor-state contracts that stand in the way of these measures.

These changes to a country’s mineral law regime are often without the support of the mining sector, which can lead to further animosity between the government and foreign investors.

Such reforms can likewise constitute a breach of the protection afforded to mineral right holders under the mineral development agreements to which they and the host governments are party. To assert their rights, investors frequently invoke the stabilisation provisions provided for in such agreements and refer these disputes to international arbitration.

Ironically, the disputes between foreign investors and host governments tend to be rooted in the historic imbalances which arise from the mineral development agreements themselves.

While the ability to regulate the economic consequences occasioned by the resource curse lies squarely with the domain of the African governments, it should be possible to better regulate the long term relationship between the host governments and foreign investors.

In this regard, the OECD’s recently approved Guiding Principles for Durable Extractive Contracts (Guiding Principles) set out eight principles that host governments and investors can use as a common reference for future negotiations of enduring, sustainable and mutually beneficial extractive contracts.

The purpose of the principles is to assist host governments and investors using them to:

  • structure their on-going relationship in an integrated manner to promote long term sustainable development, while attracting and sustaining investment;
  • foster alignment of expectations and convergence towards agreed objectives;
  • provide mechanisms that can accommodate and respond in a predictable manner to potentially significant changes in circumstances;
  • build trust to strengthen mutual confidence and reduce risk for both parties; and
  • ensure a fair share for all parties to the contract and optimise the value from resource development through equitable, sustainable and mutually beneficial contracts and operations.

Under the Guiding Principles extractives contracts are likely to be durable if they:

are aligned with the long-term vision and strategy, defined by the host government on how the extractive sector can fit into and contribute to broader sustainable development objectives;

are anchored in a transparent, constructive long-term commercial relationship and operational partnership between host governments, investors and communities, to fulfil agreed and understood objectives based on shared and realistic expectations that are managed throughout the life-cycle of the project;

balance the legitimate interests of host governments, investors, and communities, with due account taken, where relevant, of the specific rights of affected indigenous peoples recognised under applicable international and/or national law;

seek to optimise the value from resource development for all stakeholders, including economic, social and environmental outcomes. This would include identifying and managing potential adverse environmental, health, safety and social impacts of the extractive project and establish clear roles and responsibilities for the host government and the investor for the prevention, mitigation and remediation of those impacts, in consultation with affected communities;

are negotiated and based on the continued sharing, in good faith, of key financial and technical data to build a common understanding of the performance, main risks and opportunities of the project throughout its life-cycle;

operate in a sound investment and business climate which must be underpinned by a fair, transparent and clear legal and regulatory framework and enforced in a non-discriminatory manner;

are consistent with applicable laws, applicable international and regional treaties, and anticipate that host governments may introduce bona fide, non-arbitrary, and non-discriminatory changes in law and applicable regulations, covering non-fiscal regulatory areas to pursue legitimate public interest objectives; and

are underpinned by a fiscal system that is consistent with the governments’ overall economic and fiscal objectives and provides a fair sharing of financial benefits between the investor and the host government, taking into consideration the potential risks, rewards, and country circumstances.

While there is no one ideal fiscal regime, host governments ought to identify the optimal mix of fiscal instruments and terms to meet their objectives. In my experience, a predictable fiscal regime that includes responsive terms defined in legislation and or contracts to adjust the allocation of overall financial benefits between host governments and investors contributes to the long-term sustainability of extractive contracts and reduces the incentives for either party to seek renegotiation of terms.

The costs attributable to compliance with changes in law and regulations, and wholly, necessarily and exclusively related to project specific operations, in turn, should be treated as any other project costs for purposes of tax deductibility, and cost recovery in production sharing contracts.

If such changes in law and or applicable regulations result in the investor’s inability to perform its material obligations under the contract or if they lead to a material adverse change that undermines the economic viability of the project, durable extractive contracts require the parties to engage in good faith discussions which might eventually lead the parties to agree to renegotiate the terms of the contract.

Ultimately, transparency, predictability and a process of continued dialogue between the host governments and investors are key to the success of a project and an equitable sharing of benefits that result from the exploitation of the minerals.

For more information, please contact Peter Leon or your usual Herbert Smith Freehills contact:

Peter Leon
Peter Leon
Co-Chair of Africa Practice Group, Johannesburg
+27 10 500 2620



An HSF team including Martin Kavanagh, Nina Bowyer, Will Breeze, Chris Parker, James Doe, Olivier Binyingo and Joanne Elson are hosting a drinks reception for clients and contacts in Lagos on Thursday 17 October. We would be delighted if you could join us as it will be an excellent opportunity to catch up with industry contacts and friends in a relaxed and social atmosphere. Please contact us if you’d like to join us on the evening.

To RSVP or to get more information about this event, please contact Jenna Cavanagh:

Jenna Cavanagh
Jenna Cavanagh
Senior Business Development Executive
+44 793 520 3828


Authors: Paula Hodges QC, Jonathan Ripley-Evans and Gregory Travaini 

International arbitration does not lack critics. A particularly common criticism is the absence of cultural and ethnic diversity among arbitrators. In the words of Sarah François-Poncet of Salans, some twenty years ago, the usual suspects are ‘pale, male, and stale’. Despite numerous initiatives to support and encourage diversity, and the diversification of the pools from which candidates are selected, there is still much progress to be made. The problem is particularly acute when it comes to African arbitrators.

Indeed, a few months ago, in a trademark and contract dispute with clothing company Iconix Brand Group Inc., African-American rapper and entrepreneur Jay-Z complained that only three of the more than 200 arbitrators on the American Arbitration Association’s Large and Complex Cases database identified as African-American, leaving him with “no choice at all” to appoint a candidate. Jay-Z’s counsel held that the lack of ethnic diversity deprived litigants of color of a meaningful opportunity to have their claims heard by a panel of arbitrators reflecting their backgrounds and life experience, which would constitute unconscious racial bias and would in fine void Jay-Z’s agreement to arbitrate.

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Author: Greg Travaini

The firm played a key role supporting AfricArb’s first dedicated event in Asia, helping to raise the firm’s profile in the Asian and African arbitration communities.

AfricArb was created by a group of young legal professionals with a shared interest in Arbitration and Africa. The Hong Kong events builds on similarly successful ones organised in Paris and Mauritius.

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