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ARBITRATION IN AFRICA
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CORPORATE DISPUTES MAGAZINE
JAN-MAR 2015 ISSUE
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Inside this issue:
FEATURE
The spiralling cost
of arbitration
EXPERT FORUM
Pharma and biotech
patent litigation
HOT TOPIC
International
dispute resolution
involving Russian and
CIS companies
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E D I T O R I A L PA RT N E R
w w w. h e r b e r t s m i t h f r e e h i l l s. c o m
Herbert Smith Freehills LLP
As one of the world’s leading law firms, Herbert
Smith Freehills LLP advise many of the biggest
and most ambitious organisations across all
major regions of the globe. Our clients trust us
with their most important transactions, disputes
and projects because of our ability to cut
through complexity and mitigate risk. We can
help you thrive in the global economy. Operating
from over 20 offices spanning Asia, Australia,
Paula Hodges QC
Partner, head of global arbitration practice
London, UK
T: +44 (0)20 7466 2027
E: paula.hodges@hsf.com
Europe, the Middle East and the US, we can
deliver whatever expertise you need, wherever
you need it. Because technical ability alone
is not enough, we seek to build exceptional
working relationships with our clients.
Gary Milner-Moore
Partner, dispute resolution
London, UK
T: +44 (0)20 7466 2454
E: gary.milner-moore@hsf.com
John Whiteoak
Partner, dispute resolution
London, UK
T: +44 (0)207 466 2010
E: john.whiteoak@hsf.com
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PERSPECTIVES
PERSPECTIVES
ARBIT RAT I O N
IN AF R I C A
BY PAULA HODGES QC, JOHN OGILVIE AND NICHOLAS PEACOCK
> HERBERT SMITH FREEHILLS LLP
I
nternational arbitration is fast becoming the go-to
substantive and procedural aspects of the arbitration
form of dispute resolution across the continent.
law that will apply, and the attitude and powers of
African governments are keen to promote the use
the local courts with regard to onshore or offshore
of arbitration wherever possible to attract foreign
arbitration. Investors should also bear in mind the
investment. Conversely, foreign investors, who may
available investment protections.
be wary of proceedings in local courts, often prefer
arbitration for its neutrality, flexibility, choice of rules
and venue, and – in many instances – confidentiality.
Simultaneously, the number and sophistication
Enforcement
When determining the most appropriate dispute
resolution procedure, potential enforcement is a key
of African arbitral venues is growing, such that
consideration, starting with whether the country
investors are increasingly facing the option – and
into which the investment is being made – and
perhaps pressure – to agree to an African arbitral
therefore where enforcement of an arbitral award is
seat and institution. Before agreeing to a particular
likely to be sought – is a party to any of the regimes
dispute resolution procedure, investors must
facilitating enforcement of arbitral awards. Chief
consider the enforceability of any award, the
among these is the New York Convention, the most
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ARBITRATION IN AFRICA
widely-used regime for enforcement and recognition
of foreign arbitral awards and a convention to
which some 34 African countries are currently party.
The New York Convention requires the courts of
signatory states to give effect to private agreements
to arbitrate disputes and to recognise and enforce
foreign arbitral awards, subject to specific limited
exceptions and reservations. The Democratic
Republic of Congo’s reservation regarding disputes
concerning immovable property, including mines, is
a clear example of the types of reservations held by
some governments.
There are various regional inter-governmental
agreements across the continent which foreign
investors may also be able to rely on if they arbitrate
their disputes in Africa. These include the Riyadh
Convention, which covers various Middle Eastern
and North African countries, and the OHADA Treaty,
arguably the most influential and far-reaching
regional African agreement from a disputes
perspective. First signed in October 1993, the OHADA
Treaty now has some 17 Francophone African
signatories and requires that any national arbitration
law in a signatory state must be construed in
accordance with its Uniform Act on Arbitration
(Uniform Act).
Although foreign awards are reported to be
directly enforceable in most African jurisdictions,
either by way of the New York Convention or some
other regime, investors are strongly advised to
proceed with caution and to obtain local law advice
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ARBITRATION IN AFRICA
as to the particular local courts’ application of the
tribunal will not be empowered to grant interim
relevant regime. Moreover, there may be local law
measures unless this has been expressly agreed by
requirements for enforcement procedures.
the parties.
Separately, as noted above, an arbitration seated
Arbitration laws
in a signatory to the OHADA Treaty will be governed
When considering whether to seat an arbitration
in a particular African jurisdiction, because it is the
by the Uniform Act, which does not adopt the Model
Law, but reflects a number of its principles.
focus of the transaction, or because it has been
put forward as a regional arbitration centre, it is
important to consider whether there is a modern
arbitration law in place.
Regional arbitration centres
The number and sophistication of regional
arbitration centres across the continent is increasing
Various African jurisdictions, including Egypt,
and will continue to be one of the key themes in
Kenya, Mauritius, Nigeria, Rwanda, Uganda, Zambia
the African arbitration narrative. Leading examples
and Zimbabwe have based their arbitration laws
include the Cour Commune de Justice et d’Arbitrage
on the United Nations Commission on
International Trade Law (UNCITRAL)
Model Law on International
Commercial Arbitration (Model Law). In
these jurisdictions, the law is generally
representative of internationally
recognised principles, and parties
may look to the jurisprudence of
other Model Law jurisdictions,
including Germany and Singapore,
“The number and sophistication of
regional arbitration centres across the
continent is increasing and will continue
to be one of the key themes in the African
arbitration narrative.”
when considering the interpretation
of African provisions based on the
Model Law. However, even arbitration
laws based on the Model Law should be scrutinised
(CCJA) in Cote d’Ivoire which, among other things,
carefully as there may be significant departures
administers proceedings under OHADA rules,
from the Model Law. For example, for an arbitration
the long-established Cairo Regional Centre for
seated in Egypt, under the local arbitration law, a
International Commercial Arbitration (CRCICA)
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and the more recent LCIA-Mauritius International
Arbitration Centre (LCIA-MIAC).
Other regional centres, including the Lagos
In a number of jurisdictions, the local courts can
and do grant interim relief in support of foreign
arbitral proceedings. Zambian courts, for example,
Regional Centre for International Commercial
have the ability to grant such interim relief. This
Arbitration, which was established in 1989, the
ability was highlighted recently in the 2013 English
Kigali International Arbitration Centre, which was
case of U&M Mining Zambia Ltd v Konkola Copper
launched in 2011, and the recently-opened Nairobi
Mines plc [2013] EWHC 260 (Comm), in which a
International Arbitration Centre, are playing a
party was granted interim protective relief from the
crucial role in helping to educate local judiciary
Zambian courts concerning its interest in a Zambian
and practitioners and in promoting the use of
copper mine, pending a London-seated, LCIA
arbitration in the region. However, investors should
arbitration.
be aware that the growth of arbitration has in
Parties must also be aware of any local law
many cases outpaced national practice. Equally, the
requirements relating to the arbitrability of specific
unpredictability and the delays associated with local
types of dispute, or conversely, the inarbitrability
courts continue to make many of these countries
of certain disputes. For example, under Angolan
challenging venues for arbitration.
law, the arbitration of disputes arising from private
investments in the country must be seated in
Judicial attitudes and local laws
The laws and the attitude of the courts in the
country into which the investment is being made
Angola, and the applicable law must be Angolan law.
On the other hand, disputes relating to criminal or
insolvency matters are often not arbitrable.
will have a significant impact on whether arbitration,
either onshore or offshore, can be an efficient and
cost-effective way of resolving disputes.
In particular, although local laws generally provide
Investment protection
Investment protections refer to the legal
protections available to investors investing in foreign
for the courts to stay any litigation brought in
states, and are significant in the context of Africa
breach of an arbitration agreement, the courts will
because foreign investors are conscious of a risk
sometimes refuse to exercise their discretion to do
profile which may exceed their usual risk tolerance.
so. It can often be difficult to glean how the courts
Broadly, investment protection mechanisms fall into
may act in jurisdictions where few arbitration cases
a number of categories: (i) host state investment
have gone before the courts. Local advice and
legislation; (ii) investment contracts directly between
insight are essential.
the investor and the host state government; (iii)
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ARBITRATION IN AFRICA
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bilateral investment treaties (BITs) between the
a ‘regional’ arbitration seat in Africa. These will be
governments of the foreign investor’s home state
worth keeping in mind, especially if the alternative is
and the host state; and (iv) multilateral investment
litigation in the local courts. CD
treaties between the governments of three or more
states.
BITs are the most common means by which
Paula Hodges QC
foreign investors seek to protect their investments,
Partner
and indeed the number of BITs has proliferated in
Herbert Smith Freehills LLP
recent years, such that there are now more than
T: +44 (0)20 7466 2027
2500 BITs in existence, of which more than 480
E: paula.hodges@hsf.com
involve African states as parties. Protection from
expropriation without compensation is considered to
be the most fundamental and traditional protection,
John Ogilvie
Partner
however the guarantee of fair and equitable
Herbert Smith Freehills LLP
treatment is also often invoked.
T: +44 (0)20 7466 2359
E: john.ogilvie@hsf.com
Comment
While the best option for many transactions
continues to be offshore arbitration, in jurisdictions
where the arbitration law has been tested and the
local courts are more predictable and experienced in
international arbitration, there are increasingly more
Nicholas Peacock
Partner
Herbert Smith Freehills LLP
T: +44 (0)20 7466 2803
E: Nicholas.peacock@hsf.com
viable options for investors facing pressure to accept
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