Paper presented at the AfAA 3rd Annual International Arbitration Conference, 3rd - 5th November 2022.  

Introduction

Conflicts of interest between the developed and developing economies in international relations, be it commercial or otherwise, still exist as conflicting goals and divergent views.[1] Although these conflicts have resulted in some convoluted strategies and policies which are antithetical to international dispute resolution mechanisms, international arbitration remains the generally preferred means of resolving cross-border disputes.[2]

Not many people today may know that, in the 1960s, the newly independent African countries were among the countries at the forefront of canvassing a dispute resolution regime for international investment disputes. African countries were well-represented during the negotiation of the Convention for the Settlement of Investment Disputes between States and Nationals of other States in 1964,[3] and they subsequently enacted municipal laws dealing with international commercial arbitration and foreign investments.[4] These African countries and their counterparts in Latin America actively contributed to the present investor-State dispute settlement (ISDS) system. They successfully overturned the United Nations (UN) general consensual Resolution 1803(XVII) of 14 December 1962, ‘Permanent Sovereignty over Natural Resources’, which provided a balanced way to codify the principle of permanent sovereignty over natural resources.[5] To replace Resolution 1803(XVII), these developing countries secured a ‘big win’ when the United Nations General Assembly (UNGA) adopted Resolution 3281 (XXIX) containing the ‘Charter of Economic Rights and Duties of States’ on 12 December 1974, by 115 votes to 6, with 10 abstentions.[6]

The Charter of Economic Rights and Duties of States was first proposed by President Luis Echeverría of Mexico, at the third session of the United Nations Conference on Trade and Development (UNCTAD) held in Santiago, Chile, from 13 April to 21 May 1972.[7] The Charter aimed at strengthening the economic independence of developing countries and establishing and promoting international economic relations, taking into account the agreed differences in the development of developing countries and their specific needs.[8] The then capital-exporting countries viewed the new international economic order that evolved as inadequate to protect their nationals that were investing or may wish to invest in developing countries. This feeling resulted in negotiations that brought about the present BIT system, which has become a legal bother.[9] Old-generation BITs contain clauses that limit the host State’s right to approach the requisite adjudicatory body in the event of a dispute but grant the investor unfettered access to seek remedy from these bodies.[10]

What Does Africanisation Mean?

To Africanise means to make African or, in a broader sense, to succeed in making African interest and perspective influence a system. Africanisation of international dispute resolution, for me, therefore, implies that international dispute resolution should take Africa’s priorities and aspirations into consideration.[11] We should not view the Africanisation of international dispute resolution as we view Africanising educational curricula or local legislation. We must remember that an international dispute resolution system can only be international if founded on cooperation and compromise.[12] Having defined the concept of Africanisation, I will now examine it as a movement that has continuously influenced international dispute resolution.

A sure Movement

The Africanisation of international dispute resolution has always been a movement. This movement began with the contribution of African nations in establishing the ISDS system in the 1960s and has cascaded into the current contribution of the Pan-African Investment Code (PAIC) to international investment law. The PAIC aims to demolish the traditional investment perspectives enshrined in BITs.[13] Within this movement, some African countries, notably South Africa and Tanzania, have taken a radical position, changing the current ISDS narrative. Having been badly hit by excessive damage awards handed down by ISDS tribunals, many African countries are actively clamouring for reforms to the system.[14]

The PAIC is a model investment treaty that, unlike the traditional BITs, creates rights and obligations for both the State and the investor.[15] It was adopted by the African Union (AU) to emphasise its member states’ interest in ensuring sustainable development,[16] which the current legalistic approach to investor-State arbitration (ISA) seems unable to assure. Like the Norway Model BIT 2015,[17] the PAIC seeks to achieve an overall balance of the rights and obligations between the Member States and investors,[18] thereby bringing the African perspective, once again, to bear on the ISDS system and protecting the economies of capital-importing African nations. The instrument contains some key and specific provisions that focus on the African States in a typical Afro-centric manner and excludes fair and equitable treatment (FET) provision.[19]

On its part, the African Continental Free Trade Area (AfCFTA) agreement focuses on two broad issues: first, on the liberalisation of trade in goods and services and, second, on regulatory matters concerning investment, competition policy, and intellectual property.[20]The AfCFTA dispute settlement mechanism (DSM), which is modelled after the World Trade Organisation (WTO) Dispute Settlement Understanding (DSU), is only accessible to states, either as parties to the dispute or as third parties.[21] Thus, only States Parties have standing and the right of direct participation in its dispute resolution process. The DSM reflects African governments’ preference for state-to-state dispute settlement, from which an investor may benefit only through diplomatic protection,[22] as against the current ISDS system that has produced prohibitive damage awards in favour of foreign investors.[23] The DSM also signals African governments’ preference for a judicialised trade and investment dispute system that promotes certainty, predictability, and rule-based decisions, in contrast to what obtains under the current ISDS system.[24]

Article 20(1) of the AfCFTA agreement establishes the DSM. The Protocol on Rules and Procedures on Settlement of Disputes goes further to establish the Dispute Settlement Body (DSB) under article 5 of the protocol. The protocol on dispute settlement is one of the most outstanding AfCFTA Protocols. It espouses rules and procedures for the settlement of disputes within the AfCFTA. Unlike the rules and procedures of the majority of the African Regional Economic Communities, such as the Economic Community of West African States (ECOWAS), Community of Sahel-Saharan States (CEN-SAD), Intergovernmental Authority on Development (IGAD), Economic Community of Central African States (ECCAS), which were modelled after the Court of Justice of the European Union, the DSM was modelled after the DSU.[25] The AfCFTA agreement signals to the international investment community that Africa is open for business based on a single rule book for trade and investment.[26]

Steps to take to realise the Objectives of Africanisation

While there is already a movement that attempts to galvanise African interest, it is apposite to examine factors that could wane the flow of Africanisation of international dispute resolution and make suggestions. There has always been concern about African cities not being chosen as international arbitration venues and African arbitrators not having commensurate international appointments.[27] This concern does not negate the fact of a movement but a lack of strategy and development of an attractive arbitration environment and an arbitration-friendly legal system. Unless disputants see a marked difference between arbitration and litigation within a legal system, that country will hardly be a venue of choice.

Since the last decade, the judiciary of the most populous country in Africa, Nigeria, has been very supportive of arbitration and other ADR mechanisms, thereby laying a solid foundation that could turn Nigeria into a venue of choice if other variables are in place.  The School of Oriental and African Studies (SOAS) Arbitration in Africa 2020 Survey reveals that parties are increasingly using top African arbitration institutions to resolve their disputes.[28] The Mauritius Chamber of Commerce and Industry (MCCI) Arbitration and Mediation Center (MARC), the alternative dispute resolution arm of the MCCI, has remained a high-profile centre for the resolution of international arbitration.[29]Since its inception in 2012, the Kigali International Arbitration Centre (KIAC) has administered 89 arbitration cases involving parties from the United States, Italy, South Africa, Kenya, South Korea, Turkey, Burundi, Nigeria, Pakistan, Senegal, Spain, Switzerland, Singapore, France, Zambia, Uganda, India, China, and the African Union.[30]

In addition, several African countries, including Uganda, Malawi, and Nigeria, on the one hand, are currently reviewing their laws in an attempt to modernise arbitration procedures.[31] Other countries, including South Africa and Tanzania, are reforming their laws to register their dissatisfaction with the current ISDS system and imprint the growing African philosophy on international dispute resolution.[32] South Africa and Tanzania have legislatively abolished ISA. South Africa has replaced ISA with two local remedies, namely, mediation under the auspices of its Department of Trade and Industry, and litigation or other forms of adjudication within South Africa.[33] Similarly, in Tanzania, the natural wealth and resources of the country can no longer be subject to proceedings in any foreign court or tribunal;[34] disputes on the extraction, exploitation, or acquisition and use of Tanzania’s natural wealth and resources must now be adjudicated by judicial bodies or other organs established in Tanzania; and the application of the laws of Tanzania shall be acknowledged and incorporated in all arrangements or agreements in that regard.[35]

Two key issues stem from the above observations. First, there is a need for African practitioners, institutions, and governments to develop a capacity and reputation for international dispute resolution.[36] We must abandon the ‘turn by turn’ mentality and cultivate institutional excellence and capability.[37] Anyone who visits the Regional Centre for International Commercial Arbitration, Lagos (RCICAL) today, for instance, will see the need for us Africans and our governments to step up our game if we must benefit from our contributions to the development of international dispute resolution. Singapore has twice demonstrated that a nation or continent can take its destiny into its hands. Silently working behind the curtain, Singapore transformed itself from a third-world country to a first-world against all prognoses.[38] Again, Singapore, without the world paying attention to what was going on there, has transformed itself into an international arbitration hub[39] and now hosting the signing of international conventions and regular international conferences and meetings on alternative dispute resolution (ADR). It is time for Africa and Africans to walk the talk.[40]

The second issue is that the African States must formulate and implement appropriate national arbitration policies. This is the surest way to benefit from the movement and cement the Africanisation of international dispute resolution. Africa generates enough international arbitration to make it an arbitration hub. But because of ineffective national arbitration policies and a lack of institutional facilities, most international arbitrations relating to African disputes are exported abroad,[41] with the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA) dominating international arbitration in Africa.[42] Thus, while we are laboring to promote ADR and making frantic efforts to bring the African perspective to bear on international law and international dispute resolution, the benefits go elsewhere. Karel Daele reports that, often, it is the African party that chooses the European arbitral centre, even if only for personal or logistical reasons.[43]

However, in recent times, stakeholders in African arbitration, notably, African governments and arbitration practitioners, have been clamouring for the arbitration of disputes emanating from Africa to be heard in Africa; the clamour itself has become a movement.[44] But this movement must be well supported lest it veers off course as most African endeavours in the past.[45] AfCFTA’s guiding principle of boosting intra-African trade must become our joint commitment to rewrite the deplorably low intra-African trade when compared to external African trade.[46] Boosting intra-African trade is tantamount to boosting international dispute resolution within Africa, which will further engender Africanisation. As a document, the AfCFTA agreement will not achieve much unless positive measures are put in place to actualise its goals.[47]

Conclusion

Impressively, Africa has continually demanded that its perspective on international dispute resolution should be taken into account. African scholars and governments have pushed for reforms that reflect Africa’s expectations. But all this is not enough. Africa must adopt strategies that would translate the African position into benefits for the continent. It is time to walk the talk. It is time to strengthen our arbitration institutions across Africa and develop policies that would act as a foundation and building blocks for an inviting, inevitable, and enduring arbitration culture.[48] It is time to follow in the footsteps of Singapore and encourage Mauritius and Rwanda not to relent in their efforts to become arbitration destinations in Africa. All other African countries should also follow suit.

Africa is not lacking in good initiatives and vocal assertions aimed at protecting its interests. What the continent lacks is the political will to sustain momentum and support its enviable initiatives.[49] The movement of Africanising international dispute resolution has been on since the 1960s. But it has not been a smooth sail for Africa, especially as the resultant BIT system from the early stages of the movement became an albatross to many unprepared African governments. This movement has now metamorphosed into seeking reform to the ISDS system, especially the BIT system, which has troubled virtually all capital-importing countries without regard to their development status. The PAIC presents a viable platform for this new movement as it encapsulates the priorities and aspirations of Africa. What is left is for African governments and the relevant AU organs to commit to implementing of the PAIC.[50]

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*Member of Faculty, Nigerian Institute of Chartered Arbitrators

[1] See Amazu A. Asouzu, International Commercial Arbitration and African States: Practice, Participation and Institutional Development (Cambridge Press 2001) 1.

[2]Robert Wheal, Elizabeth Oger-Gross, Tolu Obamuroh and Opeyemi Longe, ‘Institutional Arbitration in Africa: Opportunities and Challenges’ (September 2020) <www.whitecase.com/insight-our-thinking/institutional-arbitration-africa-opportunities-and-challenges> accessed 10 October 2022.

[3] Paul-Jean Le Cannu, ‘Foundation and Innovation: The Participation of African States in the ICSID Dispute Resolution System’ (2018) 33(2) ICSID Rev 456. 

[4] Asouzu (n 1).

[5] Asha Kaushal, ‘Revisiting History: How the Past Matters for the Present Backlash against the Foreign Investment Regime’ (2009) 50 Harv Intl LJ 491, 499-501. 

[6] Audiovisual Library of International Law Historical Archives <https://legal.un.org/avl/ha/cerds/cerds.html#:~:text=The%20adoption%20of%20a%20Charter,April%20to%2021%20May%201972> accessed 12 August 2022.

[7] ibid.

[8] Charter of Economic Rights and Duties of States, pmbl.

[9] See Sanjeet Malik, ‘BIT of Legal Bother’ (Business Today, May 2012) <www.businesstoday.in/magazine/columns/india-planning-to-exclude-arbitration-clauses-from-bits/story/24684.html> accessed 17 March 2020

[10] Victor Oluwatomiwa Adenekan, ‘The Pan-African Investment Code and the Investment Protocol to the African Continental Free Trade Agreement: Are we Building the right House on a Weak Foundation?’ (2021) 5 <https://www.researchgate.net/publication/355465973_THE_PAN-AFRICAN_INVESTMENT_CODE_AND_THE_INVESTMENT_PROTOCOL_TO_THE_AFRICAN_CONTINENTAL_FREE_TRADE_AGREEMENT_ARE_WE_BUILDING_THE_RIGHT_HOUSE_ON_A_WEAK_FOUNDATION/link/617170c2750da711ac64ed64/download> accessed 12 October 2022 citing Nicolette Butler and Surya Subedi, 'The Future of International Investment Regulation: Towards a World Investment Organisation' (2017) 64 Netherlands International Law Review 43.

[11] See ibid 12-13.

[12] See Malcolm Langford, Daniel Behn and Ole Kristian Fauchald, ‘Backlash and State Strategies in International Investment Law’ (2017) 2. <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2704344> accessed 5 October 2022.

[13] Adenekan (n 10) 7.

[14] Magalie Masamba, ‘Government Regulatory Space in the Shadow of BITs: The Case of Tanzania’s Natural Resource Regulatory Reform’ (21 December 2017) IISD Investment Treaty News <https://www.iisd.org/itn/en/2017/12/21/governmentregulatory-space-in-the-shadow-of-bits-the-case-of-tanzanias-natural-resource-regulatory-reform-magalie-masamba/ > accessed 2 August 2021, where the author correctly states that African countries concluded BITs ‘aiming to attract foreign investors’ but are now confronted with what they did not expect.

[15] Adenekan (n 10) 7.

[16] ibid; Ignacio Torterola and Bethel Kassa, ‘Investor-State Disputes in Africa’ (7 August 2019) African L and Business <https://iclg.com/alb/9936-investor-state-disputes-in-africa> accessed 2 January 2021.

[17] Norway Model BIT 2015 (“Agreement between The Kingdom of Norway and …”).

[18] See Pan-African Investment Code, 2016, pmbl and art 2.

[19] See PAIC, arts 11(2) and 12(1) relating to its innovation respecting expropriation and compensation; see also Adenekan (n 10) 7

[20] Adenekan (n 10) 3.

[21] See Agreement Establishing the African Continental Free Trade Area, arts 20(1) and 1(w).

[22] See Gregory Shaffer, ‘What’s New in EU Trade Dispute Settlement? Judicialization, Public-Private Networks and the WTO Legal Order’ (2006) 13 J of European Public Policy 832.

[23]  See, for example, the recent arbitration case of Process and Industrial Developments Limited v Ministry of Petroleum Resources of the Federal Republic ofNigeria (P&ID v Nigeria), Case No 1:18-cv-00594 (ad hoc arbitration), where the majority of the arbitral tribunal awarded US$6.6billion against the respondent State for an alleged investment of an estimated amount of US$40 million.

[24] See Adenekan (n 10) 14; see also James Thuo Gathii, 'Evaluating the Dispute Settlement Mechanism of the African Continental Free Trade Agreement' <https://www.afronomicslaw.org/2019/04/10/evaluating-the-dispute-settlement-mechanism-of-the-african-continental-free-trade-agreement> accessed 12 October 2022; see also The Law Suite, ‘Tasks before the AfCFTA Dispute Settlement Body’ (March 2022) <https://thelawsuite.legal/tasks-before-the-afcfta-dispute-settlement-body/> accessed 12 October 2022.

[25] James T. Gathii, ‘Evaluating the Dispute Settlement Mechanism of the African Continental Free trade Agreement, (Afronomics Law, April 2019) <www.afronomicslaw.org/2019/04/10/evaluatingthe-dispute-settlement-mechanism-of-the-african-continental-free-trade-agreement/> accessed 10October 2022; see also Karen J. Alter, ‘The Global Spread of European Style International Courts’ (2012) <http://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article+1006&context+facultyworkingpapers> accessed 10 October 2022

[26] World Bank Group, ‘Making the Most of the African Continental Free Trade Area’ (June 2022) <www.worldbank.org/en/topic/trade/publication/free-trade-deal-boosts-africa-economic-development> accessed 10 October 2022

[27] Asouzu (n 1).

[28]Wheal, Oger-Gross, Obamuroh and Longe (n 2).

[29]ibid.

[30] ibid.

[31] Sandy Bhadara, ‘Africa Arbitration: Building Bridges’ (2021) <https://iclg.com/alb/16451-africa-arbitration-building-bridges> accessed 11 October 2022.

[32] See, for example, the Permanent Sovereignty Act, Act Supplement No 5 of 2017 in the Gazette of the United Republic of Tanzania No 27 Vol 98 dated 7 July 2017 and the Protection of Investment Act 2015 (South Africa); see also Adenekan (n 10) 12.

[33] Protection of Investment Act 2015 (South Africa), s 13.

[34] Permanent Sovereignty Act, s 11(1).

[35] ibid, s 11(2).

[36] Asouzu (n 1) 2

[37] See Adenekan (n 10) 6.

[38] See, generally, Lee Kuan Yew, From Third World to First – The Singapore Story: 1965-2000 (Harper Collins Publishers 2000).

[39] See Wheal, Oger-Gross, Obamuroh and Longe (n 2).

[40] See Nahanga Verter, ‘International Trade: Position of Africa in Global Merchandise Trade’ in Emerging Issues in Economics and Development Musa Ibrahim (Ed.) (Books on Demand, Germany, 2017), where the author posits that the actions taken by African countries do not reflect their ideologies and aspirations for an integrated African economy.

[41] See Andrew Mizner, ‘African Adversity in International Arbitration’ (2018) <https://iclg.com/alb/7968-african-adversity-in-international-arbitration> accessed 11 October 2022.

[42]Wheal, Oger-Gross, Obamuroh and Longe (n 2).

[43] Mizner (n 41).

[44] See Michael Ostrove, Ben Sanderson and Andrea Lapunzina, ‘Developments in African Arbitration’ (DLA Piper, May 2018) <https://globalarbitrationreview.com/review/the-middle-eastern-and-african-arbitration-review/2017/article/developments-in-african-arbitration> accessed 11 October 2022.

[45] See Regis Yann Simo, ‘Non-Exclusivity and an Ocean of Possibilities: The AfCFTA Jurisdictional Lex Specialis’ (2021) Transnational Dispute Management Journal <https://www.transnational-dispute-management.com/journal-advance-Publication-article.asp?key=1896> accessed 13 October 2022.

[46] See Adenekan, (n 10) 2.

[47] ibid 6.

[48] See ibid.

[49] See Olabisi D. Akinkugbe, ‘Dispute Settlement System under the African Continental Free Trade Area Agreement: A Preliminary Assessment’ (2020) 2) African J of Intl Comparative L 156-157.

[50] See Adenekan (n 10) 15.