ARBITRATION IN AFRICA
International arbitration is fast becoming the go-to form of dispute resolution across the continent. African governments are keen to promote the use of arbitration wherever possible to attract foreign investment. Conversely, foreign investors, who may 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 of African arbitral venues is growing, such that investors are increasingly facing the option – and perhaps pressure – to agree to an African arbitral seat and institution. Before agreeing to a particular dispute resolution procedure, investors must consider the enforceability of any award, the substantive and procedural aspects of the arbitration law that will apply, and the attitude and powers of the local courts with regard to onshore or offshore arbitration. Investors should also bear in mind the available investment protections.
When determining the most appropriate dispute resolution procedure, potential enforcement is a key consideration, starting with whether the country into which the investment is being made – and therefore where enforcement of an arbitral award is likely to be sought – is a party to any of the regimes facilitating enforcement of arbitral awards. Chief among these is the New York Convention, the most 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.
Jan-Mar 2015 issue
Herbert Smith Freehills LLP