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Opinion - Duncan Bagshaw

The times they are a-changin'


Duncan Bagshaw

The diversification of dispute resolution parameters in Africa-related contracts highlights the need for skilled international arbitrators, says Duncan Bagshaw.

The diversification of dispute resolution parameters in Africa-related contracts highlights the need for skilled international arbitrators.

There was a time when, without even looking at the dispute resolution clause in a contract, one could be confident that it would probably provide for either English of French governing law, and would provide for arbitration in London, Paris or Geneva, under the rules of the ICC or LCIA.

Nyakati zinabadilika, as Bob Dylan might have said. For a variety of reasons, the provisions in dispute resolution clauses appear, on the basis of anecdotal evidence at least, to be diversifying.

There is a growing trend for African parties to press in negotiations for an African seat and/or an African institution in dispute resolution clauses. It is well-known that the State Government of Lagos, Nigeria, seeks to insist on a Nigerian seat for arbitrations arising out of contracts which it enters into. Comparative Legal Guides reported in 2016 that, in relation to Nigeria, “In contemporary business-to-business transactions … mandatory arbitration clauses are increasingly being imposed by statutes or regulators.”

Laws relating to local content may also be relied upon to press for arbitration to take place with a seat in the jurisdiction where the project is taking place. In the Nigerian court decision in SPDC v Crestar, it was suggested that foreign arbitration would offend against the local content requirements in the Nigerian Oil and Gas Act. In my experience, other African states are also pressing harder for arbitrations to be held locally or in other African jurisdictions.

A survey in a major legal magazine in 2015 found that 58% of respondents to a survey would be willing to choose an African seat in an arbitration agreement. Fortunately, this apparent trend comes at a time when there has been significant development in the facilities for arbitration available in African jurisdictions.

Nigeria, Cote d’Ivoire, Egypt, Rwanda and South Africa all have arbitration hearing and administration facilities which can handle major international hearings. Mauritius has hosted substantial international arbitration hearings in cases administered by LCIA-MIAC and the Permanent Court of Arbitration.

In Kenya, the establishment of the Nairobi Centre for International Arbitration (launched at a conference in December 2016) should accelerate the pace of development in that important jurisdiction.

Many African jurisdictions now also have modern legal regimes for arbitration. Nine countries in Africa have adopted UNCITRAL Model Law-style statues, and the seventeen member countries of the OHADA region all apply a modern uniform arbitration law.

The formal adoption by South Africa of its new arbitration law is eagerly awaited. The latest news is that the International Arbitration Bill was approved by Cabinet in March 2017 and it is hoped that it will go before Parliament shortly.

Given the interest in seating arbitrations in Africa, decisions of African courts draw significant attention and scrutiny, although this is not always positive in nature. Debate raged around the decision of the OHADA Cour Commune de Justice et Arbitrage  (CCJA) in the Getma case to set aside an award because the parties had agreed to the tribunal’s fees exceeding the scale permitted by the CCJA rules.

However the argument was, to some extent, defused when the District Court in Washington, DC gave a judgment on 9 June 2016, declining to enforce the award which the OHADA court had set aside. The Court remarked: “[a]ny suggestion that the CCJA is inherently biased in favor of OHADA member states is unfounded.”

The diversification of seats and governing law in arbitrations places greater emphasis on the skills of the arbitrator in these matters, and the need for international arbitrators to be trained to a high standard. In an arbitration which is not seated in England, many arbitrators for whom the English law of arbitration would be second nature will have to keep in mind, and carefully comply with, the law of the seat.

It is in this situation that the skills taught to thousands of arbitrators around the world by the Chartered Institute of Arbitrators (CIArb) become of paramount importance. Arbitrators must take care when considering issues such as amendment of claims, consolidation of proceedings and other procedural matters.

Arbitrators must also be careful where the governing law is not a system of law with which they are very familiar. Whilst many African jurisdictions have laws based on English of French law, in many cases they are far from identical.

Dealing with arbitrations where the seat and governing law are different from the arbitrators’ primary qualification country is certainly challenging. But it need not necessarily mean excessive costs and delay. Arbitrators may wish to consider, for example, whether they really need expert evidence on law, or whether the parties’ counsel can simply make submissions on the law by direct reference to legal sources. With African lawyers increasing appearing in international cases, this should also help to avoid the need for expert evidence on law.

Against this background, frequent exchanges and interaction with arbitrators and counsel from a range of jurisdictions are essential. CIArb’s conference to take place in Johannesburg on 19 and 20 July 2017 will be an exceptional opportunity to learn from and interact with lawyers from a variety of African and non-African jurisdictions. A common complaint about African arbitration is a lack of availability of high-quality arbitrators and counsel on the continent.

Given the quality and breadth of speakers and delegates attending, the CIArb Johannesburg conference will be a valuable opportunity for practitioners to develop their network and knowledge of African practitioners.

I look forward to meeting old friends and new faces there.