With the explosion of technology and increased globalisation, arbitration has become the preferred mechanism for settling disputes. While the concept of arbitration has existed in one form or another for centuries, the current popularity of international arbitration is something that has occurred slowly over a period time, particularly over the past twenty years. This increase in its popularity can in some part be put down to one of the most outstanding benefits of arbitration – its transnational applicability in international disputes with minimal or (in some cases) no interference by the courts, thus boosting the parties’ confidence in resolving their issues in the best way achievable.
In recognition of the advantages of arbitration, especially in the context of international commerce, countries and regions around the world have embarked on promoting international arbitration as the best dispute settlement approach. In Africa for example, we have seen that several arbitration institutions have been, and continue to be, established across the continent. In Nigeria, we have seen the creation of the Lagos Court of Arbitration; in
International commercial arbitration is a global daily occurrence, we also have others such as:
i) Chartered Institute Of Arbitrators Kenya.
ii) Cairo Regional Centre for International Commercial Arbitration (CRCICA).
Most of these arbitrations are seated in jurisdictions such as Paris, Geneva, London, and the UAE, even where neither the subject matter of the disputes nor the parties to the dispute have any connection with the venue, but for the agreement containing the arbitration clause that makes the seat of arbitration to be in those countries.With increased globalisation, arbitration is the preferred dispute settlement mechanism. Click To Tweet
As noted above, there has been a considerable amount of effort made by African countries to encourage potential users of the arbitral process to readily seat their arbitrations in these jurisdictions. However, this effort has met with very little success, and one continues to find arbitration agreements entered into by commercial parties dealing with African companies and governments, which seek to have the seat of the arbitrations outside of Africa. In the worst situations, one finds a commercial arrangement whose entire nexus is say, in Nigeria, seated in a European country.
This disjoint between the effort being put in to promote arbitration in Africa, and the results being seen, is arguably down to some perceived challenges affecting the effectiveness of international arbitration in Africa. While some of the problems focus on the arbitrators, others focus on the institutions whose very role are to promote arbitration in Africa.
Some of the perceived challenges arise from the different underlying legal systems that can be found across African countries: they vary from civil law to common law to commercial law coupled with sharia law and to civil law coupled with sharia law. Add to these differences in legal systems, the cultural differences across Africa, and then the colonial influences ranging from the Francophone to the Anglophone and the Lusophone, and it is easy to see that it is difficult to import the internationally recognised principles governing arbitration into each individual county or indeed, region. One thing that parties engaging in arbitration, in most cases, seek to avoid is the effect of diversity of the domestic legal systems that they may find themselves in. As Sampasa (1992) suggests,
“Arbitration provides certain mechanism of escape from substantive and procedural rules of municipal systems which foreign businessmen scarcely understand and often consider as having very little relevance to the issues needing solution”
Accordingly, it may be that to see an increase in the uptake of arbitration in Africa, more needs to be done to tackle the effects of different legal systems by introducing arbitration-specific rules and procedures which mirror the internationally recognised standard, within the framework of individual country’s laws that enable tribunals and parties to conduct the process efficiently.
There is also the language barrier which is often not generally considered as a challenge in this day and age because of technology and transition into a global village. However, from a practical perspective, where English speaking parties in a matter are in a French speaking country and the arbitral institution only operates in French, it is likely that the parties would prefer to avoid such a situation and instead, select a jurisdiction where they are certain of getting an institution that operates primarily in English.
In respect of the selection of the tribunal, it has been observed that parties, even African parties, would rather import foreign arbitrators than select arbitrators from their respective or surrounding African countries. This might be down to the opinion of some people that alternative dispute resolution in some African countries is underdeveloped, and accordingly the arbitrators cannot be trusted to conduct arbitration in an organized and effective manner. This is the reason why some parties refer complex issues such as international investment and large commercial disputes to well recognised international institutions such as ICSID, ICC and LCIA.
African based arbitrators do not have global reach and are rarely recognized in international award schemes. Who’s Who Legal performs an annual review of distinguished practitioners from different nations across the world. With specific regard to international commercial arbitration, Who’s Who Legal announced 2014 the top twenty-five arbitrators in the world, and not a single one was from Africa. In 2013 out of the 573 arbitrators from seventy-four countries noted by Who’s Who, none was from Africa. There can be no doubt that African arbitrators have the intelligence, skill and knowledge to handle virtually any dispute that may be referred to international arbitration, but there can also be no doubt that they suffer from the unfortunate perception which renders Africa’s image as a corrupt and uncivilized continent. It is precisely because of this perception that business association and interaction by the outside world with Africa is kept to a minimum level.
On a similar note, there is the further perception problem that all African countries are politically and economically unstable. Parties to large transnational disputes would generally favour arbitral institutions in politically stable countries because there will be greater certainty and effective conduct of the arbitral process. There are various reasons for this, but one obvious one is that in a politically and economically stable country, things such as the encouragement of arbitration and arbitration institutions can be given top priority. However, where there is the sort of political and economic stability that African countries are perceived to be plagued with, it becomes more difficult to justify concentrating efforts on things such as the promotion of arbitration, which (rightly or wrongly) are not seen as essential to achieving political stability. In short, an unsettled political environment adversely affects the arbitration institutions and framework.Globally, international arbitration is promoted as the best dispute settlement approach. Click To Tweet
Enforcement of international arbitral awards is very important in international arbitration practice. If arbitral award made pursuant to arbitral proceedings cannot be enforced, then the arbitral process is hopeless and of no relevance. In this respect, African countries are certain behind the curve. For example in Nigeria, time limitation is a very serious obstacle in the enforcement of international arbitral awards.
The Arbitration and Conciliation Act of Nigeria does not specify the limitation period the enforcement of arbitration awards, and neither the legislature nor the judiciary have been particularly helpful in clearing up the mess.
The Nigerian Supreme court in the case of M.V Lupex V Noc & S ltd (2003)15 NWLR (pt844) 469 held that where parties have agreed to refer their dispute to arbitration, the court has a duty to enforce the agreement of the parties staying any proceedings commenced in court contrary to the arbitration agreement.
The above-mentioned challenges are only some of the challenges that arbitration in Africa faces. It is accordingly no surprise that foreign businessmen and women who chose arbitration over litigation (because of its primary advantages such as speed and efficiency) will not use Africa as the seat of their arbitration process. This is however not to say that we give up. It is to say that we look for new and innovative ways to address these challenges where justified, and to change perceptions where they do not reflect the reality.