Arbitration continues to remain the preferred dispute resolution method for international parties doing business in Africa, offering investors the benefit of having their disputes determined by independent and competent arbitrators according to rules that are both predictable and flexible, and with the comfort of enforceable awards. There was an increase in foreign direct investment into the continent in 2018, and the number of African arbitrations increased.2 Foreign direct investment into Africa saw an 11 per cent increase in 2018 to US$46 billion,3 and both the International Chamber of Commerce (ICC) and the London Centre for International Arbitration (LCIA) reported an increase in the number of parties to arbitrations from Africa in 2018.4
Before investing in Africa, investors are giving increased consideration to whether the target state for investment is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and whether it has adopted the Model Law on International Commercial Arbitration (Model Law).
The purpose of this chapter is to provide an overview of the practice of resolving disputes through international arbitration in Africa. This is evidently a challenge, not least because Africa is not unitary and comprises 54 different countries with hundreds of languages being spoken. A further divide inherited from colonial years exists between countries whose legal system is linked to civil law (mostly France and Belgium) and those linked to common law (mostly the United Kingdom). The first section below provides an overview of arbitration in Africa, while the second and third sections examine recent developments in anglophone and francophone Africa, respectively. The final section provides highlights of the recent developments regarding investment treaty arbitrations in Africa.
II OVERVIEW OF ARBITRATION IN AFRICA
Thirty-nine African states are now parties to the New York Convention,5 thereby providing investors in these jurisdictions with the assurance that arbitral awards will – or at least should – be recognised and enforced in those countries, or indeed in any of the 163 state parties to the New York Convention. Significantly, these 39 African states include Africa's three largest economies (Nigeria, South Africa and Egypt), whose combined GDPs are in excess of US$1 trillion.6 Africa is, however, the continent with the highest proportion of countries that are not parties to the New York Convention.7 Consequently, investors will continue to encounter difficulties in attempting to enforce foreign awards in those countries. Those states that are not constrained by the limited grounds of refusal in Article V of the New York Convention may impose their own more stringent criteria.
Eleven African states have adopted the UNCITRAL Model Law.8 The Model Law provides a reliable and well-structured domestic arbitration regime that is an important consideration for investors in Africa. For example, the Model Law provides that domestic courts can only refuse to enforce an award in limited circumstances. The domestic arbitration laws of a state are particularly important where investors are considering the state as a possible choice of seat for their arbitration. In those circumstances, where the seat may determine the procedural law of the arbitration, the reliability of domestic laws will be key. As the arbitration regimes of African states develop further,9 foreign investors may seat their arbitration more frequently in an African state, provided they have sufficient confidence in that jurisdiction's commitment to the rule of law. For large projects, however, the seat of arbitration favoured by foreign businesses is still often placed outside the African country. Although, according to one survey, 58 per cent of parties would consider having their arbitration seated in Africa10 of the 842 new cases registered by the ICC in 2018, just 1.9 per cent were seated in Africa, while just two of the 317 LCIA cases in 2018 had an African seat.11 Investors are likely to continue to seek the protection, particularly for large-scale investments, of a traditional seat of arbitration, such as Paris or London, under the auspices of well-established international arbitration institutions such as the ICC or the LCIA. Nonetheless, African states are adopting pro-arbitration regimes, as recently evidenced by Nigeria passing the Arbitration and Conciliation Act (Repeal and Re-Enactment Bill) 2017 (ACA) in February 2018, which contains important pro-arbitration provisions. Some of the key provisions include recognising third-party funding in arbitration, empowering arbitrators to grant interim and protective measures, and allowing parties to conclude an arbitration agreement by electronic communication. It is expected that the ACA will lead to an increase in the number of arbitration agreements electing Nigeria as the seat of arbitration.
Some regional harmonisation also exists, the most important example being OHADA (see footnote 8), a mainly francophone international organisation that groups together 17 African states.12 The OHADA treaty includes a Unified Arbitration Act (UAA) and created a Common Court of Justice and Arbitration (CCJA) in Abidjan. Furthermore, the coming into force of the African Continental Free Trade Area (AfCFTA) in May 2019, which at the time of writing has been signed by 55 African Member States and ratified by 28, will have a significant impact on African trade. Importantly, the treaty encompasses a framework for settling trade disputes arising between state parties, including a mechanism similar to the World Trade Organization's dispute settlement body. However, the issue of investment protections, including a provision for investor–state dispute settlement, is still subject to negotiation, and will be addressed in phase two of the AfCFTA negotiations.
When negotiating arbitration clauses, parties are increasingly giving consideration to agreeing to a local seat of arbitration, with the logistical benefits this provides in obtaining the relevant documentation and securing the attendance of witnesses. As a consequence, and despite concerning reports about an US$18 billion award rendered by a 'sham' arbitral institution in Cairo against Chevron,13 there has been a steady growth in the use of regional arbitral institutions, with new institutions emerging in recent years. The oldest such institution is the Cairo Regional Centre for International Commercial Arbitration (CRCICA), which by 31 December 2017 had registered 1,226 cases.14 Other smaller and more recently established institutions include the Kigali International Centre of Arbitration in Rwanda, which was established in 2011 and by 2019 had registered over 100 cases, the Arbitration Foundation of Southern Africa, the Lagos Chamber of Commerce International Arbitration Centre, the Nairobi Centre for International Arbitration, the Ghanaian Arbitration Centre, the Law Society of Kenya International Arbitration Centre and the Casablanca International Mediation and Arbitration Centre, with steps also having been taking to establish the Djibouti International Arbitration Centre.15
There has also been an emergence of specialised institutions including the Egyptian Sports Arbitration Center and the International Court of Maritime and Air Arbitration in Morocco. Although there is no further publicly available data on these onshore arbitrations, it is likely that a large proportion feature local government entities and companies. The China–Africa Joint Arbitration Centre was also established in August 2015 to address the resolution of commercial disputes between Chinese and African parties. In July 2018, the LCIA–Mauritius International Arbitration Centre formally ceased operations, after seven years. This, however, has paved the way for a new independently run centre, now renamed simply the Mauritius International Arbitration Centre (MIAC). MIAC's 2018 arbitration rules are based on the UNCITRAL Rules, and the Permanent Court of Arbitration will continue to act as the appointing authority for arbitrations conducted under the Mauritian Arbitration Act. Mauritius also offers another arbitral institution, the Mauritius Chamber of Commerce and Industry Arbitration and Mediation Center (MARC). MARC's rules provide for, inter alia, an emergency arbitrator procedure and an expedited procedure for small claims. For its part, the ICC International Court of Arbitration launched an Africa Commission to coordinate its 'expanding range of activities and growth on the continent' and to 'expand the pool of African arbitrators.'16
While, on the whole, recent developments in the context of international arbitration in Africa have been pro-arbitration, there have been a few prior instances where this has not been the case. The judgment of the Cassation Bench of the Supreme Court of Ethiopia in National Mineral Corp Pvt Ltd Co v. Danni Drilling Pvt Ltd Co17 is one such example. In this case, the Court ruled that it still had power to review an award on fundamental error of law grounds despite the parties' express agreement on the finality of the arbitral award, reversing the previous decision of the same Court establishing that finality clauses bar otherwise possible review by the Cassation Bench of the Federal Supreme Court.18 In addition, Tanzania's parliament has previously passed legislation prohibiting international arbitration in disputes relating to public–private partnership agreements and the country's national resource sector. In 2020, however, Tanzania unveiled the Arbitration Bill 2020, which proposes encouraging alternative dispute resolution within Tanzania.
III ANGLOPHONE AND COMMON LAW JURISDICTIONS
Twenty African states, including South Africa, Nigeria, much of East Africa and parts of West Africa, have legal systems based more or less on English common law.19 Nine20 of these states are members of the Common Market for Eastern and Southern Africa (COMESA), an organisation of 21 states committed to 'developing their natural and human resources for the good of their people'. The 520 million people under the COMESA umbrella, accounting for an export bill of US$112 billion, benefit from a marketplace that includes a free trade area, a customs union and trade promotion. Article 28 of the COMESA Treaty provides that the COMESA Court of Justice shall have jurisdiction to hear and determine any matter arising from an arbitration clause conferring jurisdiction upon it, as well as disputes submitted by Member States.
Anglophone states are respectful of the system of binding precedent and have the ability to call upon a rich body of common law jurisprudence. These states may indicate through arbitration-related court judgments that they are arbitration-friendly jurisdictions. One such example is Mauritius, which, pursuant to its domestic arbitration act, has established a specially constituted three-judge branch of its Supreme Court to hear international arbitration matters.21 Encouragingly, in one previous case, this special division demonstrated an arbitration-friendly approach by dismissing arguments that the domestic arbitration legislation was unconstitutional, refusing to reopen the merits of the dispute, and rejecting arguments based on public policy.22 In a more recent arbitration-friendly case, the Mauritian Supreme Court decided to refer a dispute to arbitration, holding that the Mauritian courts did not have jurisdiction to hear the dispute at hand under the Mauritius Civil Code.23 Similarly, although Tanzania has not adopted the Model Law, and notwithstanding the above comments about past legislative developments, its domestic legislation and the proposed Arbitration Bill 2020 provide for only limited grounds upon which the national courts may set aside an arbitral award.24 The High Court of Tanzania has held that it would not be proper for it to set aside an ICC award, because to do so would amount to a reopening of the issues of fact and law that the parties had submitted to arbitration for final determination.25 In Nigeria, it has long been an accepted practice that foreign arbitration awards are enforceable in Nigeria directly pursuant to the New York Convention.26
However, the picture remains mixed across anglophone Africa. For example, past attempts to enforce a Stockholm Chamber of Commerce (SCC) award in Kenya suggest that it is not always possible to predict how a local court will approach the enforcement of foreign arbitral awards. In that arbitration, the tribunal found in favour of a Tanzanian government authority in its dispute with a Kenyan construction company, just as the Tanzanian Disputes Resolution Board had done at an earlier stage in their dispute.27 The Kenyan High Court, however, refused to enforce the award, citing public policy grounds.28 The High Court found that, although the parties had agreed that their dispute would be governed by Tanzanian law, the SCC tribunal had applied English law, and as such, enforcement of the award would be contrary to the public policy of Kenya and was therefore not enforceable. The Tanzanian authority appealed to the Kenyan Court of Appeal, which held that it did not have jurisdiction over the matter. According to the Court of Appeal, the only competent court in Kenya with the power to recognise and enforce arbitral awards is the High Court, with no further right of appeal.29
Not only does the number of arbitrations in Africa continue to increase, but some of these arbitrations concern some of the largest claims in the world. The US$2 billion award that ExxonMobil and Shell secured against the Nigerian National Petroleum Corporation (NNPC) in 2011 is well-known, but it has also recently been reported that a tribunal has ordered Nigeria to pay US$6.6 billion to a British Virgin Islands company founded by Irish nationals, the highest-value African arbitration award in history and the second-largest anywhere in the world.30 The award concerned a gas supply and processing agreement, governed by Nigerian law and entered into by Nigeria's Ministry of Petroleum. Pursuant to the agreement, the claimant, Process and Industrial Developments Ltd (P&ID), was required to build facilities to refine wet gas into lean gas, which would then be used by Nigeria to power its national electricity grid. A majority of the tribunal, comprising Lord Hoffmann and Sir Anthony Evans QC, found that the Nigerian government had repudiated the agreement, which caused the 20-year project to collapse and the claimant to suffer US$6.597 billion in lost profits. P&ID successfully obtained recognition of the award in the English courts. However, in December 2019, Nigeria issued a challenge in the Nigerian courts against the award alleging that the underlying agreement was procured through fraud and corruption. The English courts have agreed to stay enforcement pending the outcome of the challenge. P&ID is also reportedly trying to enforce the award in the United States, where Nigeria is also contesting enforcement on grounds of corruption by P&ID. At the time of writing, the value, with interest, of the underlying award had increased to over US$9 billion.
Norway's state oil company, Statoil, and its partner Chevron are also seeking to enforce a billion dollar award against Nigeria in the United States. In August 2015, the majority of the ad hoc tribunal (Singapore's Laurence Boo and former UK Supreme Court Justice Lord Saville) found that NNPC had breached a production-sharing contract for the Agbami oil field by 'overlifting' crude oil and unilaterally filing tax returns on the claimants' behalf. The majority ordered Nigeria to pay over US$941.5 million in damages, with interest taking the final quantum to around US$1 billion.31
IV FRANCOPHONE and/or CIVIL LAW JURISDICTIONS
There are two main sub-regions here: northern Africa (essentially the Maghreb plus Egypt), as well as francophone western and sub-Saharan Africa. Many of the countries in the last two regions sharing a common adherence to OHADA.
Arbitration practice in northern Africa is somewhat disparate. Arbitration is a common dispute-resolution mode in Algeria and Egypt, whereas it is less so in the rest of that sub-region. It is noteworthy that, as far as domestic courts are concerned, Libyan courts are traditionally hostile to arbitration. All countries offer common features, such as a broad agreement on the validity of the Kompetenz-Kompetenz principle, which allows arbitral tribunals to determine their own jurisdiction. Although judicial intervention in an arbitration process is generally also supposed to be quite limited, Libyan law offers, for instance, broad grounds on which an arbitral award may be annulled that are similar to those applicable to domestic judgments. The other countries of the region are characterised by less stringent legislation concerning the enforcement of arbitral awards. They all recognise the requirement to file an application for exequatur with the relevant court as a precondition for enforcement. Domestic courts in Egypt adopt a rather enforcement-friendly approach, including against the state. Some other countries, such as Tunisia and Libya, are still reluctant to allow the enforcement of arbitral awards against the state.
Each of the northern African countries have distinct legislation on arbitration. They all make a distinction between domestic and international arbitration, however, in line with the traditional French approach. Another common feature is the increasing awareness of legislators concerning the promotion of arbitration as an efficient dispute resolution mechanism. With the exception of Libyan law, the main source of inspiration is again the Model Law.
Northern African countries are also parties to many arbitration-related conventions, mostly related to the rest of the Arab region, such as the Riyadh Agreement on Judicial Cooperation, the Amman Convention on International Commercial Arbitration and the Unified Agreement for the Investment of Arab Capital in the Arab States.
Northern African countries' legislation is more specific on the definition of arbitration agreements. For instance, Article 1007 of the Algerian Administrative and Civil Procedure Code defines an arbitration clause as an agreement by which the parties to a contract dealing with rights that they can freely dispose of commit to submit disputes that may arise in relation to this contract to arbitration.32 Arbitration clauses must be stated in writing, and provide for the nomination of an arbitrator or for the modalities of his or her appointment.33 The requirement of an arbitration agreement to be in writing is common to all of the northern African countries. Algerian law provides for the autonomy of arbitration agreements, but only for international arbitration.34 It is also worth noting that Libyan law provides that arbitration agreements should expressly determine the subject matter of the dispute to be determined by arbitration.
The OHADA UAA is extremely important in OHADA countries. It applies to arbitrations having their seat in an OHADA Member State. The UAA is modelled on international arbitration instruments, and in particular on the Model Law. It makes no distinction between domestic and international arbitration. It creates a unified dispute resolution system under the aegis of the CCJA, which plays an important role in fostering a harmonised approach to OHADA business law. There is room in the UAA for local arbitration institutions and ad hoc arbitration. The CCJA, which is officially the supreme court of the OHADA contracting states, combines a judicial and an arbitral role. Even for OHADA contracting states, domestic arbitration laws continue to apply with respect to issues that are not addressed in the UAA. However, according to Advisory Opinion of the CCJA No. 001/2001/EP of 30 April 2001, domestic provisions on arbitration that conflict with the UAA are deemed revoked and therefore of no effect. The primacy of the OHADA rules over domestic laws was recently affirmed during an annulment procedure before the French courts. Confronted with a conflict between OHADA law and Cameroonian law, the Paris Court of Appeal upheld the supranational character of OHADA law.35 In doing so, it gave full effect to Article 10 of the OHADA treaty, according to which '[u]niform Acts are directly applicable and overriding in the Contracting States notwithstanding any conflict they may give rise to in respect of previous or subsequent enactment of municipal laws'.36
On 23 and 24 November 2017, the OHADA Council of Ministers adopted a largely modified UAA and a new Uniform Mediation Act (UMA), and revised the CCJA Arbitration Rules. These three texts became applicable on 15 March 2018 in all OHADA Member States.
The UMA applies to any disputes submitted to a mediator, without any restriction as to the geographical location or subject matter of the relevant dispute, and covers both conventional and judicial mediations. The confidentiality of mediations and the independence and impartiality of mediators are provided for. Article 16 of the UMA provides for a regime for the recognition and enforcement of settlement agreements resulting from mediation proceedings. The UMA is thus a welcome addition to the uniform acts enacted by the OHADA as it fills the legislative gap that existed in most OHADA Member States with regard to the amicable settlement of disputes. The arbitration reform aims to promote celerity, effectiveness and transparency within the OHADA area. The reform also aims at promoting the CCJA as a more attractive centre for arbitration and OHADA Member States as attractive seats of arbitration. Moreover, it is now clearly stated in both the UAA and the CCJA Arbitration Rules that arbitration can be initiated either on the basis of an arbitration agreement or an investment-related instrument, such as an investment code or a bilateral or multilateral investment treaty (Article 3 of the UAA, Article 2.1 of the CCJA Arbitration Rules). This should attract investments in the OHADA region.
With regards to the revised UAA, the principle of Kompetenz-Kompetenz has evolved: it provides that a state court must decline jurisdiction over a dispute involving an arbitration clause when the arbitral tribunal is not yet constituted or if no request for arbitration has been submitted, unless the arbitration clause is manifestly void (as was already provided for) or, under the revised UAA, prima facie inapplicable (Article 13). Arbitration proceedings will be heard by default by a sole arbitrator (Article 5), and a limited time frame is now set for difficulties arising out of the constitution of the arbitral tribunal, including the challenge of arbitrators before national courts and the CCJA (Article 8). Arbitrators now have an obligation to disclose at any point in proceedings all circumstances that might create legitimate doubt about their independence or impartiality (Article 7). Once an award is rendered, the parties can now waive their right to seek its annulment, subject to international public policy (Article 25, Paragraph 3). The court having jurisdiction has three months to issue a decision on annulment, failing which the claim can be brought within 15 days before the CCJA, which must issue its ruling within six months (Article 27). Exequatur is deemed to have been granted if the national court fails to issue a decision 15 days after such request was referred (Article 31), and a decision granting exequatur cannot be appealed (Article 32).
With regards to the CCJA Arbitration Rules, their revision responds to most past criticisms, including the fact that the CCJA both makes decisions on arbitration proceedings and hears applications to set aside awards. According to the revised Rules, members of the CCJA with the same nationality as a state directly involved in an arbitration must remove themselves from the panel in the case at hand (Article 1.1). In addition, the court will now have the possibility to disclose the reasons for its decisions to the parties, provided that one of the parties so requests before a decision is issued (Article 1.1). The revised Rules clarify the procedure for the court to appoint the arbitrators (Article 3). It is now required that arbitrators carry out their mission with diligence and celerity (Article 4.1). The revised Rules also provide for the reinforcement of an arbitrator's power in terms of admitting evidence (Article 19), for joinder (Article 8.1) and for the voluntary intervention of third parties (Article 8.2), as well as for disputes involving multiple parties (Article 8.3) or arising out of multiple contracts (Article 8.4). Similarly to the ICC, the CCJA now has broader powers in terms of the scrutiny of draft awards, which may result in modifications being proposed to an arbitral tribunal (Article 23.2).
Arbitral awards rendered in accordance with the CCJA Rules have the same binding force within the territory of OHADA contracting states as judgments of the states' domestic courts.37 In the event of the absence of voluntary compliance with an award, its enforcement may be pursued through an application for exequatur by the winning party with the CCJA. According to Article 30 of the CCJA Rules, the order of the court to this effect makes the award enforceable in all OHADA contracting states.
An award can also be subject to three kinds of recourse:
- a challenge regarding validity, which is the equivalent of a request to set aside the award. Under the new Rules, a failure to provide reasons for the award and an improperly constituted tribunal or improperly appointed sole arbitrator are now grounds for setting the award aside (Article 29.2, which now provides for the same annulment grounds as those set out in the UAA); the CCJA has six months to render its decision on setting awards aside (Article 29.4);
- a recourse for revision aimed at allowing the revision of the award in cases where new elements or facts were discovered by one of the parties that may have altered the decision of the arbitral tribunal had they been disclosed in due course; and
- a third-party opposition that allows third parties who were not called before the arbitral tribunal and whose rights are adversely affected by the decision to challenge the award.
Decisions on exequatur are issued by the CCJA President within 15 days after the request has been filed or three days for awards on interim or conservatory measures (Article 30.2). Decisions to grant exequatur can no longer be appealed (Article 30.4).
In light of the Getma case, in which the CCJA annulled an award against the Republic of Guinea on the ground that the arbitrators had breached their mandate by negotiating directly with the parties over their fees instead of using the schedule of fees prescribed by the rules,38 Article 24.4 of the Rules now provides that any fixing of fees without the CCJA's approval is null and void, but that this is not a ground to set aside an award. This arbitration reform, together with the new UMA, thus provides a solid framework for alternative dispute resolution in OHADA Member States.
V INVESTOR–STATE DISPUTES
The reality of investing in Africa is that investors must deal with political and economic risk and instability, as well as deeper problems.39 Bilateral investment treaties (BITs) can be a cost-effective method of minimising some of that risk. BITs will typically contain provisions that, for example, guarantee compensation for an expropriation, and ensure the fair, equitable and non-discriminatory treatment of investments. In addition, many BITs will provide for disputes to be resolved through ICSID arbitration, under the umbrella of the 1965 ICSID Convention, which has an enhanced enforcement regime.
As African states seek to attract foreign investment by providing greater protection for investors, the number of BITs to which African states are party continues to increase. African states have now concluded more than 820 BITs and other treaties with investment provisions.40 Egypt alone has entered into 100 BITs throughout the world. Moreover, African states are continuing to negotiate BITs with other African states. For example, in the past 15 years Mauritius has signed or ratified 12 BITs with other African states and, of the 24 BITs and treaties with investment provisions signed in 2019 and early 2020, six involved at least one African state.
African states continue to show strong support for ICSID as a forum for resolving disputes. Forty-five have ratified the ICSID Convention,41 while a further three have signed but not ratified it,42 leaving only Angola, Eritrea, Equatorial Guinea, Libya and South Africa as non-parties – significantly fewer than the number of African states that are not parties to the New York Convention.
To date, 38 African states have been involved in ICSID proceedings. Additionally, a significant proportion of ICSID's caseload is from Africa. According to ICSID caseload statistics, Sub-Saharan Africa represented 15 per cent of the geographic distribution of all ICSID cases registered under the ICSID Convention and Additional Facility Rules by state party involved.43 This represents a 4 per cent increase from the previous year. Of the 776 cases registered at ICSID, 167 involved an African respondent, representing 21.5 per cent of ICSID's caseload. Of all the African states, Egypt had the largest number of claims (34) registered against it, with the most recent registration of a dispute in September 2019 by an Emirati oil and gas company, CTIP Oil & Gas International Limited.44 Notwithstanding the increase in the number of cases against African states, the appointment of African arbitrators in ICSID matters still remains very low. According to the 2020 ICSID statistics, only 2 per cent of all appointments made in ICSID cases involved nationals from Sub-Saharan African states, although ICSID has taken a proactive stance on the appointment of African arbitrators, naming 32 arbitrators from Sub-Saharan Africa (as opposed to 24 party-appointed arbitrators).45
However, two of Africa's largest economies, South Africa and Nigeria, have demonstrated a reluctance to enter into BITs, as they prioritise national sovereignty and public policy. South Africa has not signed or ratified a new BIT for almost a decade, and in that time it has terminated existing BITs with Argentina, Austria, Belgium, Denmark, France, Germany, Luxembourg, the Netherlands, Spain, Switzerland and the United Kingdom (although some still remain in force by virtue of sunset clauses). South Africa's current intention is to protect foreign investments through domestic legislation, a common alternative approach in many African states. On 13 December 2015, South African President Jacob Zuma signed the Protection of Investment Act into law. Although the Act applies to both foreign and domestic investors, it is likely to create uncertainty for the former because it does not provide protections that are typically included in BITs, such as obligations in respect of expropriation and fair and equitable treatment (FET). Moreover, unlike a BIT, South Africa's domestic legislation may be unilaterally amended by the government at any time. This is in contrast with the situation under a terminated BIT, which, as noted above, typically provides protection for a period of between 10 and 15 years after termination. On the other hand, investors from countries such as the US, which have never previously had a BIT with South Africa, will benefit from protections contained within the Act. The Act opts for dispute resolution through mediation or local courts, which follows a similar pattern to other domestic investment laws in the region adopting mediation as a method to settle disputes. Namibia's Investment Protection Act provides for either mediation or recourse to local courts, and Ivory Coast's Investment Code includes the use of mediation before arbitration.
Surprisingly, Africa's largest economy, Nigeria, has been less willing than its African neighbours to enter into BITs. Nigeria only has 15 BITs currently in force, and has made public statements that suggest that it is not minded to enter into further BITs. At the 2014 World Investment Forum, Nigeria stated that its right to regulate in the public interest and to preserve public policy prevailed over economic losses to investors, and expressed concern at the potential for increased exposure to claims.46 In furtherance of this policy, in December 2016 Nigeria signed a BIT with Morocco that sought to balance the interests between investors and the host state. While the BIT contains many of the usual protections, such as those relating to national treatment, FET, and full protection and security, it counterbalances these protections by also imposing obligations on investors relating to the environment, human rights, corruption and corporate governance. Morocco's new Model BIT, adopted in 2019, also includes a provision that investors operate their investments in compliance with international human rights obligations and in a matter that protects the environment and public health.47
In February 2017, an ICSID tribunal found Egypt in breach of the US–Egypt BIT in a politically sensitive case arising from pipeline attacks during the Arab Spring that interrupted Egypt's gas supply to Israel.48 Among other treaty breaches, the tribunal ruled that Egypt breached its obligation to protect and secure the pipelines: if the state could not have prevented four early militant attacks on the pipeline, these should have served as a warning that further attacks might ensue. It also held that Egypt's security forces were responsible for failing to take preventive or reactive measures and thus to protect the claimant's investment.
Aside from Egypt and in the same context, a substantial number of foreign investors have pursued investment treaty-based claims against the state of Libya under ICC or ad hoc rules in relation to the deterioration of the security situation following the uprisings of 2011.49 In 2018 and 2019, Libya began to see both favourable and unfavourable treaty-based awards. For instance, in the Way2B ACE case, the tribunal dismissed the Portuguese investor's claims, finding that the actions of the Libyan entity could not be attributed to the Libyan state for the purposes of the BIT.50 In the Cengiz case, the tribunal held Libya liable for denying full protection and security under the BIT to a Turkish investor, and awarded approximately US$50 million in compensation as well as further relief related to the release of certain performance bonds and financial guarantees.51
In addition to CTIP Oil & Gas International Limited's recent filing against Egypt, other significant ICSID arbitrations to have been filed against African respondents in the past year include a claim brought by an Italian investor against Morocco over a construction project,52 a claim by an American investor against Cameroon over its investment in a digital platform,53 and a claim by British investors against Tanzania concerning the cancellation of a power purchase agreement.54 Separately, Tanzania has seen three additional investor–state claims initiated against it in 2020 in response to mining law reforms introduced in late 2019.55 In addition, and in a rare example of a state entity bringing an ICSID case against an investor, Rwandan state-owned entity EUCL registered an ICSID claim against KivuWatt, a Rwandan subsidiary of London-listed ContourGlobal, although this claim was discontinued shortly after it was registered. 56
In late 2018, the Egyptian government reached an agreement to settle an ICC case filed by the Israel Electric Company against Egypt. EGPC, the Egyptian petroleum corporation, and EGAS, the Egyptian gas holding company, were required to pay US$1.75 billion due to the suspension of gas exports in 2012. Another development has been the UNCITRAL Rules on Transparency in Treaty-Based Investor–State Arbitration (Rules on Transparency), which came into effect on 1 April 2014 and were signed in Mauritius (Mauritius Convention). This treaty comprises a set of procedural rules that provide for transparency and accessibility to the public of treaty-based, investor–state arbitration conducted under the UNCITRAL Arbitration Rules. The Rules on Transparency include provisions on the publication of documents, open hearings, and the possibility for the public and non-disputing treaty parties to make submissions, while also providing robust safeguards for the protection of confidential information. They apply to all treaties concluded after 1 April 2014 unless the parties opt out. The Rules on Transparency will also apply to treaties concluded before this date if the state or the parties opt in. Through the Mauritius Convention, states have the opportunity to agree, subject to reservations, that the Rules on Transparency will apply to all arbitrations arising under their investment treaties concluded before 1 April 2014. Ten states signed the Mauritius Convention in March 2015, including Mauritius itself, with six more signatories following in 2015, one in 2016 and one in the first months of 2017. The Convention came into force on 18 October 2017 following its ratification by Mauritius, Canada and Switzerland. Cameroon and Gambia have since ratified the Convention, and this may encourage the remaining 18 signatories also to ratify.
In 2008, the African Union Member States developed a Pan-African Investment Code with the objective of fostering cross-border investment flows in Africa. Under the leadership of the African Union Commission, the first draft of the Code was released in 2015.
The Code seeks to:
- rebalance the interests between investors' rights and host states' obligations;
- take into account countries' sustainable development objectives and their investor–state dispute settlement systems; and
- overcome issues regarding the fragmentation of the international investment regime.
This demonstrates the appetite among African states for a rethinking of some of the traditional investment protection provisions, and (if followed) would enable greater freedom for states to pursue their economic and social objectives through regulation. However, the absence of, for example, any FET provision means (if it were implemented in place of traditional BITs) that investors may struggle to bring claims based upon legitimate expectations as to the legal and business regulatory environment, such claims having been largely developed under the FET umbrella.
In another move towards the 'Africanisation of investment arbitration',57 the Ivory Coast withdrew its express consent to ICSID arbitration contained in its Investment Code on 1 August 2018.58 Instead, the revised Investment Code now provides in Article 50 for the submission of any investment dispute to the CCJA in cases of the failure of amicable negotiations.59 While the Ivory Coast remains a signatory to the Washington Convention, its Investment Code can no longer be relied upon as a source of consent to an ICSID arbitration.60
VI OUTLOOK AND CONCLUSIONS
Given the ongoing investment flowing into Africa, there is little doubt that the number of disputes involving African projects or African parties will continue to rise in future years. It is encouraging to see that most African countries are parties to the ICSID Convention. However, more effort is required to increase the number of African states that are parties to the New York Convention, as well as ensuring the judiciary appreciate how to apply the New York Convention. The holding in 2016 of the Congress of the International Council for Commercial Arbitration in Africa (Mauritius) for the first time since its creation in 1963 is a sign of the times, and should help to foster the spirit of international arbitration in Africa. Speakers were optimistic about the development of international arbitration in Africa despite the difficulty of enforcing awards against states and state entities. A call was also made for the appointment of more African arbitrators and for the 're-localisation' of arbitration on African soil.61 In this regard, Africa International Legal Awareness, a non-profit body training African lawyers in investment treaty law and international arbitration, unveiled an online directory featuring African practitioners with expertise in these fields in March 2016.62 The African Arbitration Association, launched on 29 June 2018, will also promote the use of African practitioners, arbitrators and arbitral institutions. Work remains to be done, however, to ensure that African jurisdictions have the stability and commitment to the rule of law necessary to ensure non-interference in the arbitral process and the enforcement of international awards.
1 Jean-Christophe Honlet, Liz Tout and James Langley are partners and Marie-Hélène Ludwig is an associate at Dentons.
2 Where the figures used for this chapter are those for 2018, it is because this is the most recent year for which we have complete and published data.
3 United Nations Conference on Trade and Development, World Investment Report 2019: Special Economic Zones (2019), pages 8, 18.
4 The ICC reported that both the number of cases (87) and the number of parties (153) from Sub-Saharan Africa reached record highs in 2017. These figures represented a growth rate of 35.9 per cent for cases and 40.4 per cent for parties compared with the previous year. (ICC News, 'ICC announces 2017 figures confirming global reach and leading position for complex, high-value disputes', 7 March 2018). This continued into 2018 where the ICC reported a 17.5 per cent increase in cases from North Africa, up to 47, and an increase in North African parties from 55 to 60 (ICC News 'ICC Arbitration figures reveal new record for awards in 2018', 11 June 2019). According to the LCIA, 8 per cent of all parties were African, up from 7.1 per cent the previous year (LCIA, 2018 Annual Casework Report, page 8).
5 Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cape Verde, Cameroon, Central African Republic, Comoros, Democratic Republic of the Congo, the Ivory Coast, Djibouti, Egypt, Gabon, Ghana, Guinea, Kenya, Lesotho, Liberia, Madagascar, Mali, Mauritania, Mauritius, Morocco, Mozambique, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, the Seychelles, South Africa, Sudan, the United Republic of Tanzania, Tunisia, Uganda, Zambia and Zimbabwe. In June 2016, Somalia announced its intention to accede to the New York Convention.
6 International Monetary Fund, World Outlook Database, April 2020.
7 This includes Chad, Gambia, Equatorial Guinea, Ethiopia (ratified on 13 February 2020), Eritrea, Guinea-Bissau, Libya, Malawi, Namibia, the Republic of the Congo, Sierra Leone, Somalia (which announced in June 2016 its intention to accede to the New York Convention: Alison Ross, 'Somalia plans reforms to arbitration framework', Global Arbitration Review, 3 June 2016), South Sudan, Swaziland and Togo.
8 Egypt, Kenya, Madagascar, Mauritius, Nigeria, Rwanda, South Africa, Tunisia, Uganda, Zambia and Zimbabwe. The Uniform Arbitration Act of the Organisation for the Harmonization of Business Law in Africa (OHADA) is also inspired by the Model Law. The South African International Arbitration Act No. 15 of 2017 was assented to by the South African President on 20 December 2017. The Act incorporates the Model Law.
9 Only two African states (Sierra Leone and South Sudan) do not have discernible law applicable to arbitration (Arbitration Institutions in Africa Conference 2015).
10 Legal Business, Arbitration in Africa, July/August 2015, page 108.
11 LCIA, 2018 Annual Casework Report pages 4 and 11;ICC, 'ICC Dispute Resolution 2018 Statistics', pp. 4 and 13.
12 Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, the Republic of the Congo, the Democratic Republic of the Congo, the Ivory Coast, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, Togo. Morocco is also currently in the process of joining OHADA.
13 A US$18 billion award was rendered in June 2015 by a sham arbitral institution in Cairo in favour of 39 Saudi and Egyptian nationals against Chevron. An Egyptian criminal court convicted the three arbitrators and two employees of the arbitral institution under whose auspices the award was rendered. The details about the award came to light in June 2018, when an application to enforce the award against Chevron was filed in the US. In late 2019 an application to enforce the US$18 billion award against Chevron was denied by a US District Court in the case of Waleed Al-Qaroani, et al v. Chevron Corporation, et al o C 18-03297 JSW, California Northern District Court.
14 CRCICA Annual Report 2016.
15 'Vasani and Le Bars lead effort to create Djibouti centre', Global Arbitration Review, 14 September 2016.
16 'ICC Court to launch Africa Commission', 19 July 2018, available at: https://iccwbo.org/media-wall/news-speeches/icc-court-launch-africa-commission/.
17 Federal Supreme Court, Cassation Bench, civil case No. 42239, 18 November 2010.
18 Re National Motors Corp. v. General Business Development, Federal Supreme Court Cassation Bench, Cassation File No. 21849/1997.
19 Botswana, Cameroon, Gambia, Ghana, Kenya, Lesotho, Liberia, Malawi, Mauritius, Namibia, Nigeria, the Seychelles, Sierra Leone, Somalia, South Africa, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.
20 Kenya, Libya, Seychelles, Malawi, Mauritius, Sudan, Uganda, Zambia and Zimbabwe.
21 International Arbitration Act 2008, Section 42.
22 Cruz City 1 Mauritius Holdings v. Unitech Limited and Anor  SCJ 100.
23 Mall of Mont Choisy Limited v. Pick N' Pay Retailers (Proprietary) Limited & Ors 2015 SCJ 10.
24 Arbitration Act, Revised Edition 2002, Section 16.
25 Dowans Holdings SA (Costa Rica) and Dowans Tanzania Limited (Tanzania) v. Tanzania Electric Supply Company Limited (High Court of Tanzania, Misc. Civil Application No. 8 of 2011, 28 September 2011).
26 Tulip Nigeria LTD v. Noleggioe Transport Maritime SAS (2011) 4 Nigerian Weekly Law Report.
27 Under the contract, if a party was dissatisfied with the result of the Tanzanian Disputes Resolution Board it could refer the dispute to SCC arbitration.
28 Tanzania National Roads Agency v. Kundan Singh Construction Limited HC misc civil appeal No. 171 of 2012.
29 Tanzania National Roads Agency v. Kundan Singh Construction Limited civil appeal No. 38 of 2013.
30 Sebastian Perry, 'Mega-award against Nigeria comes to light', Global Arbitration Review, 20 March 2018.
31 Laura Roddy, 'Statoil and Chevron seek to enforce Nigerian oil award', Global Arbitration Review, 22 March 2018.
32 Article 1007 of the Algerian Administrative and Civil Procedure Code: 'The arbitration clause is the agreement by which the parties to a contract dealing with rights of which they can freely dispose commit to submit disputes that may arise in relation to this contract to arbitration.' (Translation from French.)
33 Article 1008 of the Algerian Administrative and Civil Procedure Code: 'The arbitration clause must, under penalty of nullity, be stated in writing in the main contract or in a document to which it refers. Under the same penalty, the arbitration clause must, either nominate the arbitrator(s), or specify the terms of their nomination.' (Translation from French.)
34 Article 1040 of the Algerian Administrative and Civil Procedure Code: 'The validity of an arbitration clause cannot be challenged on the ground that the main contract would be null and void.' (Translation from French.)
35 CA Paris, 20 December 2018, case No. 16/25484.
36 Article 10 of the Treaty on the Harmonization of Business Law in Africa, 17 October 1993.
37 Article 27.1 of the CCJA Arbitration Rules: 'Arbitral awards rendered in accordance with the provisions of the present rules shall have the force of res judicata within the territory of each state party, in the same manner as decisions rendered by state courts. They may be readily enforced within the territory of any of the state parties.' (Translation from French.)
38 CCJA, Plen Sess, 19 November 2015, case No. 130/2014/PC; despite the annulment of the award, Getma proceeded with its enforcement both before the US and French courts. Whilst the US courts refused to enforce the award, finding that Getma had failed to show that the CCJA's annulment decision was repugnant to fundamental notions of morality and justice, Getma obtained confirmation of the award as well as garnishment orders before the French courts that were upheld in a January 2019 ruling, See Sebastien Perry, 'Insolvent Port Operator Seeks to Collect on ICSID Award', Global Arbitration Review, 13 August 2019.
39 Of the region's 44 countries (sub-Saharan Africa), 39 show a serious corruption problem, but Botswana, Cape Verde, Rwanda and the Seychelles were ranked among the top 50 most transparent countries out of a list of 183: Transparency International, Corruption Perceptions Index 2018. Moreover, it takes an average of 1.7 years to enforce a contract, and the cost of doing so is 24.7 per cent of the underlying value of a claim in North Africa (when grouped together with the Middle East) and 41.6 per cent in sub-Saharan Africa (World Bank, Doing Business 2020).
40 Information obtained from UNCTAD Investment Policy Hub in May 2020.
41 International Centre for Settlement of Investment Disputes, List of Contracting States and Other Signatories of the Convention (as of April 2019).
42 Ethiopia, Guinea-Bissau and Namibia.
43 ICSID Caseload – Statistics (Issue 2020-1), January 2020, available at https://icsid.worldbank.org/en/Documents/resources/The%20ICSID%20Caseload%20Statistics%202020-1%20Edition-ENG.pdf.
44 CTIP Oil & Gas International Limited v. Arab Republic of Egypt (ICSID case No. ARB/19/27).
45 ICSID Caseload Statistics, p. 17.
46 Patience Okala, speech to the World Investment Forum 2014, 16 October 2014.
47 Morocco Model BIT 2019, Article 20.4.
48 Ampal-American Israel Corporation (US), BSS-EMG Investors LLC (US), David Fischer (German), EGI-Series Investments LLC (US), EGI-Fund (08-10) Investors LLC (US) v. Arab Republic of Egypt, decision on liability and heads of loss, 21 February 2017 (ICSID case No. ARB/12/11).
49 Luke Eric Peterson, 'Investigation: As fight continues over $1bil award, Libya facing at least a dozen investment treaty arbitrations – possibly more – in aftermath of Arab Spring', IAReporter, 31 March 2017.
50 Luke Eric Peterson, 'Glick, Hanotiau and Douglas dismiss claims of contractor In Libya, finding that actions of state construction agency cannot be attributed to Libyan state for purposes of BIT', IAReporter, 8 January 2019. See also Tom Jones, 'Libya escapes bulk of airport claim', Global Arbitration Review, 14 January 2019, referring to TAV Airports Holding Company, Consolidated Contractors Company and Odebrecht v. Libya.
51 Luke Eric Peterson, 'Armesto-chaired BIT tribunal sees failure to protect Turkish investment, orders $50+ Mil for Cengiz Insaat in new ICC award', IAReporter, 3 December 2018.
52 Impresa Pizzarotti & C. SpA v. Kingdom of Morocco (ICSID case No. ARB/19/14)).)
53 Hope Services LLC v. Republic of Cameroon (ICSID case No. ARB/20/2).
54 Richard N Westbury, Paul D Hinks and Symbion Power Tanzania Limited v. United Republic of Tanzania (ICSID case No. ARB/19/17)).
55 Ntaka Nickel Holding Company v. United Republic of Tanzania (UNCITRAL); Winshear Gold v. United Republic of Tanzania (UNCITRAL); Montero Mining and Exploration Ltd v. United Republic of Tanzania (UNCITRAL).
56 Energy Utility Corporation v. KivuWatt (ICSID case No. ARB/19/3).
57 Théobald Nauld, Ben Sanderson, and Andrea Lapunzina Veronelli, 'Recent Trends in Investment Arbitration in Africa', Global Arbitration Review, 11 April 2019.
58 Order No. 2018-646, 1 August 2018.
59 Article 50 of the 2018 revised Ivorian Investment Code: '[T]he parties may agree to submit their dispute for settlement to the [CCJA] of the [OHADA].'
60 Jonathan Ripley-Evans and Jenalee Harrison, Marie Terrien, 'The New Ivorian Investment Code: Tinkering with an Imperfect System or Pioneering a Path', Kluwer Arbitration Blog, 30 November 2019.
61 Sebastian Perry, 'Time to 're-localize' arbitration in Africa, ICCA told', Global Arbitration Review, 10 May 2016.