ARBITRATION IN AFRICA REPRINTED FROM: CORPORATE DISPUTES MAGAZINE JAN-MAR 2015 ISSUE corporate disputes �� CD �� www.corporatedisputesmagazine.com Inside this issue: FEATURE The spiralling cost of arbitration EXPERT FORUM Pharma and biotech patent litigation HOT TOPIC International dispute resolution involving Russian and CIS companies �� www.corporatedisputesmagazine.com Visit the website to request a free copy of the full e-magazine Published by Financier Worldwide Ltd corporatedisputes@ﬁnancierworldwide.com © 2015 Financier Worldwide Ltd. All rights reserved. E D I T O R I A L PA RT N E R w w w. h e r b e r t s m i t h f r e e h i l l s. c o m Herbert Smith Freehills LLP As one of the world’s leading law ﬁrms, Herbert Smith Freehills LLP advise many of the biggest and most ambitious organisations across all major regions of the globe. Our clients trust us with their most important transactions, disputes and projects because of our ability to cut through complexity and mitigate risk. We can help you thrive in the global economy. Operating from over 20 ofﬁces spanning Asia, Australia, Paula Hodges QC Partner, head of global arbitration practice London, UK T: +44 (0)20 7466 2027 E: [email protected] Europe, the Middle East and the US, we can deliver whatever expertise you need, wherever you need it. Because technical ability alone is not enough, we seek to build exceptional working relationships with our clients. Gary Milner-Moore Partner, dispute resolution London, UK T: +44 (0)20 7466 2454 E: [email protected] John Whiteoak Partner, dispute resolution London, UK T: +44 (0)207 466 2010 E: [email protected] 2 CORPORATE DISPUTES Jan-Mar 2015 www.corporatedisputesmagazine.com PERSPECTIVES PERSPECTIVES ARBIT RAT I O N IN AF R I C A BY PAULA HODGES QC, JOHN OGILVIE AND NICHOLAS PEACOCK > HERBERT SMITH FREEHILLS LLP I nternational arbitration is fast becoming the go-to substantive and procedural aspects of the arbitration form of dispute resolution across the continent. law that will apply, and the attitude and powers of African governments are keen to promote the use the local courts with regard to onshore or offshore of arbitration wherever possible to attract foreign arbitration. Investors should also bear in mind the investment. Conversely, foreign investors, who may available investment protections. 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 Enforcement When determining the most appropriate dispute resolution procedure, potential enforcement is a key of African arbitral venues is growing, such that consideration, starting with whether the country investors are increasingly facing the option – and into which the investment is being made – and perhaps pressure – to agree to an African arbitral therefore where enforcement of an arbitral award is seat and institution. Before agreeing to a particular likely to be sought – is a party to any of the regimes dispute resolution procedure, investors must facilitating enforcement of arbitral awards. Chief consider the enforceability of any award, the among these is the New York Convention, the most www.corporatedisputesmagazine.com CORPORATE DISPUTES Jan-Mar 2015 3 PERSPECTIVES ARBITRATION IN AFRICA 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. There are various regional inter-governmental agreements across the continent which foreign investors may also be able to rely on if they arbitrate their disputes in Africa. These include the Riyadh Convention, which covers various Middle Eastern and North African countries, and the OHADA Treaty, arguably the most inﬂuential and far-reaching regional African agreement from a disputes perspective. First signed in October 1993, the OHADA Treaty now has some 17 Francophone African signatories and requires that any national arbitration law in a signatory state must be construed in accordance with its Uniform Act on Arbitration (Uniform Act). Although foreign awards are reported to be directly enforceable in most African jurisdictions, either by way of the New York Convention or some other regime, investors are strongly advised to proceed with caution and to obtain local law advice 4 CORPORATE DISPUTES Jan-Mar 2015 www.corporatedisputesmagazine.com PERSPECTIVES ARBITRATION IN AFRICA as to the particular local courts’ application of the tribunal will not be empowered to grant interim relevant regime. Moreover, there may be local law measures unless this has been expressly agreed by requirements for enforcement procedures. the parties. Separately, as noted above, an arbitration seated Arbitration laws in a signatory to the OHADA Treaty will be governed When considering whether to seat an arbitration in a particular African jurisdiction, because it is the by the Uniform Act, which does not adopt the Model Law, but reﬂects a number of its principles. focus of the transaction, or because it has been put forward as a regional arbitration centre, it is important to consider whether there is a modern arbitration law in place. Regional arbitration centres The number and sophistication of regional arbitration centres across the continent is increasing Various African jurisdictions, including Egypt, and will continue to be one of the key themes in Kenya, Mauritius, Nigeria, Rwanda, Uganda, Zambia the African arbitration narrative. Leading examples and Zimbabwe have based their arbitration laws include the Cour Commune de Justice et d’Arbitrage on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (Model Law). In these jurisdictions, the law is generally representative of internationally recognised principles, and parties may look to the jurisprudence of other Model Law jurisdictions, including Germany and Singapore, “The number and sophistication of regional arbitration centres across the continent is increasing and will continue to be one of the key themes in the African arbitration narrative.” when considering the interpretation of African provisions based on the Model Law. However, even arbitration laws based on the Model Law should be scrutinised (CCJA) in Cote d’Ivoire which, among other things, carefully as there may be signiﬁcant departures administers proceedings under OHADA rules, from the Model Law. For example, for an arbitration the long-established Cairo Regional Centre for seated in Egypt, under the local arbitration law, a International Commercial Arbitration (CRCICA) www.corporatedisputesmagazine.com CORPORATE DISPUTES Jan-Mar 2015 5 PERSPECTIVES ARBITRATION IN AFRICA and the more recent LCIA-Mauritius International Arbitration Centre (LCIA-MIAC). Other regional centres, including the Lagos In a number of jurisdictions, the local courts can and do grant interim relief in support of foreign arbitral proceedings. Zambian courts, for example, Regional Centre for International Commercial have the ability to grant such interim relief. This Arbitration, which was established in 1989, the ability was highlighted recently in the 2013 English Kigali International Arbitration Centre, which was case of U&M Mining Zambia Ltd v Konkola Copper launched in 2011, and the recently-opened Nairobi Mines plc [2013] EWHC 260 (Comm), in which a International Arbitration Centre, are playing a party was granted interim protective relief from the crucial role in helping to educate local judiciary Zambian courts concerning its interest in a Zambian and practitioners and in promoting the use of copper mine, pending a London-seated, LCIA arbitration in the region. However, investors should arbitration. be aware that the growth of arbitration has in Parties must also be aware of any local law many cases outpaced national practice. Equally, the requirements relating to the arbitrability of speciﬁc unpredictability and the delays associated with local types of dispute, or conversely, the inarbitrability courts continue to make many of these countries of certain disputes. For example, under Angolan challenging venues for arbitration. law, the arbitration of disputes arising from private investments in the country must be seated in Judicial attitudes and local laws The laws and the attitude of the courts in the country into which the investment is being made Angola, and the applicable law must be Angolan law. On the other hand, disputes relating to criminal or insolvency matters are often not arbitrable. will have a signiﬁcant impact on whether arbitration, either onshore or offshore, can be an efﬁcient and cost-effective way of resolving disputes. In particular, although local laws generally provide Investment protection Investment protections refer to the legal protections available to investors investing in foreign for the courts to stay any litigation brought in states, and are signiﬁcant in the context of Africa breach of an arbitration agreement, the courts will because foreign investors are conscious of a risk sometimes refuse to exercise their discretion to do proﬁle which may exceed their usual risk tolerance. so. It can often be difﬁcult to glean how the courts Broadly, investment protection mechanisms fall into may act in jurisdictions where few arbitration cases a number of categories: (i) host state investment have gone before the courts. Local advice and legislation; (ii) investment contracts directly between insight are essential. the investor and the host state government; (iii) 6 CORPORATE DISPUTES Jan-Mar 2015 www.corporatedisputesmagazine.com ARBITRATION IN AFRICA PERSPECTIVES bilateral investment treaties (BITs) between the a ‘regional’ arbitration seat in Africa. These will be governments of the foreign investor’s home state worth keeping in mind, especially if the alternative is and the host state; and (iv) multilateral investment litigation in the local courts. CD treaties between the governments of three or more states. BITs are the most common means by which Paula Hodges QC foreign investors seek to protect their investments, Partner and indeed the number of BITs has proliferated in Herbert Smith Freehills LLP recent years, such that there are now more than T: +44 (0)20 7466 2027 2500 BITs in existence, of which more than 480 E: [email protected] involve African states as parties. Protection from expropriation without compensation is considered to be the most fundamental and traditional protection, John Ogilvie Partner however the guarantee of fair and equitable Herbert Smith Freehills LLP treatment is also often invoked. T: +44 (0)20 7466 2359 E: [email protected] Comment While the best option for many transactions continues to be offshore arbitration, in jurisdictions where the arbitration law has been tested and the local courts are more predictable and experienced in international arbitration, there are increasingly more Nicholas Peacock Partner Herbert Smith Freehills LLP T: +44 (0)20 7466 2803 E: [email protected] viable options for investors facing pressure to accept www.corporatedisputesmagazine.com CORPORATE DISPUTES Jan-Mar 2015 7