Sino-african solution
As infrastructure improves, trade and business will continue to grow. China has been Africa’s largest trade partner, shooting past the United States and Europe in 2009. However, with the scale of engagement going up, business disputes are inevitable. With courts in both African countries and China suffering from case backlogs, arbitration centers began to spring up to solely address business and labor disputes. Then the African and Chinese authorities decided to establish a series of China-africa Joint Arbitration Centers (CAJACS) dedicated to resolving Sino-african disputes.
“The intention of CAJAC is to create an arbitral family of China and Africa to resolve Chinese and African disputes in business, construction and trade and investment in a united family atmosphere,” said Michael David Kuper, President of the Johannesburg-based Arbitration Foundation of Southern Africa. “The CAJAC project has been endorsed by African and Chinese leaders. They have all seen in the CAJAC project - the appropriate vehicle for the resolution of disputes that may arise between China and Africa … At the heart of that vision is the determination that disputes between China and Africa will now be decided by institutions which represent China and Africa and by arbitrators who are drawn from China and Africa.”
The first CAJACS were established simultaneously in Shanghai and Johannesburg in November 2015, and each nominated 20 of their lead arbitrators to form a shared panel to adjudicate over disputes.
On March 27, CAJAC Beijing and CAJAC Nairobi were launched at a ceremony in Beijing attended by legal experts from both countries as well as representatives from the construction and transport industries. Two days later, a third CAJAC came up in Shenzhen, a bustling commerce city in south China’s Guangdong Province, which has a concentration of African businesses. A China-africa arbitration conference will be held in Johannesburg at the end of 2017.
“CAJAC is a good way to expand legal cooperation,” said Gu Zhaomin, Director General of the International Department of China Law Society, the organization of Chinese legal professionals. “Its main features are that it emphasizes the brotherhood between China and African countries, is low in cost and high in efficiency, and consists only of Chinese and African arbitrators.”
In the past, international trade disputes were generally taken to European courts. “But there were complaints that it takes too long and also costs a lot,” Gu explained. “So people started thinking why not do the arbitration in Africa or China? It’s very convenient and also, CAJAC arbitrators know one another’s cultures and legal systems better. Besides, China and Africa are focusing on development. So even after the resolution of disputes, they can remain good friends and partners. Culture is a foundation for the resolution of commercial disputes. These are the advantages of CAJAC.”
“So when businesses decide to cross borders and develop new initiatives overseas, it is imperative that it is done on the basis of knowledge of the new market, the new legal system, the [new] business community and the environment in which the business community operates. Ignorance will cause you surprise because it will not allow you to assess the legal risk correctly,” said Kuper.
To do business in South Africa, for example, he pointed out that foreign investors should know about the country’s strong labor unions and labor laws, which control all hiring and firing. Besides, projects must create “special vehicles” to benefit the local deprived population.
CAJAC’S other advantage, he said, was that it was there to provide not only protection but also information to all those who want to set up a business, whether in South Africa, Kenya or the neighboring states.
“The CAJAC data base will have … important information which will help you assess legal risk and which will bring you into touch with legal practitioners in Africa,” Kuper said. “These are the mechanisms which will allow you to come to Africa on an informed basis.”
In the future, CAJACS would be formed in different African and Chinese cities and eventually, one set of rules would be created for all the centers, making arbitration faster. There’s more to legal cooperation than arbitration.
“The basic objective is to promote better understanding of the legal culture of China and African countries, legal professionals and different legal systems. It’s also to promote practical cooperation among law firms, law schools, law research institutions and courts as well as legal administrative systems. It’s the whole picture,” Gu said.