SOAS study shows engagement with African Continental Free Trade Area Agreement

One of the key issues examined in a recent study into arbitration in Africa was the question of how parties are engaging with the Africa Continental Free Trade Area (AFCFTA) Agreement.

With the aim of creating a single continental market for goods and services, together with free movement of people and investments, the AFCFTA Agreement incorporates and implements trade facilitation measures intended to drive $450 billion in potential income gains On 1 January 2021, free trading commenced under the AFCFTA Agreement in a milestone much celebrated for both African unity and African trade. Almost two years on, the survey (22 pages / 12.7MB PDF), conducted by the School of Oriental and African (SOAS) and cosponsored by Pinsent Masons and Nigerian Disputes boutique Broderick Bozimo &

Co, asked respondents to comment on their knowledge of and engagement with the AFCFTA Agreement, and what possible impacts they envisaged the trading bloc may have on their arbitration practices. The majority of survey respondents indicated that while they have knowledge of the AFCFTA Agreement, they have not yet engaged with the Agreement or its protocols. Importantly, 78% of respondents considered that trading under the AFCFTA Agreement would lead to an increase in inter-africa business. With more business comes more commercial disputes, and various trade organisations and bodies anticipate a corresponding increase in commercial disputes. While the AFCFTA agreement provides various mechanisms for the resolution of inter-state disputes (including amicable settlement through consultation, conciliation, mediation, the use of Dispute Settlement Bodies, and arbitration), nearly half of all respondents also considered that commercial or business intra-african disputes should likewise be resolved using arbitration, as opposed to mediation (40%) or litigation (10%). The results show a significant appetite for consensual non-binding dispute resolution mechanisms such as mediation. The support for resolving intra-african commercial disputes using arbitration translated similarly into strong support by survey respondents for the establishment of a continental commercial court of arbitration, with 70% of respondents in favour of such a standing body. The support for such a court was based on respondents’ perceptions that such a body would provide a safe commercial environment, independent from governments and outside of political influences, for the resolution of commercial disputes in an efficient and cost-effective manner. The advantages of arbitral awards that would be recognisable and enforceable were also perceived advantages. However, thought needs to be given to the manner of appointment of arbitrators in any standing commercial arbitration court to ensure the impartiality of its members. Clearly, there is a need for continued sharing of information by the AFCFTA Secretariat on developments in disputes brought under AFCFTA Agreement with the African arbitration community. Those inter-state disputes will likely inform in large part the direction of travel of the resolution of commercial disputes through arbitration in Africa. Investors will be reassured and encouraged by seeing that those arbitrations can be conducted efficiently, transparently and fairly.