Africa and Arbitration – is London still relevant?

…The final day of London International Disputes Week discussed rising global nationalism and its impact on London’s influence in African arbitrations, as Africa establishes more arbitration centres and experiences a technology boom.

An assessment of London’s relevance to African arbitrations was covered in a compelling discussion chaired by Funke Adekoya, partner and head of dispute resolution at Nigerian law firm Aelex, in the first event on the closing day of London International Disputes Week.

The panel, which included speakers from Clyde & Co, Hogan Lovells and Stewarts, considered rising global nationalism, the role of the English courts in the enforcement of African disputes, and future trends for African disputes, in an increasingly virtual and technology-driven environment.

Rising Trend of Nationalism

“When you look at what is happening around the world, it’s a given that nationalism is a rising trend” asserted Adekoya, adding that “in the United Kingdom, the Brexit movement itself was based on the belief that the UK should free itself from the shackles of Europe”. In the arbitration space, she said there exists a desire for the “export of African-based disputes to London and elsewhere” to be stopped, with a preference them to be resolved on the African continent.

“What we have seen is an uptick in the number of arbitration centres being established in African countries” said Adekoya, citing a study from the School of Oriental and African Studies, which states that “nearly every African country now has an arbitration centre of some sort”, she said.

The cost of arbitration also comes into play, she continued, explaining that costs in Africa are generally lower than in London or elsewhere outside the African continent, before highlighting the introduction of the African Continental Free Trade Agreement in 2019, and the investment protocol under the agreement, which is currently being negotiated. “As part of the negotiations, African countries are proposing the use of the code to determine the terms of investment agreements” said Adekoya, adding that if this works, African countries could negotiate, implement and resolve disputes arising out of investment under the free trade agreement using African arbitration centres and under African arbitration rules.

“If this happens, the relevance of London… will shift” as more disputes will be heard on the African continent, Adekoya continued, concluding on this note: “It is my view that sooner rather than later, London will not be as relevant in African disputes.”

The Relevance of London

Stewarts international arbitration partner Daniel Wilmot agreed with Adekoya that an African arbitration movement will happen, before questioning whether London will have a role in supporting this. “Yearon-year, arbitrations involving one or more African parties are on the increase” he said, also noting a “growth in cross-border intra-african disputes, so it may be safe to assume domestic arbitration will grow too”.

As for London’s role in this, “London will always remain a source of arbitration practitioners”, arbitrators and party-appointed support, he said, also noting the arbitral institutions which exist in London, as well as London’s potentially innovative role in disputes: “Some of the larger institutions have framed innovations in arbitration rules and have heavily influenced the rules of African institutions,” he said, noting that a number of measures adopted by the London Court of International Arbitration have been “replicated” in Africa. Wilmot added that there “will always be a role of knowledge sharing and counselling on cases” between London and Africa too.

If London does have a future role to play in African arbitrations, “how long will it retain that role”, questioned Wilmot, before diving into the point of costs as a “major issue” highlighted by previous arbitration surveys conducted by Queen Mary University of London and White & Case, and whether “arbitration practitioners in London are adequately engaging with this issue”. Wilmot concluded: “Does London need to step outside of its bubble and reassess its offering and unique selling points? While London remains relevant right now to African arbitration, it is by no means a certainty going forward.”

Arbitration Opportunities

The opportunities for arbitration practitioners in the technology sector were examined by Hogan Lovells international arbitration partner Nathan Searle, who noted that “historically, big areas of arbitration coming out of the continent are natural resources and infrastructure ”, but that it is clear “technology is booming in Africa”. Major technology companies are setting up headquarters and seeing real opportunities in Africa, Searle said, adding: “Africa leads the way in terms of fintech. Mobile money is being widely adopted and it is bringing financial inclusiveness,” and technology is being adopted at a much faster rate than in other locations. In addition, “Africa is not constrained by the old copper infrastructure” like that in the United Kingdom, Searle continued, noting that this makes Africa able to “leap forward”.

Disputes in the natural resources sector are starting to shift away from oil and gas, into mining and battery minerals, said Searle: “Lithium, for example, is needed for batteries which will power today’s and tomorrow’s electric vehicles and electronic devices.” Meanwhile, the infrastructure sector also needs technology now, the infrastructure sector may see more disputes in the technology space, and this as an area active in partnerships, collaborations, and mergers and acquisitions. “Along with that comes disputes” he said.

“Joint ventures are ripe for disputes” he expanded, before highlighting that understanding your partner and what they have to offer “can be difficult in the technology space” where innovation is so important. “With innovation comes risk” he said. The problem of “how a company will be managed in a partnership”, especially between a larger company and smaller start-up, can also be an issue in terms of culture clash, and more problematic still in the technology space, where companies must keep innovating.

With outsourcing, cybersecurity issues could arise, Searle added, noting that others’ “cybersecurity systems might not be as secure as yours. Technology transfer is an issue too” he said, another opening for disputes if you do not receive the knowledge you expect or if the company you are transferring technology to subsequently falls into insolvency. The increasing regulation in the technology and telecommunications space also warrants careful consideration, he added.

South Africa

Clyde & Co partner Alon Meyerov discussed how the future of South African arbitrations look, noting the introduction of South Africa’s Arbitration Act of 2017, a “game changer” which means international arbitrations are now governed by an act which closely follows the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and “applies to all international commercial disputes and public bodies in South Africa, Meyerov explained.

The Arbitration Foundation of Southern Africa has also “done a good job of filling the gap in facilitation of international arbitrations” said Meyerov, noting that the foundation’s international arbitration rules will be published in June 2021. He described them as “good rules” which are “modern and progressive”, introducing confidentiality and transparency, and third-party funding, something that will “facilitate international arbitrations in South Africa”.

Meyerov said that arbitration venues in Africa and South Africa are “growing in popularity”. The South African courts have “moved from an interventionist approach to a supportive role” he said, adding: “South Africa has strong independent courts too, [ and] ...experienced and well-qualified arbitrators who are well-suited to adjudicate in international disputes”. He also noted South Africa’s “well-developed infrastructure systems” including good five-star hotels, modern airports and large arbitral institutions which can support large-scale international disputes, as key reasons for South Africa’s rising attractiveness as a seat of arbitration.

“It will take time until the majority or all of the disputes in Africa are adjudicated in South Africa, and in the short term, London will have a role to play”, although it is hoped that in the long-term, more and more arbitrations will be “referred to South Africa and Africa as a whole because we have the tools and all necessary structures in place to be able to successfully adjudicate those international arbitrations”, concluded Meyerov.