London and Paris, both European cities, were the go-to destinations to resolve commercial disputes – outside conventional courts – amongst African firms or shareholders.
The other option was Dubai, which too was a costly option out of Africa.
That is set to change, experts say, thanks to the creation of the African Arbitration Association (AfAA).
The continental arbitration organ will be launched next week in Abidjan, Côte d’Ivoire.
Countries from Africa have just voted to have the AfAA headquarters in Kigali, Rwanda.
The association’s foremost duty is to focus on promoting arbitration in Africa.
The new continental organ has already received backing from leading pan-African institutions like the African Development Bank (AfDB).
The secretary general of the Kigali International Arbitration Centre (KIAC), Fidèle Masengo told The New Times that the main launch for the new association will in fact take place at the headquarters of AfDB.
Masengo highlighted that the organ will advocate for arbitration in Africa, create awareness campaigns to advance the use of arbitration as well as promote capacity building among in-country arbitration mechanisms across Africa.
“As you know in many contracts, especially those financed by the World Bank or the African Development Bank, there are clauses that say in the event of disputes, arbitration will be done either in London, Paris and other Western countries,” he said.
However, context is key in resolving such cases yet the arbitrators in those cities may not be familiar with local settings or even the business laws, making the conflict resolution process more slow and costly.
Masengo told The New Times adding that the newly created mechanism will negotiate with these institutions to have the conflicts efficiently resolved in Africa.
Papias Kazawadi, a Kigali-based arbitrator, said that beyond the ease of accessibility to capacity building, they expect the establishment of the continental arbitration organ to raise the level of trust among people who seek arbitration services.
He also argued that it will potentially increase the economic benefits of arbitration to the continent.
“When commercial disputes arise, many businesses prefer arbitration. But this [arbitration] has been happening outside Africa. But with this organ, we believe the process will be shorter, consequently supporting businesses. There is an economic benefit,” Kazawadi said.
“There are cases where one party risks closure of business. And when it takes long to settle the dispute, the risk of the business dying becomes even higher,” he added.
For Emmanuel Butare, the managing partner at MRB Attorneys, the establishment of the Association could reverse the long-term understanding that arbitration is only successful in the Western world.
“Having such a continental organ will enable people to have their disputes resolved at home rather than referring them to London or Paris, where it was unnecessarily lengthy and expensive,” he noted.
Faustin Mbundu, the chairman of the board of directors of the Kigali International Arbitration Centre (KIAC) announced that Rwanda was selected to host the headquarters after winning the trust of arbitrators across the continent.
“Kigali has been confirmed by 62% of the voters as the Headquarters of the newly established African Arbitration Association (AfAA),” he wrote on Twitter on Monday.
The selection process involved online voting by members of in-country arbitration mechanisms in Africa.
The continental association has already established the board of directors composed of 14 members including two Rwandans and other members from Egypt, Kenya, South Africa, Tanzania, Namibia, and Nigeria, among others.
The Africa Arbitration Association was created by all arbitral institutions in Africa. There are currently 71 of such institutions in Africa, all of which are part of the association.
The Kigali International Arbitration Centre was established in 2012 and has been able to settle about 88 commercial and business disputes worth US$50 million (approximately Rwf42.9 billion).