Importance and challenges of arbitration in Africa

Last week on Thursday and Friday, I attended the East Africa International Arbitration Conference hosted in Kigali, under the theme: ‘Linkages between International Arbitration and Africa’s Economy’.

Last week on Thursday and Friday, I attended the East Africa International Arbitration Conference hosted in Kigali, under the theme: ‘Linkages between International Arbitration and Africa’s Economy’.

The conference covered a wide range of topics revolving around arbitration. But this piece intends to specifically focus on arbitration, as one of the forms of Alternative Dispute Resolution (ADR), or a technique for the resolution of disputes outside court litigation.

Dispute resolution mechanisms have constantly undergone transformation throughout the history of commercial conflicts. The processes of litigation have been acknowledged to prove grossly inadequate and prone to more damage than resolution of conflict by hampering positive future relationship and association between the parties to it.

Today, there’s a global paradigm shift from governmental control to deregulation in all facets of life, and a similar shift from placing reliance on strict legal provisions in resolving business or commercial disputes to the use of processes of ADR, a phrased designed to cover a wide range of processes adopted for the resolution of conflict other than through litigation.

They’re generally classified into at least four types: negotiation, mediation, conciliation, and arbitration. These forms of alternative dispute resolution exclude court intervention.

But once the parties submit their matters to arbitration, the arbitral tribunal’s decision, technically known as an award, is binding to them.  

As a matter of reality, and as agreed by most participants, arbitration is widely recognised as the most effective means of dispute settlement in the business world.

It currently applies, as a common feature, in international and domestic commercial or business-related transactions. It is, therefore, not unusual to find an arbitration clause in most commercial agreements as a key component of how disputes are to be resolved.

To many countries, including Rwanda, arbitration ensures confidence to local and foreign investors. In particular, foreign investors want to have a guarantee for their investments, by having a credible dispute settlement mechanism. This is one of the major clauses in both local contracts and the bilateral investment agreements.

Besides, arbitration is equally important in pursuit of ‘Doing Business’. Proper regulatory and policy frameworks are a catalyst to Doing Business. Doing Business does not mean to eclipse the regulations, it rather ensures compliance.

The key issue from most participants, who were dominantly lawyers/arbitrators, is how arbitration can be given much more attention at regional and sub-regional level, and down to the country level.

Even though at EAC level, there’re arbitration centres and national laws recognising arbitration, EAC lawyers/arbitrators still face a challenge of not competing favourably with their overseas counterparts at local market.

The reason being, there’s a common tendency where most African countries so much trust in foreign or overseas lawyers/arbitrators and undermine local lawyers as if they’re less skilled or inexperienced in arbitration.

This kind of mistrust impliedly denies opportunities to local arbitrators even if they have what it takes. Due to such perception, foreign lawyers, who are hired in arbitration cases, take advantage of that not to partner with local lawyers for knowledge transfer.

And, as a result, no lion’s share of profits at local market. So, there’s a need for departure from this perception of self-minimisation. It is quite a big challenge to local lawyers who have passion to defend matters that affect their countries.

This calls for African governments to change the mindset and empower local arbitrators to lead arbitral cases. The more they aren’t given opportunities to demonstrate their ability, the more they look underdogs.

It is quite true to say that if a local arbitrator isn’t given an opportunity to practise, how would they enhance their skills and knowledge given that we all learn by practice and from others.

A person will never learn something unless he does it. Lawyers do not gain skills by osmosis, but by practice. This existential perception must be discarded and we give opportunities to local lawyers to demonstrate their prowess.

For example, most Bilateral Investment Treaty (BIT) and Public-Private Partnerships (PPPs), when it comes to dispute settlement clauses they commonly refer to International Court of Arbitration, known as International Chamber of Commerce, which is regarded as the world business organization, and has been seen a model or perhaps a super model.  

Coming to the EAC bloc, there’s a couple arbitral tribunals, namely Kigali International Arbitration Centre (KIAC), the Nairobi Centre for International Arbitration (NCIA), the Centre for Arbitration and Dispute Resolution, Uganda, (CADR), and, more importantly, the East Africa Court of Justice (EACJ), which also has arbitral tribunal.

These arbitral tribunals need support not only in terms of awareness-raising, but also technically and financially in order to meet the international standards and best practices.

To this end, they will gain credibility and consequently hasten settlement of commercial disputes and promote foreign investments. Credibility of local lawyers matters most.   

Furthermore, the law firms themselves which offer arbitral services must be ready and willing to synergise their efforts for the noble cause. Working singly is less impactful but working cooperatively is more impactful at national or regional level.

Email: frednkusi88@gmail.com

The views expressed in this article are of the author and do not necessarily represent those
of The New Times.

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