Introduction

On 12 January 2023, the Law Association of Zambia and the Chartered Institute of Arbitrators (Zambia Branch) registered their aspirations with the public to set up an international arbitration center. The President of the Law Association of Zambia, Mr. Lungisani Zulu, indicated that the said center would be known as the Lusaka International Arbitration Center and “will be a forum for the resolution and administration of international commercial and domestic arbitrations and other alternative dispute processes in the country.”

Globally, international arbitration has made significant strides as the preferred dispute resolution mechanism over the last century. Europe and the Americas have led the way, with Asia taking up an eminent role in the last few decades.

However, Africa appears to be lagging in comparison to other continents. This is compounded by the fact that many Africans and/or African governments prefer seats and arbitral centers outside the continent adjudicating their disputes. Questions may be posed - what is wrong with arbitration centers and seats in Africa? Will the proposed Lusaka International Arbitration Center manage to overcome the challenges faced by its African predecessors and/or contemporaries?

In attempting to resolve the questions stated above, the first part of this series will explore the challenges that have plagued international arbitration in Africa; whilst the second part of the series proposes to offer solutions or recommendations to the challenges identified.

International Arbitration Challenges in Africa

In a 2018 international arbitration survey conducted by Queen Mary University and White and Case LLP, it was notable that no continent selected an African seat in its top four options. More worrying however was the fact that the African continent’s top four options for seats were not in Africa – London, Paris, Geneva, and Singapore were Africa’s top four seats of choice.¹ It is thus imperative to explore reasons why international arbitration centers in Africa have performed poorly compared to those on other continents. Below are reasons that have contributed to the said perceived lack of progress as both African arbitral centers and seats are relatively shunned by international arbitration parties.

• Delay in Establishing Arbitration Centers

It has been argued that the top five arbitral institutions in the world are The ICC International Court of Arbitration (established in 1923); The London Court of International Arbitration (established in 1892); The Hong Kong International Arbitration Centre (established in 1985); The Arbitration Institute of the Stockholm Chamber of Commerce (established in 1917); and Singapore International Arbitration Centre (established in 1991).²

In contrast, save for the oldest arbitral institution in Africa, the top five performing ones were founded in recent years. The Cairo Regional Centre for International Commercial Arbitration was established in 1979; The Mauritius International Arbitration Centre was initially established in 2011 as a joint venture with the London Court of International Arbitration, but since 2018 operates independently; The Kigali International Arbitration Center was established in 2012; The Arbitration Foundation of Southern Africa was established in 1996; and The Nairobi Center of International Arbitration was established in 2013.³

The belated founding of the African arbitral institutions or centers signals that they do not have a long-standing track-record of resolving arbitration disputes compared to those on other continents. This works to their disadvantage as prospective parties prefer a long and proven track-record of dispute resolution. Therefore, the proposed Lusaka International Arbitration Center will have a massive task ahead to build credibility among the business/commercial community.

• Lack of Information about Arbitral Institutions

In comparison to the renowned arbitral centers on other continents listed above, there is limited information about arbitral centers in Africa and their operations. The world-renowned arbitration centers mentioned earlier are easily accessible on their websites and provide all the necessary information to a party interested in utilizing their services. In addition, their services are widely advertised.

On the other hand, most of the African arbitral centers either have no websites or where they do, information on their websites is insufficient to convince a prospective party to consider their dispute resolution services. Further, it is noted that the African arbitral institutions are not aggressively marketed like their more renowned competitors on other continents:

 “In order to correct the misconception that Africa is not arbitration-friendly, it is incumbent on us to take active steps to increase awareness. We must build up the capacity of our arbitration centers, then market them aggressively. We must make legislative reforms an agenda priority, then publicize them widely. In all these efforts, it is important to act quickly and capitalize on the current interest in the continent, as this will eventually wane.”⁴

The foregoing is a further testament of the fact that African arbitration centers have not been adequately engaged in driving awareness of their capacity to resolve international arbitration disputes. It remains to be seen whether the Lusaka International Arbitration Center will take a more aggressive approach to advertising its capacity and services to prospective users of its services. 

• Unfriendly Arbitration Laws

As can be deciphered from the belated establishment of arbitral centers in Africa, arbitration is relatively a recent phenomenon on the African continent. As such, many countries still have laws that are not arbitration friendly, particularly international arbitration.

For instance, in some countries in North Africa, it is a requirement that court documents should be in Arabic:

“It is also important that English is universally accepted for use in court – for example, the mandatory use of Arabic in court submissions in Morocco has limited its attractiveness as an arbitral seat in non-Arabic language arbitrations.”⁵

Further, South Africa and Morocco have been argued to have outdated or relatively unfriendly arbitration laws – “in South Africa – there is a specific provision requiring approval of the Minister of Economic Development for the exequatur of certain foreign arbitral awards”⁶

The foregoing shows that Africa still has some work to do for prospective international arbitration parties to consider it as a seat of choice or utilize its arbitration centers. It is inconceivable that a party to an arbitration will select a seat with laws that are unfriendly to arbitration. Therefore, the promoters of the Lusaka International Arbitration Center have an opportunity to learn from this and advocate for arbitration friendly legislation in Zambia. 

• New York Convention Membership

In selecting an arbitration seat, prospective parties contemplate the ease of enforcement of an award in a given state. In respect of international arbitration, membership to the New York Convention is pivotal. The operations of the said convention have been set out thus:

“Companies often choose international arbitration because awards granted by an international arbitral tribunal may be enforced worldwide through the New York Convention. This treaty, which has been ratified by 158 countries, including the major trading nations, rests on two key principles:

• a written “agreement to arbitrate,” including as contained in a contractual arbitration clause, is generally enforceable; and
• subject to certain narrow exceptions, an arbitral award may be recognized and enforced as a final judgment in each contracting country.”

As emphasized above, for an award to be enforced in a foreign state, the seat where it is issued must be a member of the New York Convention.⁷ Currently, not all African states are members of the New York Convention. At least 12 of the 55 states have not acceded to it.⁸

Further, some of those that have acceded to it have reservations that make enforcement within their borders onerous. For instance, “…of the African countries signatory to the New York Convention, some countries, such as the Democratic Republic of Congo, reserved the right to refuse to enforce certain foreign arbitral awards.”⁹

This situation has the effect of deterring prospective international arbitration parties from considering Africa as a seat for their arbitral dispute. Thus, it is unsurprising that many consider arbitral hearings in jurisdictions outside the continent. Fortunately for the promoters of the Lusaka International Arbitration Center, Zambia is a member of the New York Convention.

• Perceived Corruption in Africa

Another significant consideration a prospective party to an international arbitration will consider is the level of corruption in a potential arbitration seat or country where an arbitral center is based. Unfortunately, whether justified or not, Africa has a poor reputation in respect of corruption. The best performing African state on the Transparency International Corruption Index is Botswana in 45^th place globally. The worst performing is South Sudan, whilst most African states are much closer to South Sudan than Botswana.¹⁰

The poor corruption record extends to the judiciary in some African countries. For example:

 “…interest in arbitration has been growing in Ghana, especially in the business community, as the traditional court system can be considered to be slow, often ineffective and expensive. A recent corruption scandal has done little to assuage these views. In September 2015, a journalist released an undercover report into corruption of the judiciary resulting in a series of resignations, dismissals and the investigation of over 30 judges.”¹¹

Whilst corruption in many parts of the world is present, the magnitude of it as shown in the report above does not help Africa in its desire to improve its international arbitration record. Prospective arbitral parties will be guarded on engaging arbitrators and/or counsel from Africa; they will also fear selecting an African seat for fear that courts, in offering their supportive role to arbitration, will probably entertain bribes. Therefore, for Africa to offer reasonable competition to other continents in international arbitration, much work will have to be done to fight corruption and improve its corruption perception index score. The promoters of the Lusaka International Arbitration Center will no doubt have this in mind as Zambia’s corruption index has not been favourable over the years.

• Quality of Legal Systems and Community

In order to have a satisfactory resolution to an international arbitration dispute, it is imperative that the court system is efficient in giving its supportive role such as interim measures or enforcement of awards. It is also vital that the arbitrators and legal counsel are well vest in international arbitration.

There is a perception that in Africa, both the legal system and persons that work in it fall short of the international standard. One commentator explained this perception as follows:

 “There is a false perception that arbitration as a practice is under-developed in Africa, and that there is a lack of expertise in arbitration on the ground. There is also a perception that African governments may not be pro-arbitration, and that enforcing international arbitral awards in African countries is difficult.”¹² 

This author appreciates the arguments by proponents of the perception that the legal systems or courts, in offering their supportive role to arbitration, require improvement in certain parts of Africa. In one case for the registration and enforcement of an arbitral award commenced in 2018, 

a ruling was only rendered in 2022. Such a time lag will likely prevent any prospective investor from considering Africa as a seat of choice for an international arbitration.

In respect of the qualifications of the arbitrators and lawyers in Africa to handle international arbitration matters, the lack of opportunity to practice in the field is a factor that works against them. Whilst some of them have the capacity to adequately handle such matters, the fact that many have not had the opportunity to participate in international arbitration hearings holds the continent back in being competitive in this area of practice.

• Size of Market and Economic Activities

The preceding challenges or factors do undoubtedly make Africa uncompetitive in international arbitration. However, Asia also shares some of these challenges including a relative delay in establishing arbitration centers, and a poor corruption record. That said, it has still managed to rise to the top of the international arbitration field in three decades – two of its arbitral institutions are in the top five institutions in the world; whilst Singapore and Hongkong are among the top arbitration seats of choice.¹³

Asia’s rise to the top of the international arbitration ladder has happened in tandem with its meteoric rise in its markets and economies in the last three decades. As of 2022, Asia accounts for 40.1% of the global gross domestic product; North America accounts for 28.4%; Europe

contributes 23.1%; South America accounts for 3.5%; whilst Africa only contributes 2.9% to the global gross domestic product.^[1]

The foregoing clearly shows that for Africa to have made any significant progress in international arbitration, its collective markets and economies needed to have performed at a much higher level than the figure above. Therefore, it is not surprising that Africa has lagged in many areas including international arbitration.

Therefore, the success of the Lusaka International Arbitration Center will be anchored on how well Zambia’s economy will perform in the coming years and whether it can propel itself as a hub in this part of the world.

End of Part 1