Emilia Onyema
SOAS University of London, London
eo3@soas.ac.uk

Introduction

The 55 African Union (AU) member states agreed to set up the African Continental Free Trade Area (AfCFTA) in January 2012,^[1] and the Agreement was ratified by the required 22 states for it to come into effect on 30 May 2019. The Agreement has now been signed by 54 African states^[2] and is ratified by 36 of these states.^[3] Trading in goods under the Agreement started on 1 January 2021. AfCFTA Agreement is a continental trade agreement designed to facilitate economic growth through the liberalisation of trade in goods and services, removal of tariff and non-tariff barriers, and the free movement of persons, capital, goods and services.^[4]

The significance of this Agreement can be gleaned from the World Bank Group, which notes in its recent publication, The African Continental Free Trade Area: Economic and Distributional Effects, that AfCFTA free trade area is the largest free trade area in the world (outside the World Trade Organization (WTO)). It covers a market of 1.3 billion people, with the potential for real income gains to increase by 7 per cent by 2035 or nearly US$450bn (in 2014 prices and market exchange rates). ^[5] The World Bank further notes that:

‘AfCFTA would significantly boost African trade, particularly intraregional trade in manufacturing (by 60%) … the volume of total exports would increase by almost 29 percent by 2035 relative to the baseline. Intracontinental exports would increase by over 81 percent, while exports to non-African countries would rise by 19 percent … By 2035, total production of the continent would be almost US$212 billion higher than the baseline.’^[6]

The IMF also takes a positive view of the possible gains from the execution of AfCFTA. It notes in a staff discussion note that, in 2017, intra-African trade was only 17 per cent compared to over 50 per cent within the European and Asian regions.^[7] The same note concludes in part that, ‘various models in the literature show that the potential income and welfare gains from AfCFTA are significant’.^[8]

These studies, amongst others, all point to growth in intra-African trade in goods and services as a direct result of AfCFTA through the reduction in trade (tariff and non-tariff) barriers and trade facilitation.^[9] AfCFTA is part of the African Union’s 2063 Agenda, ‘The Africa we Want’,^[10] which itself arises from the Abuja Treaty^[11] and the Lagos Plan of Action.^[12] Thus, AfCFTA does not exist in a vacuum but forms part of the actions towards the actualisation of the vision of economic prosperity and development of African states as envisioned by the OAU and the AU, and more recently restated in the Agenda 2063 of the AU.

This envisaged increase in intra-African trading activities will inevitably lead to more intra-African disputes arising from such transactions. AfCFTA include a Dispute Settlement Protocol^[13] that closely mirrors the Dispute Settlement Understanding of the WTO.^[14] This Protocol focuses on the mechanism for the resolution of disputes between the member states parties to AfCFTA, arising under AfCFTA and its Protocols. It does not provide for dispute resolution mechanisms for the private commercial disputes that will arise between the private parties that will engage in the trading activities. This article examines this latter issue.

At the Nigerian Bar Association Section on Business Law conference in 2018, I presented a lead paper where I argued for arbitration to be promoted as the dispute resolution mechanism of choice for the resolution of disputes that will arise from private commercial transactions pursuant to the operation of AfCFTA. I subsequently developed my thoughts on this proposal in a paper published by the World Trade Review in 2020.^[15] The three main proposals I made in this paper were:

• for arbitration to be identified and promoted as the primary dispute resolution mechanism of choice for such disputes;
• for the designation and promotion of some African arbitral centres as regional arbitration centres; and
• for the creation of a continental commercial court.

I do not propose to rehash the arguments I made in this 2020 publication but to further develop my thinking on the issue of regional arbitration centres.

In 2020, our Arbitration in Africa survey report focused on African arbitral institutions or centres. Our findings further strengthened my belief in the need to identify some of Africa’s most active arbitral centres as dedicated regional centres for the administration of arbitration references arising from AfCFTA-related disputes between private entities. This paper will examine the role of African regional economic communities in the economic development plan of the continent, including a brief discussion on arbitration of private commercial disputes and the argument for the regional designation of some African arbitral centres to administer private commercial disputes arising from AfCFTA transactions.

Regional economic communities in Africa

The vision of African integration has always been built on the growth of the regional economic communities (RECs) spread across the continent. As a bottom-up approach, African integration focuses on the integration of the regions that make up the continent which will lead to the integration of the continent. The AU recognises eight RECs which are spread across the continent. These RECs are:

• the Arab Maghreb Union (UMA);^[16]
• the Common Market for Eastern and Southern Africa (COMESA);^[17]
• the Community of Sahel-Saharan States (CEN-SAD);^[18]
• the East African Community (EAC);^[19]
• the Economic Community of Central African States (ECCAS);^[20]
• the Economic Community of West African States (ECOWAS);^[21]
• the Intergovernmental Authority on Development (IGAD);^[22] and
• the Southern African Development Community (SADC).^[23]

Every one of the 54 African states fall within one of these RECs, while some fall within two or more RECs.^[24]

With each African state falling within the space of at least one REC, businesses located in each state will have access to the arbitration centres located in the REC either closest to them or to which their states belong. The idea is to treat the RECs as geographical spaces in which at least one arbitral centre may be located or identified and promoted for the administration of the arbitration of AfCFTA-related commercial disputes.

Arbitration of private AfCFTA disputes

In my 2020 World Trade Review publication, I examined different types of processes for the resolution of commercial disputes. I concluded that, for cross-border disputes within the continent, arbitration remains the preferred and most appropriate mechanism.^[25] I acknowledge that, in most African countries, litigation before national courts is a less expensive process than international arbitration. I also note that arbitration may take a shorter time to conclude, as compared to a first-instance litigation proceeding before national courts. However, such gains may be wiped out through appeal processes at the enforcement of the award stage which happens before national courts.

From our 2020 Arbitration in Africa survey findings, users of African arbitration are concerned about the cost of arbitration.^[26] It is important that arbitral centres in Africa remain mindful of this finding. I recognise that excellent arbitrators and arbitral centres may indeed cost more.^[27] This implies that we need to carefully define ‘excellence’ and understand how arbitrator and centre fees are calculated. In analysing these issues, we need to examine the question of whether arbitrators sitting in African centres should be paid less than their foreign counterparts and whether this is the correct comparison.

The excellent arbitrator is one who not only meets the basic requirements of the applicable arbitration laws and rules,^[28] but also understands the issues in dispute between the parties, works efficiently and diligently, and determines the dispute between the parties in accordance with the arbitration agreement. This definition is very widely drawn to capture the essentials of any arbitration. The descriptors used in this definition attach to the particular individual appointed as arbitrator, whether African or not, as a reminder of the personal nature of the arbitrator’s mandate.

We recognise that several Africans (similar to their non-African colleagues) that sit as arbitrators meet these criteria. These individuals sit as arbitrators in arbitration references within and outside the continent, and some in Africa-related disputes and disputes that have no connection to Africa. Should such individuals (whether African or not) be paid less for providing the same quality of service when they sit under the rules of African centres? As an issue of principle, arbitrators should ideally earn comparable fees for comparative service regardless of where they render their service. This is not the case in practice. Arbitrators sitting under the rules of African arbitral centres generally earn less than they would have earned if they were sitting under the rules of an arbitral centre outside the continent for comparable tasks. Should this outcome be acceptable? In my view, it should not; yet, we know that African arbitral centres pay arbitrators sitting under their rules less. Why is this so? One of the obvious reasons for this situation is the need for African arbitral centres to make themselves attractive to their users as one outcome of the still-very-recent advent of institutional arbitration on the continent.

Arbitration as a dispute resolution process is not new to the continent. However, institutional arbitration, as part of the package of modern form of arbitration, is relatively new to the continent. In support of this assertion, Mohamed Abdel Raouf and Dalia Hussein have noted that:

‘Prior to the establishment of new regional arbitral institutions in Africa, the users (of arbitration) from the continent had very few available arbitral fora to which disputes arising out of their business transactions could be referred.’^[29]

As a concept, all arbitrators should earn comparable fees regardless of the arbitral institution at which they sit. However, with the nascent nature of institutional arbitration in Africa, it will not be practicable for arbitrators sitting under the rules of arbitral centres in Africa to be paid fees comparable to those of their foreign counterparts.

Having said this, I note that the low fees apply equally to all arbitrators, whether African or foreign, sitting under these rules. The international arbitration community will remember the furore caused by the setting aside of the award in Getma International v Guinea by the Organisation pour l'Harmonisation en Afrique du Droit des Affaires (OHADA) Common Court of Justice and Arbitration (CCJA) because the arbitrators, contrary to the then arbitration rules of the CCJA, renegotiated their fees with the parties.^[30] This issue of low fees does not apply under ad hoc references, where the arbitrators and the parties agree the rate of fees to be paid to the arbitrators. Anecdotal evidence supports the view that arbitrators sitting under ad hoc references in African countries earn considerably much more than those sitting under institutional references.

African arbitration centres

The two top African arbitral centres according to our 2020 Arbitration in Africa survey report are the Arbitration Foundation of Southern Africa (AFSA) and the Cairo Regional Centre for International Commercial Arbitration (CRCICA).^[31] CRCICA is the oldest Asian-African Legal Consultative Organisation (AALCO)^[32] arbitral centre in Africa; it was established in 1979.^[33] The Arbitration Foundation of Southern Africa was established in 1996, although it only administered domestic cases until 2017 when its international section was established.^[34] As it relates to Francophone Africa, its busiest arbitration centre is the Ouagadougou Arbitration, Mediation and Conciliation Centre, founded in 2005.^[35] If we compare these centres with the International Court of Arbitration of the International Chamber of Commerce (ICC^[36]) and the London Court of International Arbitration (LCIA),^[37] both of which have celebrated their centenaries, the claim that institutional arbitration is still relatively new to the continent becomes clearer.

Longevity of arbitral centres is a prized possession in arbitration. Feedback from respondents in the 2018 Queen Mary International Arbitration survey show that users are very much persuaded to choose an arbitration institution for its ‘general reputation and recognition, high level of administration and previous experience’.^[38] Reputation and experience comes with longevity of the centre. Users also want to be assured that the centre will be around for some time and will remain in business when their dispute eventuates. This need for a strong degree of assurance by users is important since they may run the risk of their arbitration agreement becoming incapable of being performed if their chosen arbitration centre ceases to exist by the time a covered dispute arises between them.^[39] At the very least, the parties may find themselves unable to agree to a different arbitration centre or ad hoc proceedings, leaving them at the mercy of national courts who may take unpredictable views of their predicament. If we remember that the primary purpose of the parties including an arbitration agreement in their contract is for them not to start with national courts when a dispute arises, such assurances become even more reasonable.

Having shown that African arbitral centres are relative newcomers in the arbitral market, and that African users are already conversant with referring their disputes to foreign-seated arbitral centres, the need for African centres to make themselves a little more attractive to users becomes more obvious. They appear to mainly do this through charging lower fees for comparable services. For example, the minimum filing fees for arbitration under CRCICA arbitration is US$500^[40] while the minimum fee for filing a case with the ICC is US$5,000.^[41]

The culture of institutional arbitration is gradually consolidating in some African countries with the caseload of African arbitral centres increasing year-on-year. Therefore, as found by the Queen Mary Survey mentioned above, African centres need to show high levels of administration and experience which will lead to reputation. The major African arbitral centres are acquiring experience on administering arbitration references, including complex cases. This will, over time, lead to the reputation necessary for users to gain confidence in choosing these centres.

The 2020 Arbitration in Africa survey report identifies the major or top African arbitral centres as:

• Arbitration Foundation of Southern Africa (AFSA);
• Cairo Regional Centre for International Commercial Arbitration (CRCICA);
• Ouagadougou Arbitration, Mediation and Conciliation Centre (OAMCC);
• OHADA Common Court of Justice and Arbitration Centre (CCJAC); and
• Kigali International Arbitration Centre (KIAC).

To these five we can add the following arbitral centres that are also active in the administration of arbitration disputes and can evidence such experience and expertise:

• Regional Centre for International Commercial Arbitration Lagos (RCICAL);^[42]
• Lagos Court of Arbitration (LCA);
• Nairobi Centre for International Arbitration (NCIA); and
• Tanzania Institute of Arbitrators (TIA).^[43]

Referring back to our idea of regional arbitration centres mapped against the spaces occupied by the RECs, we find the following:

Table 1: RECs and regional arbitration centres

Table 1 shows that there are at least two identifiable and active arbitral centres that can service the space for each REC. Some RECs will have access to more arbitration centres than others. This may be a positive outcome if more disputes arise from those regions.

The next issue to explore is the need to promote these centres to commercial entities on the continent who will participate in the AfCFTA trading bloc. Promotion of these centres to users starts with the promotion of arbitration as an effective dispute resolution mechanism to businesses operating in the AfCFTA area. These businesses need to conclude arbitration agreements in which they appoint one of these centres to administer the arbitration of their dispute when such a covered dispute arises.

Should the centres themselves promote arbitration to the users or should the AfCFTA Secretariat^[44] and the AU support the centres – or even independently promote arbitration and the centres to users? For purposes of independence and the promotion of healthy competition, the preferred view is for the AU and the Secretariat of AfCFTA to promote the inclusion of arbitration agreements and to promote the identified arbitral centres within the RECs to parties and national chambers of commerce as they promote AfCFTA and its protocols.^[45] A clear endorsement of these arbitral centres by the AU/AfCFTA is not just a vote of confidence but sends a clear signal of support to users who can rely on such endorsement to choose any of the arbitral centres to administer their dispute.

One major reason for this suggestion is to stem the tide of dispute flight from the continent and to also promote intra-African arbitral centres. There is no reason disputants from Ghana and Kenya (for example) cannot agree to arbitrate their dispute before the CRCICA, AFSA or KIAC. This intra-African collaboration is still missing. African parties continue to arbitrate their disputes before non-African arbitral centres; this is no longer justifiable with the number of active and experienced arbitral centres we currently have on the continent. It was in 1977 that AALCO noted the need for the ‘establishment of a network of Regional Centres for Arbitration functioning … so that the flow of arbitration cases to arbitral institutions outside the … region could be minimised’. This was the primary reason it set up the regional centres, of which three are located in Africa (Cairo, Lagos and Nairobi).^[46] This reason continues to subsist almost 43 years later. The time to make this vision a reality has now come.

Conclusion

The commencement of trading under AfCFTA, the political will demonstrated by the heads of state and governments of the AU in pushing through AfCFTA and the assistance of the partners of the AU is promising. The same enthusiasm needs to be deployed to ensure that private commercial or business disputes arising between parties to the transactions in the trading bloc are referred to African arbitral centres for arbitration.

As the AU and the AfCFTA Secretariat support this suggestion, they need to continue to remind their member states of the need to modernise their arbitration laws and for the national courts to embrace and support the outcomes of such arbitrations to ensure finality and continued confidence of the users. In this regard, the AfCFTA Secretariat and the AU can engage with the African Arbitration Association^[47] who can support them in devising appropriate support packages and mechanisms for the African users, legislatures and courts.