This latest edition of our Africa Business Newsletter brings you insights into the dynamic field of international arbitration. This newsletter includes: an overview of the current arbitration landscape in Africa, highlights of the latest trends and developments in Africa-related arbitrations, and a list of selected matters and references that our teams have recently handled.
Introduction
As a pretext to this focus, we are excited to announce the recent addition of Ioana Knoll-Tudor as partner, in order to develop the international arbitration practice of our Paris office and strengthen the global arbitration practice of the firm. With Ioana’s arrival, Addleshaw Goddard extends its international arbitration practice in its offices strategically located in all main arbitration centres of the world – France (Paris), Germany (Hamburg, Munich and Frankfurt, and soon Berlin), the United Kingdom (6 offices), Asia (Singapore, Japan) and the Middle East (UAE, Qatar, Oman and Saudi Arabia).
Our expertise in international arbitration also extends to the African continent now more than ever, a region of growing significance in the foreign investments and arbitration landscapes.
Overview: international arbitration in Africa
The international arbitration landscape in Africa has been evolving particularly rapidly over the last decade, driven by a surge in international trade and investment across the continent. Cross-border investment disputes involving African parties or assets have seen a significant increase in recent years, with international arbitration emerging as the primary means of resolving disputes.
- Arbitral institutions: prominent international arbitral institutions like the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), and the International Centre for Settlement of Investment Disputes (ICSID) continue to play a pivotal role in shaping the arbitration landscape in Africa. Their strong global reputations and substantial experience, notably in handling high-value cases, have made them the preferred choice for many parties operating on the continent;
- OHADA: another key player in the African arbitration landscape is the Organization for the Harmonization of Business Law in Africa (OHADA), which provides a unified arbitration law across its 17 member states. The growing popularity and success of OHADA arbitration in the region can be mostly attributed to two of its instruments: (i) the OHADA Uniform Arbitration Act, which governs both domestic and international arbitrations and includes provisions on the administration of arbitral proceedings and the enforcement of arbitral awards, and (ii) the Common Court of Justice and Arbitration (CCJA), located in Abidjan, which acts both as a supranational court with final jurisdiction over all matters within the scope of OHADA jurisdiction as well as an arbitration institution with its own set of arbitration rules;
- Regional arbitration centres: in addition to international institutions and OHADA, several regional arbitration centres have emerged in key cities such as the Arbitration Foundation of Southern Africa (AFSA), the Cairo Regional Centre for International Commercial Arbitration (CRCICA), the Kigali International Arbitration Centre (KIAC), the Lagos Court of Arbitration (LCA), and the Nairobi Centre for International Arbitration (NCIA). The growing popularity of these centres, built around their offer of tailored arbitration services that cater to the specific needs of the local and regional business communities, reflects a positive trend towards the decentralization and localization of arbitration services in Africa;
- Statistics: the growing prominence of arbitration in Africa is further reflected in statistics. For instance, LCIA caseloads involving sub-Saharan parties has grown from 4.5% in 2011 to 11.7% in 2020. Additionally, caseloads from ICSID involving at least one party from a sub-Saharan African state have nearly tripled over the last decade, while Oil, Gas & Mining consistently appears as the most represented economic sectors in cases registered before ICSID and involving African States (33% in 2017).
Looking ahead, the future of international arbitration in Africa appears promising. The continued growth of international trade and investment, coupled with the ongoing efforts to strengthen and harmonize arbitration laws and practices, present significant opportunities for the further development of arbitration in the region. However, challenges remain, including the need to enhance the capacity and diversity of local arbitrators, improve the enforcement of arbitral awards, and address concerns about the cost and time efficiency of arbitration proceedings. Addressing these challenges will be crucial for realizing the full potential of international arbitration in Africa.
UK Supreme Court rules in favour of Mozambique in the "Tuna Bond" case
- The UK Supreme Court issued on 20 September 2023 a significant ruling on the stay of legal proceedings in the context of international arbitration. The decision, which overturned a previous ruling by the London Court of Appeal, relates to a high-profile USD 2 billion lawsuit known as the "Tuna Bond" case, stemming from bribery allegations involving Mozambique and Privinvest, an Abu Dhabi shipbuilder.
- In the case, Mozambique had sued Privinvest in UK courts, and the shipbuilder sought a stay of the litigation in favor of arbitration. Although the London Court of Appeal partially granted the stay, the Supreme Court took a different approach, analyzing the meaning of an arbitral “matter” under the UK Arbitration Act and determining that it refers to a substantial issue that is legally relevant to a claim or defense in the legal proceedings. The Court subsequently found that the claims of bribery conspiracy, and dishonest assistance did not fall within the scope of the arbitration agreements, allowing the suit to proceed.
Read the full judgment here
Canadian company Winshear Gold reaches USD 30 million settlement to end ICSID arbitration with Tanzania
- Canadian gold explorer Winshear Gold has reached a USD 30 million settlement with Tanzania (with the company expected to receive around USD 18.5 million after deducting funding and legal expenses) to resolve a long-standing dispute regarding the seizure of investment property.
- Winshear initiated arbitration in 2020 before ICSID to seek at least USD 96 million in damages before ICSID, alleging that Tanzania had breached its obligations under the Canada-Tanzania Bilateral Investment Treaty when the state cancelled Winshear’s retention licenses over the SMP gold project in 2018 and transferred the rights to the licensed areas to the government, rendering the project “valueless”.
Read the full article here
Nigeria successfully challenges USD 11 billion award on grounds of fraud
- In a judgment rendered on 23 October 2023, the Business and Property Court in London has dismissed the USD 11 billion lawsuit filed by BVI company Process & Industrial Developments (P&ID) against Nigeria.
- The lawsuit stemmed from a 2010 agreement to construct a gas processing facility in Nigeria, which was unsuccessful. In 2017, an arbitral tribunal ordered Nigeria to pay P&ID USD 6.6 billion, with interest accumulating to over USD 11 billion. Following Nigeria’s challenge to the enforcement of the arbitral award (which was upheld by the UK Commercial Court), the UK court however determined that the award had been obtained through fraudulent means and was therefore contrary to public policy.
Read the full judgment here
DRC government's freeze on mining licenses threatens investor confidence
- In a decree released on 29 August 2023, the government of the Democratic Republic of Congo (DRC) has suspended over 20 mining licences, raising concerns about investor confidence in the country's challenging market.
- The Ministry of Mines cited companies’ failure to sign documents related to social and environmental commitments as the reason for the licence suspensions, but local observers believe the government's true intention is to acquire and resell the assets for financial gain ahead of the national election in December.
- The move has reinforced the perception of the DRC as a difficult market to operate in, and is expected to have a negative impact on investor confidence. Mining companies affected by the suspensions will appeal the decree and, should it fail, may likely resort to international arbitration.
Read the full article here
Nigeria enacts new arbitration act to cement its place as Africa's leading arbitration seat
- On 26 May 2023, the President of Nigeria signed a bill to replace the country’s 35-year-old Arbitration and Conciliation Act (1988) by the new Arbitration and Mediation Act (2023), based on the revised UNCITRAL Model Law adopted in 2006, to strengthen Nigeria's position as a leading arbitration destination in Africa and establish itself as an arbitration-friendly jurisdiction.
- The new Act introduces significant changes such as the legitimization of third-party funding, the recognition and enforcement of interim measures and, quite innovatively, the possibility for parties to have their awards reviewed by an Award Review Tribunal (ART). The Act also addresses emergency arbitration and arbitrator immunity, and includes provisions on mediation, including the enforcement of settlement agreements and the incorporation of the Singapore Convention.
Read the full article here
Other relevant news
- A guide on Mauritius’ latest law, practice, trends and developments related to international arbitration, from our colleagues in BLC Robert & Associates (Read the full article here);
- A detailed summary on the current state of Moroccan international arbitration law, by Professor Azzedine Kettani (Read the full article here);
- An analysis on the legal and regulatory implications on investments in Tanzania as regards sovereignty over natural wealth and resources, from our colleagues in Next Law Advocates (Read full article here);
- An investigation from the Council of French Investors in Africa (Cian), whose results show an increased profitability of international companies in 2022, particularly in Senegal, Ivory Coast, Morocco, Uganda, Kenya and Tanzania, while noting that security and political concerns have affected investment in Mali, the Central African Republic and Burkina Faso (Read the full report in French here);
- An injunction placed by the Accra High Court on Australian mining firm, Cassius Mining Limited, from going to international arbitration over a USD 300 million dispute with Ghana (Read the full article here);
- The official launch by the CIArb of a Rwanda branch to popularise and promote arbitration via a close cooperation with the Kigali International Arbitration Centre (KIAC) (Read the full article here);
- An order made by an ICSID arbitral tribunal against Tanzania to pay USD 109 million to compensate a group of mining companies for their losses related to the abolition of their retention licenses for the Ntaka Hill Project (Read the full article here);
- A USD 1.7 billion arbitration initiated in the UK by Turkish contractor Yapi Merkezi against the Ethiopian Railway Corporation for damages incurred over the Awash-Woldia/Hara Gebeya Railway project during the 2020-2022 conflict in northern Ethiopia (Read the full article here).
Some recent examples of our work in the region:
Representing companies in Africa
- Construction Dispute: acting for an African State, obtaining the dismissal of a request for arbitration before the ICC filed by a US company. The case involved a claim of USD 500,000 allegedly due under a contract with the State, which had however been signed by the claimant company only. The State put forward that no valid arbitration agreement existed as the contract was not performed under the terms of the unsigned document containing the arbitration clause. The arbitral tribunal agreed with our client’s arguments and dismissed the claim for lack of jurisdiction.
- Shareholder’s Agreement Dispute: representing an African State in an arbitration administered by the CCJA-OHADA. The dispute related to the claimants’ attempt to enforce a shareholders’ agreement among the parties relating to a high-profile pan-African TV channel and to obtain more than EUR 12 million in damages. Our team obtained the dismissal of the entirety of the claims. During the proceedings, involving complex issues of French and Luxembourg law, our team established that the claimants lacked standing to claim on behalf of a third party, i.e., the company of which the parties were shareholders.
- Rare annulment from the Paris Court of Appeal: obtaining the partial annulment of an ICC arbitral award of EUR 20 million rendered against an African State. This is a notable accomplishment taking into account that less than 20% of all annulment requests are granted by French courts. The dispute related to the claimants’ attempt to set aside a settlement agreement with the State relating to damages awarded under an earlier CCJA arbitral award for more than EUR 65 million. Although the tribunal dismissed all the claimants’ claims, it awarded damages on the grounds that the settlement agreement had only been partially performed by the State. The Paris Court of Appeal agreed with our argument that the claimants had never sought redress for the alleged partial performance of the settlement agreement and that damages had been awarded against the state in violation of its rights to defend itself.
- Successful settlement in ICC proceedings: representing a global French group leader in the pharmaceutical industry against a UK company in an arbitration administered by the ICC. The dispute arose between the parties concerning the implementation of the representations & warranties given by the seller pursuant to an agreement for the sale and purchase of a Nigerian pharmaceutical company. After a first round of written submissions, our team was however able to achieve a successful settlement.
- Win for Egypt’s service market leader: representing one of Egypt’s leading service company in an international arbitration administered by the Hungarian Court of Arbitration of Budapest (MKIK) against its long-term Hungarian partner, as a result of the latter’s unilateral termination of their agency agreement. The arbitral tribunal held the Hungarian company’s termination unlawful and subsequently ordered it to pay indemnities to our client covering commissions due before and after the termination, equitable indemnity, interests and arbitration costs.
Acting for international contractors
- Representing an international contractor in a multi-million-dollar dispute under a FIDIC contract concerning a transport infrastructure project in East Africa. The dispute proceeded through an ICC arbitration;
- Advising an international contractor in a Dispute Adjudication Board (DAB) relating to disputes arising from a major infrastructure project in East Africa. The sums in dispute totalled in excess of USD 130 million;
- Acting for a Korean contractor in LCIA arbitration proceedings concerning a power project in West Africa;
- Acting for a Japanese JV contractor in relation to a series of Dispute Board referrals regarding an infrastructure project in Uganda;
- Representing an international contractor in arbitration regarding the design and construction of a major rail project in South Africa;
- Representing one of South Africa's leading EPC contractors in two arbitrations relating to the design, construction, installation and upgrade of two major oil and gas pipelines running between Durban and Johannesburg;
- Acting for a Japanese contractor in relation to arbitration regarding a hydropower project in Kenya.
