News & Analysis

Proposals to Streamline Investment Disputes Settlement under AfCFTA

Published

1 year ago

March 27, 2022

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By Dr. Kariuki Muigua, PhD (Leading Environmental Law Scholar, Policy Advisor, Natural Resources Lawyer and Dispute Resolution Expert from Kenya), Winner of Kenya’s ADR Practitioner of the Year 2021, ADR Publisher of the Year 2021 and CIArb (Kenya) Lifetime Achievement Award 2021*

Some commentators have observed that the AfCFTA Agreement will hopefully include an investment protocol, which is likely to include substantive investment protections and a separate set of rules for the resolution of investment disputes, during African Union’s Phase II negotiations. It is recommended that such an investment protocol will consider incorporating the issues these issues.

Clarification of Definition of Arbitration and the Arbitration Body under AfCFTA

It is necessary for the AfCFTA to be reviewed and clarify whether arbitration as provided for under the Agreement and the relevant protocol covers state-state arbitration, investor-state arbitration or both. It is also necessary to make it clear as to which body would be charged with conducting the arbitration process whose decision is then adopted as the decision of the Dispute Settlement Board. This is especially important considering that the Agreement and the Protocol on dispute settlement omitted any reference to the international arbitration bodies such as the International Centre for Settlement of Investment Disputes (ICSID) and the Permanent Court of Arbitration. Defining the body charged with arbitration may save parties considerable time and resources as opposed to the current position where parties have the right to appoint such arbitrator (s), failing which the Board would appoint them on the parties’ behalf.

Inclusion of Judicial Mechanisms to Settle State–State Disputes

Notably, a number of African states subscribe to the ICSID system as a way of attracting foreign investments. This is because most of the foreign investors do not have confidence in the local frameworks on investment disputes settlement. For instance, the Investment Agreement for the COMESA Common Investment Area requires that its Member States should, where they have not done so, endeavour to accede to: the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards; the International Convention on Settlement of Investment Disputes between States and Nationals of Other States; the Convention Establishing the Multilateral Investment Guarantee Agency; the Agreement Establishing the African Trade Insurance Agency; and any other multilateral agreement designed to promote or protect investment.

The creation of a new dispute settlement system under AfCFTA creates new challenges as to how disputes with foreigners on matters falling under this Agreement will be dealt with. This is because the AfCFTA is an agreement among African Union member states and cannot therefore create any rights or obligations for foreign (non-African) investors. However, most African national courts have been associated with lack of impartiality and independence from their governments and may also not have expertise investment-related arbitrations. This may therefore not be viable as at now and will take time to equip them properly and also have them shed the notions of lack of impartiality and independence. There is however a need for national courts to work towards enhancing their independence and impartiality.

Use of Regional Courts for State-State Arbitration

Currently, the place of regional courts in settlement of disputes especially through arbitration as far as disputes arising under the AfCFTA Investment Protocol are concerned is not clear. The courts, such as the East African Court of Justice (EACJ) have not been expressly mentioned in the Agreement. This is unlike the provisions in the Investment Agreement for the COMESA Common Investment Area which expressly provides that ‘any dispute between Member States as to the interpretation or application of this Agreement not satisfactorily settled through negotiation within 6 months, may be referred for decision to either: (i) an arbitral tribunal constituted under the COMESA Court of Justice in accordance with Article 28(b) of the COMESA Treaty; or (ii) an independent arbitral tribunal; or (iii) the COMESA Court of Justice sitting as a court’.

As for Investor-State disputes, the Investment Agreement for the COMESA Common Investment Area provides that ‘in the event that a dispute between a COMESA investor and a Member State has not been resolved pursuant to good faith efforts in accordance with Article 26, a COMESA investor may submit to arbitration under this Agreement a claim that the Member State in whose territory it has made an investment has breached an obligation under Part Two of this Agreement and that the investment has incurred loss or damage by reason of, or arising out of that breach by submitting that claim to any one of the following fora at a time: to the competent court of the Member State in whose territory the investment has been made; to the COMESA Court of Justice in accordance with Article 28(b) of the COMESA Treaty; or to international arbitration: (i) under the International Centre for the Settlement of Investment Disputes (ICSID) Convention, provided that both the home state of an investor and Member State in whose territory the investment has been made are parties to the ICSID Convention; (ii) under the ICSID Additional Facility Rules, provided that either the non-disputing Party or the respondent is a party to the ICSID Convention; (ii) under the UNCITRAL Arbitration Rules; or (iv) under any other arbitration institution or under any other arbitration rules, if the both parties to the dispute agree. Such clarity is needed under AfCFTA.

While the Agreement may leave out the inclusion of international arbitral bodies, there is a need for clarity on the place of local national courts and regional courts/dispute settlement bodies in the implementation of AfCFTA. There is also a need to clearly differentiate between state-state disputes and investor-state disputes and how they are to be settled. There may be a need to consider having such courts working closely with the inter-state disputes settlement body provided for under the AfCFTA Investment Protocol especially in handling the state-state arbitrations. This would not only build the capacity of these regional courts but would also enhance the efficiency of arbitration as provided for under AfCFTA Protocol. While the African Continental Free Trade Agreement is well meaning in its objectives, the provisions on dispute settlement are unclear. It is not clear as to what type of disputes would be submitted to particular dispute settlement settlements and whether the arbitral process provided for under the Agreement would allow parties to go for international arbitrators or arbitral bodies. This is especially important when it comes to investment disputes which may prove challenging to some of the regional dispute settlement bodies in Africa.

There is a need to clarify the issues raised in this section as they may determine the success of the implementation of AfCFTA. Africa must acknowledge that while economic integration is an idea whose time has come, the potential disputes must be settled in a clear and unambiguous manner that creates confidence for the member states and other investors dealing with matters provided for under the Agreement. For African countries to achieve their economic independence as envisaged under AfCFTA, they must be willing to invest in local expertise in dispute settlement by not only encouraging and supporting individual local dispute settlement experts but also strengthening the national and regional dispute settlement bodies in order for them to win the confidence of local investors, state parties and international investors as well.

*This article is an extract from the Book: Settling Disputes Through Arbitration in Kenya, 4^th Edition, Glenwood Publishers, Nairobi, 2022 by Dr. Kariuki Muigua, PhD, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Publisher of the Year 2021 and ADR Lifetime Achievement Award 2021 (CIArb Kenya). Dr. Kariuki Muigua is a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. Dr. Kariuki Muigua is a Senior Lecturer of Environmental Law and Dispute resolution at the University of Nairobi School of Law and The Center for Advanced Studies in Environmental Law and Policy (CASELAP). He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Dr. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Africa Trustee of the Chartered Institute of Arbitrators and the Managing Partner of Kariuki Muigua & Co. Advocates. Dr. Muigua is recognized among the top 5 leading lawyers and dispute resolution experts in Kenya by the Chambers Global Guide 2022.

References

Muigua, K., Settling Disputes Through Arbitration in Kenya, 4^th Edition, Glenwood Publishers, Nairobi, 2022, p. 304 to 308.

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Why is THE LAWYER AFRICA Listing Top Law Firms and Top Lawyers?

Published

3 days ago

June 5, 2023

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The Litigation Hall of Fame | Kenya in 2023 (The Most Distinguished 50 Litigation Lawyers in Kenya).

We live in the age of information overload where too much information (TMI) is increasingly making it difficult to find actionable legal data about a good law firm or lawyer. At the same time, legal services are increasingly going digital and finding your next lawyer is a now a matter of a few clicks. Many existing, new and potential clients are interested to know more about the lawyer handling or likely to handle their next case or transaction as every HR Manager seeks to know how their In-house Lawyer or next hire compares to peers.

The biggest dilemma especially for commercial consumers of legal services is where to begin the journey in finding the law firm or the lawyer to meet their immediate legal need created by their new venture, business, transaction or dispute. In-house counsel are also called upon to justify opting for one lawyer or law firm or over the other. Hence, the rise in the popularity of international law directories rankings as an attempt to fill the yawning gap by listing a few dozen lawyers and law firms in esoteric categories that often don’t align with the legal needs of the domestic legal market.

But ranking two dozen elite lawyers or big law firms in a big jurisdiction like Kenya there are over 20,000 lawyers is merely a drop in the ocean. The result is the same candidates are listed year after year and an In-house Legal Team looking to infuse new blood in their external counsel panel is left very little discretion. At best, International legal ranking only succeed to tilt the scales in favour of few big firms and their lawyers and to aid the choice of International Legal buyers who are constrained for time in picking their External Counsel in jurisdictions where they cannot find referrals.

The questions that beg are: What about the other top law firms and lawyers who are equally good if not better but don’t have the time to fill the technical paperwork that comes with International Legal Directories rankings? What about Domestic Legal Buyers who simply want to justify why they prefer a lawyer or law firm not listed in the International Directory? Can increasing the number of listed lawyers or law firms from less 0.1% of the profession (as captured by International Law Directories) to at least 1% of the profession or higher for those specializing in the practice area help in enhancing access to justice in Africa? Can ranking law firms by number of fee earners help in the quest for a more accurate bird’s eye view of a country’s legal landscape?

At THE LAWYER AFRICA, we have set out to list Top Law Firms and Top Lawyers in the various practice areas in a way that democratizes law rankings and listings and brings this essential value add within reach of most lawyers and every law firms doing top legal work. We don’t promise to list all the top lawyers or law firms, but we commit to make sure every lawyer or law firm we list is at the top of the game in the listed practice area. We aim to help both little known and already known law firms and lawyers doing top legal work in their area of specialization get discovered by discerning clients and possibly get more opportunities to do great work.

THE LAWYER AFRICA is looking to list up to Top 200 Law Firms in every African Jurisdiction based on their reputation and number of fee earners headcount with a goal of listing at least Africa’s Top 1,000 Law Firms which are leaders in their respective countries. We also seek to list up to Top 1,000 Lawyers in every country in Africa in at least five main practice areas, namely, Litigation, Commercial Law, Property law, In-house and Private Sector or more.

THE LAWYER AFRICA categorizes law firms in large jurisdictions as Top 5, Top 10, Top 20, Top 50 and Top 100 (and allow tying where number of counsel is equal). The Top Lawyers are listed in three categories, namely, Hall of Fame (the Distinguished Top 50 or 75 Practitioners in a Practice Area), Top 100 (the Leading Top 100 Practitioners in a Practice Area) and Up-and-Coming (the promising Top 50 or 75 Practitioners in a Practice Area). The placing of a listings depends on a number of key factors including the number of key matters or transactions handled, years in practice and experience, size of team working under a counsel, reputation and opinion of peers (where available) as established by THE LAWYER AFRICA.

THE LAWYER AFRICA prefers to list a counsel in only one listing, as far as possible. The Team tries (as far as possible) not to contact listed law firms or lawyers before the listing is finalized in the first. However, a listed law firm or lawyer may be contacted at the pre-launch stage of a list for purposes of selling merchandise relating to the launch but such engagement will not affect the listing. In case of future listings, it is expected that interested lawyers or law firms who feel they were previously left out of the list may to provide information for consideration to determine if they qualify for the next listing but that will not guarantee any listing.

THE LAWYER AFRICA undertakes not to charge for listing any lawyer or law firm. However, upon publication of a listing, as part of recovering the sunk costs we incur in the research and publication of the listings, we shall charge a token for printing and shipping of Quality A3 Certificate for listed Law Firms and/or A4 Certificate for listed Lawyers who wish to have or display the branded souvenirs or to use our proprietary digital materials in their business branding. We may also charge listed and unlisted law firms and lawyers an affordable fee for limited banner advertising or publishing of enhanced profiles next to the listings.

For any question or feedback on any list or listing, feel free to contact THE LAWYER AFRICA PUBLISHER at info[at]thelawyer[dot]africa.

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The Roles of the Three Parts of the Permanent Court of Arbitration

Published

1 week ago

May 30, 2023

Admin

H.E. Amb. Marcin Czepelak, the Fourteenth Secretary-General of the Permanent Court of Arbitration (PCA)

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News & Analysis

Brief History of the Permanent Court of Arbitration (PCA)

Published

2 weeks ago

May 26, 2023

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By Dr. Kariuki Muigua, PhD, C.Arb, Current Member of Permanent Court of Arbitration (PCA) Representing the Republic of Kenya.

The Permanent Court of Arbitration (PCA) is a 124 Years Old Intergovernmental Organization currently with 122 contracting states. It was established at the turn of 20^th Century during the first Hague Peace Conference held between 18^th May and 29^th July 1899. The conference was an initiative of then Russian Czar Nicholas II to discuss peace and disarmament and specifically with the object of “seeking the most effective means of ensuring to all peoples the benefits of a real and lasting peace, and, above all, of limiting the progressive development of existing armaments.” The culmination of the conference was the adoption of a Convention on the Pacific Settlement of International Disputes, which dealt not only with arbitration but also with other methods of pacific settlement, such as good offices and mediation.

The aim of the conference was to “strengthen systems of international dispute resolution” especially international arbitration which in the last century had proven effective for the purpose with number of successful international arbitrations being concluded among Nations. The Alabama arbitration of 1871-1872 between the United Kingdom (UK) and the United States (US) under the Treaty of Washington of 1871 culminating in the arbitral tribunal’s award that the UK pay the US compensation for breach of neutrality during American Civil War which it did had demonstrated the effectiveness of arbitration in settling of international disputes and piqued interest of many practitioners in it as a mode of dispute resolution during the latter years of the nineteenth century.

The Institut de Droit International adopted a code of procedure for arbitration in 1875 to answer the need for a general law of arbitration governing for countries and parties wishing to have recourse to international arbitration. The growth of arbitration as a mode of international dispute resolution formed the background of the 1899 conference and informed its most enduring achievement, namely, the establishment of the PCA as the first global mechanism for the settlement of disputes between states. Article 16 of the 1899 Convention recognized that “in questions of a legal nature, and especially in the interpretation or application of International Conventions” arbitration is the “most effective, and at the same time the most equitable, means of settling disputes which diplomacy has failed to settle.”

In turn, the 1899 Convention provided for the creation of permanent machinery to enable the setting up of arbitral tribunals as necessary and to facilitate their work under the auspices of the institution it named as the Permanent Court of Arbitration (PCA). In particular, Article 20 of the 1899 Convention stated that “[w]ith the object of facilitating an immediate recourse to arbitration for international differences which it has not been possible to settle by diplomacy, the signatory Powers undertake to organize a Permanent Court of Arbitration, accessible at all times and operating, unless otherwise stipulated by the parties, in accordance with the rules of procedure inserted in the present Convention.” In effect, the Convention set up a permanent system of international arbitration and institutionalized the law and practice of arbitration in a definite and acceptable way.

As a result, the Permanent Court of Arbitration (PCA) was established in 1900 and began operating in 1902. The PCA as established consisted of a panel of jurists designated by each country acceding to the Convention with each country being entitled to designate up to four from among whom the members of each arbitral tribunal might be chosen. In addition, the Convention created a permanent Bureau, located in The Hague, with functions similar to those of a court registry or secretariat. The 1899 Convention also laid down a set of rules of procedure to govern the conduct of arbitrations under the PCA framework.

The second Hague Peace Conference in 1907 saw a revision of the 1899 Convention and improvement of the rules governing arbitral proceedings. Today, the PCA has developed into a modern, multi-faceted arbitral institution perfectly situated to meet the evolving dispute resolution needs of the international community. The Permanent Court of Arbitration has also diversified its service offering alongside those contemplated by the Conventions. For instance, today the International Bureau of the Permanent Court of Arbitration serves as a registry in important international arbitrations. In 1993, the Permanent Court of Arbitration adopted new “Optional Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State” and, in 2001, “Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment”.

Reference

PCA Website: https://pca-cpa.org/en/about/introduction/history/ (accessed on 25^th May 2023).