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*
Despite the efforts by Arbitration stakeholders to invest in making Africa a more receptive destination for international arbitration, the country still faces a number of challenges that have slowed down the progress. These include: real or perceived national courts interference; perception of corruption/ government interference; inadequate marketing of the country; inadequate capacity of existing institutions; and endless court proceedings, among others.
Inadequate Legal and Institutional Framework on International Commercial Arbitration
The inadequate legal regimes and infrastructures for the efficient and effective organization and conduct of international commercial arbitration in Africa has denied the local international arbitrators the fora to display their skills and expertise in international commercial arbitration. However, progress has made towards addressing this challenge such as the enactment of the Nairobi Centre for International Arbitration Act and the subsequent establishment of the Nairobi Centre for International Arbitration under section 4 of the Act. Still, there exists a challenge on the capacity of existing institutions to meet the demands for ADR mechanisms introduced by the constitution as well as handling the commercial arbitration matters. Much needs to be done to enhance their capacity in terms of their number, adequate staff and finances to ensure that they are up to task in facilitation of ADR.
Appointment of International Arbitrators by Parties
Despite there being individuals with the relevant knowledge, skill and experience on international dispute resolution and competent institutions, which specialize in, or are devoted to, facilitating alternative dispute resolution (ADR), there has been a general tendency by parties to a dispute doing business in Africa to go back to their home turfs to appoint arbitrators. Most disputants prefer to appoint their non-nationals as arbitrators in international disputes, thus resulting in instances where even some Africans go for non- Africans to be arbitrators. Indeed, it has been observed that the near absence of African arbitrators in ICSID arbitration proceedings can in part be explained by the fact that African states predominantly appoint international lawyers to represent their interests. This portrays Africa to the outside world as a place where there are no qualified arbitrators to be appointed as international commercial arbitrators.
Inadequate International Marketing
The African continent in general have been portrayed as less developed in terms of handling international commercial arbitration, and little has been done in marketing it as a centre for international commercial arbitration. Many people outside Africa still carry with them the perception that Africa does not have adequate qualified international commercial arbitrators. They have therefore not sought to know whether this is the position as there has also not been much effort from Africans themselves to refute this assumption.
Uncertainty in Drafting Arbitration Clauses
There is the need to draft the arbitration clause in a clear manner to avoid misinterpretation. Uncertainty in drafting arbitration clauses has always drawn the attention of courts leading to unnecessary interference. This interference intimidates the foreigners thus making them shy away from African centres. There is also need to ensure that the instances of court intervention are kept to the minimum so as to boost the confidence of commercial disputants in the willingness of courts to uphold the outcome of the international commercial arbitrations held in the country.
Perceived Interference by the National Courts
In many African countries, for instance Kenya, Arbitration law provides for involvement of the national courts in Arbitration, including international commercial arbitration. For instance, section 10 of the Kenyan Arbitration Act provides that except as provided in the Act, no court shall intervene in matters governed by the Act. This provision echoes Article 5 of the UNCITRAL Model Law on international commercial arbitration. In effect, the article limits the scope of the role of the court in arbitration only to situations that are contemplated under the Model Law. However, it has been noted that even when an African state has become a party to the relevant treaties, there might still be the perception that its courts could not be relied on to apply the text correctly or in good faith, with a further argument that national legal frameworks are not conducive for the constitution of arbitral tribunals and to the conduct of arbitration, permitting the ‘local court’ to interfere unduly in arbitral proceedings.
Sometimes matters will be appealed all the way to the highest court on the law of the land in search of setting aside of awards. Parties to arbitration agreements have used court intervention to delay and frustrate arbitral proceedings whether yet to start or pending. This delays finalization of the matter as well as watering down the perceived advantages of arbitration and ADR in general. This can only be corrected through setting up tribunals or courts with finality in their decisions and operating free of national courts interference. Court interference intimidates investors since they are never sure what reasoning the court might adopt should it be called upon to deliberate on such disputes.
Uncertainty of Costs
It has been observed that arbitration is now a service industry, and a very profitable one at that with the arbitral institution, the arbitrators, the lawyers, the expert witnesses and the providers of ancillary services all charging fees on a scale. There have not been very clear guidelines on the remuneration of arbitrators and foreigners are not always very sure on what they would have to pay if and when they engage African international arbitrators to arbitrate their commercial disputes. This is because the issue is often left to the particular institutional guidelines. For instance, the Kenyan branch of Chartered Institute of Arbitrators has its own rules and guidelines on the remuneration of its arbitrators. However, these are only applicable to those who practice arbitration under the Institute and thus have limited applicability.
Perception of Corruption
A bleak image is painted to the international community regarding the governance system in place in Africa. This hinders the expansion of the scope of international commercial arbitration as the view is taken to imply that justice is impossible to achieve in Africa. Further, it has been argued that at times governments are also perceived to be interfering with private commercial arbitration matters. For instance, the government may try to influence the outcome of the process especially where there are its interests at stake and put forward the argument of grounds of public policy.
Bias against Africa
With racism still existing in society, Africa has borne the blunt of it with the bias rendering Africa’s image as a corrupt and uncivilized continent. It has been observed that Parties to disputes rarely select African cities as venues for international arbitration, and this is so even for some international arbitral institutions or arbitrators, when asked to make the choice.
*This article is an extract from the Book: Settling Disputes Through Arbitration in Kenya, 4th Edition (Chapter Thirteen), 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, 4th Edition, Glenwood Publishers, Nairobi, 2022, p. 264 to 269.