By Hon. Prof. Kariuki Muigua, OGW, PhD, C.Arb, FCIArb is a Professor of Environmental Law and Dispute Resolution at the University of Nairobi, Member of Permanent Court of Arbitration, Leading Environmental Law Scholar, Respected Sustainable Development Policy Advisor, Top Natural Resources Lawyer, Highly-Regarded Dispute Resolution Expert and Awardee of the Order of Grand Warrior (OGW) of Kenya by H.E. the President of Republic of Kenya. He is The African ADR Practitioner of the Year 2022, The African Arbitrator of the Year 2022, ADR Practitioner of the Year in Kenya 2021, CIArb (Kenya) Lifetime Achievement Award 2021 and ADR Publisher of the Year 2021 and Author of the Kenya’s First ESG Book: Embracing Environmental Social and Governance (ESG) tenets for Sustainable Development” (Glenwood, Nairobi, July 2023) and Kenya’s First Two Climate Change Law Book: Combating Climate Change for Sustainability (Glenwood, Nairobi, October 2023), Achieving Climate Justice for Development (Glenwood, Nairobi, October 2023) and Promoting Rule of Law for Sustainable Development (Glenwood, Nairobi, January 2024)*
There is need to embrace ADR mechanisms in the management of energy disputes in Africa. It has been pointed out that concerns with regard to time and cost relating to energy disputes call for swift and efficient dispute resolution in Africa, which will likely take the form of ADR methods, especially in the context of volatile economic and commercial contexts. ADR mechanisms including arbitration and mediation are therefore appropriate in the management of energy disputes in Africa. It has rightly been observed that ADR mechanisms have been practiced in Africa for many centuries. These techniques fit comfortably within traditional concepts of African justice, particularly its core values of reconciliation, peace and cohesion.
ADR mechanisms provide parties with the opportunity to manage and resolve disputes before they escalate, which can not only save time and costs but can also preserve critical business relationships especially in long term energy projects. Parties should therefore embrace ADR mechanisms including negotiation, mediation and arbitration in order to foster effective management of energy disputes in Africa.
In the case of arbitration, it is essential to address inadequate legal and institutional framework, inadequate marketing, uncertainty in drafting arbitration clauses, interference by national courts, uncertainty of costs, perception of corruption and bias against Africa. This calls for strengthening the legal and institutional capacity on arbitration in Africa, drafting of effective arbitration clauses in energy contracts, marketing Africa as a hub for arbitration, capacity building for arbitrators through education and training, limiting court intervention in arbitration to a basic and necessary minimum, and addressing the problem of corruption through good governance.
It has also been suggested that there is need to establish a unified international arbitration court for energy disputes. It has been argued that there is a need for unification of the current international arbitration mechanisms since the different arbitration procedures, subject to different procedural and substantial rules, may result in problems concerning the enforcement of the arbitral awards in local jurisdictions. Establishment of a unified international arbitration court for energy disputes will ensure that the court has the widest jurisdiction to hear the energy disputes through the most suitable procedural and substantial rules for energy-specific disputes. This will also ensure predictable, transparent, and unified arbitration mechanism for management of energy disputes.
It is also imperative for parties to embrace dispute avoidance. It has been asserted that conflict avoidance requires clear, concise, careful and proper planning of the strategy for the execution of projects. It is also about adopting a proactive conflict avoidance approach such as risk analysis, clarity in the contract documentation or partnering. It is therefore vital for players in the energy sector in Africa including energy companies to avoid or minimise the chance of disputes arising in the first instance through measures such as ensuring clear and well-drafted contracts which include workable and not overly complicated dispute resolution provisions followed by effective project management from beginning to end. Finally, there is need for the energy sector in Africa to embrace Sustainable Development.
The principle of Sustainable Development requires an integrated approach to development that takes into account environmental protection, economic development and social progress. Players in the energy sector in Africa especially multinational corporations in the oil and gas sector have on several occasions been accused of failing to adhere to the principles of Sustainable Development as evidenced by environmental concerns including the extinction of biodiversity, contamination and destruction of soil and air pollution as a result of oil spillages.
Further, multinational corporations operating in Africa including those in the energy sector have been accused of gross human rights violations, such as killings, bad labour practices and land injustices. Such practices have had an impact on economic activities, social-cultural life and human health of the affected people thus hindering the attainment of Sustainable Development. This has also led to rise of disputes between host states and investors under investment treaty arbitration with host states seeking to enforce the tenets of Sustainable Development including environmental protection and human rights against multinational corporations.
It is therefore imperative for energy companies including multinational corporations in Africa to embrace Sustainable Development by fostering social justice, environmental sustainability, alternative energy and clean technology efforts. In addition, it has been asserted that it is important for African Countries to ensure that they review and negotiate appropriately with foreign countries in order to capture the tenets of Sustainable Development including Environmental, Social and Governance (ESG) clauses in BITs. The need for Sustainable Development in the energy sector in Africa is informed by global agendas including energy transition, environmental protection and confronting climate change.
*This is an extract from the Book: Promoting Rule of Law for Sustainable Development (Glenwood, Nairobi, January 2024) by Hon. Prof. Kariuki Muigua, OGW, PhD, Professor of Environmental Law and Dispute Resolution, Senior Advocate of Kenya, Chartered Arbitrator, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Lifetime Achievement Award 2021 (CIArb Kenya), African Arbitrator of the Year 2022, Africa ADR Practitioner of the Year 2022, Member of National Environment Tribunal (NET) Emeritus (2017 to 2022) and Member of Permanent Court of Arbitration nominated by Republic of Kenya. Prof. Kariuki Muigua is a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. Prof. Kariuki Muigua teaches Environmental Law and Dispute resolution at the University of Nairobi School of Law, The Center for Advanced Studies in Environmental Law and Policy (CASELAP) and Wangari Maathai Institute for Peace and Environmental Studies. He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Prof. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Managing Partner of Kariuki Muigua & Co. Advocates and Africa Trustee Emeritus of the Chartered Institute of Arbitrators 2019-2022. Prof. Muigua is a 2023 recipient of President of the Republic of Kenya Order of Grand Warrior (OGW) Award for his service to the Nation as a Distinguished Expert, Academic and Scholar in Dispute Resolution and recognized among the top 5 leading lawyers and dispute resolution experts in Band 1 in Kenya by the Chambers Global Guide 2022 and was listed in the Inaugural THE LAWYER AFRICA Litigation Hall of Fame 2023 as one of the Top 50 Most Distinguished Litigation Lawyers in Kenya and the Top Arbitrator in Kenya in 2023.
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