Experts have urged African governments to use local arbitration centres to save the continent millions of dollars spent in cases filed abroad.
The arbitration experts were meeting in Kigali for the East Africa International Arbitration Conference, whose theme was Linkages between International Arbitration and Africa’s Economy. The conference was held on September 28 and 29.
“More than 95 per cent of all African cases are taken to arbitration centers outside the continent, and this is money getting out of local economies,” said Thierry Ngoga Gakuba, one the participants.
According to the experts, it is difficult to calculate how much money African countries and companies on the continent spend on arbitration because of the confidential nature of the cases, but they estimate that it could be millions of dollars every year.
“When a dispute arises on a contract entered into in Africa, concerning a project on the continent, and the matter is taken to Europe or Asia for arbitration, the parties spend money there instead of keeping it here in Africa,” said Fidel Masengo, the executive director of the Kigali International Arbitration Centre (KIAC).
The conference discussed the economic potential of international arbitration for African economies by developing settlement mechanisms in the continent.
Sam Rugege, the chief justice of Rwanda, while addressing the participants, urged African countries to invest in building strong international arbitration centres.
“We must make our arbitration centres excellent by having competent personnel and expert arbitrators. This will reduce the number of cases being referred to courts in Paris, London or New York,” Justice Rugege said.
Many African countries have invested in affordable or almost free arbitration forums, but this has failed to attract more cases.
An example is the East African Court of Justice, which is an affordable arbitration centre but people have remained reluctant to refer their disputes to the court despite the court conforming to international commercial arbitration practices.
Even the EAC partner states are yet to take up the free services offered by the Court. They find it easier to go to France, London or Hong Kong for arbitration.
Some analysts say African governments often negotiate from weaker positions, especially in big projects funded by Western countries or international development partners, who link funding with arbitration centres in the West should disputes arise.
According to the analysts, foreign investors are suspicious of the credibility of African arbitration centres, their skills, and the enforceability of their awards.
“We have the expertise, with centres like KIAC, the International Centre for Arbitration and Mediation Abuja (ICAMA), which are tried and tested,” said Ikpeme Nkebem, the general manager of ICAMA.
Besides, the millions of dollars lost to the West, analysts say the continued export of arbitration cases to Western centres robs African practitioners of the potential experience and exposure.”
To reverse this trend, experts tasked governments, negotiators and lawyers of big corporations involved in big projects in Africa to push for local arbitration.
African governments are involved in mega contracts with international contractors who prefer to use Western-based arbitration centres such as the ICC, ICSID, London Arbitration centre, and others.
“When they are negotiating, they should push for African arbitration centres, both for the benefit of African professionals and economies,” said Mr Gakuba.