Attracted by the vast business opportunities in African countries, over the past few years there has been a significant increase in the number of Chinese companies investing in the continent. This boom of Chinese investment has boosted the growth rate of a number of African economies and the China-Africa story looks set to continue, with the total value of China's foreign direct investment into Africa reaching an estimated USD 100 billion by 2020.
But with great opportunities come potential risks and challenges which require robust and reliable legal frameworks for effective dispute resolution. International arbitration has become the preferred mode of dispute resolution for international business disputes, including those involving Chinese investments in African countries. Traditionally, these disputes have been administered by a handful of established arbitration centres based in Europe and have taken place in European cities, including London and Paris.
In an effort to improve efficiency for investors in Africa based outside of Europe, a number of African arbitration institutions have launched in recent years including LCIA-MIAC in Mauritius, Kigali International Arbitration Centre (KIAC) in Rwanda, Lagos Court of Arbitration (LCA) and Lagos Chamber of Commerce International Arbitration Centre (LACIAC) in Nigeria, Cairo Regional Centre for International Commercial Arbitration in Egypt (CRCICA) and Cour Commune de Justice et d'Arbitrage (CCJA) in Abidjan. There are also steps being taken to establish arbitration centres in Kenya and Tanzania.
The China-Africa Joint Arbitration Centre
Now there is a new kid on the block. The China-Africa Joint Arbitration Centre (CAJAC), with centres in both Shanghai and Johannesburg, is earmarked to be the international arbitration venue of choice for disputes involving African and Chinese businesses. CAJAC will provide a whole range of dispute resolution services including arbitration, mediation, adjudication and conciliation.
The result of the "Johannesburg Consensus", an agreement reached in Johannesburg on 17 August 2015 by representatives of various arbitration associations in Southern Africa and China, CAJAC promises to offer a cost efficient alternative to the more established arbitration centres for China-Africa disputes.
Tony Canny, a partner in our Johannesburg office was a signatory to the Johannesburg Consensus along with the Secretary General of the China Law Society and the Chairman of the China-Africa Joint Arbitration Centre Shanghai.
It is expected that CAJAC will facilitate and enhance business, trade and investment between China and African countries and there are plans to have its arbitration rules, once developed, adopted in the numerous China-Africa bilateral investment treaties.
It is hoped that CAJAC and other international arbitration centres like it will provide investors with opportunities to resolve commercial disputes locally, potentially saving time and costs. If successful, such initiatives should lead to the development of arbitral jurisprudence and expertise across Africa, for the benefit of all foreign investors and domestic parties alike.