African governments have grown wise to the fact that arbitration can be a source of economic activity, with conference centres, hotels and local lawyers set to benefit. A recognised arbitration centre may also help to reinforce messages about political and legal stability, which could be seen as one way to reassure foreign investors1. This is part of the reason why so many institutions have emerged in Africa in recent years. There are now over 90 arbitration institutions existing on the continent, with some countries hosting multiple centres – Nigeria and South Africa have at least six each, and even Mauritius, one of the smallest countries in Africa, has three.

However, it has been said that the number of arbitration institutions in Africa is disproportionate, and only a few of them have managed to gain serious traction. Even fewer have managed to compete with the likes of the ICC2 and the LCIA3, which continue to dominate the international arbitration market in Africa. But, why is this the case? And could this change in the future?

There appear to be two key considerations which impact the decision as to where to arbitrate – (1) the safety and security of the seat of the host country, and (2) the reputation of the institution itself. These considerations mean the longstanding foreign centres are still more prevalent, but there is growing evidence that the African institutions could gain in popularity. Parties have made it clear that they are increasingly willing to favour the promotion of ethnic diversity within the tribunal by choosing African centres over the security of the tried and tested institutions in more developed nations, as we will explore.

The arbitral seat

The seat of the arbitration determines the law of the arbitration. This is important, because it will dictate the relationship between the tribunal and the courts, which will, in turn, be significant when it comes to enforcing the arbitral award.

The results of the White & Case and Queen Mary University of London (“QMUL”) ‘2021 International Arbitration Survey’4 found that the five most preferred seats for arbitration are London, Singapore, Hong Kong, Paris and Geneva. These cities each have a longstanding and recognised reputation as a “safe seat” for international arbitration – they are generally in jurisdictions with strong, modern arbitration laws and judiciaries that are supportive of the arbitral process. Most also have established democratic governments, which offers stability.

Of note, the survey found that significant gains had been made by Singapore and Hong Kong, as compared to previous surveys in 2018 and 2015. The growth in popularity of seats in this region might reflect an increasing willingness by parties with commercial interests linked to the area to resolve disputes “locally”. This might indicate that we could see a similar trend in Africa in the future. However, it could take a long time for the apparent stability of an African seat to translate into utilisation of its institution, particularly when the reputation of the centre is another major factor for selection. It is also apparent that not all African countries would be considered a “safe seat” – in the afternoon keynote speech at the November 2018 African Law & Business Summit, Segun Osuntokun gave some examples of why arbitrating within certain African countries may give rise to “jitters”5. For example, states such as The Gambia, Somalia and Namibia are not signatories to the New York Convention (which aims to ensure the enforcement of foreign arbitration awards worldwide by requiring contracting states to enforce agreements that satisfy certain conditions).

“Greater support for arbitration by local courts and judiciary” (56%), “increased neutrality and impartiality of the local legal system” (54%), and “better track record in enforcing agreements to arbitrate and arbitral awards” (47%) were cited in the 2021 survey as the key adaptations that would make other arbitral seats (those failing to make the top spots) more attractive. Clearly, the responses point to the importance of the local courts and judiciary in recognising and supporting the use of international arbitration. This would suggest that changes to local legal systems to ensure that the seat offers a supportive judiciary, and an impartial court system, has the potential to make certain African seats more appealing.

This also seems to be reflected in Emilia Onyema’s (of SOAS University of London) ‘2020 Arbitration in Africa Survey Report’6. When rating the top African cities for arbitration (almost one third of respondents selected Cairo as the most popular African seat), the main reasons stated in support included the existence of arbitration friendly laws and jurisdictions, as well as the availability of arbitration expertise7. The survey also identified some of the difficulties faced by users when arbitrating in Africa. These included unclear local laws on arbitration and difficulties in enforcing an award.

The arbitral institution

The five most preferred arbitral institutions as found in the 2021 survey are the ICC, SIAC8, HKIAC9, LCIA and CIETAC10. In Africa specifically, the preferred institutions were the ICC (79%), LCIA (57%), SIAC (39%), ICSID11 (21%) and HKIAC (14%)12. Interviews confirmed the principal drivers behind choice of institution include the general reputation of the institution and the respondent’s previous experience of that institution.

In Onyema’s ‘2020 Arbitration in Africa Survey Report’, the Arbitration Foundation of Southern Africa (AFSA) and the Cairo Regional Centre for International Commercial Arbitration (CRCICA) were selected as the top African centres and, similarly, the responses found that both centres enjoy a strong reputation from users both within and outside their locations. Respondents also praised their professionalism, efficiency and support facilities (including the quality of the support and administrative staff).

The findings of both surveys indicate that there is an emphasis on reputation, recognition and experience. It is obvious that this will result in a greater weighting towards long-established institutions, with proven track records and substantial experience. This means that it may take a long time before newer arbitration institutions in Africa can build their own following, particularly internationally.

Interestingly though, not all arbitration centres operating in Africa carry out the functions of an arbitral institution – some centres do not administer arbitration cases, but instead provide facilities such as hearing rooms to support the private dispute resolution process or act as appointing authorities. This might be another reason why some African institutions are not utilised much.13

Nevertheless, respondents to the 2021 survey revealed that in particular circumstances they would widen the list of institutions they might consider. For example, depending on the potential value of a given dispute, practitioners reported that they would be willing to consider less well-known institutions offering competitive fees, a diverse pool of arbitrators, and high quality administrative and logistical support for virtual hearings. These considerations do not displace the general factors of reputation and recognition, but they suggest that there are other distinguishing features which may influence the choice of one institution over another.

Diversity and appetite for change

There is a desire for greater diversity in arbitrators. Ethnic diversity in particular is an area where respondents to the QMUL survey felt there was a lack of progress and a distinct need for improvement.

An example from respondents was where an arbitral panel is composed entirely of arbitrators who have no relationship with, or understanding of, a specific country or culture central to a dispute. This could lead parties to feel that the arbitrators might not fully appreciate cultural differences and might subconsciously favour parties from areas or cultures with which they are more familiar. This concern arose particularly in relation to arbitrators from North America and Western Europe when dealing with disputes involving legal or cultural norms from other parts of the world.

Several interviewees highlighted that, depending on the nature and value of the dispute, they might be willing to use less widely known institutions based in jurisdictions that are emerging as arbitration hubs, or new entrants to the market. They explained that trusting in such institutions can be an effective means of encouraging greater diversity, particularly when those institutions may be able to suggest a different pool of arbitrators. This could include arbitrators who may not have high visibility globally, but who have experience of a region, applicable law or industry for a given dispute.

Separately, it has also been suggested14 that African parties should regularly choose to appoint arbitrators of African origin, especially in those arbitration references affecting or emanating from that continent. This may help to develop arbitration jurisprudence and knowledge which would make Africa more competitive on the global arbitration stage. It has further been suggested that more needs to be done by way of training arbitrators to develop relevant skills, which will ensure the continued availability of experts within Africa.

This view is arguably supported by the findings of the 2021 survey – many respondents felt that opportunities to increase the visibility of diverse candidates should be encouraged through initiatives such as “education and promotion of arbitration in jurisdictions with less developed international arbitration networks” (38%), “more mentorship programmes for less experienced arbitration practitioners” (36%) and “speaking opportunities at conferences for less experienced and more diverse members of the arbitration community” (25%). Building visibility is particularly important considering the perception that users prefer arbitrators about whom they have knowledge or with whom they have had previous experience. If the African institutions can suggest a diverse pool of recognised and high-quality arbitrators, this might encourage greater use of the African centres.

This all suggests that there is an openness and possibly even an appetite for using “other” institutions if this might lead to greater ethnic diversity or offer better knowledge of the locale amongst the tribunal members. Whilst it might not be considered appropriate for a dispute originating in North America, Europe or Asia, it seems as though choosing an African institution which would be able to recommend a pool of high-quality African arbitrators with local knowledge and experience would be both a sensible and welcome choice for parties and disputes originating in Africa.

Conclusion

Institutions like the ICC and the LCIA continue to dominate the market for reasons which centre on reputation, recognition and experience. Firstly, the top-rated institutions are based in cities with a recognised and longstanding reputation as a “safe seat” for international arbitration. Those seats have strong, modern arbitration laws and supportive judiciaries. Secondly, the centres themselves have a strong reputation and parties are even more likely to choose those institutions if they have had a previous positive experience with them. This means that it would take a long time for newer institutions in Africa to build an international following.

However, research suggests that there is a hunger for greater ethnic diversity in arbitrators, particularly where the arbitrator has a relationship with or understanding of a specific country or culture central to a dispute. It is apparent that there needs to be a level playing field of opportunities for engagement and visibility within the arbitration community to help promote African arbitrators. Training will be important to ensure that such arbitrators are skilled and knowledgeable. Depending on where they are based, parties may be more willing to use new or less widely known institutions based in African jurisdictions, where this is appropriate for the dispute. For arbitration currently being conducted “out of Africa”, this may be a way for it to be encouraged back in.