The China-Africa Joint Arbitration Centre (CAJAC) was established in August 2015 to address resolution of commercial disputes between Chinese and African parties.
The Beijing Consensus, calling for a joint dispute resolution framework to be developed between China and Africa, was signed in June 2015 by a wide range of Chinese trade commissions, arbitral bodies and universities, as well as delegates from Africa. It was followed by the signing of a similar consensus in Johannesburg in August 2015, resulting in the establishment of CAJAC.
The reasons for the creation of CAJAC are many. China is one of the largest sources of investment into Africa and one of South Africa’s largest trading partners. Due to the increasing trade and investment cooperation between China and African countries, including South Africa, there has been a growing need for a neutral and cost-effective mechanism for resolving commercial disputes between African and Chinese parties.
Prior to the establishment of CAJAC, African and Chinese parties to a dispute could either pursue their claims in local courts, submit their dispute for arbitration locally in China or South Africa or one of the international arbitration forums (such as the International Court of Arbitration or the London Court of International Arbitration), or resolve their disputes via ad-hoc arbitration. These available alternatives to resolve commercial disputes, however, have their drawbacks, including, amongst others, concerns related to inefficiency, impracticality and fear of prejudice, regulatory obstacles related to local arbitration or litigation, as well as the high costs of international arbitration. Although resolution of disputes at the main international arbitration centres is well established, it has not always been considered the most effective solution for the Chinese and South African parties.
CAJAC aims to address these problems. It will have an arbitral committee consisting of arbitrators nominated by both China and South Africa. The parties to a dispute can appoint arbitrators from this arbitral committee for the purposes of resolving their disputes. CAJAC Johannesburg is expected to operate as a fully administered arbitration centre, initially using Rules for the Conduct of Arbitrations of Africa ADR until the standard CAJAC arbitration rules are developed in conjunction with CAJAC Shanghai.
It is intended that CAJAC will operate in Johannesburg and Shanghai and will provide dispute resolution services that will include arbitration, mediation and conciliation. Disputes arising out of Chinese business activities in Africa will be resolved in Johannesburg and disputes arising out of African business activities in China will be resolved in Shanghai.
Generally, the creation of CAJAC is regarded as a positive development for South Africa, allowing it to enter an international arbitration stage and become an important international arbitration hub on the African continent.