International investment arbitration – also known as investment treaty arbitration or investorState arbitration – is a procedure whereby foreign investors may seek a binding adjudication of claims against host States that have either violated investment protection treaty obligations or, in some circumstances, breached their contractual commitments or their national foreign investment law. The countries of Africa are party to numerous bilateral and multilateral investment treaties which are intended to promote investment by ensuring fair treatment of foreign investors and which permit arbitration of investor claims before the International Centre for Settlement of Investment Disputes (ICSID) or similar fora. In 2014, economic activity in Africa remained strong due to external demand and healthy increases in both private and public investment. With political instability in North Africa and challenges posed by the Ebola epidemic in West Africa, Sub-Saharan Africa led the continent’s economic growth. The number of new investment arbitrations in Africa in 2014 returned to the level of previous years, after an increase in 2013. Disputes continue to be heavily concentrated in the oil, gas and mining industry, although the construction, transportation, and agriculture, fishing and forestry industries also see multiple pending disputes. Reflecting trade and investment patterns, countries in the region have concluded at least 1,385 investment treaties (including bilateral investment treaties, free trade agreements and other treaties containing investment-related provisions), of which 833 are currently in force. Approximately 13 percent of the region’s investment treaties are intraregional (i.e., concluded between only African countries), as are approximately 14 percent of the region’s investment disputes. Continental Africa comprises 54 countries, ranging from its largest economies, Nigeria and South Africa, to its smallest, Comoros and São Tomé and Príncipe. Investment Arbitration in the Region1 A total of 112 ICSID cases have involved African parties as claimant investors, respondent States or both, with the first arbitration brought against an African country – by American and Swiss investors against Morocco – filed in 1972, and the first arbitration brought by an African investor – by a Senegalese investor against Senegal – filed in 1982. Of those 112 cases, 38 cases were pending in 2014. Elevator Speeches International Investment Arbitration in Africa: Year in Review 2014 INTERNATIONAL ARBITRATION TEAM For questions about international investment arbitration, please contact a member of our International Arbitration Team, or the authors of this review: Authors: Emma Lindsay Counsel, New York +1 212 541 2121 email@example.com Daniel Lewkowicz Intern,* New York +1 212 541 1254 firstname.lastname@example.org *admission pending in New York 1 This review considers only investment arbitrations brought under the auspices of ICSID, which constitute the significant majority of investment arbitrations in the region and total 112 to date. Based on our review of public sources, we are aware of seven other investment claims relating to the region, most of which were brought pursuant to the UNCITRAL Arbitration Rules. As most investment treaties allow for fully confidential arbitration, the actual number of non-ICSID cases could be higher. PAGE 2 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM Claims against African countries have been made most frequently by investors from the United States, the United Kingdom and Italy. Of the investment arbitrations against African countries pending in 2014, German investors had brought the greatest number. Top Nationalities of Investors with ICSID Arbitrations in Africa PAGE 3 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM The countries in the region that have faced the most investment claims are Egypt, the Democratic Republic of Congo, Guinea and Algeria. Mozambique and Sudan faced their first investment claims in 2014. African Countries Facing Investment Claims PAGE 4 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM The number of investment arbitrations initiated in 2014 decreased from 2013, but was in line with prior years. The basis for arbitral jurisdiction in most cases has been an investment treaty (typically a bilateral investment treaty), although claims also have been made pursuant to contracts and, less frequently, national investment laws. The vast majority of investment arbitrations against African countries have been brought by investors from other regions. However, approximately 14 percent of investment arbitrations in the region have involved only African parties. The four such arbitrations pending in 2014 were brought by investors from Gambia, Mali, South Africa and Mauritania against Gambia, Mali, Mozambique and Mauritania respectively. Investment disputes in the region have arisen most frequently in the oil, gas and mining industry. Of the disputes pending in 2014, 41 percent involved this industry. 14 12 10 8 6 4 2 0 2010 2011 2012 2013 2014 Total Cases Initiated Per Year Oil, Gas & Mining Other Industry Construction Transportation Agriculture, Fishing & Forestry Tourism Electric Power & Other Energy Services & Trade Water, Sanitation & Flood Protection Finance Information & Communication 56 21 43 12 16 7 8 Investment treaty Contract Investment law Other Investment Cases by Industry Cases Initiated Per Year Instrument Invoked to Establish ICSID Jurisdiction 39 15 16 4 4 3 3 1 1 1 2 2 3 4 10 10 8 8 5 5 5 Inner Circle = Pending Cases Outer Circle = Total Cases Inner Circle = Pending Cases Outer Circle = Total Cases PAGE 5 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM Of the 74 concluded arbitrations, 17 cases (23 percent) have involved further proceedings seeking to annul the arbitral award. Applications for annulment were successful, in whole or in part, in three cases and rejected in seven cases, with applications in two cases pending in 2014. Three cases were settled, and two cases were discontinued. Investment Treaties Involving African Countries More than a third of the nearly 3,300 investment treaties currently in existence involve African signatories. Egypt has concluded the most investment treaties, followed by Morocco and Tunisia. 0 20 40 60 80 100 120 EGYPT MOROCCO TUNISIA ALGERIA SOUTH AFRICA MAURITIUS LIBYA SUDAN ZIMBABWE SENEGAL ETHIOPIA GHANA NIGERIA MOZAMBIQUE GUINEA MALI MAURITANIA BENIN DEMOCRATIC REPUBLIC OF CONGO TANZANIA BURKINA FASO CAMEROON GAMBIA CÔTE D’IVOIRE UGANDA KENYA NAMIBIA CHAD GABON DJIBOUTI REPUBLIC OF CONGO ZAMBIA RWANDA BURUNDI CAPE VERDE COMOROS SWAZILAND ANGOLA BOTSWANA MALAWI NIGER EQUATORIAL GUINEA MADAGASCAR TOGO SEYCHELLES LIBERIA GUINEA-BISSAU SIERRA LEONE ERITREA LESOTHO CENTRAL AFRICAN REPUBLIC SOMALIA SÃO TOMÉ AND PRÍNCIPE SOUTH SUDAN Number of Treaties Number of Treaties in Force PAGE 6 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM Of the 1,385 investment treaties signed by African countries, 175 are treaties signed between or among only African countries. The United States has signed 26 investment treaties with African countries, nine of which permit investor-State arbitration (the bilateral investment treaties between the United States and each of Cameroon, Congo, the Democratic Republic of Congo, Egypt, Morocco, Mozambique, Rwanda, Tunisia and Senegal). Eight investment treaties were signed by African countries in 2014. Côte d’Ivoire led the field, concluding two bilateral investment treaties this year. Canada was the most active treaty partner, signing five bilateral investment treaties with African countries. Other Developments in 2014 u After 10 years of talks, the European Union (EU), the Economic Community of West African States (ECOWAS), the West African Economic and Monetary Union (UEMOA) and 16 West African countries concluded the negotiations for an economic partnership agreement. The agreement has been presented to political decision-makers in the EU and West Africa for signature and ratification. u ECOWAS and the United States signed a trade and investment framework agreement on August 5, 2014. The agreement is aimed at expanding trade and investment between the United States and the 15 ECOWAS member countries. u The bilateral investment treaty between Mozambique and Japan entered into force on August 29, 2014. Signed in June 2013, it is the first such treaty that Japan has concluded with a Sub-Saharan African country and the second that Japan has concluded on the continent (the first being with Egypt in 1977). u The termination of the bilateral investment treaty between South Africa and Germany came into effect on October 22, 2014, following South Africa’s unilateral denouncement of the treaty in October 2013. The treaty will remain in force for a period of 20 years with respect to investments made prior to the date of termination. Critical Times to Consult Counsel INVESTORS: u At the outset – when structuring an investment and negotiating project contracts u As soon as difficulties arise – when facing operational, regulatory or other issues in the host country u In discussions with the host country – when trying to resolve difficulties amicably u Before commencing a claim – when deciding whether and how to make a claim against the host country u In post-award proceedings – when seeking to collect on an award or reach a settlement with the host country u In getting the business relationship back on track – when moving forward in the wake of a dispute STATES: u At the outset – when negotiating and drafting investment treaties and national investment laws u In the pre-investment process – when inviting and accepting foreign investment u In the investment phase – when negotiating project contracts u As soon as notice of a dispute is given – when consulting with an investor about a potential investment arbitration claim u Upon receipt of a claim – when formulating an arbitral strategy in the initial stages of a dispute u In implementing or challenging an award – when considering next steps after the arbitration concludes PAGE 7 bryancave.com | A Global Law Firm BRYAN CAVE INTERNATIONAL ARBITRATION TEAM Authors Emma Lindsay Counsel, New York +1 212 541 2121 email@example.com Daniel Lewkowicz Intern,* New York +1 212 541 1254 firstname.lastname@example.org *admission pending in New York Additional Contacts Pedro Martinez-Fraga Partner, Miami +1 786 322 7373 email@example.com Co-Leader of the International Arbitration Team Rodney Page Partner, Washington, D.C. +1 202 508 6002 firstname.lastname@example.org Co-Leader of the International Arbitration Team Constantin Achillas Partner, Paris +33 1 44 17 77 34 email@example.com Nigel Binnersley Partner, Hong Kong +852 3588 9110 firstname.lastname@example.org Mathew Rea Partner, London +44 (0)20 3207 1203 email@example.com About Our Team Bryan Cave’s International Arbitration Team provides a comprehensive service to clients around the world embracing all aspects of international dispute resolution. We handle a broad range of matters, including international commercial and investment arbitration, public international law and complex commercial litigation, for a wide variety of business, financial, institutional and individual clients, including publicly-held multinational corporations, large and mid-sized privately-held companies, partnerships and emerging enterprises. We also advise sovereign clients with regard to their particular complex legal, regulatory and commercial challenges. Our team features many practitioners who serve as both counsel and arbitrator and draws on the full range of subject-matter and industry experience across the firm, including in construction, energy, finance, manufacturing, mining and natural resources, pharmaceuticals, technology, telecommunications, tourism, transportation and many other sectors. Combining the common law and civil law traditions, members of our team are admitted to practice in many jurisdictions across the globe and speak a variety of languages. In addition, we work with an established network of law firm “friends” and colleagues in places where we do not have a direct presence, ensuring our strong market knowledge and quality of service on matters worldwide. This review is published for the clients and friends of Bryan Cave LLP. The statements made in this publication are for general educational purposes only. Information contained herein is not to be considered as legal advice or a legal opinion on any specific facts or circumstances. You are urged to seek the advice of your legal counsel if you have any specific questions as to the application of the law. The receipt of this publication does not create an attorney-client relationship between you and Bryan Cave LLP. © 2015 Bryan Cave LLP. All Rights Reserved.