United We Arbitrate: Dedicated China-Africa Arbitration Bodies Are Bypassing International Courts to Settle Commercial Disputes

By Sarkar, Sudeshna | African Business, May 2017 | Go to article overview

United We Arbitrate: Dedicated China-Africa Arbitration Bodies Are Bypassing International Courts to Settle Commercial Disputes


Sarkar, Sudeshna, African Business


The plight of Chinese company Addax Petroleum, which became locked in court battles over its operations in Gabon, is a good example of what triggered a new and growing Sino-African legal movement.

In 2013, after the Gabonese government took back an oilfield it had licensed to Addax, alleging breach of contract, the Chinese company went to the International Court of Arbitration in Paris, seeking damages. The court's first ruling went against Addax, which reportedly paid the Gabonese government over $400m to settle the dispute.

With China now Africa's largest trading partner and Chinese companies' burgeoning investments in Africa, commercial disputes are inevitably on the increase. This, coupled with dissatisfaction at the established international tribunes, has led to the opening of dedicated arbitration centres resolving trade disputes between Chinese and African companies on their own soils.

"In the past, businesses went to Europe to resolve cross-border disputes," says Gu Zhaomin, director general of the international department of China Law Society (CLS), the official organisation of Chinese legal professionals that advises the Chinese government on legal issues. "But there were complaints that it took too long to do the arbitration in [Europe] and it also cost a lot."

In November 2015 the first China-Africa Joint Arbitration Centres (CAJACs) were established in Johannesburg and Shanghai. This year, the legal cooperation has gathered more steam, with CAJACs opening in Nairobi, Beijing and Shenzhen in March. Supported by the top state authorities, the CAJACs are a kind of South-South alliance in a post-colonial era where developing economies are asserting their interests and rights.

Speaking at a conference in Beijing to inaugurate the Nairobi and Beijing centres, Michael David Ku per, president of the Johannesburg-based Arbitration Foundation of Southern Africa, said that the CAJAC project has been endorsed by 50 African heads of state and the head of state of China.

"They have all seen in [it] the appropriate vehicle for the resolution of disputes that may arise between China and Africa," he said. "At the heart of that vision is the determination that disputes between China and Africa will now be decided by institutions which represent China and Africa and by arbitrators who are drawn from China and Africa."

He said that the existing panel of CAJAC arbitrators--comprising 20 lead arbitrators each from CAJAC Johannesburg and CAJAC Shanghai--would now be extended to include an equal number nominated by the three new CAJACs. Besides acting as arbitrators, the CAJACs would also function as business advisers.

"Africa is not one country," Kuper said. "It is [54] different ones with very different infrastructures, philosophies, methods of governance and regulation. So when business decides to cross borders and develop new initiatives overseas, it is imperative that this is done on the basis of knowledge of the new market, the new legal system, the [new] business community and the environment in which the business community operates. Ignorance will cause you surprise because it will not allow you to assess the legal risk correctly."

To do business in South Africa, for example, he pointed out, the foreign investor should know about the country's strong labour unions and labour laws, which control all hiring and firing. Besides, projects must create "special vehicles" to benefit the local deprived population. …

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