Isabelle Michou of Herbert Smith Freehills discusses the emerging seats of arbitration in Africa.
The market for legal disputes is flourishing in many African states and French lawyers have been flocking to the continent to capitalise, benefitting from the rights of audience they have in many Francophone countries. Despite being able to argue cases in court however, they often team up with local counsel in the relevant country.
Isabelle Michou, a Paris-based partner with international law firm Herbert Smith Freehills LLP, points out that in litigation “international clients therefore keep working with the large international firms they are more familiar with while getting access to local counsel with the most appropriate connections with the local bar, so as to have the most efficient team in place”.
However, arbitration is “entirely different”, as although these projects are in Africa, any international party involved in a dispute will usually seek a seat in Europe, due to the level of intervention by African courts, and deal with international firms operating outside of the continent.
The seat of arbitration is key to the legal framework of an arbitration case, especially in regards to the constitution of the arbitral tribunal. Very often companies will first propose an ICC or LCIA arbitration seat in Geneva, Paris or London, “almost to avoid Africa”, says Michou, although she adds that there have been increasing attempts by African parties to get a seat in the African host country: “This increasing trend is true with contracts concluded with states or state entities – for example, Nigeria will try to have Lagos as a seat of arbitration. The seat of arbitration therefore becomes a negotiation tool.”
THE NEXT ARBITRATION HUB?
“There is definitely an appetite for arbitration in Africa”, Michou says, emphasising that “everything is in place to make Africa an important place for arbitration”.
She notes that the number of ICC arbitrations is increasing, often the African party is a state from sub Saharan Africa – this is also reflected in the growth of arbitral institutions locally. One of these hubs is Mauritius, which is promoting itself as a seat of arbitration. It has the advantage of being perceived as neutral which is very important, states Michou.
Parties and practitioners, particularly from Nigeria, are showing considerable interest in the Mauritius International Arbitration Centre Limited (MIAC), a trend that is only increasing with Asian investment into Africa, she says: “Mauritius is well placed as a venue for arbitration – it could offer a good option for those parties who want a seat in Africa”
The fact that MIAC is linked to the London Court of International Arbitration (LCIA) – an institution with a strong track record – places it in a stronger position than other regional and national institutions in Africa, Michou adds, comparing it to emerging seats ofarbitration in Casablanca or the CCJA (the Common Court of Justice and Arbitration of the Organization for the Harmonization of Corporate Law in Africa (OHADA)). She points out that many of these institutions “look good on paper but they may lack an established track record to be considered as an attractive option, they may need time to build up the necessary reputation and resources – they have the instruments in place but need to see how it works in practice”.
The LCIA link also makes it more attractive, with an increasing number of cases and dedicated judges trained in international arbitration to provide local support if it is needed.
Despite the headway made by Mauritius, it is not the only venue looking to build up its reputation as an alternative seat on the African continent. Many local companies in OHADA jurisdictions now provide for arbitration before the CCJA, although Michou warns that the process is “not always good enough” at this stage. The CCJA administers cases and has its own arbitration rules similar to those of the ICC, but the dual role the CCJA plays as an arbitral institution and as a court dealing with setting aside applications, may pose a problem as a potential conflict of interest.
“If you choose the CCJA arbitration as an institution, you can in theory choose a seat in, for example, Geneva, but because of its dual role you must go before CCJA. This is a problem if you have a seat in Paris, as you may have parallel proceedings to set aside the award,” Michou states, adding that in practice, there is “no choice but to choose a seat within an OHADA country – but over time this will change as [the CCJA] begins to build the necessary track record”.
By: Isabelle Michou of Herbert Smith Freehills