The rise in global trade and the expansion of technology has continued to connect East Africa with the rest of the world. The local practitioners have responded to opportunities presented by globalization by setting up institutional mechanisms which could help them exploit the benefits of increased trade activities. An increasing number of lawyers from East Africa are recognized yearly by global leaders like Chambers Global and Legal500 as experts in international arbitration, giving hope that the growth in this area of practice is visible to the world. Quite recently, East African lawyers made headlines in scoring huge gains at the International Centre for Settlement of Investment Disputes (ICSID) and other international arbitration fora.
Within this region, we have at least four prominent international arbitration centers – the East African Court of Justice, Kigali International Arbitration Centre, Nairobi International Arbitration Centre, and ICAMEK in Kampala. The East African Court of Justice has a special jurisdiction, outside treaty interpretation, to sit as an arbitration centre.
It is not in doubt that the East African Community now offers a conducive environment for the practice of international arbitration. The various international arbitration centers have set up elaborate rules which are benchmarked with their global peers. Beyond the rules, the centers have set up world-class hearing facilities capable of hosting any kind of international proceedings.
To complement the facilities and rules, local courts have firmly established judicial precedents recognizing awards made by international arbitration tribunals. The consistency in court decisions has fortified East Africa as an international arbitration hub, and promises to present better opportunities for investors flocking the region.
East African states are increasingly finding themselves involved in international disputes with investors. The number of investor-state disputes involving East African states has grown over the years. Most of these disputes are handled at ICSID and at the International Chamber of Commerce (ICC) Court of Arbitration, while a good number of the cases are also handled at the London Court of International Arbitration. At the ICSID, for instance, cases involving Sub-Saharan countries (including East African Community states) recently accounted for at least 25% of cases handled by the body.
To appreciate the involvement of the region in investor-state arbitrations, a glance at the records at ICSID reveals that about 18 cases have been filed in recent times against the East African Community states. These matters mainly originated from the mining and energy sectors. Of these matters, 6 are against the Republic of Tanzania, 3 against the Republic of Kenya, 3 against the Republic of Uganda, 4 against the Republic of Burundi, and 1 each against the Republic of Rwanda and the Republic of South Sudan.
In recent times , the number of cases submitted for administrative actions by the ICC Court of Arbitration set a new record high. Out of these, Sub-Saharan Africa recorded a rise of at least 50% in new cases submitted to the ICC. There is no doubt that a significant number of these cases originated in or involved parties from the East African Community.
Opportunities
The East African Community has grown into an important economic hub. We are witnessing increasing competition among global investors in the extractive industry, infrastructure, energy and in various service industries. With the increase in trade comes the need to ensure acceptable dispute resolution mechanisms. International arbitration has become the dispute resolution method of choice for many international businessmen, due to its notable advantages.
Local lawyers have the best opportunity to act in international arbitration matters involving international business deals performed locally. This is mainly due to their understanding of the local circumstances and ability to quickly collect evidence which is the backbone of the arbitral proceedings. To grasp these opportunities local lawyers need to continuously building their capacities and seeking out the opportunities right at the contract formulation stage. It is also safe to say that regional arbitration mechanisms are best placed to handle disputes originating locally, as there is a need to focus on fairness and avoid bias by choosing the appropriate forum.
Of the disputes involving East African states at ICSID, representation by local counsel is usually restricted to providing local content, they are always shadowed by overseas counsel often preferred by governments. The old adage goes, do not judge a fish by its inability to climb a tree. Again, do not judge a jumbo by its inability to swim in an ocean. Our local arbitration experts have been unfairly judged based on standards extraneous to us, (standards which bear no resemblance to those of an appropriate counsel)while ignoring the real standards upon which decisions on who to choose as counsel should be based. Our governments and in-house counsel are the main culprits.
While one would expect that East African lawyers are actively involved in representing their states in these proceedings, in reality there is low involvement from among our membership. Sadly, even our own states appoint their legal representatives and tribunal members from further afield. Even in situations where local experts are involved, they serve to provide local content to their foreign counterparts. The situation obtaining today has caused unfair leverage to our overseas counterparts who continue to get exposure and skills at the expense of the local lawyers. This imbalance could be addressed by varying current policies to empower local experts to drive the cases while seeking assistance of their overseas counterparts on a needs basis. The common practice by our governments and corporations preferring overseas counsel also sees them prefer overseas seats of arbitration. This is not surprising. While what follows here may seem unfair to most hardworking and honest officers in the relevant positions, the other truth is that corruption and greed has played a huge part in undermining both local experts and regional institutions in the area of arbitration. Short-term motivations like international flights, opportunities to shop in polished malls abroad, and overseas allowances have played a huge role in undermining local and regional arbitration resources.
The growth of Sino-African trade with East African states and businessmen has presented an opportunity which local lawyers should quickly unlock for their benefit. The launch of Belt and Road Initiative by the Chinese government has seen a sharp rise in involvement of Chinese corporations in large-scale infrastructural investments in East Africa. In the last half of the current decade, the Chinese investment in Africa has grown by nearly 100% compared to the 5 years previous. At the same time there is heightened interest by the USA through the newly featured Kenya-USA Free Trade Agreement, while the EU sees more opportunities for investing in the region. There is also marked growth of domestic industries. There is need for the legal profession in East Africa to move with speed and address the unique business needs of these relationships and exploit the region’s easily accessible international arbitration facilities as dispute resolution centers.
Challenges
Paradoxically, the increase in opportunities for international arbitration in East Africa has not translated into significant excitement in the trade-in-legal services market in the region. The legal practitioners have not surmounted the challenges which face international arbitration in the region thus inhibiting their capacities to fully realize the benefits of international arbitration. Amongst the numerous challenges we face as a region, the following are significant:
Lack of synergy among international arbitration bodies in the region – While the existence of the multiple institutions in themselves is an indication to the world the East Africa is a hub of international arbitration, absence of synergy between them has served to undermine their abilities to effectively realize their objectives. I look forward to a day when these institutions will forge a common framework for collaboration to complement each other. Such collaboration will afford the international arbitration centers a joint marketing front which enables them make better use of their existing capacities.
Lack of synergy among training institutions – Legal education providers in the East African Community have not forged a collaborative framework to leverage on their abilities to handle emerging areas of practice which, paradoxically, generate major international arbitration briefs. If the various legal education trainers in the region forged a common working relationship they could present a viable front through which the region could partner with overseas experts to provide the necessary training to local people. This could help the locals obtain the much-sought skills at affordable costs given the power of a common front and the economies of scale resulting from the unity.
Limited in-depth knowledge of key sectors – Recent trends show that international arbitration briefs arise from the extractive industries, oil and gas, maritime, and international trade.. The Emergence of international arbitration as the dispute resolution method of choice has gradually exposed the Achilles heels of many legal practitioners in East Africa; that they are not adequately equipped to compete for businesses in the international market. Our centers for legal education have not fully integrated studies in the above sectors into the curriculum and as such, levels of training in these key areas are limited. Even among in-house counsel in the region the same issue arises capacity to handle international arbitration right from contract formulation stage is diminished by the lack of in-depth knowledgein these key subject areas. It is not surprising that most international contracts made and performed locally contain international arbitration clauses providing for rules and seats across the oceans. While this situation could be attributed to many factors, lack of adequate capacity to negotiate for consideration of our homegrown international arbitration centers ranks high among them.
Government policies – Even with increased attempt to promote international arbitration as an area of legal practice in East Africa, the slow response by the respective states to make policies addressing needs of legal practitioners has served to slow the pace of progress. It is a fact that no state in the world has ever prospered by undermining its own professionals. While there have been marked efforts by our governments to promote conducive environment for trade, a lot more remains to be done if legal practitioners in the region hope to realize adequately the benefits of international arbitration. Our governments still prefer to send international arbitration briefs to firms residing outside the continent. Even though this could be justified on the basis that there is limited capacity locally, the best way to address this is to mandate that the local firms partner with an external firm with capacity whenever new businesses arise. Further, the policies could require that the local partners be trained on specific aspects of the brief as a condition of award. This is the surest way to build the region’s capacity; by doing the actual work, with the assistance of our colleagues from beyond our borders who are already well equipped in the subject.
Moving Forward - We could easily address the issue of multiplicity of institutional roles if we negotiated a collaboration framework under which the role of branding and marketing the centers, among other areas, could be fronted jointly by key regional players. This will not only ensure maximization on resources but also present to the world a united front which can compete effectively with peers like Kuala Lumpur International Arbitration Centre.
The East Africa Law Society, presents the single most important opportunity for marketing the region’s international arbitration centers to the world. Leveraging on its global reach and reputation amongst potential clientele in public and private spaces, The East African Law Society provides an effective front both in the short term and long-term,creating a lasting brand for the centers.
The deficiencies in knowledge and exposure in the subject areas specific to international arbitration briefs can be addressed by reviewing legal education curriculum and recognizing those areas as subjects worth administering right from the foundation of law training. Increased exposure to these areas through seminars, conferences and online trainings could also serve to shore up capacity among the region’s eager professional bodies.
In addition, there is need to debate government policy in the award of professional briefs particularly in international arbitration. The discourse should be aimed at ensuring that the policies are tailored to promote, and not to stifle, international arbitration among the local professionals and institutions. The regional mechanisms, including the regional courts, should be given priority in allocation of arbitration briefs. In-house counsel should be motivated to ensure that at contract negotiation stages, regional institutions are indicated as the seats of dispute resolution.
Finally, there is need to address the bias concern. Regional courts are empanelled by the states, and so are international arbitration systems like the ICSID. There is still room for suspecting bias among regional judges being made to serve as arbitrators. This is even more pronounced when these judges also retain active roles as judicial officers in their respective countries. In the case of EACJ, for instance, a number of judges are also active as judges back at their home states. While they are competent and among the highest qualified arbitrators one will come across in the region, there is the lingering question of how they deal with the complex processes of award recognition, challenge or enforcement. These are questions that inevitably find their way to the domestic courts. The same judges who sat as arbitrators have their peers at home sitting to look at their decisions. In future, there may be need to set up dedicated arbitration panels at EACJ, not manned by judges retaining roles in domestic courts, but by judges whose dedication is purely to the regional court on full time basis.
{The original version of this paper was presented at the 2020 Chartered Intistute of Arbitrators’ Conference}
Hanningtone is a founding Partner of ALP East Africa, a regional law practice with cross-border reach in Kenya, Uganda, Tanzania and South Sudan. He is a former CEO of the East Africa Law Society. He can be reached at hamol@alp-ea.com