It is time for a shakeup in international arbitration. For too long, Africa and other regions of the world have punched below their weight on matters of continental and international arbitration. People like Senegalese Professor Makane Moïse Mbengue of the University of Geneva think it’s time things changed.
“There are more and more voices among nations that are calling for better geographic diversity in arbitration,” Prof Makane told Justice Hub’s Janet Anderson during an interview on the sidelines of the I Polyphonic Day on International Justice recently in The Hague.
Prof Makane says Africa needs a place at the table in international arbitration and is encouraged by what’s already being done to make the needed changes.
Justice Hub: The Permanent Court of Arbitration (PCA) exists as one of the lesser known mechanisms that can be used by states and private companies to solve disputes peacefully. Is the PCA functioning well?
Prof Makane: I think that today there is a consensus at the international level on the need to rethink certain dispute settlement mechanisms and in particular, investment arbitration. There has been a lot of criticism, justified and not justified sometimes, with respect to what we call Investor-State Dispute Settlement – ISDS.
Justice Hub: What does that mean – ISDS?
ISDS means the possibility for a foreign investor – a private company for instance – to initiate a dispute against a state. That’s why it is called “Investor-State Dispute Settlement”.
Justice Hub: Is it the case that normally the state has all the power and that’s why it can be difficult for an investor?
Most of the time, apart from the exception of human rights courts, dispute settlement at the international level occurs between states. Investment agreements and in particular bilateral investment agreements contain provisions allowing investors to initiate a dispute against a host state when they have a dispute with that state. So if you’re a Dutch investor investing in Senegal and if it happens that there is a bilateral investment treaty (BIT) between the Netherlands and Senegal, then as a Dutch investor you can initiate arbitration against that Senegal. So it is usually the investor who is initiating the dispute.
The most known avenue for investment arbitration is the ICSID (International Centre for Settlement of Investment Disputes) which is based in Washington DC. ICSID is part of the World Bank group.
The Hague-based PCA has recently become very well known too and it is used as an avenue for investment arbitration. That’s why when you talk about ISDS nowadays, you also cover the PCA.
Justice Hub: Is the PCA very active in Africa?
The PCA has some centres in Africa. They have one centre in Mauritius for example. There is a project to to conclude an agreement as well with the African Union (AU) so that the PCA can have a centre in Addis Ababa which hosts the AU’s headquarters. The PCA is developing the idea of having some sort of decentralised centres in Africa which is actually a very good idea.
Justice Hub: Why is having bases in Africa a good idea?
Because many African countries and also negotiators of investment agreements believe that it is better to solve disputes in Africa. Investment disputes raise several local concerns, local specificities and cultural concerns. There is a belief that a settlement in Africa would better take into account the African concerns. This idea of having dispute settlement centres in Africa is very welcome today among the negotiators.
Justice Hub: Why not have an African started, an African grown, an African-owned arbitration institution?
Well, last year we finalised the negotiations of a new investment legal instrument called the Pan-African Investment Code. It is supposed to be the new model for investment agreements at the African level. It was a project of the African Union.
What we have inserted there in the Pan-African investment code is that when investment arbitration occurs, it must be settled within dispute resolution centres in Africa. We also mentioned that it could as well be the PCA centres in Africa. So there is actually a trend that says “let’s opt for investment arbitration, let’s opt for ISDS but let’s have it in Africa.”
The other concern is not just to localise in Africa. Many countries and negotiators believe as well that there is a problem of diversity in investment arbitration today. If you pay attention, you will realise that most of the arbitrators come from certain countries and certain parts of the world – that is the developed world. Yet, many of the disputes come from another part of the world – the developing world. There are more and more voices among nations that are calling for better geographic diversity in arbitration.
Having disputes being settled in Africa might allow for African arbitrators to be appointed more often. It might maybe create a change of mentality that since the disputes are happening in Africa, there might be more effort to find arbitrators from Africa.
Justice Hub: What difference would that make to the actual result?
I want to clarify something. Having investment disputes being settled in Africa doesn’t mean that arbitrators from other parts of the world should not be involved in the settlement of investment disputes involving African states. When I talk about diversity, I am really talking about more participation from different arbitrators from different parts of the world. The idea is not to exclude any part of the world.
So what’s going to be the impact of this? I think that law is law, of course. But in many of those investment disputes, you have certain peculiarities. What happens in Africa is maybe different from what happens in the European, North American or Latin American contexts in respect of investment disputes. Therefore, it is very important to have in mind these particular concerns that are proper to a region when settling investment disputes.
I don’t believe that the law operates in a vacuum. When states in Africa today take certain measures regarding natural resources or mining, there are reasons for them to take those measures. I think it’s important therefore for the arbitrators to be sensitive to the particular contexts of those countries which might be very much different from contexts of other countries.
Photo: Janet Anderson/ Justice Hub