Re-localization of arbitration in Africa: the Rwandan experience
Recently, during ICCA congress 2016 held in Mauritius, In the keynote speech published by GAR on 11th May 2016, Justice Yussuf Abdulqawi (a Somali Judge and Vice President of international Court of Justice at the Hague) highlighted that international arbitration’s contribution to the rule of law in Africa is being hindered by the reluctance of parties to use local arbitral institutions or appoint African arbitrators.He quoted remarks made by the past ICCA president Jan Paulsson in 1987 that:
"when the entire centre of gravity of an investment contract from its negotiation to its performance is in an African country and has resulted in thecreation of an enterprise whose physical plant, corporate records and personnel are located in that country, the concept of arbitration in Europe or North America may be not only artificial but truly burdensome”.
As you can observe, Prof. Jan Paulsson remarks date from 1987 which is almost 30 years but still the delocalization of the proceedings is still observed with an estimate of more than 95 per cent of arbitrationsinvolving an African party take place outside the continent. The impact of delocalization is even beyond the question of holding back the contribution of international arbitration to the rule of law in Africa. I strongly believe that there is much more including the economic losses from Africa’s law firms and different other industries since arbitration is not only a legal form of justice.
Back home after the ICCA conference, considering the challenges highlighted by Justice Yussuf in his keynote speech, I was interested to crosscheck what has been done in Rwanda to assess whether it is still dark as in many African countries or some lights have been observed.
Rwanda committed to global standard dispute resolution and positioning Africa seats.
Beyond being the easiest place to do business with its capital city being the cleanest in Africa; Rwanda committed to global standard dispute resolution with much focus on proximity indicated below:
2008: Rwanda Signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
2008: Rwanda passed Arbitration and Conciliation Act 2008 based on UNCITRAL Model law
2012: Launching of Kigali International Arbitration Centre with modern set of Arbitration rules consistent with international best practices and covering all aspects of the arbitral proceedings. Arbitration services under KIAC are very cost effective with a schedule of fees allowing the costs of KIAC arbitrations to be kept in line with the size and the complexity of the cases referred to the Centre. Last month KIAC registered its 36th case among them 5 international cases.
2012: A pro-arbitration set of Supreme Court’s instruction and policy on Enforcement of Awards
2014: Ministerial Instructions setting up Modalities for drafting, Negotiating, Requesting for Opinions, signing and managing Contracts: A ministerial instruction setting model dispute resolution clauses which among other promote use of dispute resolution in contract negotiation involving Public Institutions in Rwanda.
The Ministerial instruction set model dispute resolution clauses based on proximity approach, determine who should be involved in negotiation of complex international contracts with ultimate purpose to avoid pathological dispute resolution clauses in complex international contracts involving Government of Rwanda.
Beyond the Arbitration legal framework in Rwanda
It is not enough to have friendly courts and legal framework for arbitration to be elected as seat or place of hearings. In fact Arbitration is not only a legal concept or a form of justice but an industry which includes many attractive factors such as tourism, Hotels facilities, zero tolerance to corruption, Entry facilities, safety, internet facility, transport.
Beyond the touristic attractions including Mountain Gorilla and National Parks; the improvement in many indicators is positioning Kigali as a hub of international arbitration in Africa and beyond as below indicated:
- Rwanda is the 2nd best performer in Doing Business in Africa (World Bank DB report 2015).
- Rwanda is the least corrupted country in the region (see Corruption Perceptions Index (CPI 2015)
- The Global State of Mind(2013) rank Rwanda as the safest place to leave in the world followed by Georgia, Qatar and Singapore.
- Rwanda is the only African country listed among the Top 10 most efficient Governments in the world (Global Competitiveness Report 2014)
- Rwanda visa policy: No Entry visa application required for all African Pass port holders, Granting visa online within 3 days to nationals of other continents who are not exempted.
- Fastest Broad band in Africa according to the latest statistic of Ookla
- Kigali: the Africa’s cleanest City.
- Rwanda use three official languages (Kinyarwanda, English and French)
- Almost 30 flights destination per day to Europe, Asia and main cities of Africa
The impact in practice on the re-localization of Arbitration to Africa.
While the 95 per cent of arbitrations involving an African party take place outside; in Rwanda, the statistical report of arbitral institution in Rwanda (KIAC) at the end of 2015 indicated the following:
- The hearing of the total 28 cases at the end of the 2015 took place in Kigali-Rwanda.
- Concerning the nationalities of arbitrators; 25/28 are from African continent. In considering the arbitrators involved in the KIAC international arbitration Cases; the statistical report 2015 revealed that out of 5 international arbitration cases parties and the Centre appointed 6/9 from African Continent leaving 3/9 to Western Europe and Asia. Parties to the dispute were from Italy, Rwanda, Kenya, Pakistan, Senegal and South Africa and USA.
There is still a long way to go; the most important is that Economists confirmed that the 21st Century is indeed to be “Africa’s century”. Among what is being said outside Africa is that by 2030, Africa’s top 18 cities could have a combined spending power of $ 1.3 trillion. The unmet infrastructure needs of the continent require “at least $ 46 billion more in spending per year” (McKinsey). With Such economic expansion disputes will arise and a need to think and rethink our dispute resolution mechanisms remain a paramount especially the re-localization of arbitration to Africa by convincing our political leadership and private Sector to push the necessary infrastructures.
Finally, the lesson from the Rwandan experience is hat much remains to be done, nonetheless what we also learned is that change is possible, it is happening, and the mission of everyone especially legal practitioners around the continent is to contribute to make it happen more quickly than in the past.
By NGOGA GAKUBA Thierry
Advocate and Arbitrator at Legal Line Partners and former Registrar of KIAC - Kigali-Rwanda
Tel: +250 788408210