10 January 2022

Arbitration In Southern Africa – Time For Korean Companies To Consider Alternative Arbitration Venues?

For years now, the African continent has seemed destined for bigger and better things.
South Korea Litigation, Mediation & Arbitration
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For years now, the African continent has seemed destined for bigger and better things. With a massive landmass consisting of 54 countries and boasting some of the best natural resources on the planet, coupled with a populace of almost 1.3 billion people (projected to be 2.5 billion by 2050), I believe Africa is set to be the next strategic region for investment and development.

Africa today accounts for around 18% of the world's population but only about 3% of the global GDP. This highlights the undoubted potential in the region but also attests to the failure to tap into the continent's development potential. One of the major reasons for this, and particularly from the perspective of South Korean companies, is largely based on the perceived volatility in the region when it comes to protection of investments via legislation which is supported by the courts and administrative bodies. To thus achieve its full potential, there needs to be significant policy reforms and trade facilitation measures across Africa.

The good news however, which is an excellent move in the right direction, is that African Continental Free Trade Area ("AfCTFA") has been implemented and trade barriers started to be lifted from the 1st of January 2021. AfCTFA has been ratified by 38 of the 54 signatories thereof with its objective to create a single market for goods and services and to strengthen the economic integration of Africa. The implementation of AfCTFA will lead to an increase in volume of trade not only continentally but also internationally. With increased trade and more foreign direct investment, there will naturally be an increase in international disputes.

African Arbitration Market

International arbitration involving African parties has in recent years seen a significant increase in the use of international arbitration to resolve disputes.1 According to the International Chamber of Commerce, 125 parties from sub-Saharan Africa accounted for approximately 5 percent of all parties in its 2020 caseload, with Nigerian (22) and Egyptian (13) parties taking the lead.2 In addition, when it came to appointment of sub-Saharan African arbitrators only 1.2% of the total arbitrators appointed came from the region. The most commonly selected lex contractus was English law followed by US states, Swiss law and French law.

The 2020 caseload for the London Court of International Arbitration shows that African parties were involved in almost 12 percent of the cases with Nigeria and Mauritius being the countries taking the lead. With regards to the appointment of arbitrators, African arbitrators accounted for just over 2 percent of appointments. The most commonly selected lex contractus was English law followed by German law.3

For the Korean Commercial Arbitration Board, 2.7 percent of matters referred in 2020 were African parties with South African parties making up 1.4 percent.4  There were unfortunately no arbitrators appointed who were from Africa.

This shows that Africa-related caseloads for arbitral institutions are on the rise and with the AfCFTA now gaining traction, there is bound to be an increase in Africa-related arbitrations as trade and investment increase.

Overlooked Value of African Seats for Arbitration

South Korean investors usually inquire about the laws, culture, nature and political environment of the host State to ensure that its environment is suitable for their investments and that their investments will be protected. This is important to Korean investors because of sovereign risk insurance, such as expropriation or situations where a State's local judiciary disputes an arbitral tribunal's jurisdiction on the grounds that the dispute should be resolved by the local judiciary.

While the resolution of disputes in developed seats and under international conventions has its own advantages, selecting African seats for the resolution of African disputes has its benefits. Least of which allows for relatively easy enforcement of the host State's assets in situations where most of the assets are located in its local territories. Under AfCTFA, the agreement under the Protocol on Rules and Procedures on the Settlement of Disputes ("Protocol") offers two routes for settling disputes. The First is mediation, conciliation, diplomatic processes and arbitration. The second is an initial diplomatic consultation, calling on a panel to deal with unresolved issues, or a body that can give final judgment on the issues if this fails. Under Article 27 of the Protocol, arbitration awards shall be enforced in accordance with the provisions of Articles 24 and 25 of the Protocol mutatis mutandis.

This is quite important in that Korea has signed Bilateral Investment Treaties with a number of African countries (Kenya, Cameroon, Zimbabwe, Rwanda, Gabon, Mauritius, Congo, Libya, Mauritania, Burkina Faso, Algeria, Morocco, Tanzania, Nigeria, Egypt, South Africa, Congo (Democratic Republic), Senegal, Tunisia)5. This would give an extra protective layer in terms of the most-favoured-nations clause which should result in the enforcement of arbitration awards in a more secure and effective manner should there ever be a host State reneging on their obligations.

More importantly, and as highlighted in a recent panel discussion on African-Chinese Disputes hosted by Fangda Partners, ASAFO and CO and Delos Dispute Resolution, it was mentioned that selecting African seats for the resolution of Africa-related disputes presents a unique opportunity to aid development of the host State's international and arbitration laws. This will allow African courts, when determining arbitration-related applications, to analyze, examine and review their arbitration laws in relation to local and international aspects that the arbitration might raise. This has the potential to improve African States' jurisprudence on international law and arbitration related matters, and provide opportunities to update arbitration laws in order to ensure that statutes are up-to-date with the constant developments in international arbitration. With the view to the future, and the expected increase in Africa-related arbitrations, this would be a necessary and important step in the development of arbitration in the region.

Southern African Arbitration Developments

The Arbitration Foundation of Southern Africa ("AFSA") has released revised arbitration rules, which came into force on 1 June 2021. The 2021 rules have been introduced to account for the growing popularity of arbitration in South Africa and across the African continent, and to reflect current best practice around the world for arbitration procedure, to position AFSA at the leading edge of arbitration in Africa. AFSA is a private dispute resolution authority which manages and administers the confidential resolution of a wide-range of local and international disputes by way of mediation, adjudication, arbitration and related processes. AFSA's head office is in Sandton, Johannesburg, with branch offices in Cape Town, Pretoria, Durban and Mthatha.6 According to the 2020 survey respondents in the School of Oriental and African Studies Arbitration in Africa Survey 2020 Report, AFSA is the leading arbitral institute in Africa with just over 4,000 cases heard under its own rules.7

The amendments to AFSA rules include the following:

  • These new rules form part of a wider objective to revitalise arbitration in South Africa which started in 2017 with the adoption of the International Arbitration Act, replacing the 1965 Arbitration Act, which incorporated international legislative best practice (i.e. the UNCITRAL model law) into South Africa's domestic law.
  • One of the most notable changes is the modernisation of AFSA's operations, by introducing the AFSA Court and a secretariat. The role of the court is to oversee the appointment of arbitrators, to deal with the arbitrator challenges and issues of jurisdiction. It is assisted by a secretariat which is responsible for the day-to-day case management. This reflects a similar approach adopted by the main arbitration institutions across the world.
  • Expedited procedures, the appointment of an emergency arbitrator, the arbitral tribunal's power to dismiss a claim early, the arbitral tribunal's authority to conduct a virtual hearing, the availability for costs and rules governing third-party funding. These features are in line with the latest revisions of the LCIA rules and the ICC rules and reflect current arbitration practices.

Traditionally, South African courts are perceived as being supportive of international arbitration. This has furthermore been enhanced by the recent amendments to the AFSA rules and South Africa's arbitration laws in 2017. In addition, South African law is a hybrid between the Roman-Dutch system (civil law) and the English system (common law). The Roman-Dutch common law is followed in South African contract law, law of delict (tort), law of persons, law of things, family law etc. This influence can be mostly seen in substantive private law. English law influence is most apparent in procedural aspects of the legal system and methods of adjudication. South Africa follows English law in civil procedure, company law, constitutional law and the law of evidence. Because of its well-established and rich legal jurisprudence, South African law (especially civil and common law elements) also forms the legal system basis in Botswana, Lesotho, Namibia, Swaziland and Zimbabwe. This adds even more appeal to the use of South Africa as the seat for Africa-related arbitrations.

Break the Shackles

With the amazing array of companies that Korea boasts, particularly in the important sectors of infrastructure and energy, IT and tech, bio-tech and manufacturing, it seems only logical that their involvement and investment into Southern Africa will increase significantly over the next few years. However, to facilitate this, requires both the continued reform of legislation and law in Southern Africa to ensure the protection of Korean investments together with Korean companies breaking the shackles of past reservations and embracing the unlimited potential of major development in Africa which lies at the cusp of its reinvention and blossoming future. A good start thus, would be to use African arbitration venues for Africa-related projects and trust in the systems in place which have developed significantly and offer the same services and as any of the other traditional arbitration centres. 

Southern Africa is sending a clear and decisive message to foreign and domestic investors in that it is open for business and is willing to commit to international arbitration standards which will be based on rigorous enforcement and supported by active discussions and engagement between all parties.

In closing, there is an old African proverb that states, "If you want to know the end, look at the beginning."  It is time for us to look at this as the beginning of African arbitration being trusted and utilised to fulfil the needs to all users in Africa, particularly South Korean companies and investors who are ready to take the journey together.


1. Queen Mary University London, 2019 International Arbitration Survey: International Construction Disputes, pp. 8-9; Queen Mary University London, 2018 International Arbitration Survey: The Evolution of International Arbitration, p. 2. (The 2018 survey was undertaken in collaboration with White & Case; the 2019 focuses particularly on construction disputes.)

2. ICC Dispute Resolution 2020 Statistics

3. LCIA 2020 Annual Casework Report

4. Korean Commercial Arbitration Board Annual Report 2020

5. UNCTAD Investment Policy Hub



The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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