In August 2015, the Arbitration Foundation of Southern Africa (AFSA) announced the establishment of the China-Africa Joint International Arbitration Centre (CAJAC), which will serve to address the resolution of commercial disputes between Chinese and African parties. The CAJAC was created as a result of the agreement reached by AFSA, Africa ADR (AFSA's external arm), the Association of Arbitrators and the Shanghai International Trade Arbitration Centre after more than two years of negotiations and collaboration between the Chinese and South African delegations.
The Beijing Consensus, calling for a joint dispute resolution framework to be developed between China and Africa, was signed in June 2015 by a wide range of Chinese trade commissions, arbitral bodies and universities, as well as delegates from Africa. It was followed by the signing of a similar consensus in Johannesburg in August 2015, resulting in the establishment of CAJAC.
The reasons for the creation of CAJAC are many. China is one of the largest sources of investment into Africa and one of South Africa's largest trading partners. Due to the increasing trade and investment cooperation between China and African countries, including South Africa, there has been a growing need for a neutral and cost-effective mechanism for resolving commercial disputes between African and Chinese parties.
Prior to the establishment of CAJAC, the African and Chinese parties to the dispute could either pursue their claims in local courts, submit their dispute for arbitration locally in China or South Africa or one of the international arbitration forums, for example the ICC, the International Court of Arbitration or the London Court of International Arbitration, or resolve their disputes via ad-hoc arbitration. The available alternatives to resolve commercial disputes, however, have their drawbacks, including, amongst others, concerns related to inefficiency, impracticality and fear of prejudice, regulatory obstacles related to local arbitration or litigation, as well as the high costs of international arbitration. Although resolution of disputes at the main international arbitration centres is well established, it has not always been considered the most effective or cost-effective solution for the Chinese and South African parties.
CAJAC aims to address these problems. It will have an arbitral committee consisting of arbitrators nominated by both China and South Africa, from which the parties to the dispute can appoint arbitrators for the purposes of resolving their disputes. CAJAC Johannesburg is expected to operate as a fully administered arbitration centre initially using arbitration rules of Africa ADR until the standard CAJAC arbitration rules are developed in conjunction with CAJAC Shanghai.
It is intended that CAJAC will operate in Johannesburg and Shanghai and will provide dispute resolution services that will include arbitration, mediation and conciliation. Disputes arising out of Chinese business activities in Africa will be resolved in Johannesburg and the disputes arising out of African business activities in China will be resolved in Shanghai. CAJAC Johannesburg is currently officially hearing matters and is in the process of setting up numerous committees in order to advance the initiative.
It should also be noted that in South Africa adoption of the new International Arbitration Act is expected in 2016. The South African Law Commission has recommended adoption of the UNCITRAL Model Law in South Africa for international commercial arbitrations, which would significantly modernise the South African arbitration legal framework.
Generally, adoption of the new International Arbitration Act as well as the creation of CAJAC is regarded as a positive development for South Africa, allowing it to enter an international arbitration stage and become an important international arbitration hub on the African continent.
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