Asia and Africa: Trends in the Developing East-South Dispute Resolution Axis

Transcription

1 Tuesday, 4 November :00 10:30 a.m. Asia and Africa: Trends in the Developing East-South Dispute Resolution Axis Rapporteur: Sharece Thomas, John Marshall Law School, Atlanta, Georgia Program Chair: Joan Grafstein, Esq., JAMS, Atlanta, Georgia First speaker was Thomas R. Snider, a shareholder at Greenberg Traurig LLP in Washington, DC. He practices international arbitration and other forms of complex cross-border dispute resolution involving international and foreign law. He is experienced in state-to-state arbitration, international commercial arbitration, international investment disputes, and U.S. litigation involving the Foreign Sovereign Immunities Act. Among other publications is his Resolving Trans-Boundary Hydroelectric Power Project Disputes: The Indus Waters Kishenganga Arbitration, 17 Int'l Arb. L. Rev. 58, Mr. Snider spoke on arbitration between Asian and African parties. Trade and investment between Asia and Africa have been growing significantly in the last ten years. China has been Africa s largest trade partner since Trade between Africa and China alone reached US$10 billion in 2000, US$100 billion in 2008, and over US$200 billion in Comparatively, trade between the European Union and Africa in 2013 was about US$137 billion, and trade between the United States and Africa that same year was about US$96 billion. In terms of investment, France and the United States are the two largest foreign investors in Africa (as of 2011), followed by Malaysia, China, and India. The rise of trade and investment between Asia and Africa inevitably increase cross-border disputes. International arbitration will likely be the primary mechanism for resolving them. There already was a tacit recognition of this at the Fourth Ministerial Conference of the Forum on China-Africa Cooperation held in Sharm el Sheikh in November The action plan resulting stated that [t]he two sides agreed to encourage the usage of national and regional arbitration organs in resolving 29

2 contractual conflicts between Chinese and African enterprises. On the investor-state side, there are already approximately 100 BITs signed between Asian and African countries. Disputes between African and Asian parties are beginning to emerge in such areas as contracts, (particularly in construction and infrastructure sectors), labor, environmental, maritime, shipping, trademark infringement, and unlawful competition. At least anecdotally, there is a sense among African parties that Asian parties typically prefer to resolve large commercial and investment disputes with their African counterparts through negotiations, relationships, diplomatic channels, or other informal dispute-resolution mechanisms. This seems to be particularly true of Chinese state organs and state-owned entities. African parties appreciate these informal dispute-resolution mechanisms, but there is some evidence that patience may be wearing thin with respect to these approaches on the part of African parties and particularly African governments, due in part to many African parties view that informal dispute resolution is more beneficial to the Asian party. As a result, there may be a growing willingness of African parties to resort to arbitration earlier on in the dispute-resolution process. One recent case is suggestive. In August 2014, Chad announced it was initiating an International Chamber of Commerce (ICC) arbitration against the China National Petroleum Corporation (CNPC), a large Chinese state-owned oil company, in relation to environmental damages allegedly caused by the dumping of excess crude oil by CNPC in pits. As a result of the dumping, Chad cancelled CNPC s licenses to operate at five drilling sites, and, rather than resort to other dispute-resolution mechanisms or waiting for CNPC to initiate arbitration, Chad commenced arbitration under the arbitration clause in the governing contract, seeking US$1.2 billion in damages. Chad and CNPC thereafter reportedly reached a settlement in their dispute in October 2014, under which CNPC agreed to pay Chad US$400 million for the alleged dumping. 30

3 Another example involves the port at Djibouti. In July 2014, Djibouti commenced a London Court of International Arbitration (LCIA) case against Dubai-based DP World, the operator of Djibouti s container terminal, alleging that the company secured the concession through bribery, an allegation the company denies. While not all the details of these cases are known and it is dangerous to draw conclusions from one or two arbitrations, it is striking to see African states resorting to the proactive use of international arbitration. The respondents in these cases are also notable a large Chinese-owned state entity and a formidable Dubai-based company. These cases may suggest some enhanced willingness among African states to embrace international arbitration for resolving disputes with foreign parties generally and Asian parties in particular. The second speaker was Ucheora Onwuamaegbu. Esq. Mr. Onwuamaegbu is a resident of Lagos, Nigeria. He provides advisory services to foreign investors and governments while also acting as arbitrator in international disputes. For over a decade, Mr. Onwuamaegbu was a Senior Counsel at the World Bank's International Center for Settlement of Investment Disputes (ICSID), where he administered numerous arbitrations under treaties, national laws, and contracts. Prior to ICSID, he was a lawyer at the United Nations Compensation Commission in Geneva, responsible for claims regarding business losses by airlines and shipping companies and claims for lost bank remittances. Mr. Onwuamaegbu serves as legal adviser to Kuwait's National Focal Point, which supervises the implementation of a multi-billion dollar post-award environmental remediation program. He served on a committee responsible for privatizing solid mineral assets of Nigeria. Mr. Onwuamaegbu is a Barrister and Solicitor of the Supreme Court of Nigeria and a Solicitor of the Supreme Court of England and Wales. A former Senior Visiting Fellow at Columbia University's Vale Center on Sustainable International Investment, he wrote and spoke extensively on international investment dispute resolution. His languages include English, Igbo, French, and basic Spanish and Arabic. 31

4 Mr. Onwuamaegbu elaborated on the dispute resolution trends in the approximately one hundred African and Asian Bilateral Investment Treaties (BITs). Some 60% for African countries are not enforced, compared to 21% of China s BITs with other States. For India, 81% suffer non-enforcement, compared to India s 17% with other countries.. Despite high non-enforcement of the 100 Africa/Asia BITs, it does not appear to impede investment flow into Africa. Some BITs provide for a three-to-six-month cooling off period. In domestic courts there is a fork in the road provision: if a plaintiff chooses to go to court, it cannot go to arbitration afterward. Most dispute resolution provisions include domestic negotiations. Some resolutions for non-enforcement include a negative impact on most favored nation status, additional treaties, a joint negotiation approach, and the Model BIT approach. Under the joint negotiation approach, the countries involved would come together to make treaties. However, the question is, how would these treaties be applied practically? What would be the difference between the new treaties and the BITs? Does the issue stem from not having enough treaties or instead the lack of some mechanism to enforce the arbitration clauses in the existing BITs? The model BIT template approach resolution, taken from SADEC (the Southern Africa Development Community), would give the countries a model set of rules, derived from the U.S. and Canada, including: (1) requirement of mediation prior to arbitration (at instance of the State); (2) nondisputing State party participation; (3) amicus curiae submissions; (4) transparency (publication of pleadings and awards; open hearings); (5) consolidation of proceedings; (6) recognition of the possibility of an appellate mechanism in the future; (7) possibility of counter-claim proceedings by the State against the investor for breach of obligations such as environmental and labor standards, corporate governance issues, corruption, etc.; and (8) use of regional arbitration centers, (e.g., Cairo, Hong Kong, 32

5 Lagos, Kigali, Kuala Lumpur, Mauritius, Singapore) in order to aid development of arbitration talent on national levels. These provisions are not commonly in African/Asian treaties. In closing, better treaties and greater enforcement would enhance Asian/African trade and investment. The third panelist was Dr. Kenneth K. Mwenda, PhD, LLD, DSc (Econ), Adjunct Professor at the Washington College of Law, American University, Washington. A Rhodes Scholar, author of 23 scholarly books and over 80 articles, he serves as the Manager and Executive Head of the World Bank s Voice Secondment Program, a major capacity-building initiative of the Board of Executive Directors of the World Bank. His extensive background is set out at Dr. Mwenda discussed Foreign Investment Policy In Zambia: A Lesson from Chinese Direct Investment. The topic of discussion was directed towards the main issues facing Chinese Foreign direct investment (FDI) in a country such as Zambia. China is interested in Zambia because of its abundant natural resources, specifically copper. In 2009 China surpassed the U.S. as an African investor. Zambia had the highest flow of FDI among the 16 landlocked developing countries in Africa, according to the UN Conference on Trade and Development (UNCTAD). Zambia boasts of being the highest copper-producing country in Africa and is the beneficiary of the continent s third-highest level of Chinese investment. But Zambia has high levels of unemployment and poverty, leaving many Zambians asking, What has happened to the fruits of our government s lucrative deals with the Chinese? Some Chinese investors have even taken over local small businesses, such as selling chickens. The controversy in Zambia is that some Chinese contractors are corrupt. Labor disputes do not go to labor arbitration but instead are informally resolved. The Chinese and Zambian governments are cooperating with each other, but the people of Zambia are suffering. The 33

6 Chinese bringing their own workers, and some of these workers are criminals who disrupt the communities in Zambia. While there are laws in place, if the law is broken by the Chinese investors, it does not appear that anything is being done to remedy the situation for the workers. The solutions that were offered included arbitration (The Arbitration Act 2000), the enactment of mining legislation (Mines and Minerals Act 2008), and additional labor laws. Dr. Mwenda closed with stating that although solutions have been created, the issue still lies in effectiveness and efficiency of law enforcement in Zambia. There is also concern about the culture of compliance with domestic laws and regulation by Chinese investors. The fourth speaker on the panel was Ms. Huawei Sun, Counsel and Arbitrator in Beijing, who is also admitted to practice law in the state of New York. She specializes in international commercial and investment treaty arbitration. She has acted as counsel for a range of Chinese and foreign banking and corporate clients in arbitration cases conducted under CIETAC, UNCITRAL, SIAC, HKIAC, and ICC arbitration rules. Ms. Sun was one of the founding partners of Beijing Hui Zhong Law Firm. Previously Ms. Sun worked at the Beijing and Hong Kong offices of a leading international law firm for over seven years, where she was responsible for managing the firm's China-related arbitration matters. Ms. Sun has advised MOFCOM on various investment treaty-related issues, including handling the first arbitration claim brought against China under an investment treaty. She serves on the CIETAC Panel of Arbitrators. Ms. Sun discussed the panel topic, Asia and Africa: Trends in the Developing East-South Dispute Resolution Axis from China's perspective. There are nearly 2500 Chinese companies doing business in Africa. Investment activities have expanded beyond energy and resources and currently include Special Chinese Economic Zones (SEZs). Energy issues are oil pricing, oil lifting, tax, and government licenses. Construction issues are delay, quality, and pricing. Crude oil dumping issues and labor issues have also arisen. The legal issues 34

7 include unfamiliarity with English law and rigorous common law traditions. There are also cultural barriers, such as communication. Expectations are not expressed or made clear, resulting in misunderstandings between the parties. Arbitration offers a dispute resolution mechanism for these issues. The first arbitration option is ICC or LCIA, which offer the best cost and convenience and give the option of using local consultants. Then there is CIETAC, the largest arbitration center, usually for shorter arbitrations. There is also CRCICA, a large arbitration center from China to African parties. There is no government intervention for arbitration, and there is no corruption. CRCICA attempts to talk to the plaintiffs first. The final mechanism presented is the China-Africa Joint Arbitration Center. Ms. Sun stated that Chinese parties have a lot of backing to create the kinds of arbitration that better suit them. The final panelist was Professor Nachiketa Mittal, who teaches international commercial arbitration and banking law to LLM students at the National Law University of Odisha, India. He also teaches ADR, Banking Law, interpretation of statutes, and code of criminal procedure to the undergraduate law students. Professor Mittal served in Washington as a Senior Associate with the India Chapter of Ashoka: Innovators for the Public. He has provided legal support to social entrepreneurs, making legal intervention on public policy and social issues. Professor Nachiketa has published articles on laws relating to nonperforming assets and legal aspects of e-banking fraud. Professor Mittal discussed the Indian perspective on Africa-related arbitration. Most Indian players in Africa are private Multi National Enterprises (MNEs). India is Africa s fourth-largest trading partner behind the EU, China and the U.S. Bilateral trade is expected to reach 90bn USD by India has three kinds of investments in Africa: joint ventures; greenfield investments and mergers & acquisitions. In southern Africa, Mauritius and South Africa are major states attracting Indian interest. Indian companies doing business in Mauritius include public sector giants such as Indian Oil, SBI, LIC, Bank of Baroda, New India Assurance Company, Telecommunications Consultant India Ltd and Mahanagar 35

8 Telephone (Mauritius) Ltd. Indian companies have largely entered Africa as individual businesses, while other countries have benefited from strong government-to-government initiatives. The issues discussed stemmed from Indian businesses not being backed by government initiatives. The solution is to direct collective efforts to building a culture of arbitration in Africa from an Indian perspective. Enhancement of business opportunities in Africa is directly proportional to effective arbitration in Africa as a dispute resolution system. Professor Mittal called for collecting thinking focused on the following: Is a sound FDI policy enough for enhancing business opportunity in Africa? Why do we need to look beyond the investment regime? Why do we need to explore the arbitration landscape in Africa? And how can India and Africa plug the gaps? 36