Chinese Africa Joint Arbitration Center: A Solution to Trade Disputes between Africa and China

The increasing trade and investment cooperation between China and Africa, as well as the diversity of individual legal systems across African countries, create a growing need for neutral and cost-effective mechanisms for resolving commercial disputes between African and Chinese parties. These factors prompted the establishment of the Chinese Africa Joint Arbitration Center (CAJAC), which aims to provide efficient arbitral facilities that are tailored to resolve issues that may arise in China-African commercial relationships.

In 2015, the Forum of Chinese African Corporation (FOCAC), representing China and 50 African States, adopted the Johannesburg Action Plan and committed to establishing the CAJAC in South Africa. The action plan was designed to foster trade and investment, harmonize business practices and arbitral systems, and draw arbitrators who are familiar with the cultural norms and practices of China and African nations. In 2017, the Nairobi CAJAC was established after an agreement between the Beijing Arbitration Commission and the Nairobi Centre for International Arbitration (NCIA), under the guidance of the China Law Society.

Each of CAJACs centers are supported by an arbitral authority with the legal know-how to deal with international disputes, offering globally recognized and enforced arbitration awards in accordance with the New York Convention. CAJAC centers now include:

  • CAJAC Johannesburg under the auspices of the Arbitration Foundation of Southern Africa (AFSA)
  • CAJAC Nairobi under the auspices of the Nairobi Centre for International Arbitration (NCIA)
  • CAJAC Beijing under the auspices of the Beijing International Arbitration Centre (BIAC)
  • CAJAC Shanghai under the auspices of the Shanghai International Arbitration Centre (SHIAC)
  • CAJAC Shenzhen under the auspices of the Shenzhen International Court of Arbitration (SCIA)

Some of the benefits provided by CAJAC include: (1) the ability for parties to select at least one member of the arbitral panel from a committee of arbitrators, well trained in Chinese and African arbitration systems, (2) a more neutral and cost-effective mechanism (3) stronger protections for Chinese investments in Africa.

First, CAJAC has a concept of a shared panel to ensure that parties have an identical choice of arbitrators, or panels of arbitrators, irrespective of the center in which their dispute is heard. The parties can select at least one member of the arbitral panel as a neutral and dependent chair from the arbitral committee. The arbitrators who are elected to serve in the CAJAC panel have expertise in a range of different fields, but all have relevant experience in international arbitration. CAJAC arbitrators are also familiar with the cultural norms and practices of both China and Africa. The arbitrators conduct many exchange visits between China and South Africa to discuss various topics of common interest. For instance, in March 2016 a delegation from CAJAC South Africa went to Shanghai for first-hand exposure to Chinese arbitration practice and to explain South African arbitration practices to their Chinese counterparts.

Second, prior to CAJAC, African and Chinese parties to a dispute could pursue their claims in local courts, submit their dispute to one of the international arbitration bodies such as the ICC, or resolve their disputes via ad-hoc arbitration. Resolution of disputes in foreign national courts has been neither cost-effective nor time efficient. Some of the challenges that China faces when investing across the African continent include different legal systems, cultural differences, language barriers, political instability, and Africa’s general image as a corrupt and uncivilized continent. In response, CAJAC promises a uniform system for Chinese and African parties to resolve their trade disputes and dispose of matters quickly.

Third, China’s investment and involvement in Africa has dramatically increased in recent years. According to the U.N. Habitat Program’s 2018 report on African countries, over the period of 2003-2014, Chinese foreign direct investment in Africa increased from $491 million to over $32.4 billion. Also, in late 2018, Chinese President Xi Jinping offered another $60 billion in African financing and wrote off some debt for poorer African nations. Dissatisfaction with international tribunals, coupled with increased Chinese investment in Africa, demanded the establishment of a neutral and cost-effective mechanisms for the protection of Chinese investments in Africa. CAJAC seeks to address these concerns by providing a more streamlined, consistent, and neutral mechanism for China to protects and control its investment.

In conclusion, trade disputes are inevitable where there are increased levels of trade. Therefore, this initiative is very important to create more efficient ways to resolve these unavoidable trade disputes and provide adequate protections to foreign investment. CAJAC has certainly put Southern African nations on the international arbitration map, and time will tell whether these centers can live up to their vision to be forces for good in international dispute resolution.

By Princesse Mabiala

Sources

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s