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Africa
One Belt,One Law
New dedicated arbitration centers pave the way for greater Sino-African legal synergy
By Sudeshna Sarkar  ·2017-05-09
Launching ceremony of China-Africa Joint Arbitration Center Beijing and China-Africa Joint Arbitration Center Nairobi in Beijing (SUDESHNA SARKAR)

There was a giant map unfurled beside him and as Lawrence Muiruri Ngugi spoke, he kept on gesturing at it for illumination. The CEO of the Nairobi Center for International Arbitration (NCIA) in Kenya traced the pathways of some of the biggest infrastructure projects in Nairobi: a mammoth oil pipeline, a highway and a standard-gauge railway (SGR).

"Infrastructure is the underbelly of Africa's development," Ngugi said. "Many regions of Africa, because of their colonial history, have lagged behind in development of infrastructure. Africa is [now] engaged in the development of infrastructure of every kind, airports, railway, stadiums, bridges [and] ports. And China has not been left behind in the development of this infrastructure."

In Kenya alone, over 50 Chinese companies are implementing projects that range from a solar power park in north Kenya to building three berths at Lamu Port near the Indian Ocean. The SGR Ngugi referred to earlier runs from Mombasa on the coast to the border with Uganda, and is also a Chinese-contracted project.

Three factors have given a stimulus to infrastructure building in Africa and Chinese involvement in it. In 2013, Chinese President Xi Jinping announced the Belt and Road Initiative - the Silk Road Economic Belt to develop infrastructure, trade and people-to-people exchanges along the ancient Silk Road trade routes that ran through Asia, Africa and Europe.

Two years later, the African Union launched Agenda 2063, its pan-African development blueprint with massive infrastructure plans to forge closer links among its 54 member states. The same year, at the Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC) in South Africa, President Xi proposed 10 cooperation plans between China and Africa in 2016-18, which includes a specific China-Africa infrastructure plan. Under this, China will use its expertise to help Africa design, build, operate and maintain infrastructure projects.

Sino-African solution

As infrastructure improves, trade and business will continue to grow. China has been Africa's largest trade partner, shooting past the United States and Europe in 2009. However, with the scale of engagement going up, business disputes are inevitable. With courts in both African countries and China suffering from case backlogs, arbitration centers began to spring up to solely address business and labor disputes. Then the African and Chinese authorities decided to establish a series of China-Africa Joint Arbitration Centers (CAJACs) dedicated to resolving Sino-African disputes.

"The intention of CAJAC is to create an arbitral family of China and Africa to resolve Chinese and African disputes in business, construction and trade and investment in a united family atmosphere," said Michael David Kuper, President of the Johannesburg-based Arbitration Foundation of Southern Africa. "The CAJAC project has been endorsed by African and Chinese leaders. They have all seen in the CAJAC project - the appropriate vehicle for the resolution of disputes that may arise between China and Africa... At the heart of that vision is the determination that disputes between China and Africa will now be decided by institutions which represent China and Africa and by arbitrators who are drawn from China and Africa."

The first CAJACs were established simultaneously in Shanghai and Johannesburg in November 2015, and each nominated 20 of their lead arbitrators to form a shared panel to adjudicate over disputes.

On March 27, CAJAC Beijing and CAJAC Nairobi were launched at a ceremony in Beijing attended by legal experts from both countries as well as representatives from the construction and transport industries. Two days later, a third CAJAC came up in Shenzhen, a bustling commerce city in south China's Guangdong Province, which has a concentration of African businesses. A China-Africa arbitration conference will be held in Johannesburg at the end of 2017.

"CAJAC is a good way to expand legal cooperation," said Gu Zhaomin, Director General of the International Department of China Law Society, the organization of Chinese legal professionals. "Its main features are that it emphasizes the brotherhood between China and African countries, is low in cost and high in efficiency, and consists only of Chinese and African arbitrators."

In the past, international trade disputes were generally taken to European courts. "But there were complaints that it takes too long and also costs a lot," Gu explained. "So people started thinking why not do the arbitration in Africa or China? It's very convenient and also, CAJAC arbitrators know one another's cultures and legal systems better. Besides, China and Africa are focusing on development. So even after the resolution of disputes, they can remain good friends and partners. Culture is a foundation for the resolution of commercial disputes. These are the advantages of CAJAC."

Inside Africa

Africa, Kuper remarked, is not one country. It is 54 different ones with very different infrastructures, philosophies, methods of governance and regulation.

"So when businesses decide to cross borders and develop new initiatives overseas, it is imperative that it is done on the basis of knowledge of the new market, the new legal system, the [new] business community and the environment in which the business community operates. Ignorance will cause you surprise because it will not allow you to assess the legal risk correctly," said Kuper.

To do business in South Africa, for example, he pointed out that foreign investors should know about the country's strong labor unions and labor laws, which control all hiring and firing. Besides, projects must create "special vehicles" to benefit the local deprived population.

CAJAC's other advantage, he said, was that it was there to provide not only protection but also information to all those who want to set up a business, whether in South Africa, Kenya or the neighboring states.

"The CAJAC data base will have... important information which will help you assess legal risk and which will bring you into touch with legal practitioners in Africa," Kuper said. "These are the mechanisms which will allow you to come to Africa on an informed basis."

In the future, CAJACs would be formed in different African and Chinese cities and eventually, one set of rules would be created for all the centers, making arbitration faster. There's more to legal cooperation than arbitration.

"The basic objective is to promote better understanding of the legal culture of China and African countries, legal professionals and different legal systems. It's also to promote practical cooperation among law firms, law schools, law research institutions and courts as well as legal administrative systems. It's the whole picture," Gu said.

Sharing legal knowledge

The China Law Society is coordinating Chinese and African law schools to set up joint legal research centers and training bases in Africa. In January, the School of Legal Studies of Guangdong University of Foreign Studies paired up with Strathmore Law School in Nairobi to found a joint legal research center and training base in Nairobi. Gu said there would be similar pairings in Cameroon, South Africa and Tanzania.

"China has more trade and investment relations with foreign countries. Legal cooperation is therefore necessary to provide coordination among different legal systems and policies to smooth, promote and safeguard economic cooperation," he said.

The rapid change in the international market has also made such cooperation imperative. "The existing legal frameworks or conventions may not be in tandem with the trends," Gu explained. "A lot of African countries were not independent when some legal treaties and frameworks were drafted. [So] in these frameworks the interests of developing countries might not be well protected. It is very important that legal professionals of these developing countries join together to promote and safeguard our own development interests."

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