The fast development of business relations between China and Africa in recent years has brought about frequent civil and commercial transactions between both sides.
In 2000 when the Forum on China-Africa Cooperation (FOCAC) was established, the trade volume between China and Africa had just reached $10 billion. In the first 11 months of 2016, this figure reached $134.59 billion, according to statistics from General Administration of Customs of China. Zhu Weidong, research fellow with the Institute of West Asian and African Studies, Chinese Academy of Social Sciences, shared his thoughts with ChinAfrica on the importance of cross-border legal issues in the frequent civil and commercial transactions between both sides. Edited excerpts of his thoughts follow:
China has been the largest trading partner of Africa since 2009 and with the rapid growth in terms of the country's direct investment to Africa. In the first 10 months of 2016, China's non-financial direct investment in the continent exceeded $2.5 billion, a year-on-year growth of 31 percent, according to the Ministry of Commerce of China. More than 3,000 Chinese enterprises have investment in 52 countries and regions in Africa. This makes the continent the second largest contract project market for China. According to the FOCAC Johannesburg Action Plan (2016-18), China will scale up its investment to Africa and plan to increase the stock of direct investment in Africa to $100 billion in 2020, which will lead to more civil and commercial transactions between both sides.
The frequent civil and commercial transactions between both sides have resulted in various cross-border legal issues which will have negative impact on the sustainable business relations if they are not dealt with properly and efficiently. The cross-border legal issues arising from China-Africa business transactions are mainly those concerning civil, commercial and criminal matters. The number of cases involving Chinese parties in the African courts or arbitral institutions and the cases involving African parties in the Chinese courts or arbitral institutions are rising rapidly.
The civil and commercial disputes between both sides are mainly from contracts, investments, delict and family matters; and the criminal matters are mainly from illicit drug trafficking, dealing in precious animal and plant products and telecommunication fraud. The increasing cross-border legal issues have, to some degree, impeded the healthy development of business relations and attracted attention from governments involved. In some of the action plans adopted by the FOCAC Ministerial Conference, proposals have been made to tackle such cross-border legal issues.
The proper and efficient settlement of the cross-border legal issues between the parties involved requires a comprehensive and sound bilateral legal framework covering civil, commercial and criminal matters, investment and double taxation. But at present, the bilateral legal framework between China and African countries is far from complete and needs to be improved.
Currently there are also very few African countries that have ratified the multilateral conventions in civil and commercial judicial assistance. Only Egypt, Morocco, Botswana, Malawi and Seychelles acceded to the 1965 Hague Convention on the Service Abroad and only Morocco, South Africa and Seychelles became parties to the 1970 Hague Convention on the Taking of Evidence Abroad. It is manifestly necessary for the related parties to conclude more bilateral judicial assistance treaties in civil and commercial matters to smooth the way for the settlement of cross-border legal disputes. Otherwise, it will cause much inconvenience to the parties participating in the cross-border business transactions.
The large increase of cross-border crimes between China and Africa in recent years also necessitates the negotiation and conclusion of more bilateral judicial assistance treaties in such areas as extradition and the transfer of the sentenced persons to fight against such crimes effectively. However, up to now, only Namibia, Algeria, Tunisia, South Africa and Egypt concluded bilateral treaties on judicial assistance in criminal matters with China; and only Namibia, Algeria, Tunisia, South Africa and Angola concluded bilateral treaties on extradition with China. According to the information from the Ministry of Foreign Affairs of China, Kenya and China are very interested in reaching such a bilateral treaty. Additionally, the negotiation of the bilateral judicial assistance treaty and extradition treaty between China and Mauritius is now in process.
Finally and of great importance is the double taxation treaties (DTT) between China and African countries. The DTT is a very important legal instrument for those involved in cross-border business transactions. It can avoid the levying of tax by two or more jurisdictions on the same declared income or financial transactions, thus mitigating the economic operators' tax burden, and help to boost the business relations between both sides. According to the information from the Chinese State Administration of Taxation, China has concluded 14 DTTs with African countries, including Mauritius, Uganda, Botswana, Sudan, Egypt, South Africa, Nigeria and Zimbabwe; but the DTTs with Uganda, Zimbabwe and Botswana have not yet come into effect.
No one will doubt the role that the law plays in the maintenance of business relations and social order, especially for the cross-border civil and commercial transactions. There is no uniform legal system to govern the cross-border civil and commercial transactions in the world due to the national sovereignty and diversified legal traditions. Therefore, it is very important for the countries involved to conclude bilateral legal frameworks to govern such transactions, which can provide the legal certainty and predictability and a safe transacting environment for those participating in such transactions.
At present, the bilateral legal framework between China and African countries still needs to be improved to provide a sound legal guarantee for the sustainable business relations between both sides. Therefore, the Chinese and African governments can work together in future toward a comprehensive legal framework which will definitely enhance the confidence of the people to participate in cross-border transactions and sustainable business relations between both sides will thereby be maintained.