Investment disputes continue to drive international arbitration developments in Africa

Meanwhile, big-ticket investment and commercial disputes continue to dominate the international arbitration landscape across resource-rich African jurisdictions.

Francophone and Lusophone Africa

In Western and Central Africa, which is largely francophone, the Organisation for the Harmonisation of Business Law in Africa (OHADA) continues to play a significant role in creating a more stable and predictable business environment across its 17 member states and providing a uniform system to resolve cross-border commercial disputes across the region.

In November 2023, OHADA Arbitration Centre revised its internal regulations applicable to arbitral proceedings, which entered in force in late 2023. The new rules are part of OHADA's ongoing efforts to modernise and streamline its arbitration framework to make it more efficient and user-friendly. They replaced the previous rules of a much less detailed nature dating back to June 1999.

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The revised rules grant a larger role to the General Secretary of the Centre in monitoring the arbitral proceedings administrated by the OHADA Arbitration Centre. A follow-up committee chaired by the General Secretary has been created under the new rules, also to ensure the efficiency of the arbitral proceedings. While there is not yet sufficient feedback of improvements under the new regulations, the OHADA Arbitration Centre is expected to publish an annual statistics report on its activities.

In Portuguese-speaking, or lusophone, Africa – countries like Angola and Mozambique – there are also noticeable developments in the field of arbitration. The number of large scale commercial and investment disputes in the region will continue to rise following more bilateral investment treaties (BITs), particularly with Asian countries.

In Angola, for example, the government has signed new BITs with China and with Japan, both of which entered into force in 2024. These BITs include an international arbitration clause to offer better legal protection and stronger enforcement of rights for Chinese and Japanese investors in Angola, where investors from both countries are not only investing in the oil, gas and natural resources sectors but also increasingly in the fields of construction, technology and professional services.

High-profile recent cases

High-profile international arbitration cases in the region are dominated by investor-state disputes, such as those administered by the International Centre for Settlement of Investment Disputes (ICSID). For example, several foreign investors have initiated arbitration proceedings against the Democratic Republic of the Congo (DRC) in recent years. Cases that are ongoing include ICSID arbitration proceedings brought by Australian mining company AVZ Minerals against the DRC for the government’s alleged failure to procure the grant of an exploitation mining permit, and an ICSID case introduced by Swiss bank Afriland First Group SA and others against the DRC for its alleged abuse to place the bank’s local subsidiary under provisional administration based on accusations of mismanagement.

In another ad hoc arbitration proceedings, UK listed Red Rock Resources has brought a US$10 million claim against DRC to recover the share of the sale proceeds of some key assets of a joint venture company. The final arbitration award has not been released yet, although a draft award was sent to the company in January 2024.

West Africa

Nigeria, which is Africa’s largest economy, is vying for position as a leading commercial arbitration centre in Africa following the reform of its legal framework for arbitration. The Arbitration and Mediation Act came into force in May 2023, replacing the 35-year-old Arbitration and Conciliation Act. The new law aligns with international standards and includes provisions for third-party funding that was previously prohibited, emergency arbitrators and a procedure for the review of awards.

Other important changes under the new framework include making it mandatory for a court to grant a stay of proceedings pending arbitration unless the agreement is void, inoperative or incapable of being performed, and clarifying the limitation periods for enforcing an arbitral award and giving the courts power to grant interim measures.

The new Act enhances Nigeria’s arbitration framework and is expected to make Nigeria more attractive as an arbitration destination and spur the growth of arbitration in Nigeria.

Another important development in Nigeria is the collaboration agreement between the Lagos Chamber of Commerce International Arbitration Centre (LACIAC) and the Permanent Court of Arbitration, which is headquartered in The Hague in Netherlands. The agreement, which was signed in June 2023, allows the two organisations to collaborate and promote the resolution of international disputes through arbitration and other alternative dispute resolution methods in the region. The collaboration will also see the two organisations share each other’s facilities for meetings and hearings, so the LACIAC’s hearings can be conducted in the PCA’s facilities in Port Louis in Mauritius.

High-profile recent cases

A long-running dispute between Nigeria and British Virgin Islands company Process & Industrial Developments Limited (P&ID) has come to an end, with the Commercial Court in London setting aside an $11 billion arbitration award that was against Nigeria in favour of the foreign investor.

The landmark case stems from a 2010 contract signed between P&ID and Nigeria's Ministry of Petroleum Resources for the construction of a gas processing plant that was never constructed. In 2012, P&ID initiated arbitration, claiming that the government had failed to provide adequate infrastructure and ‘wet’ gas. The arbitration, which took place in London in 2015, led to a final award two years later. The tribunal ordered Nigeria to pay $6.6bn as compensation for two decades of lost gas contracts. Taking into account an annual fixed interest rate of 7%, the award was eventually worth over $11bn. The Nigerian state then challenged the award before the English High Court in London.

In October 2023, the court overturned the award, ruling that it was obtained through fraud, corruption, and the improper retention of leaked documents, some of which were found to be confidential and subject to legal professional privilege. The case highlights concerns around the transparency and reliability of the arbitral process, with Mr Justice Knowles setting out a number of points of reflection on the case as part of his judgment, focusing on transparency, interventionism, disclosure and the balance of power.

In another significant case, the Supreme Court in Nigeria recently dismissed a challenge to enforcement of an arbitral award in the case of NNPC v Fung Tai Eng. The dispute related to a contract between the Nigerian National Petroleum Corporation (NNPC) and Fung Tai Engineering Company Limited (Fung Tai), which included an arbitration clause. Fung Tai commenced arbitration proceedings in reliance on the clause and obtained an award in its favour and applied to the Lagos Division of the Federal High Court for the recognition and enforcement of the award. In response, the NNPC unsuccessfully applied to the same court to set aside the award. The decision was appealed to the Nigerian Supreme Court which emphasised the finality of arbitral awards and reaffirmed the Nigerian courts’ support for the arbitration process. The decision shows that there is limited scope of judicial intervention in arbitration proceedings and the importance of respecting arbitration agreements.

Ghana has also recently won a high-profile international arbitration case brought against it by foreign investors ENI and Vitol under the Ghana – Italy Bilateral Investment Treaty, concerning a dispute over the Sankofa gas project. The international arbitration tribunal ruled in favour of Ghana, dismissing all claims for damages and compensation sought by the investors.