Transnational Dispute Management

Africa is well-known for its customary secular dispute resolution mechanisms such as the “Gacaca”1 in Rwanda and the “Shimguilina”2 in Ethiopia. These traditional mechanisms to settle disputes have evolved and arbitration is nowadays a preferred mode of dispute resolution, although criticized by some States and part of the civil society.

One of the criticisms addressed by States and Non-Governmental Organizations towards the Investor-State Dispute Settlement mechanism is that it does not equally balance the rights and obligations conferred to foreign investors and States. A reason for such a criticism may be found in the severe economic crisis that lead to numerous international arbitration cases. For instance, African States were hit by a significant economic crisis in 2014 mainly caused by a downturn in the price of raw materials.3 Consequently, some African States have adopted nationalist economic policies, notably in the mining industry. In order to regain control of their own resources, States such as Mozambique and the Democratic Republic of Congo amended their mining codes, respectively in 20144 and 2018.5 For their part, Zimbabwe, Kenya, Namibia, Sierra Leone and Mali have announced their willingness to adopt reforms in the same vein.6 Consequently, there exists a dilemma for African States between the need to attract foreign direct investment and the need to protect their economies. This tension can be seen in policymaking related to arbitration adopted by African States. Indeed, an analysis of the economic and legal policies implemented by African States reveals the diversity of concerns affecting African States. One must keep in mind that Africa is a continent composed of 54 States and 8 regional economic communities, which are at different stages of economic development. In 2017, Foreign Direct Investment (hereinafter “FDI”) flows in Africa slumped to 42 billion USD7 to rise to 46 billion USD in 2018.8 This increase does not reflect the slow economic recovery of African States since FDI reached 59 billion USD in 2016.9 In 2019, East Africa is still the fastest growing region10 with Ethiopia continuing to be the biggest FDI recipient in the region.11 On the contrary, the Central Africa region continues to underperform.12

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