On 6 June 2024, Howard Kennedy and 3VB hosted a panel event focusing on disputes involving African states and state-owned entities as part of London International Disputes Week ("LIDW"). Duncan Bagshaw, Partner and Head of International Arbitration at Howard Kennedy, was joined by an esteemed panel of experts:
- Jane Davies Evans KC, Barrister at 3VB
- Bisi Makanjuola, Barrister and Partner at Olaniwun Ajayi, Nigeria
- Nania Owusu-Ankomah Sackey, Advocate and Partner at Bentsi-Enchill, Letsa & Ankomah, Ghana, and President of London Court of International Arbitration (LCIA) African Users’ Council
- Kamau Karori SC, Partner at IKM Advocates, Kenya, and Fellow of the Chartered Institute of Arbitration (Kenya Branch))
- Madeline Kimei, Advocate and founder of iResolve, Tanzania
The panellists shared their experiences and opinions on key issues when handling these types of disputes, including tips for negotiating with states, managing the appearance of corruption and how to identify who you contracted with when it comes to state entities.
Key issues discussed during the session were:
Identifying the contractual parties and any requirements for validity
A key consideration when dealing with states is who you are contracting with. It is not always straightforward to identify the contracting party. It is also essential for investors and contractors entering into contracts with states to establish that the person representing the state or state body has the sufficient authority to enter into the contract.
Once you have established the contracting parties, it's important to establish any requirements for a valid contract to be formed. Some states may require parliamentary approval. A useful tip from the panel in this regard was to obtain a certification from the Attorney General certifying that parliamentary approval is not required. This is to ensure the contract's validity cannot be questioned if there is a turn-over of governments and/or Attorney General.
Ensuring you have ears on the ground will prevent future issues
It is important to understand the jurisdiction in which you're operating – proper community engagement and local legal compliance is particularly important. Not all issues can be addressed by the contract. Failure for an investor to carry out proper community engagement processes before a project is agreed can result in delays in the future. For example, issues relating to rights over land, and local customs. Whilst a state or state body may want a project to take place and give the necessary permissions, if there is valid local protest to such a project, investors can find themselves suffering a loss due to lack of community engagement and local legal compliance.
Speaking to the correct individuals in order to avoid arbitration
States are multifaceted bodies which means it is often difficult to negotiate with them, or state bodies, when trying to avoid arbitration. Getting the right people with the proper authorisations to enter into compromise or settlement agreements is key to avoiding arbitration when dealing with state entities, but the authorised person can vary from state to state.
Negotiations with states or state entities require an awareness of political, economic, and public opinion as well as an understanding of the high level of bureaucracy that is often involved. Shifting parties and changes in government members can also cause delays, or opportunities, in negotiations.
Managing the appearance of corruption
A key issue discussed by the panel was the appearance of corruption, particularly in the wake of the recent judgment in Federal Republic of Nigeria v P&ID. Jurisdictions such as Kenya require there to be sufficient evidence of corruption before making a ruling or allegation of corruption in an arbitration. Due to fraud and corruption being a complex field, which often straddles the line between criminal and civil, arbitrators must be respectful of the various bodies in their jurisdiction entrusted to investigate such cases. However, in the event a case is put forward where there are suspicions of corruption, but it is not central to the case, the panel indicated that the arbitrators might consider inviting the parties to agree to allow the arbitrators to deal with allegations of corruption.
A further point of note is that corruption may vary from country to country. What may appear as corruption in one state may be acceptable in another. It is therefore important to engage experts with experience working in the environment where the dispute has arisen.
Key takeaways
- Africa is a large continent, so it is imperative to be aware of local customs and legislation for each state.
- It is crucial to have clear and broad contracts when dealing with states. This is to account for the shift towards increasingly frequent changes in government across the continent.
- Identifying the correct contracting party, negotiating with the appropriate authorised person and obtaining certifications about the person with authority will help prevent issues arising further down the line.
- Work with lawyers and advisors who understand the local environment and can ensure community engagement and local legal compliance.
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