INTERNATIONAL ARBITRATION 1/3LY
SPECIAL REPORT 39
UPSTREAM OIL & GAS DISPUTES IN SUB-SAHARAN AFRICA
Volatility in energy prices continues to have a particularly strong effect on Sub-Saharan Africa. In many countries in the region there is a unique combination of government reliance on revenue from natural resources, to meet high social needs and other government spending commitments. In times of lower energy prices which increase pressure on margins, there is increased potential for disputes, whether with host governments over licence terms or between industry participants. In Sub-Saharan Africa those disputes navigate a uniquely challenging legal, regulatory and political environment that demands consideration of alternative means of resolving disputes. These include a lack of legal certainty resulting from outdated oil & gas legislation that is not always fit for contemporary use and which is applied by under resourced national courts, in which decisions are not effectively reported. While investors will inevitably have some involvement with local laws and the local legal system, many disputes can be referred to arbitration. International arbitration seated in the established arbitration centres of London and Paris is a tried and tested route, which has benefits in terms of certainty of process as well as a wide pool of potential arbitrators, and this will very often be the best choice, although other options are available within Sub-Saharan Africa itself. GENERAL ARBITRATION FRAMEWORK In contrast to other regions, the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) has not yet been adopted comprehensively across the African continent, and non-signatories include major producers Equatorial Guinea and Angola. Even in signatory jurisdictions, however, those seeking enforcement of foreign arbitration awards through the courts will often find them under-resourced. Speed and reliability of enforcement within the region therefore remain an issue. However it is debatable whether enforcement in Sub-Saharan Africa of arbitrations seated in the region is more effective than arbitrations seated outside the region. Outdated national arbitration laws have tended to restrict the extent to which such disputes have been arbitrated within the region. While some countries (for example, Mauritius, Nigeria and Kenya) have enacted arbitration laws based on the United Nations Commission on International Trade Law Model Law (“UNCITRAL Model Law”) and, therefore, now have legislation in line with international norms respecting the independence of the arbitral process, others still have antiquated laws which often allow for substantive judicial review of arbitral decisions and draw little distinction between domestic and international arbitration. For example, the current Tanzanian Arbitration Act has been updated from time to time and may soon be re-enacted, but at the moment it remains largely based on legislation from 1889. Likewise, South Africa’s Arbitration Act is also far out of line with the UNCITRAL Model Law.
BY MAURICE KENTON, PARTNER, CLYDE & CO
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