Comparative Regime of Arbitration In Africa (OHADA) and Selected Asian Countries Roland Amoussou-Guenou, PhD Director VOVAN- Lawyers,

Patent & Notarial Services Attorneys Member of Legalink www.vovan-lawgroup.com Email: roland.amoussou@vovan-bangkok.com Lecturer in Law at the Asian Institute of Technology (AIT) Thailand
Introduction According to the World Investment Report 2013, Africa was the only region that saw FDI flows rise in 2012. These FDI flows were partially driven by investment in the extractive sector 1. A significant part of FDI flows to Africa are now coming from Asia, which is a new and remarkable trend. Indeed, trade and investment between Africa and Asia in general and China and India 2 in Particular have soared during the last decade. The bilateral trade volumes reached 166.3 billion U.S. dollars in 2011, up 83 percent increase from 2009. They are valued at more than 200 billion in 2013 3. Direct Chinese investment in Africa was estimated at 30 billion U.S. dollars in 2013, covering 50 countries. China has stakes in important African banks such as the South African Standard Bank 4 and African banks have started to open desks in China. China has also provided 15 billion U.S. dollars of lending of a preferential nature to Africa while the African Development Bank (AfDB) and the Chinese ODA 5 are linked in major co-funded development projects across the Continent 6. While China and India are taking the lead in the emerging Asia-Africa economic interactions, other Asian players such as Japan, Korea, Singapore, Vietnam and Thailand
See United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2013. See, Indian Investment in Africa Soars, http://www.dw.de/indian-investment-in-africa-soars/a-16951164 3 See, Chinas African Investment grows 30 fold, http://www.china.org.cn/business/201307/12/content_29403154.htm 4 See, China, Buys into Standard Bank, http://www.southafrica.info/business/investing/stanbank261007.htm#.Uy__c_mSx8E 5 Official Development Assistance, through the Ministry of Commerce of the Peoples Republic of China. See http://english.mofcom.gov.cn/ 6 See Kingsley Ighobor, China in the heart of Africa, Africa Renewal, January 2013, http://www.un.org/africarenewal/magazine/january-2013/china-heart-africa
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and even Myanmar are increasingly present in food export, mining, oil and gas, infrastructure, tourism, commodity markets, services and PPP projects. With the expansion of this new Asia-Africa trade and investment, there is a burning need for effective cross-border disputes solutions to address the legal and contractual risks. For example, Chinese operations in Africa are facing many accusations and complaints from public and private partners as well as local communities. The African Development bank has established a bilateral dialogue mechanism to address some of these issues 7. But dialogue alone will not be enough to resolve business disputes when important financial interests are at stake or when contractual rights are violated. Very little is known about the available mechanisms for timely and cost-effective dispute resolution systems that can be relied upon by companies and entrepreneurs involved in the Asia-African Trade. The purpose of the present article is to give an overview of the regime of the international arbitration systems in the African regional grouping known as OHADA 8 and in selected Asian countries 9. The Rationale for International Arbitration Parties to international contracts avoid being sued in a foreign country, where differences and uncertainty in the law, language, legal and business culture could present decisive disadvantages. Arbitration, however, provides the benefits of a relatively cost-effective and expeditious dispute resolution process in a neutral venue with proceedings conducted according to familiar and well established arbitration procedures. Arbitration offers the added flexibility of allowing parties to choose the arbitration tribunal, the arbitrators, and in some cases, the arbitration law and rules. While the arbitrators task as a third party, is to resolve a dispute by deciding who is right or wrong, the parties still retain a significant level of control of the management of their conflict, thanks to the contractual aspects of the arbitration. Such dispute resolution features are very relevant in the context of the Asia-Africa trade and investment, where geographical distance, cultural differences and contrasting legal environment and practices may represent important challenges and risks.

See African Development Bank (AfDB), China welcomes AfDBs Leadership in ensuring the sustainability of projects in Africa, http://www.afdb.org/en/news-and-events/article/china-welcomes-afdbsleadership-in-ensuring-the-sustainability-of-projects-in-africa-12734/ 8 Organization of Harmonization in Africa of Business Law (Organisation pour lharmonisation en Afrique du droit des affaires) 9 China, India, Malaysia, Singapore, Thailand and Vietnam

ARBITRATION IN OHADA COUNTRIES A brief introduction of OHADA regional business law environment OHADA is an international organization created by a Treaty signed in Port-Louis (Mauritius) on 17 October 1993 by fourteen African States 10. The Acronym stands for Organisation pour lHarmonisation en Afrique du Droit des Affaires (Organization for Harmonization of Business Law in Africa). The idea behind the creation of OHADA sprang from a political will to strengthen the African legal system by enacting a secure and legal framework for the conduct of business in Africa, which is considered as a requisite for the development of the Continent 11. The importance of an appropriate and user-friendly legal framework, as well as an effective dispute resolution mechanism, to attract foreign investment and foster economic development and growth was the main concern of the founders of OHADA 12. For many decades, and during recent years, the State Justice system in the OHADA Member countries has been inadequate for the settlement of disputes in international business activities. It was also unsatisfactory for the resolution of disputes between the private sector and public entities in the context of public procurement contract award and execution. There has been a notable effort to deal with these concerns in the framework of the OHADA reform and particular attention was given to Arbitration. The OHADA Arbitration The enactment of a single arbitration regulation was a major legal event for the African countries involved in the OHADA reform. In fact, the so-called OHADA arbitration involves two different and distinctive components. The first one is represented by the ordinary regulation on arbitration, as organized by the Uniform Act of 11 March 1999 13. The second one concerns the institutional arbitration

It is to be noted that the OHADA Treaty was revised in Quebec (Canada) on 17 October 2008. See http://www.ohada.com/traite-revise.html 11 See Eversheds, Business Law in Africa OHADA and the Harmonization Process, Kogan Page Ltd., 2002. 12 At present OHADA has 17 member countries: Benin, Chad, Burkina Faso, Cameroon, Central African Republic, Comoros, Congo, Democratic Republic of Congo, Ivory Coast, Gabon, Guinea, Bissau Guinea, Equatorial Guinea, Mali, Niger, Senegal, and Togo. 13 See OHADA Official Gazette 3rd year, N 8, 15 May 1999, pp. 1-8.

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administered by the Common Court of Justice and Arbitration (CCJA) under the Rules of Arbitration of 11 March 1999 14. Both instruments can be used by parties involved in public sector and private relationships to settle contractual disputes. The sections below will introduce the main features the dual OHADA system. The CCJA Arbitration The Common Court or Justice and Arbitration (CCJA) is a supra-national body, which is both a Court of Justice and an Arbitration institution covering all the OHADA States. In global practice, it is unusual to find an arbitration institution under a State court system, but so far, the autonomy and efficiency which shall prevail in any arbitration services have not been questioned by the users of the CCJA. Unlike other institutions such as the ICC where a standard arbitration clause is provided in the ICC arbitration Rules, the CCJA has not proposed any model arbitration clause. Therefore, the drafting of an effective CCJA arbitration agreement shall take into consideration, the arbitration provisions in the OHADA Treaty itself 15. It shall also include a reference to the Arbitration Rules adopted by the OHADA Council of Ministers, on 11 March 1999. The scope of the CCJA Arbitration According to Article 21 of the Treaty in application of an arbitration agreement or a submission, any party to a contract, whether one of the parties has its habitual domicile or resides in one of the member states, whether the contract is performed or has to be performed totally or partially on the territory of one or several states, may submit a contractual dispute to the arbitration procedure provided for by the present Section. Referring to Article 1 of the Arbitration Rules, the Court (the CCJA), exercises the administration of arbitrations in the fields determined by Article 21 of the OHADA Treaty. In other words, for the CCJA to accept a request for arbitration, connecting elements to OHADA countries, such as residence, domicile, contract performed or to be performed must be identified.

Idem Article 21 of the OHADA Treaty provides: in application of an arbitration agreement or a submission, any party to a contract, whether one of the parties has its habitual domicile or resides in one of the member states, whether the contract is executed or has to be executed totally or partially on the territory of one or several states, may submit a contractual dispute to the arbitration procedure provided for by the present Section. The Common Court of Justice and Arbitration does not decide the dispute itself. It appoints or confirms the arbitrators, shall be informed of the conduct of the proceeding, and examines the draft awards
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The administrative nature of the CCJA arbitration must is emphasized. Moreover, any dispute including those involving States and State entities can henceforth be submitted to arbitration. The other major advantage for the potential users of the CCJA arbitration is that, once the award is issued and granted exequatur, it can be enforced directly in all the OHADA member states, without additional procedures in individual OHADA countries where enforcement will be requested. This regional recognition and enforcement feature of an arbitral award is unique. It does not exist in any other region in the world. The OHADA Arbitration According to the Uniform Act Contrary to the CCJA Arbitration Rule, which is administrative in nature, the Uniform Act is rather an instrument of a legislative status. As such, it introduces a unified regime of arbitration in all of the OHADA countries. The Uniform Act on Arbitration applies where parties refer to arbitration, but omit to indicate an institution in charge of administering the arbitral proceedings. It can also apply where they have decided to resort to an ad hoc arbitration. In these cases, the application of the Uniform Act is possible in Any arbitration where the seat of the arbitral tribunal is located in one of the Member-Countries. In line with the main issue of the arbitrability by public entity contracts entered into with private parties, Article 2 Paragraph 1 of the Act, introduces a radical novelty in providing that Any legal or natural person may refer to arbitration on rights which can be freely disposed of. Traditionally, in Civil Law countries in general and in Francophone countries of Africa in particular, the settlement of disputes between the private sector and public entities were subject to the exclusive competence of administrative courts. The OHADA framework for arbitration solutions can be used for the settlement of disputes between the private sector and public entities in the context of the growing AsiaAfrica trade and investment. ARBITRATION IN SELECTED ASIAN COUNTRIES The growing interest for Arbitration in Asia is a result of the globalization. Statistics of leading Arbitration organizations such as the International Court of Arbitration of the

International Chamber of Commerce (ICC) show an upsurge of cases in number and value, which are brought to Arbitration and ADR involving Asian parties 16. Many Asian parties, especially State entities and State owned enterprises (SOEs) had disappointing experiences with arbitration, after losing most of their cases. As a result, there is a growing distrust regarding arbitration in some the Asian countries. Contrary to what OHADA has achieved, there is no such harmonized business law 17 or arbitration legislation and regulation regime in Asia. In the case of the ASEAN, which can be compared to OHADA from a regional integration perspective, a regional arbitration center to deal with future AEC business disputes has not yet be conceived 18. Indeed, Asian countries present a variety of models and solutions regarding their approach to arbitration concept and arbitration laws and practices. Therefore, Parties seeking arbitration in Asia must carefully select a domestic law if they opt for ad hoc arbitration or a national arbitration center if they prefer institutional arbitration. Another feature of arbitration in Asia is that, after the award is issued, the winning party must pursue the recognition and enforcement on a country by country basis. The exercise can be very cumbersome, time-consuming and expensive. Therefore, when considering arbitration in Asia, one must carefully comply with local requirements of the laws and regulations on various aspects of the arbitration such as the arbitration agreement, mandatory provisions, the appointment of the arbitral tribunal, the proceedings, the applicable law to the merit, the applicable law to the proceedings, the conduct of the hearings and the recognition and enforcement issues. The sections below give an overview of arbitration in selected Asian countries. Arbitration in the Peoples Republic of China Arbitration in China is governed by the Arbitration Law, which came into force on September 1, 1995 19. The legislation provides unified law on the administration of domestic and international arbitration. An important feature of the Arbitration Law is that it discourages ad hoc arbitration, requiring parties to specify a recognized arbitration institution in their arbitration agreement. Although parties are not permitted to specify

The ICC statistical report includes detailed information on the participation of ICC arbitration in of parties from different parts of the world. See http://www.iccwbo.org/Products-and-Services/Arbitrationand-ADR/Articles/2013/New-release-from-the-ICC-International-Court-of-Arbitration-Bulletin/ 17 See Dr. Roland Amoussou-Guenou, ASEAN (or Asian) Principles of Contract Law, Journal of International Business Law, N.5 (2005) http://www.worldcat.org/title/perspectives-des-principes-asean-ouasiatiques-du-droits-des-contrats-perspectives-of-asean-or-asian-principles-of-contract-law/oclc/774272886 18 See Asian Development Bank (ADB) The ASEAN Economic Community: A Work in Progress, http://www.adb.org/publications/asean-economic-community-work-progress 19 See Arbitration Law of the Peoples Republic of China, http://english.mofcom.gov.cn/aarticle/policyrelease/internationalpolicy/200705/20070504715852.html

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alternative rules, Chinese parties are not prevented from agreeing to arbitrate outside China. China has acceded to the New York Convention in 1987 20, but its records of enforcement has been unpredictable. The China International Economic and Trade Arbitration Commission (CIETAC), was established in 1956 under the auspices of the China Council for the Promotion of International Trade to handle disputes arising from international or foreign related economic or trade transactions. CIETAC has its headquarters in Beijing, with sub-commissions in Shenzhen and Shanghai. CIETAC maintains a panel of Chinese and foreign arbitrators, from which the parties are required to make their selection, and has its own procedural rules. In September 2000, CIETAC amended its arbitration rules, extending the bodys jurisdiction to include the arbitration of domestic disputes. When considering arbitration in China one must take into consideration the form, the content and the prescriptions of the law in order to avoid the nullification of an ill-drafted arbitration agreement. One important aspect when anticipating arbitration in China, is to bear in mind the language and also the fact that China is a civil law country where rules for conduct of hearings, provision of evidence and other matters are not same as in other Asian countries with Common Law system 21. India India was one of the first countries in South Asia, to reform its arbitration law to break free from the odd arbitration practices of the past, inherited from the British system. Party autonomy and maximum judicial support with minimum judicial intervention are the new abiding features of the Arbitration and Conciliation Act, 1996, based on the UNCITRAL Model Law of 1985 and the UNCITRAL Rules of Arbitration of 1976 22. The courts in India offer full support and encouragement for arbitration. They do not review the merits of an award in an arbitration, unless it is at the request of a party and only under restricted grounds of challenge laid down in the Arbitration Act.

See New York Arbitration Convention, http://www.iccwbo.org/Products-and-Services/Arbitration-andADR/Articles/2013/New-release-from-the-ICC-International-Court-of-Arbitration-Bulletin/ 21 See Mamoudou Samassekou, PhD Candidate, Wuhan University Law School, A comparative Study: Arbitration Agreement in OHADA and Peoples Republic of China Arbitration Laws, Journal of Politics and Law, Vol. 4, N.1; March 2011 22 Bijoylashmi Das and Harsimran Singh, Commercial Arbitration in India: an Update, http://www.iidac.com/about.html

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India is also a party to the New York Convention since 1960, allowing arbitral awards to be enforced by the Courts in almost any country around the world 23. The India International and Domestic Arbitration Centre (IIDAC) is a professional body dedicated to the promotion, facilitation and determination of disputes by domestic and International arbitration, Mediation, Conciliation and other ADR methods. IIDAC which provides ADR related services for all parties, regardless of their location, and the legal system they are subject to. IIDAC provides advisory and consultancy services covering whole range of subject matters under various institutional rules ad hoc arbitration including arbitration according to UNCITRAL Rules 24. Singapore International arbitration in Singapore is governed by the International Arbitration Act 1995, which substantially adopts the UNCITRAL Model Law. The New York Convention has been incorporated into Singapores International Arbitration Act. Awards can be enforced in Singapore, subject only to the reciprocity reservations and the standards exceptions in art 5 of the New York Convention. The Singapore International Arbitration Center (SIAC) was established in 1991 under the auspices of the Economic Development Board and the Trade Development Board 25. Since 3 August 1999 SIAC has operated as an independent institution under the auspices of the Singapore Academy of Law. Whilst SIAC has acquired a global reputation of effective arbitration center, it should be reminded especially to Parties from OHADA that Singapore is a Common Law country. Malaysia Arbitration in Malaysia has a very unique feature that has the potential to serve the purpose of the Asia-Africa business. Indeed the Kuala Lumpur Regional Center for Arbitration (KLRCA) was established under the auspices of the Asia-African Legislative Consultative Organization 26. There is a dual system of international arbitration in Malaysia: those that come under the Malaysian Arbitration Act 1952, and those conducted under the rules of the Kuala Lumpur Regional Center of Arbitration (KLRCA).

23 See New York Convention, http://www.newyorkconvention.org/contracting-states/list-of-contractingstates 24 See India and International and Domestic Arbitration Center (IIDAC) http://www.iidac.com/about.html 25 See SIAC, http://www.siac.org.sg/ 26 See KLRCA, http://klrca.org.my/about/

The KLRCA was established in 1978 and has become the principal organization responsible for international commercial arbitrations in Malaysia. The KLRCA rules are based on UNCITRAL, with certain modifications. They allow for significant autonomy to parties in relation to arbitration procedure and the appointment of arbitrators 27. Awards made in Malaysia are enforceable in the same manner as judgments. Malaysia is party to the New York Convention and foreign awards are thus enforceable. Malaysia is also a Common Law country and Parties from OHADA seeking arbitration in Malaysia may face some challenges. Thailand The arbitration regime in Thailand is provided by Arbitration Act B.E. 2545 (2002), which closely follows the UNCITRAL model law. However, there are some distinct features which are unique to Thailand. For many decades, Thailand has embraced and promoted arbitration as a method of resolving commercial disputes. The country was among the earliest parties to adopt the 1958 New York Convention on the Uniform Enforcement of Arbitral Awards in December of 1959. Nevertheless roughly 10 years ago, arbitration has become controversial in Thailand. Some of the controversies were caused by misunderstandings about the true nature of arbitration and also because of insufficient knowledge and skills in arbitration by State senior officers in charge of contract management and directors of State owned enterprises. As a consequence, Thailand is increasingly perceived as having evolved from an arbitration friendly State to arbitration less friendly State. Things have started to change in 2004, when several controversial bills proposed to the government involved arbitration, such as the bill on the Amendment of Thai Penal Code and the bill on the Amendment of the Arbitration Act. In addition to restricting some arbitration activities, on July 28, 2009, the Cabinet passed a new Resolution expanding the 2004 Cabinet Resolution to restrict the use of arbitration in all types of contracts between a governmental organization and a private company. The business community has expressed regret and concerns through a Position Paper on Arbitration in Thailand 28

See Kuala Lumpur Regional Centre for Arbitration, http://klrca.org.my/ See Position Paper on Arbitration in Thailand, The American Chamber of Commerce in Thailand October 2009
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Despite the pitfalls, many arbitrations in Thailand are conducted under the supervision of the International Chamber of Commerce (ICC). There are also two main domestic arbitration institutions in Thailand which are the Thai Arbitration Institute (TAI) under the Alternative Dispute Resolution Office, Office of the Judiciary (ADRO) and The Thai Commercial Arbitration Institute 29 of the Board of Trade. Both institutions are well respected. They are supervised by a diverse advisory boards, they have standard arbitration rules, and they maintain a list of qualified and available arbitrators. Based the challenges regarding arbitration on Thailand, there is a need to promote a better understanding of arbitration for State officers and Managers of State Owned enterprises Vietnam With the passing of the Ordinance on Commercial Arbitration (Arbitration Ordinance) in 2003, arbitration became an official method for resolving disputes arising from commercial activities. On 17 June 2010, the Vietnam National Assembly passed the Law on Commercial Arbitration No. 54/2010/QH12, which took effect on 1 January 2011 (Arbitration Law or Law) and replaced the Arbitration Ordinance. The Arbitration Law is aimed at encouraging dispute resolution by arbitration and facilitating the development of commercial arbitration activities in Vietnam in accordance with the countrys on-going socio-economic development. Decree 63/2011/ND-CP of the Government dated 28 July 2011 includes further implementing regulations on the Law (Decree 63). In January 2013, the Vietnamese Supreme Court published a draft resolution which is intended to provide additional guidance on the Arbitration Law 30. The Arbitration Law introduces solutions that encourage the development of commercial arbitration, especially international commercial arbitration. Vietnam International Arbitration Center under the Vietnam Chamber of Commerce and Industry (VIAC) was established in 1993. It an independent and non-profit organization.

See Alternative Dispute Resolution Office (Ministry of Justice, Thailand) http://www.adro.coj.go.th/cms3_autostart.php 30 See, Indochina Legal, Reform of Commercial Arbitration Law (Law 54, dated 17 June 2010), Letter from Vietnam, October 2010, and N.4.

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The mission of the VIAC is to promote arbitration and ADR. VIAC is slowly building an international reputation within the local and international communities 31. Because of the relative novelty of the arbitration law and regulations in Vietnam, some time will be required for the local arbitration expertise to be developed. Conclusion Where business goes, disputes always follow. This is especially true for the growing Asia-Africa trade and investment, where many factors such as the geographical distance, different culture and practices, unfamiliar legal systems and different languages are serious challenges and potential risk factors. There is a need for effective dispute resolution mechanisms to assure an amicable dispute resolution and the sustainability of the economic development driven by this new interregional collaboration. A significant effort was make from the African side with the creation of the CCJA and OHADA arbitration system within the harmonization of business law reform. But very little is known about these instruments in Asia. Likewise there is a dearth of knowledge and materials about Asian laws and practices which are quite different compared to what African businesses are familiar with. Nevertheless the Kuala Lumpur Regional Center for Arbitration (KLRCA) established under the auspices of the Asia-African Legislative Consultative Organization could bridge the gap in Asia and serve the same purpose as the CCJA under the OHADA, in Africa.

See Vietnam International Arbitration Center (VIAC) http://www.viac.org.vn/enUS/Home/introduction.aspx

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