Programme Director,
Ladies and gentlemen;
I am impressed by the array of experts in various fields to deal with one of the growing semi-legal instrument in the resolution of disputes. So even before Conference deliberations and sharing of expertise and experiences take place, I am convinced that the Mechanism that will come out of Conference will be the one that is informed by the best available expertise and experience in this field.
It is my view that a mechanism that is underpinned by absolute neutrality, presided over by and staffed by professionals of impeccable integrity, is already in the making if only from a cursory glance of the delegates and experts that are gathered here today.
I therefore wish to thank the various law firms, corporate governance institutions, Chambers of Commerce, academic and local and international dispute resolution institutions for having availed their experts to take part in this important inaugural conference. I welcome all delegates, leaders, facilitators, discussants, panellists and presenters to the beautiful city of Cape Town.
Programme Director; allow me also to thank the earlier initiatives that have been taken by Africans themselves in this regard. I would like to thank the efforts of the Cairo Regional Centre for International Commercial Arbitration, the joint venture between the Arbitration Foundation of Southern Africa (AFSA) and the Mauritius Chamber of Commerce, as well as the London Court of International Arbitration which has partnered with Mauritius.
In relation to the issue of the arbitration that conference will discuss, I will beg your indulgence to quote three South African experiences with this new system of resolving conflicts:
- Firstly, I will refer to the past. During the negotiations for our democratic dispensation a slew of political parties who favoured a federalist dispensation, requested the intervention of international mediators to deal with some Constitutional deadlocks. It was under these circumstances that Lord Carrington, the former British Secretary and the former United States Secretary of States, Dr Henry Kissinger and Kenyan national Professor Washington Okumu came to our country in 1994. When the two statesmen left prematurely, Professor Okumu remained behind to broker an agreement between the African National Congress, the Inkatha Freedom Party and the National Party in which the Inkatha Freedom Party, amongst other things, agreed to participate in the general elections of 1994.
- Secondly, I will refer to the present. A number of labour disputes between employers and employees are mediated through the offices of the independent Commission for Conciliation, Mediation and Arbitration. Either through its own invitation to parties that are in dispute or at the invitation by the parties themselves, the services of the CCMA have been much appreciated in reducing areas of contestation between parties in dispute.
- Thirdly, I will refer to the future. After our own analysis of the deficiencies of the Domestic Arbitration Act, Act 42 of 1965, we found the Act to be deficient for an expanding international trade and investment regime. The South African Law Commission is a statutory body tasked with researching and recommending to Government for the development, improvement, modernisation and reforms to all branches of law. The Commission is finalising its recommendations about how the Alternative Dispute Resolution can be codified into South African Law so as to enable the resolution of conflict without resorting to the lengthy and often costly litigation processes. Much work has been done in the past by the Commission, including Draft Bills and Issue Papers on what was referred to as Project 94, but the need for these to be responsive to the international best practices has always made the task a moving target. A new instruction was issued for the Project 94 to be reinstated at the end of 2011.I am confident that both the outcomes of this Conference and the Recommendations of the Commission will find resonance with each other. We envisage that these Bills will be tabled before Parliament shortly after the general elections in 2014.
When investors think about investment in Africa, they often have to make rational choices between the return on their investment and the negative connotations of an Africa that is politically unstable; a continent where corruption has become second nature, where regulatory bodies are inadequate and where infrastructure is poor. In spite of these connotations, one area of business, namely Mergers and Acquisitions, is rising and investors are willing to invest and mitigate the risks involved in doing business in the continent.
According to available figures, the value of Mergers and Acquisitions in Sub-Saharan Africa reached US$25-billion in 2012, and this was a rise of 18% from the 2011 financial year. The African Development Bank confirms that around one third of countries in the continent experience an annual growth of over six per cent. The allure of the African Market is largely a function of its own history: that it is largely underdeveloped and therefore untapped.
Using the example mobile penetration alone, one survey shows that 71% of mobile internet users in Africa are men. Over half of them are between the ages of 18 and 24. 57% of mobile internet users in African own vehicles, 48% of internet users have some form of payment cards; African consumers prefer mobile ads which provide downloadable content of 74%.
There are many examples to quote in various business areas which show that while there are concerns, Africa is a favoured investment destination by many global companies. This becomes even more so as traditional markets shrink.
The shortage of infrastructure is an incentive for companies involved to begin to invest in this area of business and in other supportive services at both the high end and low ends. The bountiful availability of mineral and energy resources points to a need for an investment in transportation infrastructure. The lack of aviation interconnectivity is always a draw card for the aviation industry to invest in this vast market. All these possible investors will require a conducive environment to conduct their business, while the host countries would also be eyeing benefits for their own economies and business opportunities for their citizens.
Two weeks ago, I had the honour of opening brand new offices of a law firm that has established a footprint in the continent. They advised me that the business opportunities are great and they intend to use their continental footprint to expand even further. The company already deals in various areas of business and I am sure that they will be ready to share their experiences as part of their contributions to the mechanisms that will finally come out of this conference. African businesses can only succeed if it is prepared to share experiences.
There are many areas of contestation such as corporate social investments; the marginalisation of local populations, the lack of beneficiation for local products the compromise of local supply chains and the corporate governance deviation from international practice. A Mechanism delegates will discuss in the next two days should seek to limit these skewed power relations.
It is my view that once an ADR Mechanism is developed as a private sector initiative, apprehensions by some African governments that some Multinational Corporations have an overreach that amounts to interference in domestic policy-making, will be reduced. The Mechanism should also be able to protect the continent’s citizens from the predatory nature of some of the companies doing in business in Africa. These companies should correctly be seen as part of the Continent’s economic development rather than as profit repatriators. Contract drafting, contract management and contract adherence become very important areas of concentration for all parties concerned.
An independent Mechanism developed by the private sector needs to be seized with the reality of a continent where State-Owned Companies still play a large economic and developmental role. In most African states, parastatals play a large role negotiating, mediating and arbitration of trade and investment deals. There should also be an attendant recognition that investing countries could themselves use the vehicles of their State-Owned Enterprises to invest in the continent. This will thus require a mechanism that will be able to respond to both public and the private sector trade, business and investments in the continent.
A conference that seeks to thrash out an arbitration system that will deal with the growing business, trade and investments partnerships is both necessary and welcome. It is my view that the evolution of an ADR is one instrument that will further unlock this untapped business potential as foreign investors find confidence that their disputes with local companies and businesses will be arbitrated speedily to the mutual benefit of all involved. The added advantage will also be that as disputes can arbitrated within the African continent, the costs, the time and the inconvenience of attending to disputes in investing countries will be reduced.
I am confident that this issue of the continent’s peculiarities that I have raised will be achieved because some solutions already exist within the current global instrument of the ADR, particularly the United Nations Commission on Internal Trade Law (UNCITRAL) Model Law on International Commercial Arbitration of 1985 and as amended in 2006. I am therefore happy that the issues of the location of the centres of dispute resolutions will offset the traveling that such a huge continent still requires. The flexibility of procedures, the enforceability of awards, the impartiality and the independence of arbitrators are also some of the areas that give comfort that the Mechanism will respond to the specific conditions of the continent.
I am also impressed that the number of requests for arbitration is growing exponentially. While in the year 1999 only 529 requests were from 1354 parties from 107 different countries, in 2012 there were 759 requests filed with the ICC International Court of Arbitration coming from 2005 parties from 137 countries and independent territories. This accounts for the total of the more than 19 000 disputes that have been resolved since the inception of the International Commercial Courts in 1923.
An effective alternative dispute resolution (ADR) Mechanism will also require the strengthening of regional trade blocs in such a manner that they all strive for the development of the continent as a whole rather than the promotion of their regional interests. Much headway has been made in this regard at a political level and there is general acceptance that if one part of Africa is underdeveloped and less attractive for business, then the whole continent will be similarly affected.
It will require that as regional economic bodies find themselves, whatever areas of disagreements they may face will be ably mediated by such efforts that conference is starting today. The point I want to make is that the market already exists for such an ADR Mechanism. All it may need is that brilliant contributions that will be made here be also responsive to a market that already exists, while it also locates itself within the challenges that may arise in future.
The ADR Mechanism should not in my view, be a replacement of the existing trade relationships, patent rights and corporate governance ethics. Conference in my view should rather strengthen areas of weaknesses on agreements that already exist. It is further hoped that entities and businesses that enter into agreements with continental partners, will front load the advice coming from such a mechanism so as to prevent future disagreements.
I do accept that the African ADR Mechanism is long overdue. There is however an attendant vigilance that should be exercised in arriving at a Mechanism that will be able to resist test stresses in future. The route of establishing this Mechanism will require, among others, a thorough identification of mutually beneficiating partnerships; synergies with existing legal instruments; compliance with the parent global instruments; learning from the current best practices such as those of Brazil, Europe, Mainland, China and Hong Kong where these arbitration services are well-established and careful consideration of the text of the documents of association.
More often than not texts in internationally binding instruments have become contested, and in an effort to find the right balance and catering of the interests of all signatories, a lot of time has been spent on this issue alone. I am painfully aware of some global engagements which get postponed because parties cannot find one another because of inconsistencies in and disagreements over text. I am certain that the collective expertise in this Conference will deftly navigate this contested area of global instrument formulation.
Our efforts to evolve a Mechanism should also be driven by the desire for African solutions to those accounting challenges, dispute management issues academic excellence and corporate governance development that will cast the continent as a shining light in all these areas. I am also delighted that the Mechanism itself is so flexible that it can locate at any venue of the choice of the disputants, speak in the preferred language while reducing the costs that are attached to lengthy litigation processes.
I have raised the issue of the African ADR Mechanisms being long in coming. I am however comforted by the fact that this will allow delegates and experts gathered here to seize the moment and to try to arrive at a Mechanism that will be both an envy and a reference point for existing Mechanisms. You have thus been presented with a perfect opportunity to develop your area of expertise as represented by the delegates and experts gathered today while also pledging your patriotism to and solidarity with our continent.
It is important that as we develop such instruments as the ADR we also recognise the existence of the economic regulatory bodies so as to avoid one becoming a proxy for the other. Both have a role to play, and both should find each other so that the business environment in the continent is conducive to direct foreign investment.
One area I would suggest as delegates craft a Mechanism would be for approaches to be made to national legislatures to begin efforts to domesticate outcomes of this conference. The involvement for the Trade, Industry and Investment Government Departments would be a desirable consultation point. In our case the need for synchronising the draft Promotion and Protection of Investment Bill is relevant to the development of this Model Law. The early lobbying should, in my view, be dome through the relevant structures of the African Union or be canvassed within the national legislatures so that they can find their way to the Summit of Head of States and Governments.
Our experience is that as a continent we are sometimes we are impeded by the fact that some Parliaments of the Member States are still dealing with the adoption of continental instruments. It is however heartening that of the 54 member states of the African Union, at least 30 states have now adopted modern arbitration legislation. Conference is also requested to consider developing a Mechanism that will encourage ease of adaptation for countries that are still developing their own instruments.
I strongly believe that as the Mechanism gains maturity those issues which can be settled outside courts will redirect our courts to deal directly with issues of a judicial nature. This will act as a means to increase access to justice for our citizens which is still a challenge in many of our jurisdictions. The department’s driven Civil Justice Review Project CJPR) also proposes the optimal use of the ADR to enhance access to justice. Already in our country the Constitutional Court is accepting the private choice of the disputants in the case Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews 2009 (4) SA 529 (CC) though adding a rider that the private process must be fairly conducted on the basis that the outcome will be respected and enforced by the courts.
There is still much to be done in the evolution of the legal instruments for the continent as the issue of the Kenyan leadership and the ICC showed about a month ago. I am confident that Conference approach can be used as a locomotive to encourage the rest of the legal profession in the continent to finalise the legal instruments that will respond to the challenges that we have faced in the past.
As this is an inaugural conference, areas of contestations should be expected as delegates try to find one another. But I also want to point out that you have inadvertently become victims of the objectives of this conference. With such an array of experts, academic and legal professionals in the area of arbitration and mediation, finding consensus amongst yourselves should be your second nature. Africa and companies doing business in the continent expect no less.
It is my pleasure to welcome you to this beautiful city of Cape Town. We are delighted that the organisers have chosen it as a venue for the ADR and Arbitration Inaugural Conference. The beauty of the City is well documented. It will be worth your while to unwind after the exhaustive conference by visiting all the wonders that Cape Town is known for. Apart from being our Legislative seat of Government, Cape Town also has the Table Mountain which has been declared by UNESCO as one of the new Seven Wonders of the World. There are vast wineries and wine farmlands, and the road to the Eastern Coast is blessed with one of the best sceneries in the world.
It is now my pleasure to declare this ADR and Arbitration Conference officially opened.
Thank you.
