The Arbitration Foundation of Southern Africa (AFSA), one of the most used arbitral institutions in Sub-Saharan Africa, launched its revised International Arbitration Rules (New AFSA Rules) on 1 June 2021.
The drafting committee of the New AFSA Rules included various well-known members of the global and African international arbitration community, and the rules were circulated for comment from legal practitioners.
The New AFSA Rules seek to leverage the best practice contained in international arbitration rules of institutions such as the ICC and LCIA. This provides familiarity and comfort for global entities who invest in Africa to have disputes arbitrated on the continent, based on procedural rules they know and trust.
African disputes do not always involve a quantum that warrants the administration costs of traditional arbitral institutions but can be administered at a lower cost through institutions such as AFSA. The New AFSA Rules also provide for measures to improve efficiencies in running arbitral matters and leverage technology. This also allows for more cost effective dispute resolution.
The New AFSA Rules provide for multi-party and multi-contract disputes, as well as matters of ethics, but other noteworthy highlights of the revised rules are:
Establishment of a Court: a new Court has been established and will be assisted by the Secretariat. The Court will play an overarching supervisory role. The Court will not decide the merits of disputes submitted to AFSA but instead seeks to oversee procedural fairness in matters such as appointment of arbitrators and jurisdictional points. The decisions of the Court on procedural issues shall be final and binding with the parties deemed to have waived their rights of appeal or review by any court to any state or other legal authority. This measure is aimed at providing for efficient case management and procedural certainty.
Urgent Procedures: there are two formal procedures to assist in the urgent adjudication of disputes, namely expedited arbitration and the appointment of an emergency arbitrator: Expedited arbitration in lower quantum disputes: prior to the constitution of the arbitral tribunal, a party may apply for expedited arbitration proceedings. If granted, this would result in the matter being decided within six months in most cases. This is procured through truncated time periods, the appointment of a sole arbitrator, the determination of the matter on the basis of documentary evidence alone and/or the provision of summary reasons for the award (unless parties agree that no reasons at all are required). This process may only be followed in cases where the aggregate amount in dispute for any claim and counterclaim (or set-off defence) does not exceed the equivalent amount of USD500,000 (about ZAR7 million) or where the parties agree.
Emergency arbitrator: a party may apply to the Secretariat for the appointment of an arbitrator to conduct emergency proceedings pending the constitution of the arbitral tribunal. This applies where a party requires urgent interim or conservatory measures that cannot await the constitution of the arbitral tribunal. The application may only be brought prior to the constitution of the arbitral tribunal. If granted, the emergency arbitrator will be appointed within 48 hours of application. The arbitrator must establish a procedural timetable within two days and the claim decided as soon as possible but no later than 14 days from appointment. This emergency measure does not apply if the parties concluded the arbitration agreement before 1 June 2021 and the parties have not agreed in writing to opt-in to the emergency measure or if the parties have agreed in writing at any time to opt-out. As such, this is a measure for parties to consider when drafting arbitration clauses or agreements.
Digitisation of hearings: like other leading institutions, hearings under the New AFSA Rules may take place in person or by other means including by video, telephone conference or a combination thereof. One of the major impacts of Covid-19 on dispute resolution is the largescale migration to digital platforms of case management and hearings. The growth in demand has compelled service providers to upscale internet facilities and other role players, such as companies and law firms, to ensure access to the necessary technology and cybersecurity. Again, this saves on costs and allows legal practitioners from outside of South African to participate in proceedings with ease.
Third party funding: specific provision is made for third party funding of disputes referred in terms of the New AFSA Rules. The third party funding agreement must be concluded before the commencement of the arbitration and the party funded must notify the other parties, arbitral tribunal and secretariat as soon as practicable. This aligns with the growth in third party funding that is anticipated in Africa, where it has been an underutilised tool to date, and more so given the financial impact of Covid-19 on businesses and the desire to remove the cost of arbitration from their annual budgets, in exchange for a slightly smaller share of the winnings recovered.
Confidentiality and publication of award: as a general rule, confidentiality in arbitral disputes is fundamental and this remains the position under the New AFSA Rules. However, also important is the need for judicial precedent, especially in relation to complex commercial matters. The New AFSA Rules are alive to the fact that the omission to publish arbitral awards has carried with it unintended adverse consequences to the overall development of legal jurisprudence. Under the New AFSA Rules, the default position is that AFSA may in principle publish all arbitral awards in an anonymised or pseudonymided form unless a party to the arbitration proceedings objects in writing to publication within 30 days of notification of the award. This measure enhances transparency and it is a promising initiative for the development of the body of law and therefore legal certainty in Africa.
In addition to South Africa being an established seat for arbitration in Africa with many well-known advantages and Johannesburg, Cape Town and Durban being listed among the preferred major cities for arbitration in Africa, AFSA was listed as the top African Arbitral Centre in the 2020 Arbitration in Africa Survey Report. The New AFSA Rules are yet another reason for parties to agree to South Africa as the seat of arbitration in cross-border African disputes.
If you would like to arrange tailored training on international arbitration in African disputes and whether it is appropriate to include reference to the New AFSA Rules in your commercial agreements, please email the authors.