How the new CAJAC rules could improve Africa-China arbitration proceedings

September 26, 2024

By:  Siphokazi Kayana and Charlene Ferns

It is well known that China is one of the largest producers and commercial traders in the world, dealing with well over 126 countries as of 2024. However, what many people do not know is that of the countries China deals and/or trades with, over 53 of them are located within the African continent. Today, as China has become one of Africa’s largest trading partners, with a record total of $282bn in trade volume in 2023, and as economic relations between the two regions evolves, the need for more effective and fair dispute resolution mechanisms has grown. When it comes to the trade and investment ties between China and Africa, the two regions have been able to rely on the Chinese Africa Joint Arbitration Center (CAJAC) to chart the waters of diverse individual legal systems across each African country, and cater to the need for neutral and cost-effective mechanisms for resolving commercial disputes since its inception in 2015. It is important to note the establishment of CAJAC was a departure from the normal African framework adopted for international arbitration, which is mostly based on European and Western practices and precedents similar to those of the United Nations Commission on International Trade Law (Uncitral), which China’s international arbitration legislation is not based on.

Potential new rules

The first proposed rule change will allow foreign arbitral institutions to conduct foreign-related arbitration business in mainland China. This will help to standardise arbitration across a diverse multitude of economies, cultures and differences, thereby enhancing the reliability of Sino-African engagements. Another proposed rule change will see not only PRC courts, but also arbitral tribunals and emergency arbitrators empowered to grant interim relief. This amendment enhances the efficiency and effectiveness of the arbitration process by providing parties with quicker access to necessary temporary measures, such as asset freezes or injunctions, to protect their interests during the arbitration. It reduces dependency on court intervention, thereby streamlining proceedings and saving time and costs. Additionally, it has also been recommended that grounds for the setting aside and non-enforcement of arbitral awards will be unified across both domestic and foreign-related awards, thereby creating a consistent framework. This harmonisation enhances legal clarity and predictability, reducing complexities and potential inconsistencies in the arbitration process. It will foster a more reliable and transparent arbitration environment, building greater confidence among international and domestic parties. And, if ad hoc arbitration proceedings are permitted for foreign-related commercial disputes, as proposed in the new changes, each party will be able to tailor the arbitration process to their specific needs without constraints.

Positive impact

These reforms are expected to impact the current CAJAC rules if adopted and will result in the establishment of potentially new rules which further bridge the gap between China and Africa and further push the adoption of an exclusive dispute resolution mechanism such as CAJAC between these countries. The success of CAJAC and the vision which it encompasses cannot be understated. It has laid the foundation for much needed discussions amongst Brics (Brazil, Russia, India, China and South Africa) countries regarding the arbitrational mechanisms currently in use and the need for potential reform thereof especially given the admission of Egypt, Ethiopia, Iran and the United Arab Emirates to the membership of Brics and the growing need for a uniform dispute resolution mechanism to serve the member states. As Sino-African economic relations continue to deepen, CAJAC's improved framework will play a crucial role in resolving disputes amicably and efficiently, fostering a more harmonious and prosperous partnership between the two regions.

Source: Bizcommunity