One might assume that as arbitration has been on the rise in Africa, along with the emergence of numerous arbitration centres, fewer disputes would be sent abroad for resolution. However, the reality on the ground paints a different picture.

Despite the existence of over 90 arbitral centres spread across African countries, major disputes from the continent are still being rendered in foreign centres based in Paris, London and Singapore, findings have shown.

For instance, while showcasing the diversity of the International Chamber of Commerce (ICC) 2021 caseload, Secretary-General Alexander Fessas highlighted that 193 parties of the arbitrations the Paris-based court administered were from 35 African countries.

And the ICC is not the only preferred choice for African parties seeking arbitration abroad as some opt for the London Court of International Arbitration (LCIA) and the Singapore International Arbitration Centre (SIAC). In 2022, the LCIA and the SIAC handled 13 and nine cases involving African parties, respectively.

Practitioners who spoke to Law.com International also shared the view that the increase in African arbitral institutions has not matched the level of their patronage.

"I think it is a question of choice. There are nearly a hundred arbitration centres in Africa now, which is a lot," said Thomas Kendra, partner at Hogan Lovells and board member at Kigali International Centre for Arbitration.

Although acknowledged that there is a market for African entities to resolve their arbitration at home, Kendra said many still prefer foreign institutions due to their long-standing reputation and experience.

Other factors he cited include the nature of the dispute, location of the parties and amounts of money involved.

This aligns with a survey of over 1,200 practitioners conducted by White & Case LLP and Queen Mary University, which revealed that African respondents ranked the ICC and LCIA as the top two institutions.

Investor power

Paula Hodges, global head of arbitration at Herbert Smith Freehills LLP and LCIA president, recognised the role of early multi-national investors in Africa.

"A lot foreign investors were nervous about having any dispute on the ground in the country. They wanted a neutral ground," Hodges said, noting that a lot of African institutions were willing to agree to such terms because they were keen to secure the financial commitment from the investors.

She stressed that even though some countries such as Nigeria and Ghana can now insist on clauses that favour their national arbitration centres, it is still a "split picture".

"That is why there is that discrepancy that there are a lot of institutions but not yet a requisite number of cases happening in Africa," Hodges stated.

Jimmy Kodo, a legal practitioner and member of multiple African arbitration centres, adds that the vast majority of arbitration involving state-owned entities and businesses takes place in foreign countries because the contracts are drafted abroad, he said.

"9 out of 10 of these contracts contain clauses designating foreign arbitration centres for the dispute resolution."