China’s relationship with Africa is blossoming. Cathy Chen explores some of the continent’s hotspots for Chinese investment
It has always been a shaky marriage to maintain, but one filled with promise. Culturally and geographically oceans apart, the African bloc is characterised by legal inconsistencies, corruption and often dangerous conflict. But China has been nothing if not persistent in pursuing its desires.
If anyone doubted the commitment, Chinese President Hu Jintao’s pledge in July 2012 of US$20 billion worth of loans to African countries, with priority support to development of infrastructure, agriculture, manufacturing and SMEs, should have put paid to those doubts. According to the UN’s World Investment Report 2012, China’s two-way trade with Africa reached US$166.3 billion in 2011, covering 50 countries on the continent. South Africa’s Standard Bank forecasts the figure will surpass US$200 billion for 2012.
China’s desire is fuelled by three essential elements: a booming market for its excess manufacturing capacity (Standard Bank estimates 18% of Africa’s imports were sourced from China in 2012); vast energy resources to ensure its continued insatiable development; and a wide market for its considerable expertise in infrastructure building following decades of domestic development. For Africa’s part, the continent is evolving quickly, with GDP growth averaging well above 5% in the past decade, according to the International Monetary Fund. Its fractious components need continued investment to spur growth in infrastructure and help establish more stable and open economies.
Shourav Lahiri, a partner at Pinsent Masons in Beijing, specialises in advising state-owned enterprises (SOEs) on energy and infrastructure projects, and has experience in 10 African nations. Pinsent acted for SFECO, a subsidiary of Shanghai Construction Group, in its purchase in April 2012 of a stake in Chalice, an Australian mining company with a mine in Eritrea. Pinsent also acted for East China Exploration (ECE) in its joint venture in the UK to set up China Africa Resources, which listed on the AIM market. The firm then assisted this entity, which was majority held by ECE, to acquire the Berg Aukus mine in Namibia.
Mauritius cements plans to be seat of arbitration for Africa
Around 350 delegates attended an international arbitration conference on 10 and 11 December in Mauritius to mark the launch of the LCIA-Mauritius International Arbitration Centre (LCIA-MIAC), a joint venture between the London Court of International Arbitration (LCIA) and the government of Mauritius.
The keynote speaker, Patricia O’Brien, legal counsel and undersecretary-general for legal affairs at the United Nations, set the tone for the conference, describing it as a “testament to the commitment of Mauritius to position itself as a credible and enduring platform in the domain of international arbitration”.
The overriding message was that Mauritius, which uses a unique mix of both common law and civil law, is an efficient, neutral and safe seat for international arbitration. Opening the conference, the prime minister, Navinchandra Ramgoolam, said: “Like Singapore in Southeast Asia, and like Switzerland in Europe, Mauritius is very much part of this region that is Africa, but it is also uniquely open to the rest of the world … Mauritius has the necessary infrastructure to become the centre for the resolution of international disputes”.
Salim Moollan, a London-based barrister described by several speakers as “the driving force” behind the conference, told China Business Law Journal the project to develop Mauritius as a platform for international arbitration had never been a commercial venture. “It is about capacity building for the entire region, to try and slowly build up our ability to handle these disputes ourselves.” Moollan is chairperson of the working group on arbitration and conciliation of the UN Commission on International Trade Law (UNCITRAL).
Delegates were uniformly impressed with the conference and the ambitions of Mauritius. “This kind of conference provides a good platform to establish who is good and what they can do,” said Jin Li Nan, managing partner of Shanghai Guo He Law Firm, adding that there are “many well established international arbitrators but they have no market”.
“Mauritius is a great junction between Asia and Africa, so it can serve two markets in that sense,” said Diane Desierto, an assistant professor at Peking University’s School of Transnational Law. “They have civil law and common law and that is a huge advantage for many Asian countries that don’t want to go to a common law jurisdiction.”
“We would normally look at the ICC Paris as the seat for arbitration … it’s nice to know that there is another option,” said Fatma Karume, a partner at Ishengoma Karume Masha & Magai in Tanzania, which is part of the DLA Piper Group.
In remarks delivered during his closing address, the chief justice of Mauritius, Justice Yeung Kam John Yeung Sik Yuen, said that the role of the judiciary would be to “facilitate international arbitration”.
Mauritius has been steadily laying the groundwork to attract international arbitration to its shores. The Mauritius International Arbitration Act, 2008, which is based on the UNCITRAL Model Law, came into effect in January 2009. It gives the secretary-general of the Permanent Court of Arbitration (PCA)powers that include appointing arbitrators in arbitral proceedings.
In April 2009, Mauritius signed a host country agreement with the PCA, and in September 2010 the PCA opened its first office outside The Hague, in Mauritius. In 2010, the country held its first international arbitration conference.