Address by the Deputy Minister of Justice and Constitutional Development, the Hon JH Jeffery, MP at the First China-Africa Joint Arbitration Centre (CAJAC) International Arbitration Conference, held at the Cape Town International Convention Centre (CTICC), 25 November 2017
Members of the judiciary,
Members of the China-Africa Joint Arbitration Centre,
Members of the Forum for China-Africa Cooperation,
The Executive management of the Arbitration Foundation of South Africa,
Members of the China Law Society and various South African law societies,
Members of the legal profession,
Ladies and gentlemen
I’m extremely honoured to be part of this – the very first – China-Africa Arbitration Centre International Arbitration Conference.
It’s one of many “firsts” that I’ve been privileged to have been part of in the establishment and growth of the China-Africa International Arbitration Centre.
On the occasion of the establishment of CAJAC and the signing of the Johannesburg Consensus, on the 17th of August 2015, I remarked that –
“the establishment of the China-Africa International Arbitration Centre is an important step in furthering the partnership between our two countries – a partnership that is becoming ever-stronger.
This has indeed become the case, not only in terms of greater collaboration in the area of arbitration, but also in respect of increased trade and investment between our countries.
The South African Department of Trade and Industry (DTI) and the Bank of China signed a strategic co-operation Memorandum of Understanding in Johannesburg in March this year. The signing of this MOU enables us to run investment promotion campaigns and to jointly support enterprises from the two countries for enhanced economic and trade cooperation.
The DTI has also lead a group of South African companies to the 17th Annual China Mining Congress and Expo that was held at the Tianjin Meijiang Convention Centre in China in September.
South Africa’s participation in the Expo is a result of South Africa and China having developed strong bilateral relations during the past decade.
The BRICS Summit which took place in Xiamen, China, in September set an important milestone towards building stronger solidarity and cooperation among emerging markets and developing countries to implement the 2030 Agenda for Sustainable Development.
South Africa’s partnership in BRICS is premised on advancing the country’s national interests, promoting regional integration and advocating a more inclusive global governance system. Total bilateral trade between South Africa and other BRICS countries amounted to US$29 billion last year.
South Africa’s biggest export destination within BRICS remains China, followed by India, Brazil and Russia.
The same pattern is also evident in imports, with China remaining the biggest source of South African imports. Whilst South Africa has abundant natural resources, it is critical to implement beneficiation programmes to support our industrialisation policy.
Cabinet recently said the adoption of the BRICS Xiamen Declaration and Action Plan highlighted the strong foundation that BRICS has made in terms of establishing institutional mechanisms for tangible cooperation.
Last month, South Africa also co-hosted the China International Small and Medium Enterprises Fair (CISMEF) which took place in Guangzhou City, Guandong. The aim of the fair was to unlock markets for small businesses and cooperatives.
These are but some of the initiatives and interventions to further trade and investments between our countries.
At the fifth Biennial Conference of China-Africa Industrial Forum that opened in Beijing last week, it was highlighted that Sino-African trade is likely to total $180billion (R11.94 trillion) in 2017.
And with increased trade and increased investment comes the need for greater commercial dispute resolution mechanisms – hence the need to look at international arbitration.
As you know, the China-Africa Joint Arbitration Centre is a landmark multi-lateral partnership between leading Chinese and African arbitral institutions created to ensure a comprehensive dispute resolution mechanism acceptable to Chinese and African business, investment and legal communities.
Since its establishment, the CAJAC operates out of South Africa and Kenya, and in China, it operates out of Shanghai, Beijing and Shenzhen.
These CAJAC regional centres offer a shared dispute resolution mechanism and are building a China-Africa jurisprudence, which further facilitates trade and investment between Africa and the Peoples’ Republic of China.
Arbitration in Africa is becoming all the more important, particularly in view of World Bank figures which show that economic growth in Sub-Saharan Africa is recovering, albeit at a modest pace.
According to the World Bank the rebound is led by Africa’s largest economies.
In the second quarter of 2017, Nigeria emerged from a five-quarter recession and South Africa emerged from two consecutive quarters of negative growth. Improving global conditions, including rising energy and metals prices and increased capital inflows, have helped support the recovery in regional growth.
Sub-Saharan economic growth is further projected to increase by more than 1% to a projected 2.4% in 2017 from 1.3% in 2016. Looking further ahead, Sub-Saharan Africa is projected to see a moderate increase in economic activity, with growth rising to 3.2% in 2018 and 3.5% in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation.
International arbitration also becomes all the more important in view of China’s “Belt and Road Initiative” (or the One Belt, One Road Initiative, as it was previously called). This Initiative seeks to build infrastructure in the footsteps of the ancient silk trade route. It aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network - including roads, ports, railway tracks, pipelines, airports, transnational electric grids and fibre optics. It involves 65 countries, which together account for one-third of global GDP and 60% of the world's population.
It is against this backdrop of increased trade and investment, as well as the recovery in economic growth that international commercial arbitration has a significant role to play.
South Africa has to respond in a way that will allow international arbitration to flourish and to meet growing demands for dispute resolution.
It means keeping up with international best practice – and one of the key ways in doing just that, is ensuring that the legislative framework is sound.
I am therefore pleased to advise that last month, on 24 October, our National Assembly passed South Africa’s International Arbitration Bill. This past Wednesday, 22 November, the Select Committee of the National Council of Provinces (the second House of Parliament) approved the Bill with no amendments.
I am told that the Bill is scheduled for approval by the NCOP plenary sometime next week, where after it will be sent to the President to sign it into law.
We are therefore confident that it will on our statute books before the end of the year.
The Bill has been long overdue.
As you know, South Africa is a party to the New York Convention.
In May 1976, South Africa acceded to the Convention without reservation and the Convention has been in force since August 1976.
Furthermore, South Africa enacted the Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 in order to give effect to the principles of the Convention.
The Arbitration Act of 1965 governs arbitration proceedings in South Africa. This Act however makes no distinction between domestic and international arbitration and the Act is not based on the UNCITRAL Model Law.
The new International Arbitration Bill emanates from an investigation of the South African Law Reform Commission.
Concerns were raised that the Recognition and Enforcement of Foreign Arbitral Awards Act is not in alignment with international developments, that the Arbitration Act of 1965 is inadequate for purposes of international arbitration and the South African arbitration law is outdated in many respects and thus needs revision and updating in order to reflect and serve modern commercial needs.
The main thrust of the Bill is the adoption of the UNCITRAL Model Law as the cornerstone of the international arbitration regime in South Africa.
The Model Law is the current international benchmark for arbitration laws as it was developed to address the wide divergence of approaches taken in international arbitration throughout the world and to provide a modern and easily adapted alternative to outdated national regimes.
It is intended for adoption by individual countries and has been adopted by many Commonwealth and other countries, including important trading partners of South Africa, both within SADC and beyond.
Of the 54 members of the African Union, more than half have modern arbitration legislation for international arbitration.
The new Bill comes at an opportune time for our country to opt into the international standard for the resolution of commercial disputes. Not only does it have the potential to attract foreign direct investment, but also to give greater legal protection to South African investments abroad.
Our Bill provides that the Arbitration Act is not applicable to arbitration matters which are subject to the Model Law. The purpose of this exclusion is to provide certainty for foreign users of the Model Law in South Africa so that they will know that they do not have to search outside the enacting legislation for possible discrepancies.
The Bill, subject to the provisions of section 12 of the Promotion and Protection of Investment Act binds public bodies, and applies to any arbitration in terms of an arbitration agreement to which a public body is a party.
Investor-state arbitrations will be regulated under the Protection of Investment Act. The reluctance to permit such arbitrations under the International Arbitration Bill must be understood in terms of Government protecting our sovereignty as a nation and our policy space.
The Bill also makes provision for the confidentiality of arbitral proceedings where such proceedings are held in private.
However, where an organ of State is a party to arbitration proceedings, such proceedings must be held in public due to the public interest in the matter.
In terms of clause 16, a foreign arbitral award may be recognised in the Republic as required by the Convention.
Furthermore, a foreign arbitral award must, on application, be made an order of court, and be enforced in the same manner as any judgment or order of court, provided it complies with the provisions of the clauses of the Bill dealing with the recognition and enforcement of foreign arbitral awards.
With regard to the transitional arrangements, the Model Law will apply to all international agreements, irrespective of whether the agreement was entered into before or after the commencement of the Bill.
Of course, once the new legislation has been enacted the proof of the pudding will lie in the eating.
And various factors will play a role in establishing ourselves as trusted and respected players in the field of arbitration.
Besides issues relating to the formal legal infrastructure – aspects such as the neutrality and impartiality of the legal system, our national arbitration law, and our track record for enforcing agreements to arbitrate and arbitral awards – it is equally important to ensure that arbitration keeps up with the times and is cost-effective and delivers a speedy resolution of disputes.
I am told that, at the invitation of the Shanghai International Arbitration Centre (SHIAC) and the Chinese Law Society, a delegation from the China-Africa Joint Arbitration Centre South Africa visited China.
The discussions covered a number of topics. One of the areas that I was particularly interested to read about related to the time it takes to resolve legal disputes.
In China, time is clearly of the essence – and arbitrators are expected to distil the key issues in a matter and to then ask the parties to focus on those. While there may be some cross-examination, this is limited only to the key issues. Proceedings rarely last for more than a day. Only evidence that is strictly relevant to the key issues is presented orally.
Whilst the emphasis is on the relevant documents, there is, however, no process of discovery. The parties put up documents supporting their case as part of their statements of claim in the reference.
The Chinese participants to the discussions also emphasised that arbitrations conducted under the auspices of the CAJAC would have to “be efficient and produce speedy resolutions”.
The parties would have to focus on the key issues and it was stressed that lengthy hearings would not be acceptable to the Chinese commercial community.
It reminds one of 2016’s World Economic Forum in Davos where one of the speakers remarked that “speed is the new currency of business”.
It therefore also makes good sense that the CAJAC is establishing itself as a one-stop-shop. Besides acting as arbitrators, the various CAJACs - being Johannesburg, Shanghai, Nairobi, Beijing and Shenzhen - would also function as business advisers by providing information to those wishing to set up business in Africa or China.
Ladies and gentlemen,
In closing, I want to extend our congratulations to the China-Africa Joint Arbitration Centre on its remarkable growth and success over just a little more than two years. May it go from strength to strength.
It seems that this year was an auspicious choice for the holding of this first CAJAC Conference. I am told that 2017 is the Year of the Fire Rooster.
The rooster is known as the one who awakes first, at dawn, and gets everyone going for the day ahead – it symbolizes punctuality, a sense of good timing, enthusiasm and a focus on good things to come.
I want to wish you all a very successful conference. Like the rooster awakes the world to a new day ahead, may this conference awake a new era in arbitration in China and Africa and new opportunities for investment and trade.I thank you.