Africa's new economic partnerships and dispute settlement.

Author:Shinn, David H.
Position:Proceedings of the 110th Annual Meeting of the American Society of International Law: Charting New Frontiers in International Law

This panel was convened at 11:00 a.m., Thursday, March 31, 2016, by its moderator Uche Ewelukwa of the University of Arkansas School of Law, who introduced the panelists: Victoria Shannon Sahani of Washington and Lee University School of Law; David H. Shinn of George Washington University School of Law; and Thomas R. Snider of Greenberg Traurig LLP. *


My remarks during the panel focused on the role of China, India, Brazil, and Turkey in Africa, emphasizing that emerging nations generally are playing an increasingly more important role. They provide alternative investment, aid, and even models for development. China and India are particularly interested in access to Africa's natural resources--Brazil and Turkey less so. China and India also have growing security interests in Africa. Turkey has demonstrated a security interest in northeast Africa, especially Somalia.

There is potential security competition between China and India in the Indian Ocean where both countries have been active in combating Somali piracy. This led to an expansion of the Chinese navy in the Indian Ocean. China is building a military facility in Djibouti to support its naval interests while India recently signed an agreement for a military base in the Seychelles. India has expressed concern about possible Chinese encirclement.

China is Africa's major trading partner but India may soon pass the United States and capture the second position. Turkey and Brazil are much smaller trading partners. China provides about $3 billion annually in foreign aid to Africa, as compared to $8 billion annually from the United States. Aid from Turkey, India, and Brazil is less than $1 billion each annually. None of these countries attach political strings to their aid, but China makes a point of publicizing this point while the others do not.

The numbers for foreign direct investment (FDI) are fuzzy for all four countries. China's official FDI figure understates the actual number as it leaves out flows from tax havens such as the British Virgin Islands and Hong Kong. The actual number is probably double the official figure, but still constitutes only about 5 percent of China's global FDI. India, Brazil, and Turkey have considerably less FDI in Africa.

China is making the biggest effort on expanding soft power in Africa. It offers numerous scholarships and its official news agency, Xinhua, is the largest news service in Africa. China Radio International and China Central Television are also active in Africa. India, Brazil, and Turkey are doing little in the media field but India and Turkey offer many scholarships. Most Turkish scholarships are to universities and many of them have gone to Somalis. Brazil has been less engaged but has a strong program in helping African countries to improve their agriculture.

Brazil's economy is performing poorly at the moment and its efforts in Africa have stagnated. Turkey is facing similar distractions but President Erdogan did recently visit four West African countries. India's economy is still strong and we can expect to see more engagement by India in Africa in the short-term.

Responding to a question, I noted that most African countries have a problem with corruption. China, India, Brazil, and Turkey also do not have the best records regarding corruption. When they engage in Africa, it is similar to pushing on an open door.

China is trying to improve its environmental record in both China and Africa, but its efforts in Africa so far are limited to voluntary guidelines for Chinese companies operating in Africa. While state-owned enterprises tend to heed the guidelines, some private companies do not.

The government of China has especially good relations with African governments. This gives Chinese companies, especially state-owned enterprises, engaged in Africa an advantage when disputes arise. For example, the director of roads in Ethiopia commented to me several years ago that China is building most of the roads in the country. When the government of Ethiopia has a problem with a Chinese company, it calls the Chinese ambassador and asks him to fix the matter; there is no need to go through the court system. As a former American ambassador to Ethiopia, I can assure you this approach would not work if an American company had a dispute with the Ethiopian government. The dispute would probably take years to resolve by a court of law.

There is a lot of mythology on the topic of land grabbing in Africa. I am not aware of any African country where foreigners can buy land. They can obtain long-term leases, sometimes up to ninety-nine years. Long-term leases do raise questions about forcing local people off of the land for the benefit of a foreign investor. This was an issue in the Gambela region of Ethiopia and has arisen in a number of other African countries.

Although most Chinese companies in Africa are private, the overwhelming dollar value of their contracts and investment is controlled by state-owned enterprises. The private companies tend to engage in small projects. The Indian, Brazilian, and Turkish companies are overwhelmingly private. This tends to have an impact on how disputes are resolved. The most common disputes concern labor issues and labor safety questions. There have also been disputes over the environmental impacts of foreign companies. In the case of China, most of the disputes are resolved informally before they ever reach a court.


By Thomas R. Snider **

My remarks will focus on the dispute settlement aspect of the panel's topic. I will discuss the proliferation of international arbitral institutions in Africa, make some remarks on the increasing proactive use of international arbitration by African states, and discuss South Africa's new investment law, which, among other things, does not provide for arbitration...

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