Jacques Domincan-Bird is a Dispute Resolution Associate at Rosenblatt in London, UK. His experience spans the full range of dispute resolution, covering cross-border commercial arbitration under ICC and LCIA Rules, the UK High Court, Court of Appeal, and Supreme Court litigation, and alternative dispute resolution fora. Recent cases have centred on complex contract disputes, director and shareholders’ disputes, intellectual property disputes, and asset tracing. His LinkedIn profile is at https://www.linkedin.com/in/jacques-domican-bird-a6997549/.

Introduction

Corruption, fraud, and bribery are nothing new in law, commerce and politics, including in Africa. A 2020 report found illicit financial flows across the continent at that point totalled around US$88.6bn a year.[1]

Arbitration is not immune from these challenges either. In an arbitration context, corruption, fraud, and bribery can arise at the contract procurement stage, during arbitration proceedings, and even in relation to the conduct of tribunal members. Nigeria v Process & Industrial Developments Limited (“P&ID”) has brought many of these issues to the fore - in extraordinary technicolour.[2]

Following a supply and processing agreement arbitration, P&ID was granted an arbitral award against the state of Nigeria in 2017 amounting to US$11bn (“2017 Award”). This figure equated to a significant proportion of Nigeria’s entire federal budget. Nigeria then challenged the 2017 Award in the English High Court under section 68 of the Arbitration Act 1996. In his judgment, Mr. Justice Robin Knowles concluded that the 2017 Award was obtained on a fraudulent basis, that witnesses had variously been bribed and committed perjury, and privileged documents had been retained improperly. Knowles J also questioned whether the arbitral tribunal could have done more to intervene or request further assurances in response to various warning signs which arose[3]. The English Court of Appeal dismissed P&ID’s inevitable appeal, but the Supreme Court has granted permission to appeal, which will likely be heard in 2025. To an extent, though, the genie is already out of the bottle. 

Another noteworthy case, involving two Nigerian entities of multinational companies, was Global Gas Refinery Limited (“GGRL”) v Shell Petroleum Development Company (“Shell”). Here, GGRL initiated ICC arbitration proceedings, claiming that Shell had breached the terms of a gas processing agreement by failing to supply wet gas, as required. Following the publication of an award in 2017 (against GGRL), GGRL sought to set aside the award on the primary basis that the tribunal president had been less than forthcoming about their previous involvement with the other side[4].

To its great credit, the Lagos High Court found that the president should, quite simply, have recused himself rather than resist the challenge. Interestingly, the ICC had previously considered and rejected the same challenge. Nonetheless, a harsh reality may be that cases such as this could lead those preparing for arbitrations with an African focus towards a preference for foreign arbitrators who could, perhaps controversially, and maybe unfairly, be perceived to be more ethical[5]. Whilst GGRL was a legitimate arbitration challenge via a national court, there is some concern regarding the separation of powers between, and a lack of deference by, national courts towards tribunal decisions in some other African jurisdictions. In one ICSID arbitration case, the Tanzanian High Court granted interim injunction proceedings, even though the parties had not given their express agreement that the Court had authority to do so, in a scenario when only the ICSID tribunal had the power to do so[6].

These and other such examples create an impression of an all too malleable arbitral system in some African states. Further, they undermine the reliability of arbitration as a credible dispute resolution forum in Africa and do not go far enough to fend off competition the continent faces from other, more established arbitral seats. Whilst, for instance, the Cairo Regional Centre for International Commercial Arbitration is very well established and respected, London, Singapore, Hong Kong, Paris and Geneva remain the preferred seats, due to greater support for arbitration by domestic courts and judiciary[7]. 

What can be and is being done?

42 of 54 African countries have now signed up to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards[8]. Looking ahead, this, along with the presence of very significant natural and other resources will continue to drive the popularity and attractiveness of arbitration involving African parties. The practical application of African-focussed arbitration will hopefully be followed by a widespread move away from corrupt practices and towards internationally expected standards. The future is looking bright. 

Since P&ID, the Nigerian government has led the way by reviewing how commercial and governmental contracts are signed off and already taken steps towards introducing more rigorous review and approval processes for relevant contracts[9]. Indeed, it may even be possible to incorporate such review and approval processes into law, with contracts failing to comply deemed unenforceable. Interestingly, there has also been some discussion about what the level of proof should be in civil matters where fraud is alleged[10]. In Nigerian law, and in other African countries, an allegation of fraud must be proven to a criminal standard, rather than a civil standard, as is the case in many European countries for instance. Should a lower burden of proof threshold be adopted, resulting in fraud being proven more readily, there could be a stronger notion of trust when it comes to arbitrations with an African element.  Apart from this, some traditional methods of fraud detection have proven to be slow and sometimes inaccurate.[11] Alongside legislative and institutional reforms, the ability of artificial intelligence to analyse significant datasets and identify subtle anomalies, might make it useful for fraud detection. By applying machine learning algorithms to historical fraud cases in Africa, patterns can be learnt to predict future fraudulent activities which enable flagging suspicious activity before it can cause financial harm.

Further, contracts and projects have been cancelled because of investors seeking remedies and raising issues of corruption. In Menzies Middle East and Africa S.A. v. Senegal (ICSID Case No. ARB/15/21), the government seized aviation company AHS SA, alleging it was secretly controlled by Karim Wade, the former president’s son, for illicit enrichment. After a corruption investigation, the company was placed under administration in 2013 and its assets were confiscated in 2015, prompting foreign investors to claim unlawful expropriation. Similarly, in BSG Resources Limited v Republic of Guinea (ICSID Case No. ARB/14/22), the government revoked BSG’s mining licenses in 2014 after finding they were obtained through corruption. BSG challenged this as unlawful expropriation, but the ICSID tribunal ruled against it, citing corruption in the grant of the mining licenses[12]. These cases highlight the legal tensions that arise when anti-corruption enforcement impacts international investments.  If more steps are taken to combat corruption through proper decision-making, this can only be a good thing in reducing bad practices (whether perceived or actual) in terms of corruption, fraud and bribery across Africa. 

[1]     “Economic Development in Africa Report 2020: Tackling Illicit Financial Flows for Sustainable Development in Africa” (UNCTAD 2020) <https://unctad.org/system/files/official-document/aldcafrica2020_en.pdf> accessed 28 March 2025 .

[2]     The Federal Republic of Nigeria v Process & Industrial Developments Ltd [2023] EWHC 2638 (Comm),  para 587 (P&ID).

[3]     “African Arbitration: Has the Elephant Bolted? | Morrison Foerster” (Morrison Foerster) <https://www.mofo.com/resources/events/240506-african-arbitration-has-the-elephant> accessed 28 March 2025; and paragraph 587, P&ID.

[4]     Global Gas and Refinery Limited v The Shell Petroleum Development Company of Nigeria (HC Nigeria, 25 February 2020) and analysis in “Once Challenged, Should an Arbitrator Withdraw? A Consideration of Nigerian Jurisprudence” <https://www.ibanet.org/once-challenged-should-arbitrator-withdraw-Nigeria-jurisprudence> accessed 21 February 2025. Also, in “Global Gas and Refinery Limited and Shell Petroleum Development Company: Is Nigeria Pro or Anti-Arbitration? The Lagos High Court Says That When Challenged, an Arbitrator Should Just Resign”, 16 May 2020, <https://arbitrationblog.kluwerarbitration.com/2020/05/16/global-gas-and-refinery-limited-and-shell-petroleum-development-company-is-nigeria-pro-or-anti-arbitration-the-lagos-high-court-says-that-when-challenged-an-arbitrator-should-just-resign/> accessed 27 February 2025.

[5]     Onyema E, “SOAS Arbitration in Africa Survey Report” (2024) <https://eprints.soas.ac.uk/42913/1/2024%20SOAS%20Arbitration%20in%20Africa%20Survey%20Report.pdf> accessed 28 March 2025.

[6]     Martinez A and others, ‘Arbitration in Africa: Past, Present, and Future’ (Kluwer Arbitration Blog, 26 August 2024) <https://arbitrationblog.kluwerarbitration.com/2016/01/13/arbitration-in-africa-past-present-and-future/> accessed 19 February 2025.

[7]     Cohen Smutny A, Gallagher N, “2021 International Arbitration Survey: Adapting arbitration to a changing world” <https://www.qmul.ac.uk/arbitration/research/2021-international-arbitration-survey/> accessed 27 March 2025.

[8]     Iweins D (Why Africa is at a disadvantage in terms of international arbitration - The Africa Report.com) 20 December 2023, <https://www.theafricareport.com/331021/why-africa-struggles-to-win-its-court-battles/> accessed 20 February 2025. 

[9]     “African Arbitration: Has the Elephant Bolted? | Morrison Foerster” (n 2). 

[10]   Ibid. 

[11]   U. Bansal, S. Bharatwal, D.S. Bagiyam, E.R. Kismawadi, “Fraud detection in the era of AI: Harnessing technology for a safer digital economy”, IGI Global, 2024. 

[12]     Ceccarelli L, Ghassabian H and Poggi L, “The ICSID Tribunal’s Decision in BSG Resources v. Guinea Concludes That the Mining Licences Were Obtained through Corruption - Investment Treaty News” (Investment Treaty News, April 2, 2024) <https://www.iisd.org/itn/2024/04/02/the-icsid-tribunals-decision-in-bsg-resources-v-guinea-concludes-that-the-mining-licences-were-obtained-through-corruption/> accessed 20 March  2025.