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Will disputes under the AfCFTA Agreement be less “political”?


Will disputes under the AfCFTA Agreement be less “political”?

Will disputes under the AfCFTA Agreement be less “political”?

It has been observed that the dispute settlement system of the African Continental Free Trade Area (AfCFTA) is less “political” in design than, for example, the former SADC Dispute Settlement Protocol.[1] This is true, if the point is that disputes of the kind which resulted in the demise of the SADC Tribunal will not be heard under the Dispute Settlement System (DS) of the AfCFTA. But the technical reason is a basic one: The AfCFTA Agreement does not provide for the same Principles and General Undertakings which were invoked in the case which resulted in the original SADC Tribunal being abolished. It is thus a matter of jurisdiction: disputes about the issues addressed in the relevant SADC case are not justiciable under the AfCFTA Agreement.

The SADC Dispute Settlement Protocol was suspended (by unanimous decision of the SADC Summit) after the SADC Tribunal had ruled that Zimbabwe’s expropriation without compensation of private land amounted to a violation of certain provisions in the SADC Treaty.[2] The application was brought by affected individuals, citizens of Zimbabwe. The SADC Tribunal declared that the Applicants had been denied access to justice, have been discriminated against, and were entitled to fair compensation. The Tribunal invoked a principle mentioned in Article 4 of the SADC Treaty (SADC and its Member States shall act in accordance with principles such as human rights, democracy and the rule of law) and one of the General Undertakings in Article 6 of the SADC Treaty (SADC and its Member States shall not discriminate against any person...).

The South African Constitutional Court has since ruled that the participation of the South African President in the decision to abolish the SADC Tribunal was illegal and had to be withdrawn.[3] This was done. The subsequent SADC Dispute Settlement Protocol (not yet in force) provides for inter-State disputes only.

The AfCFTA Agreement does not provide for “human rights” provisions such as those found in the SADC Treaty. They cannot be invoked in disputes under the AfCFTA Dispute Settlement Protocol, which is modelled on the World Trade Organization (WTO) dispute settlement system. The AfCFTA system, just like that of the WTO, consists of a Dispute Settlement Body (DSB) and an Appellate Body (AB).

Like the WTO, only inter-State disputes will be heard in the AfCFTA.[4] It can be argued that this is a consequence of the fact that the WTO and the AfCFTA are member-driven regimes; applications by private parties do not fit into such designs. In a system where only State Parties litigate, the Parties to a dispute must first enter into consultations, with a view to finding an amicable resolution.[5] They may at any time use good offices, conciliation, or mediation; which shall be confidential.[6] The State Parties may, in addition, resort to arbitration.[7] Disputes about compliance with final rulings are also justiciable.

But there is an important qualification: Many WTO Member States are active litigators (African Member States are not) and do not view officially declared disputes as offensive to others. All Member States benefit from the clarification and certainty brought about by binding decisions delivered by an independent judicial forum. Private firms also profit when their rights are protected in this manner.

The present crisis around the AB of the WTO, brought about by the refusal of the United States to participate in the appointment of new AB members, shows that member-driven dispute settlement regimes are also susceptible to serious “political” disputes. How will such an eventuality be handled in the AfCFTA? It may be a good idea to make appointments to the AfCFTA AB subject to the “reverse consensus” procedure.

Applications brought under the AfCFTA DS Protocol will first be heard by Panels, appointed for each case. The AB hears appeals against Panel reports. Defendants cannot prevent formal disputes from being declared and cannot veto the adoption of Panel and AB Reports. They will be adopted unless there is a consensus not to do so.[8] This is called “reverse consensus”. It prevents defendants from blocking the initiation of formal dispute settlement proceedings or the adoption of binding judgments.

The inclusion of the reverse consensus principle in the AfCFTA DS Protocol could bring real benefits, but only if the State Parties will use this system for settling disputes about the application or interpretation of AfCFTA legal instruments. The benefits (certainty and predictability) will not materialize if the AfCFTA State Parties continue with their practice not to declare official disputes when obligations in Agreements regulating trade among them are violated. And there is an alternative option in Article 10(2) of the AfCFTA Agreement: The Assembly shall have the exclusive authority to adopt interpretations of this Agreement on the recommendation of the Council of Ministers. This is a “behind closed doors” procedure and will not create binding precedents.

In most instances non-compliance with obligations in trade agreements involve measures by governments (e.g. import restrictions or discrimination in favour of domestic firms) which impact on private parties involved in trade related transactions. They cannot file applications under the AfCFTA DS to protect their rights. Applications in domestic courts might be possible, provided the required constitutional and due process grounds exist. In countries with a dualist tradition, international agreements cannot be directly invoked as part of the law of the land.[9] Dualism generally applies in African countries with a Common Law tradition.

The approach adopted under the AfCFTA means that private parties will only be protected if a State Party, able to show that its rights have been violated, would bring a claim, as most WTO members do. Whether African Governments will also do this under the AfCFTA, needs to be seen. It does not look very likely. They never sue each other under the legal instruments of the Regional Economic Communities (RECs).

Most international trade disputes involve trade remedies and safeguards; for example, when goods are dumped in foreign markets at prices below cost, when exported goods are subsidized, or when new trade liberalization obligations result in an upsurge of imported goods and cause injury to domestic industries. The AfCFTA has an Annex on Trade Remedies and Safeguards, based on the relevant WTO principles. Disputes thereunder often involve technical rules and proof via the use of trade data, but they are vital for the rules-based regulation of trade in goods. Only about four African countries have the domestic machinery in place to implement trade remedies according to the applicable rules.[10] In this area there must be deliberate efforts to assist AfCFTA State Parties to develop expertise and domestic procedures for investigation private complaints involving trade remedy measures. The AfCFTA Secretariat has been given the task to assist State Parties in this regard.

Disputes about trade in services should not be ignored. They will become increasingly important. Domestic courts often hear cases involving measures by national regulators responsible for telecommunication, the energy and financial sectors. In these cases, rules about due process (administrative justice), constitutional rights (e.g. against discrimination) and statutory interpretation figure prominently. Disputes about trade in services should actually be familiar terrain and can, under certain conditions also be heard by national courts. The applicants must have standing, be domiciled within the jurisdiction of the relevant court, and the dispute must involve the application of national legal norms. When services related disputes are heard by intentional courts or tribunals, the relevant international legal instruments are applied.

If the AfCFTA brings about change in the State Parties’ attitude towards the settlement of international trade disputes, it will make a real contribution to better trade governance in Africa. Multilateral trade governance will also benefit. If this does not happen, the Governments of the State Parties will continue to find “political” solutions to differences essentially about the application of legally agreed norms. Certainty, consistency, transparency and good governance benefits will remain absent. This is the real political threat when it comes to dispute settlement under the AfCFTA.

[1] Its official title was Protocol on Tribunal in the Southern African Development Community.

[2] Reported as Mike Campbell (Pvt) Ltd and Others v Republic of Zimbabwe (2/2007) [2008] SADCT 2 (28 November 2008). SADC (T) Case No. 2/2007.

[3] Law Society of South Africa & Others v President of the Republic of South Africa & Others [2018] ZACC 51.

[4] Art 3 pdf AfCFTA Dispute Settlement Protocol (973 KB)

[5] See, for example, Art 6 AfCFTA DS Protocol.

[6] Art 8 AfCFTA DS Protocol.

[7] Art 27 AfCFTA DS Protocol.

[8] https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c3s1p1_e.htm. See Art 19(4) and 22(9) of the AfCFTA DS Protocol.

[9] Dualism emphasizes the difference between national and international law and requires the incorporation of the latter into the former before international law can be invoked before domestic courts. Monism accepts that the internal and international legal systems form a unity.

[10] Egypt, Morocco, Tunisia and South Africa.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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