Building capacity to help Africa trade better

The AfCFTA Dispute Settlement Mechanism as part of a continental Trade Regime


The AfCFTA Dispute Settlement Mechanism as part of a continental Trade Regime

The AfCFTA Dispute Settlement Mechanism as part of a continental Trade Regime

Article 20 of the African Continental Free Trade Area (AfCFTA) Founding Agreement provides for a Dispute Settlement Mechanism as part of the overall AfCFTA design. It reads:

  1. A Dispute Settlement Mechanism is hereby established and shall apply to the settlement of disputes arising between State Parties.

  2. The Dispute Settlement Mechanism shall be administered in accordance with the Protocol on Rules and Procedures on the Settlement of Disputes.

  3. The Protocol on Rules and Procedures on the Settlement of Disputes shall establish, inter alia, a Dispute Settlement Body.

The Dispute Settlement Body (DSB) is composed of representatives of the State Parties. It has the authority to establish Dispute Settlement Panels and an Appellate Body, to adopt Panel and Appellate Body reports, to maintain surveillance of implementation of rulings and recommendations of the Panels and Appellate Body, and to authorise the suspension of concessions and other obligations under the AfCFTA Agreement.[1]

The DSB of the AfCFTA has attended to the outstanding tasks such as the adoption of rules of procedure, drawing up a roster for Panellists, and appointing the Members of the Appellate Body. The relevant decisions now need to be adopted by the AfCFTA structures (such as the Council of Ministers) in order for this Mechanism to become operational.

When could formal disputes be expected to be heard under the AfCFTA Dispute Settlement Mechanism? Since the AfCFTA Agreement is officially in force since the 30th of May 2019,[2] it may be feasible, in theory, to use the AfCFTA Protocol on Rules and Procedures on the Settlement of Disputes (hereinafter called the Dispute Settlement Protocol) once it is operational to settle disputes among the State Parties in the manner intended in this Protocol. However, trade in goods and services under the AfCFTA is not yet possible. The required tariff schedules, rules of origin and conditions for trade in the five priority services areas,[3] are still being negotiated.

Disputes about related AfCFTA matters such as trade facilitation, customs administration, the non-discrimination principle etc might arose but the settlement thereof will be more of a theoretical than a practical nature. In any case, most of the trade in goods and services on the continent will continue under existing Regional Economic Community (REC) arrangements.[4] It will make more sense for the Parties to such disputes to use the REC Courts or dispute settlement mechanisms of the for settling such disputes.

The typical advantages of a dispute settlement system forming part of a single undertaking trade regime (as is the case here[5]) is that legal certainty and predictability become systemically enshrined. This benefits all parties involved in cross-border trade, investment, and consumption. Article 4 of the AfCFTA Dispute Settlement Protocol says the AfCFTA dispute settlement mechanism “is a central element in providing security and predictability to the regional trading system. The dispute settlement mechanism shall preserve the rights and obligations of State Parties under the Agreement and clarify the existing provisions of the Agreement in accordance with customary rules of interpretation of public international law”.

Only the AfCFTA State Parties (those African Union Member States that have ratified the AfCFTA Agreement and for whom it has entered into force[6]) will be able to file applications. Private parties and firms are the entities normally affected by unlawful State action but will not have standing under this dispute settlement arrangement. Nothing prevents their States of nationality or those with sufficient connection to file a case against another State Party. This is how most applications in the WTO are brought. The State Parties then act in terms of their own treaty rights and entitlements. One of the implications is that private parties and firms should push for their own States to take up cases on their behalf. There are examples of domestic arrangements where private parties and firms have rights vis-à-vis their own governments and are entitled to invoke protection via international litigation effectively instituted on their behalf. This does not happen locally.

The AfCFTA dispute settlement mechanism is modelled on the Dispute Settlement Understanding (DSU) of the World Trade Organisation (WTO) but provides a framework to develop a unique dispute settlement regime, jurisprudence, and acquis for the continent, although it will exist alongside the REC dispute settlement systems. Jurisdictional boundaries will have to be demarcated with care; international courts only have jurisdiction over those matters covered by the legal instruments falling under their jurisdiction. In respect of intra-African trade issues, it might be possible that more than one forum could have jurisdiction. To provide an example: If two African nations, members of both the WTO, a particular REC and the AfCFTA, have a dispute over a phytosanitary issue, the application for enforcing the relevant rights might be brought under WTO rules, before the relevant REC Court, or under the AfCFTA Dispute Settlement Mechanism. The main reason is that in respect of phytosanitary issues, the same principles can be invoked under these agreements. The deciding factor is whether the forum in question has jurisdiction over the matter and whether the applicant and respondent have standing. A State Party which has invoked the rules and procedures of the AfCFTA Dispute Settlement Protocol shall not invoke another forum for dispute settlement on the same matter.[7]

A dispute settlement proceeding shall be considered to have been initiated in accordance with the AfCFTA Protocol when the Complaining Party requests consultations pursuant to Article 7 of this Protocol.[8] State Parties to a dispute may at any time voluntarily undertake good offices, conciliation, or mediation for settling a dispute.[9]

Whether the AfCFTA State Parties will ever actively use the AfCFTA Dispute Settlement Mechanism, is another matter. They prefer to settle their trade related differences through discussions, consultations or by allowing for derogations in particular instances. This has been the practice under the rules of those RECs with their own dispute settlement mechanisms and Courts.[10] International arbitration (another form of adjudication) is not used to settle trade disputes either.[11] It seems unlikely that the practice under the AfCFTA will be different. Should matters turn out another way, it could bring about a very important change in how African Governments pursue economic integration and trade liberalisation amongst themselves. It will also promote and protect the rights of private parties, importers, exporters, consumers, and investors. A rules-based trade regime will, in effect, be brought about.

[1] Art 5 AfCFTA Dispute Settlement Protocol.

[2] Twenty-two ratifications were needed. See Art 23 of the AfCFTA Agreement.

[3] Transport, communications, finances, tourism, and business services.

[4] See Art 19(2) AfCFTA Agreement and Art 8(2) AfCFTA Protocol on Trade in Goods.

[5] Art 8(2) AfCFTA Agreement states that the “Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, Competition Policy, Rules and Procedures on the Settlement of Disputes and their associated Annexes and Appendices shall form part of the single undertaking, subject to entry into force”. (Emphasis added.)

[6] See the definition of “State Party” in Art 1 AfCFTA Agreement.

[7] Art 3 AfCFTA Dispute Settlement Protocol.

[8] Ibid.

[9] Art 8 AfCFTA Dispute Settlement Protocol.

[10] The East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA) and the Economic Community of West African States (ECOWAS) have their own Courts of Justice. The Southern African Development Community (SADC) unanimously abolished its Tribunal in 2011 after a ruling against Zimbabwe for expropriating private land without compensation.

[11] A dispute among the Members of the Southern African Customs Union (SACU) about the administration of SACU’s Common Revenue Pool under the present SACU Agreement (which entered into force in 2004) was referred to the Permanent Court of International Arbitration in the Hague for settlement.

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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