Considerations for Dispute Resolution Mechanisms Under the African Continental Free Trade Agreement (AfCFTA); by Kolapo Femi-Oyekola
African countries in a bid to bolster international trade and foreign exchange earnings are signatories to customs agreements, with the ECOWAS Trade Liberalisation Scheme (ETLS) as one of such. The Scheme was established to ,among others, develop a unified West African market through “the liberalisation of trade by the abolition among member states of custom duties levied on imports and exports and the abolition of non-tariff barriers”.[1] The scheme covers goods wholly or substantially produced in member states, and provides a Common External Tariff (CET) to protect regionally produced goods.[2]
In June 2019, Nigeria also signed the Africa Free Trade Agreement (the “AfCFTA” or “Agreement”), which aims to boost trade relations between member countries. The agreement removes all quotas and taxes on goods, and presumably promotes free circulation of goods within signatories, and promotes competition within members. Its purport is to ensure that locally produced goods move freely, devoid of any tariffs/taxes between member states with the multiplier gains of improved wages and employment, increased productivity, and economic growth within signatories.
With the implementation of such an agreement and with trade amongst the member States, disputes are bound to arise as is the case with trade relations. In view of this, a reliable dispute resolution mechanism will be integral to resolving such disputes, and to also uphold a rules-based regime of a single market economy as envisioned by the drafters of the Agreement.[3] This Article will provide an overview of the dispute resolution mechanisms provided for, under the AfCFTA.
According to Article 1 of the AfCFTA Protocol on Rules and Procedures on the Settlement of Disputes (the “Protocol”), which is a Protocol of the Agreement, a dispute is defined as “a disagreement between State Parties regarding the interpretation and/or application of the Agreement in relation to their rights and obligations”.[4]
As a means of dispute settlement and resolution, Article 20 of the AfCFTA provides that:
(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 main aim of the Protocol is to “ensure that the disputes that arise under the AfCFTA are resolved in a manner that is transparent, accountable, fair, predictable, and consistent with the provisions and principles of the Agreement.” The Protocol applies to disputes between State Parties relating to their rights and obligations, subject to such special and additional rules and procedures on dispute settlement contained in the Agreement, and not between individuals or private parties. As such, private parties can only bring their cases to the DSB through their respective States and not as individuals.
The Protocol establishes the Dispute Settlement Body (“DSB”), modelled after the World Trade Organization’s Dispute Settlement Understanding, which constitutes representatives of State Parties, and outlines the framework for the resolution of disputes under the Agreement and its Protocols. The Dispute Settlement Mechanism (“DSM”) established by the DSB provides for the Appellate Body (AB) constituted by 7 (seven) members whose mandate is to adjudicate appeals against Panel reports.
The Protocol establishes the following dispute settlement mechanisms which will be discussed seriatim: (i) Amicable Settlement through consultation; (ii) Good Offices, Conciliation and Mediation (iii) Dispute Settlement Body and; (iv) Arbitration.
a. Amicable Settlement through Consultation
Parties will attempt to resolve their dispute through consultation, as a mandatory first step which should, where a State party has declared a dispute against another State Party. The aggrieved Party is required to notify the DSB in writing, of the reasons for its complaints, stating its grievances by specifying its violations. Furthermore, the respondent has ten days within which to prepare its response after receiving the request for consultation, and is required to enter into consultations within 30 days.
b. Good Offices, Conciliation and Mediation
This is provided for, under Article 8 of the Protocol, and states that an independent party may assist the parties to resolve disputes presented before it. Through this means, Parties may commence and terminate these proceedings as long as they are not prior to requests for consultations. However, if such a request is made after a request for consultations, the aggrieved party shall wait for a 60-day period before requesting the creation of a panel, except in cases where the parties jointly consider that this mechanism has been unable to resolve the dispute.[5]
c. Dispute Settlement Body (DSB)
This process involves at least two bodies of the DSB namely; the Panel and the Appellate Body, and the delegation of adjudicatory powers to an independent panel of three (3) persons set up by the Body, or where parties are dissatisfied with the Panel’s findings, to a further panel of 3 persons from a pool of 7 persons who form the Appellate Body. [6]
The Panel is to review and consider submissions made by the parties and make fundings thereof. Where parties fail to agree on a settlement, the Panel may issue a report but where a settlement is reached, the report will include a summary of the case and the agreed terms of settlement, which shall be ultimately presented to the DSB for adoption.On the other hand, the Appellate Body will hear Appeals which will subsequently be adopted by the DSB after which such decision will be enforced in accordance with the Protocol.
It is important to note that both bodies are required to interpret the agreement in accordance with the customary rules of interpretation of public international law, including the Vienna Convention on the Law of Treaties, 1969. Additionally, it should be noted that this can only be activated where parties have failed to settle the dispute during consultations stated above The following paragraphs will consider the DSB and its role in resolving disputes under the Agreement through its subordinate bodies.[7]
d. Arbitration
Article 27 of the Protocol provides that only State Parties may also resolve their disputes through arbitration, as an alternative to resolution by the DSB and same shall be in accordance with any agreements and procedure thereunder.
It is important to note that where a party elects dispute settlement by arbitration, such party precludes itself from simultaneously using the Panel to settle disputes. Decisions delivered by the arbitral tribunal shall be binding on the parties, and shall be enforced in accordance with the provisions of the Protocol. However, the DSB must be notified before enforcement.
Where the Panel or the Appellate Body concludes that a measure is inconsistent with the Agreement, Article 23 of the Protocol provides available remedies in that they shall recommend that the concerned State Party brings the measure into conformity with the Agreement.[8] Furthermore, State Parties are required to fully implement the recommendations and rulings of the DSB, and where accepted recommendations and rulings of the DSB are not implemented by a party within a reasonable period of time, the guilty party may be ordered to pay compensation, or may be suspended of concessions or other obligations.[9]
Conclusion:
The Agreement and its Protocol are welcome and commendable developments, set to provide sound and useful dispute settlement mechanisms to govern trade under the AfCFTA. Notably, the Protocol, takes steps towards ensuring swift resolution of disputes under it, as is the case in the World Trade Organisation Dispute Settlement which it is fashioned after; realistic timelines are put in place for actions and responses under each mechanism. Additionally, the Protocol, in Article 19, notably addresses circumstances of conflict and inconsistency with regional agreements where it states that in the event of any conflict or inconsistency between the provisions of Agreement and any other regional agreement, AfCFTA’s provisions shall prevail in respect of such inconsistency.[10] Furthermore, the Protocol provides that where a State Party has initiated a proceeding under the Dispute Protocol regarding a specific matter, the State Party shall not invoke another forum for dispute settlement on the same matter. It is expected that this provision will prevent instances of forum shopping by State Parties.
In addition to the existing key provisions, it is recommended that for State Parties and parties, due considerations must be made to key issues in dispute settlement such as flexibility, costs, and speed in deciding the most appropriate mechanism for dispute settlement. Also, while an arbitration reduces the room for a dispute to subsist for longer, the DSB procedure’s strict timelines present a better opportunity for a swifter resolution of the dispute.[11] Additionally, the Protocol should be amended to apply to private parties, and not preclude private parties from presenting their disputes through state parties, alone, as is currently the case. [12] In conclusion, with the Protocol fashioned after the notable and wider-covering World Trade Organisation Dispute Settlement Mechanism, it will only be discovered in implementation whether the applicability of the Protocol will align with the socio-political realities of inter-Africa trade.
[1] Article 3, Economic Community of West African States Treaty
[2] African Integration Through Free Trade — ETLS, AfCFTA, and the Nigerian Conundrum (2019) by Kolapo Femi-Oyekola, 2019 Last accessed September 5, 2019
[3] Dispute Resolution Protocols In African Continental Free Trade Area: Reviewing Existing Protocols and Rules, Diane Okoko, March 25, 2022 https://www.mondaq.com/nigeria/international-trade-investment/1175724/dispute-resolution-protocols-in-african-continental-free-trade-area-reviewing-existing-protocols-and-rules Last accessed: October 1, 2022
[4] The Agreement, under this, means the Agreement Establishing the AfCFTA and its Protocols, its Annexes and Appendices.
[5] Dispute Resolution Mechanisms under the African Continental Free Trade Area (AfCFTA) by Chido Mafongoya (For Centurion Law Group’s AfCFTA Desk) https://centurionlg.com/2022/02/16/dispute-resolution-mechanisms-under-the-african-continental-free-trade-area-afcfta/#_ftn21 Last accessed June 8, 2022
[6] Mechanisms For Settlement Of Disputes Under The African Continental Free Trade Area Agreement July 7, 2019 by Aaron Onyebuchi and Efemena Iluezi-Ogbaudu https://strachanpartners.com/wp-content/uploads/2019/07/MECHANISMS-FOR-SETTLEMENT-OF-DISPUTES-UNDER-THE-AFRICAN-CONTINENTAL-FREE-TRADE-AGREEMENT.pdf Last accessed: July 18, 2022
[7] Mechanisms For Settlement Of Disputes Under The African Continental Free Trade Area Agreement July 7, 2019 by Aaron Onyebuchi and Efemena Iluezi-Ogbaudu https://strachanpartners.com/wp-content/uploads/2019/07/MECHANISMS-FOR-SETTLEMENT-OF-DISPUTES-UNDER-THE-AFRICAN-CONTINENTAL-FREE-TRADE-AGREEMENT.pdf Last accessed: July 18, 2022
[8] Article 23 of the Protocol
[9] Article 25 of the Protocol
[10] Dispute Resolution Protocols In African Continental Free Trade Area: Reviewing Existing Protocols and Rules, Diane Okoko, March 25, 2022 https://www.mondaq.com/nigeria/international-trade-investment/1175724/dispute-resolution-protocols-in-african-continental-free-trade-area-reviewing-existing-protocols-and-rules Last accessed: October 1, 2022
[11] Mechanisms For Settlement Of Disputes Under The African Continental Free Trade Area Agreement July 7, 2019 by Aaron Onyebuchi and Efemena Iluezi-Ogbaudu https://strachanpartners.com/wp-content/uploads/2019/07/MECHANISMS-FOR-SETTLEMENT-OF-DISPUTES-UNDER-THE-AFRICAN-CONTINENTAL-FREE-TRADE-AGREEMENT.pdf Last accessed: July 18, 2022
[12] Article 3(1) of the Dispute Settlement Protocol reads: This Protocol shall apply to disputes arising between State Parties concerning their rights and obligations under the provisions of the Agreement.
