Malawi Supreme Court of Appeal already pronounced itself in favour of international arbitration in Malawi

* One of the parties had referred to the International Chamber of Commerce a commercial dispute in respect of a contract which was being performed in Malawi

* The other party sought an anti-arbitration injunction and after the High Court refused to grant the injunction, Supreme Court of Appeal upheld the lower court’s decision

Analysis by Duncan Mlanjira

Malawi is from tomorrow, September 5-6, hosting its first-ever international arbitration symposium at Bingu International Convention Centre (BICC) to cement and enhance the importance of the creation of Malawi International Arbitration Centre (MIAC), which the Supreme Court of Appeal already pronounced itself as in favour of international arbitration in the country.

The MIAC is a joint venture private company limited by guarantee incorporated by Malawi Confederation of Chambers of Commerce (MCCI) and the Malawi Law Society (MLS) on September 7, 2023 — which establishes and seeks to maintain a private sector-led neutral and independent facility for the resolution or settlement of commercial, investment and other disputes by way of arbitration, mediation and like processes as opposed to litigation in the Courts.

MCCI, MLS and MAIC joined venture seeks to improve the business environment in Malawi by institutionalising arbitration and alternative dispute resolution and enhancing access to justice through efficient non-adjudicatory measures in the service of the local and international business community.

“Its unique feature is that it is a legally sanctioned wholly private initiative that actively promotes collaboration and recognition by state parties and multilateral institutions at national, regional and international levels.

In furtherance of this main object, the company undertakes to manage and sustainably operationalise an arbitration centre in the Republic of Malawi to maintain and develop the business of alternative dispute resolution by providing services in Malawi and throughout Africa.”

According to information booklet for the Symposium, the country’s Supreme Court of Appeal added credence to this arbitration process on March 14, 2024, when Justice of Appeal Frank Kapanda, SC delivered a judgment in a matter in which one of the parties had referred to the International Chamber of Commerce a commercial dispute in respect of a contract which was being performed in Malawi.

The other party sought an anti-arbitration injunction and after the High Court refused to grant the injunction, Supreme Court of Appeal upheld the lower court’s decision.

In his ruling in Projex Group Limited v. Central East African Railways Limited, Justice Kapanda said: “In sum..this Court declines the Applicants request to intervene with an injunction against arbitration…This aligns with the principle of competenz-competenz in commercial arbitration, emphasizing that the arbitrator should decide issues related to the arbitration agreement.

“The competence-competence principle is a fundamental concept in international arbitration. It grants the arbitral tribunal the authority to rule on its own jurisdiction, including challenges to the existence, validity or scope of an arbitration agreement.

“It is our view that this Court lacks jurisdiction to adjudicate a plea that can be decided by an arbitral tribunal. The overarching idea is to provide a one-stop forum for the effective and efficient resolution of commercial disputes through arbitration and judicial intervention should not disrupt the process of arbitration.”

Maravi Express takes you through the process that led to the creation of Malawi International Arbitration Centre (MIAC) as contained in the information booklet and joint invitation of the first-ever international arbitration symposium to the business community.

Background

The Malawi Government acceded the New York Convention effective 2nd June, 2021. Malawi is the 167th country in the world to accede to the Convention. By doing so, Malawi qualifies itself as a suitable jurisdiction in which international and local commercial disputes can be resolved through arbitration as an alternative dispute resolution to litigation.

With these developments, there was and there is now special focus on Malawi as a seat for international commercial arbitration.

The Malawi Law Society (MLS) in collaboration with the SADC-Lawyers Association (SADC-LA) and the Arbitration Foundation of Southern Africa (AFSA) organised an inaugural International Commercial Arbitration Seminar as a first step towards establishment of an international commercial arbitration seat in Malawi.

The seminar took place in Mangochi, Malawi from 26th to 28th January, 2022. It trained almost 200 lawyers from Malawi, Zambia, Zimbabwe, Namibia and South Africa in the theory and practice of international commercial arbitration.

The seminar provided a comprehensive introduction to international commercial arbitration and a review of current developments in the SADC region.

Following the Mangochi seminar, at a joint review meeting held on 28th January, 2022, the SADC-LA, AFSA and MLS leadership and the Attorney General of the Republic of Malawi resolved to pursue efforts to establish an institution to administer domestic and international arbitrations.

Technically, Malawi is already a seat for arbitration (both local and international) by virtue of being an independent legal system that acceded to the New York Convention.

Signing of Memorandum of Understanding between Malawi Government, MLS and AFSA SADC Division

Since the inaugural seminar, the MLS, the SADCLA and AFSA undertook respective consultations with key stakeholders as to the viability of the project, which included the Malawi Government, the Malawi Judiciary and key players in the public and private sector.

The Government of Malawi endorsed the project from inception through the Attorney General at the seminar, and later through the Minister of Justice and publicly by the President of the Republic of Malawi, His Excellency Dr Lazarus McCarthy Chakwera.

The public endorsement by the State President was made in his speech during the Constructive Engagement Meeting Towards the Establishment of the Malawi International Commercial Arbitration Centre and the signing of the Project Partners Memorandum of Understanding at Bingu International Convention Centre, in Lilongwe on 15th August, 2022.

The President also directed the Attorney General to prioritise the processing of the Arbitration and Mediation Bill so that it is enacted into law as soon as possible.

The significance of the President’s remarks cannot be overemphasised as he made them whilst he was also doubling as the Chairman for SADC thereby, indirectly endorsing the project at the SADC Community level.

The Malawi Judiciary, through the Chief Justice, Justice Rezine Mzikamanda, SC publicly supported the project. He emphasised the importance of the project to promote Malawi as a suitable destination for investment.

Further commitment from Malawi Government and the Judiciary on the arbitration project

The Executive and Judicial Branches have continuously renewed their commitment to and showed support for the project. On 28th August, 2023, the MLS and the AFSA SADC Division met with the Minister of Justice and the Solicitor General, Hon. Titus Mvalo and Hon. Allison M’bang’ombe respectively at the Ministry of Justice Boardroom.

The Minister assured the MLS and the AFSA SADC Division that Malawi is committed to support the Centre. To demonstrate government’s commitment to the cause, the Minister of Justice and the Solicitor General positively acknowledged and agreed to the recommendation that the MLS and the AFSA SADC Division should develop an International Arbitration Bill modelled on the UNCITRAL model law.

On 29th August, 2023, the Chief Justice met with the MLS and the AFSA SADC Division Team. The Chief Justice indicated that the Judiciary understands the importance and benefits of arbitration and noted that it benefits the Judiciary as well.

He pledged that the “Malawi Judiciary was committed to playing its rightful role to ensure that the cause of arbitration succeeds so that we all benefit”.

Signing of agreement between MLS and AFSA SADC Division

To cement the relationship and foster collaboration between the MLS and AFSA SADC Division, the two parties signed an International Arbitration Facilitation Agreement on 29th August, 2023 at Sunbird Mount Soche Hotel in Blantyre.

Through this agreement, “the parties wish to collaborate in pursuit of the institutionalization of the practice of international commercial and investment arbitration based on a standardized set of rules and procedures for the administration of arbitration and mediation processes in Malawi and the SADC Region”.

The parties also agreed and signed an implementation roll out plan. was expected to start administering arbitrations by the end of 2023.

Private sector-led International Arbitration Centre in Malawi and its registration

On 7th September, 2023, the MLS jointly with the MCCCI, a partnership of private enterprises and associations representing all sectors of the economy of Malawi, registered a company limited by guarantee, Commercial Arbitration Centre Limited.

This company is the vehicle through which the Malawi International Arbitration Centre (MIAC) will be operated which has MLS president, Patrick Gray Mpaka, MCCCI president, Lekani Katandula and now Dr Wisely Phiri and Emily Makuta, — a senior and experienced corporate executive from the corporate and business world — are the first Directors of the company working with the MCCI and MLS Secretariats to transition the new company into full operations.

The Company is currently working towards operationalising so that the Centre can open its doors and start administering commercial and investment arbitrations within the year 2024.

It is a legal requirement in Malawi for a company to obtain permission of the Government in order to use the word Malawi in the name of a company and following an application on 5th January 2024, the Malawi Government — through the Secretary to the President & Cabinet issued permission to use the protected name — thus the Malawi International Arbitration Centre is fully authorised to operate as such.

Enactment of the International Arbitration Act, 2024

The MLS and AFSA SADC Division developed the draft International Arbitration Bill adopting the UNCITRAL model law which the MLS submitted to the Ministry of Justice on 19th September, 2023.

The Bill was introduced in Parliament in its November, 2023 sitting and on 7th December, 2023, the Malawi National Assembly passed the International Arbitration Bill, which was assented to 1st February, 2024, by the President on 31st January, 2024 — and the Act was published on 2nd February, 2024.

The International Arbitration Act has domesticated the Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law. This covers the space for international arbitration in Malawi.

Government’s commitment in deferring management of Malawi Arbitration Centre to the private sector

In his address at the Johannesburg Arbitration Week on 9th April, 2024, the Minister of Justice, Titus Mvalo told the international and local business community that “as Government we feel that we have fulfilled our core responsibility — we have left it to the Malawi Chamber of Commerce, the Malawi Law Society and the general business community to kick start the administration of the centre but we will remain supportive if the Centre needs any other Government support”.

The ball is, therefore, fully in the court of the MCCCI, the MLS, other professional bodies and the business community to fully operationalise MIAC — thus the hosting of the first ever symposium to introduce the MIAC to the local business community and showcase how it will facilitate effective business dispsute resolution and what role the business community and professional bodies can play to make all this realistic.

Further Regional Commitment to the arbitration project in Malawi

With full endorsement of the Malawi Government — through its accession to the New York Convention and its recent executive, legislative and judicial pronouncements as explained above — the initiative is part of the broader network of like-minded institutions committed to effective, efficient and business-like commercial and investment dispute resolution through the development of a shared arbitration framework and advancement of the practice of international arbitration in the SADC region.

As part of this regional integration initiative, on 9th April 2024 at the Johannesburg Arbitration Week, the Malawi Law Society signed an Alliance Charter with the Arbitration Foundation of Southern Africa, the SADC Lawyers Association and 12 other Law Societies from within the SADC region — signed by MLS president, Patrick Gray Mpaka, thereby becoming a member of the family of internationally recognised Centres emerging within the SADC region.

As a duly incorporated entity, MIAC is at stage where it now needs and seeks to be as participatory and inclusive of the national business community and professional bodies or their members as possible in the legally established operational structure of the Centre.

Thus is in order for the Centre to be fully owned and accepted by the business community, which is its true ambassador and the ultimate beneficiary for its efficient operations.

The Centre also needs to raise funds and generate resources for its setting up costs and expenses before it can begin to generate its own income to sustain its efficient operations in the administration and resolution or settlement of commercial, investment and other disputes by way of arbitration, mediation and similar non-adjudicatory processes.

On Tuesday, Illovo Sugar Malawi invested K10 million towards the first-ever Arbitration Symposium in Malawi in recognition of the role MIAC will be playing going forward in as far as conflict resolution is concerned.

The Centre’s relevant mandate in this regard is in Article 2 of its Memorandum and Articles of Association. Articles 2.2.6, 2.2.9 and 2.2.14 respectively enable the Centre to convene conferences and symposia designed to support and develop awareness of its activities, to issue and distribute marketing and informative publications and training materials where appropriate and to raise funds by way of such services and through subscriptions and other fundraising activities.

Article 4.4 of the Articles of Association of the Centre provides that the membership of the Company shall be bodies corporate when it says that no natural person shall be permitted to be members of the Company.

So far, only the MLS and the MCCCI are its members being the founding members at incorporation.

Purpose of the symposium

(i) to inform the national business community and professional bodies or their members or member firms on the state of development of the Centre and the direction the initiative is taking;

(ii) to give room for formal ownership and participation by the local business community and professional bodies or their members or member firms through recruitment of members to be featured and involved within the organisational structure of the Centre as the institution develops before it progressively starts offering it services to the local and international business community; and

(iii) to raise money to fund the initial setting up costs and expenses for the Centre before the Centre is able to raise its own money to sustain its operations.

Keynote address at the symposium will be delivered by Minister of Justice, Titus Mvalo who is guest of honour while speakers include MCCI President and MIAC director, Dr. Wisely Phiri; former Attorney General, Dr. Chikosa Silungwe; MCCI CEO, Daisy Kambalame; MIAC company secretary, Pempho Likongwe and MIAC director, Emily Makuta.

Foreign speakers are Samuel Mbiriri Nderitu, who is board director of Nairobi IAC and Kenya ICC national committee as well as chairman of Arbitration Foundation of Southern Africa-SADC, Des Williams.