{"id":284180,"date":"2024-12-20T12:39:00","date_gmt":"2024-12-20T11:39:00","guid":{"rendered":"https:\/\/dailyjus.com\/?p=284180"},"modified":"2024-12-20T12:39:00","modified_gmt":"2024-12-20T11:39:00","slug":"mining-arbitration-series-a-perspective-from-france-africa","status":"publish","type":"post","link":"https:\/\/dailyjus.com\/index.php\/2024\/12\/20\/mining-arbitration-series-a-perspective-from-france-africa\/","title":{"rendered":"Mining Arbitration Series – A Perspective from France & Africa"},"content":{"rendered":"\n

Recent Trends in International Mining Arbitration in France and Africa<\/strong><\/strong><\/h1>\n\n\n\n
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THE AUTHOR:<\/strong>
Constance Malleville<\/strong><\/a>, Associate at Clyde & Co<\/strong><\/a><\/p>\n\n\n\n

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Clyde & Co<\/a>\u2019s Young Arbitration Group provides a unique insight into\u00a0international arbitration\u00a0issues through the lens of young international arbitration practitioners working across different jurisdictions. In this series with\u00a0Daily Jus<\/a>, Clyde & Co explores the role of arbitration\u00a0in mining\u00a0disputes.<\/em><\/em><\/p>\n\n\n\n

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Mining is vital to the global economy, as it supplies key materials for infrastructure, technology, and energy. Unsurprisingly, the mining and metals sector, as one of the most globalised industries (See, the 2020 UNCTAD World Investment Report<\/a>, p. 37), has therefore emerged as a leading user of international arbitration over the past decade (See 2023 Mining Arbitration Report Industry Insights, Issue 6<\/a>, p. 11 and The ICSID Caseload Statistics (Issue 2024-2)<\/a>, p. 14). A number of factors make the sector prone to disputes, such as the complex and high-stakes nature of mining projects often involving multinational stakeholders and significant investments, the large amount of physical assets which are often of strategic value to the host State and economically and politically important to local communities, and the fact that these projects generally operate across diverse legal and regulatory landscapes. Energy transition and rising demand for critical minerals have further increased conflicts.<\/p>\n\n\n\n

This article provides an insight into the latest arbitral developments and trends emerging from the mining sector in France and Africa.<\/p>\n\n\n\n

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Latest Developments in Mining Arbitration in France<\/strong><\/h2>\n\n\n\n

The arbitration between KN Holding LLC, Severgroup LLC and the French Republic stands as the most recent and notable development in international mining arbitration in France.<\/p>\n\n\n\n

On 8 June 2021, two Russian mining companies, KN Holding LLC and Severgroup LLC, initiated arbitration proceedings against France under the France-Russia BIT and pursuant to the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules (1976)<\/a>. The claimants alleged that France violated the BIT concerning their rights to exploit gold and other resources in the Montagne d\u2019Or region of French Guiana. Central to the dispute is France’s decision not to renew a mining concession for the Montagne d\u2019Or goldmine, in which the claimants had invested via a UK-based company, Nordgold. Claimants sought approximately US$4.56 billion in damages. In 2022, the arbitration was suspended by agreement of the parties. The proceedings then resumed in 2024 (KN Holding and Severgroup v. France<\/em>, Press Release of the PCA on the First Procedural Meeting, Adoption of Terms of Appointment and Issuance of Procedural Order No. 2, 25 July 2024<\/a>).<\/p>\n\n\n\n

An earlier decision supported Nordgold’s claim to a renewal of its concession rights under the French Mining Code. However, this decision was overturned by France’s highest administrative court, in Montagne d’Or v. France<\/em>, Decision of the French Council of State (6th Chamber) 456736 on 19 October 2023<\/a>. Further proceedings before the Bordeaux Administrative Court of Appeal culminated in a judgment rendered on 26 November 2024<\/a>, which confirmed that Nordgold was not entitled to a concession renewal, thereby aligning with the Conseil d\u2019\u00c9tat<\/em>\u2019s earlier ruling.<\/p>\n\n\n\n

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Major Recent Trends in Mining International Arbitration in Africa<\/strong><\/h2>\n\n\n\n

Countries in sub-Saharan Africa are home to many of the world\u2019s largest mining projects. The Democratic Republic of the Congo<\/a> (\u201cDRC\u201d) hosts the world\u2019s largest reserves of cobalt, Guinea<\/a> has the world\u2019s largest reserves of high-grade bauxite, and the DRC, Ghana<\/a>, Mali<\/a>, Namibia<\/a> and Zimbabwe<\/a> have some of the largest reserves of lithium. Significant copper reserves are also located in the DRC, Namibia, South Africa<\/a> and Zambia<\/a>, and rare earth deposits have considerable potential in Burundi<\/a>, Kenya<\/a>, Madagascar<\/a>, Malawi<\/a>, Mozambique<\/a>, Namibia, Tanzania<\/a> and Zambia. These extensive resources make the African continent a hotspot for mining-related disputes.<\/p>\n\n\n\n

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The Continuous Impact of Chinese Investments in the Mining Sector in Africa<\/strong><\/h3>\n\n\n\n

China has become Africa\u2019s largest trading partner, primarily through state-owned enterprises, following the launch of the Belt and Road Initiative (BRI) in 2013\u2014a global strategy aimed at enhancing trade and economic growth through infrastructure development and improved connectivity across Asia, Africa, Europe, and beyond.<\/p>\n\n\n\n

Chinese foreign direct investment to Africa increased from around US$ 75 million in 2003 to US$ 1.8 billion in 2022<\/a>.<\/p>\n\n\n\n

From 2007 to 2020, China’s development banks also financed infrastructure projects in sub-Saharan Africa with US$ 23 billion \u2013 more than twice the combined lending by the United States, Germany, Japan, and France (See, Andrea Shalal, Chinese funding of sub-Saharan African infrastructure dwarfs that of West, says think tank, Reuters, 9 February 2022). Interestingly, over the past years, China\u2019s investment in renewable energy infrastructure (including thermal solar, hydro, wind, biomass, geothermal and energy storage) has significantly increased compared to its investment in fossil fuel infrastructure (See<\/em>, REN21, Renewables 2021: Global Status Report, 15 June 2021<\/a>, PDF p. 17).<\/p>\n\n\n\n

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The Increase of Local Mining Reforms in the Domestic Regulatory Laws of African States and Consequences for Arbitration Disputes<\/strong><\/h3>\n\n\n\n

In recent years, African States have sought greater control over mining projects within their territory and a greater portion of the resulting economic benefits. This has led to the development of national regulations governing mining projects, which, in turn, apply to mining disputes.<\/p>\n\n\n\n

Between 2013 and 2020, at least 16 African countries overhauled their local mining laws and regulations, adapting to the evolving demands of the industry and revising and\/or introducing provisions concerning arbitration \u2013 namely Burkina Faso<\/a>, Cameroon<\/a>, the DRC, Gabon<\/a>, Guinea, the Ivory Coast<\/a>, Kenya, Madagascar, Mali, Mozambique, Namibia, Senegal<\/a>, Sierra Leone<\/a>, Tanzania, Zambia and Zimbabwe.<\/p>\n\n\n\n

Some of these new laws have significantly limited access to international arbitration for the resolution of mining disputes (See<\/em>, the Mining Arbitration Report, Jus Mundi, March 2023, PDF p. 23<\/a>). The most well-known example is South Africa\u2019s Protection of Investment Act, which came into force in July 2018 and which mandates mediation as the first step in resolving disputes, allowing international arbitration only with the government’s consent (Act No. 22 of 2015, Protection of Investment Act, 2015, published in the Republic of South Africa\u2019s Government Gazette, Vol 606, 15 December 2015, No. 39514, Article 13<\/a>).<\/p>\n\n\n\n

As a result, regional arbitration has gained prominence within the continent. A prime example is the establishment of the Common Court of Justice and Arbitration (CCJA)<\/a> which is the judicial body of the Organization for the Harmonization of Business Law in Africa (OHADA), a regional organisation focused on harmonising business law across 17 African countries. The CCJA provides arbitration services for resolving commercial disputes, including those in the mining sector (See<\/em>, Mouhamed Kebe, Cahiers de l’arbitrage, 1st April 2023, issue n\u00b02, p. 459).<\/p>\n\n\n\n

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The Emergence of Counterclaims by States in the Context of International Investment Arbitration in Africa \u00a0<\/strong><\/h3>\n\n\n\n

In recent years, investment treaty arbitration has seen a notable rise in States asserting counterclaims as a defence. This general trend is also true of investment arbitration involving African States, which have started raising more and more counterclaims concerning environmental risks and human rights (See<\/em>, EEPL v. Congo<\/em>, Decision on the Claimant\u2019s Preliminary Objections on the Respondent\u2019s counterclaims, 12 January 2024<\/a>. See<\/em> also, Shell Nigeria and others v. NNPC<\/em>, Partial award, 30 May 2013<\/a>. <\/a>In the case of MINE v. Guinea (II)<\/em>, Award, 6 January 1988<\/a> the Republic of Guinea was the first State ever to submit a counterclaim in an ICSID arbitration and it was also the first State ever to see an investment tribunal uphold its claims.<\/p>\n\n\n\n

However, most counterclaims raised by States have ultimately failed, with many being dismissed on jurisdictional or admissibility grounds.<\/p>\n\n\n\n

Indeed, despite efforts by treaty negotiators to explicitly allow States to raise counterclaims, very few investment instruments provide clear consent for States to do so. One exception is the Investment Agreement for the Common Market for Eastern and Southern Africa (COMESA)<\/a>,\u00a0signed on 23 May 2007, but not yet in force, which states in its Article 7 that: \u201cA Member State against whom a claim is brought by a COMESA investor under this Article may assert as a defence, counterclaim, right of set off or other similar claim, that the COMESA investor bringing the claim has not fulfilled its obligations under this Agreement, including the obligations to comply with all applicable domestic measures or that it has not taken all reasonable steps to mitigate possible damages<\/em>.\u201d Moreover, the Draft Pan African Investment Code (PAIC) 2016<\/a> by the African Union includes a full chapter on investors\u2019 obligations and expressly allows for States\u2019 counterclaims in Article 43: \u201cA Member State may initiate a counterclaim against the investor before any competent body dealing with a dispute under this Code for damages or other relief resulting from an alleged breach of the Code<\/em>\u201d.<\/p>\n\n\n\n

In the coming years, observers widely anticipate a substantial rise in the number of counterclaims brought by States against investors, with greater success expected in terms of jurisdiction, admissibility, and merits.<\/a><\/p>\n\n\n\n

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ABOUT THE AUTHOR:<\/strong><\/p>\n\n\n\n

Constance Malleville<\/strong><\/a> is an associate in the Litigation and International Arbitration team of the Paris office at Clyde & Co<\/strong><\/a>. She acts in both commercial and investment arbitration (including ICC<\/a>, ICSID<\/a>, PCA<\/a> and ad hoc arbitration proceedings), as well as in setting aside and enforcement proceedings of arbitral awards before French courts.\u00a0Constance also regularly represents companies and individuals before civil and commercial courts, in France and abroad,\u00a0including in\u00a0recognition and enforcement proceedings of foreign judgments.<\/p>\n\n\n\n

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*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.<\/em><\/em><\/p>\n\n\n\n

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