Kenya, wider East Africa and indeed much of Africa are now key destinations for investment. Thanks to the rise of technology and innovation across the continent, leading to a boom in technology start-ups especially in fintech, significant sums are being committed. In 2021 tech start-ups in Africa raised almost $5bn (R75bn), with about $3bn (R45bn) going to fintech as the digital transformation of economies accelerates.
With big investment comes complex and detailed contractual arrangements. Foreign investors will often require that overseas law applies to these and that any legal disputes are decided in international legal centres rather than in African courts. At first sight this can seem as a downside for African businesses raising money, but it can be a plus.
A recent report commissioned by Legal UK and written by Oxera, a leading economics consultancy, shows the economic value of English law as a fundamental platform for international business everywhere. It provides a global infrastructure for the trade, financial and commercial contracts on which international business relies, lowering transaction costs and providing network effect benefits for internationally mobile transactions.
In new technology vital for the fintech sector, English law has already stepped up. In 2021 the UK Law Commission confirmed that the current legal framework in England and Wales is clearly able to facilitate and support the use of smart legal contracts. The UK Jurisdiction Taskforce has confirmed that cryptoassets can be treated as property and has produced a set of rules for the resolution of smart contract disputes.
Businesses anywhere in the world can use UK arbitration institutions such as the London Court of International Arbitration (LCIA), or those with branches in the UK such as the International Commercial Court.
East African businesses can share these benefits — English law contracts with their clarity, certainty, predictability, flexibility and adaptation to technology issues are available to all. And when legal disputes about English law contracts occur, and English law needs to be interpreted and adjudicated on, this can be done from all over the world. English law is so well established globally that it can be used by businesses worldwide via numerous international access points, including Africa.
Africa is home to many English-qualified lawyers familiar with English law concepts, and with their guidance African businesses can easily access English law itself. And if there are legal disputes, there are a variety of ways in which African businesses can conveniently manage these.
One traditional route is via international arbitration. Many leading international arbitrators hold English law qualifications and a large proportion of international arbitrations are decided under English law. Businesses anywhere in the world can use UK arbitration institutions such as the London Court of International Arbitration (LCIA), or those with branches in the UK such as the International Commercial Court. But arbitrations can be legally based and take place anywhere convenient to the parties, including online.
In-Africa arbitration is beginning to grow, with arbitration centres and institutes starting up across the continent, including the Nairobi Centre for International Arbitration in Kenya, the Ghana Arbitration Centre, the Botswana Institute of Arbitrators, the African Institute of Mediation and Arbitration in Zimbabwe and the Arbitration Foundation of Southern Africa in SA. African arbitration centres will be able to host English law governed contractual disputes.
An alternative route is to use one of the new international commercial courts established around the world with English law as their legal basis. This includes the Dubai International Financial Centre Courts, which African businesses may find convenient to use.
It is also now easier than ever for international business to go to the source and have English law cases decided by the English judiciary itself, in the commercial court in London. There was high use of the commercial court by overseas parties before the pandemic and over the last year this stayed steady at 75% of cases. Now with the move to remote hearings it is easier than ever for African businesses to use the commercial court and the global English law infrastructure.
The benefits of English law can be accessed seamlessly in a number of ways by businesses around the world including Africa. As investment flows into Africa continues — and specifically into technology and fintech — being able to depend on English law will be an important part of growing successful international technology businesses.
Helen Dodds is director, Legal UK
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