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The trend of high levels of foreign investment in Mozambique since 2010 was recently confirmed by the statistics released by the World Bank which show that the net foreign investment in Mozambique in 2014 amounted to US$4.9 billion (the third-largest foreign investment receiver in Africa after South Africa and the Republic of Congo). The existence of these high levels of foreign investment is critical to understand the role that arbitration has gradually been given by the Mozambican government as the preferred dispute resolution method provided in contracts with foreign investors and, more generally, in the legislation that regulates some of the more important sectors for Mozambican economy.

Arbitral tribunals are today expressly recognised by the Constitution of Mozambique as part of the judicial organisation. Though only in 2004 did arbitration receive constitutional recognition, references to arbitration in the Mozambican legal system already existed by then. The Civil Procedure Code of 1961 had already regulated arbitration by admitting arbitration agreements on matters that were not related to inalienable rights.

The legal framework regarding arbitration went beyond the aforementioned and original recognition, being based today primarily on the following provisions: (1) the Arbitration, Conciliation and Mediation Law (ACML), approved by Law No. 11/99, of 8 July; and (2) the Administrative Procedure Law, approved by Law No. 7/2014, of 28 February.

The main principles applicable to arbitration in Mozambique correspond to those which are widely accepted in the modern arbitration laws worldwide and although the ACML is not based in the UNCITRAL Model Law, it is clear that a large number of the legislative solutions are inspired in that Model Law.

These above referred two pieces of legislation have a cross-sector approach in arbitration matters – regulating its essential aspects – but there is also separate legislation that recognises arbitration as the appropriate mechanism for the resolution of certain disputes in specific sectors. In this regard, three specific regimes should be noted as particularly relevant to international investors:

Investment Law

According to the Investment Law (approved by Law No. 3/93, of 24 June), the final resolution of any dispute involving the state and foreign investors in the context of investments authorised and carried out in the country takes place by means of arbitration, unless otherwise agreed.

The legal framework of public-private partnerships

Another example of the importance of arbitration in Mozambique is the legal framework of public-private partnerships (approved by Law No. 15/2011, of 10 August), which includes specific provisions allowing for the use of arbitration for the resolution of disputes arising under that type of project.

Petroleum Law

With relevance in the oil sector, the Petroleum Law (approved by Law No. 21/2014, of 18 August) provides that disputes arising out from agreements or concessions falling within its scope, if not resolved through amicable means, must be submitted to arbitration or to the competent state courts, on the basis of what is set forth in the relevant contractual terms.

The existence of a number of special arbitration regimes is perhaps the most distinctive feature of Mozambican arbitration and is one that should be carefully considered in the drafting of arbitration agreements in view of some degree of overlapping that sometimes exists between some of existing regimes and also in view of some ambiguities caused by mechanisms of mandatory arbitration in some sectors.

The importance of arbitration as a dispute resolution mechanism in Mozambique is undoubtedly clear, and stems directly from the existence of cross-sector legislation applicable to large investment projects that are taking place in the country and that clearly indicates a preference for arbitration as a method of resolving disputes. The favourable approach of the Mozambican state in relation to arbitration is also confirmed by the fact that it ratified the New York Convention in 1998 and the Washington Convention in 1995.

International, domestic and administrative arbitration

In the light of the legislation currently in force, arbitration in Mozambique can be categorised into three types: domestic, administrative and international arbitration.

Domestic arbitration corresponds to arbitration proceedings that present connection elements only with the Mozambican state and covers the majority of disputes that do not show specificities that justify their inclusion in the remaining categories. In this context, Mozambican legislation provides for a wide definition of disputes that may be resolved by arbitration, opting for a general rule of admissibility that entails only two exceptions: (1) on the one hand, all disputes that are subject to special regimes that set aside the rules provided for in Law No. 11/99, of 8 July; (2) on the other, disputes relating to inalienable or non-negotiable rights, being that this limitation can be primary or supervening. This means that if the dispute involves initially inalienable or non-negotiable rights, it cannot be brought to arbitration at any stage. However, if questions of such nature are raised during the dispute, the arbitral tribunal should refrain from issuing a decision and refer the parties to the state courts for resolution of this particular issue.

The use of arbitration under the above-mentioned law is available to private and public entities. The latter, however, can only resort to arbitration in relation to private law or private contractual disputes. For any other disputes, public entities may only enter into arbitration agreements if allowed by law. It is in this field that administrative arbitration becomes relevant, as discussed below.

The definition of international arbitration includes all disputes relating to international trade interests, namely (1) when the parties to an arbitration agreement have, at the time of conclusion of that agreement, their business domicile in different countries; (2) the place of arbitration or the place in which a substantial part of the obligations resulting from the underlying agreement is to be performed outside the country in which the parties have their place of business or the place with which the subject matter of the dispute is deemed to be closely connected is also located outside the country in which the parties have their place of business; or (3) the parties have expressly stipulated that the subject matter of the arbitration agreement has connections with more than one country. If no specific stipulation is set forth by the parties, the provisions applicable to domestic arbitration are also applicable to international arbitration. The arbitral tribunal shall decide in accordance with the rules of law chosen by the parties or, failing such provision, the rules of law determined by the conflict of laws rules deemed appropriate by the arbitral tribunal. In any case, the arbitral tribunal shall take into account the usages of the trade applicable to the transaction.

Finally, regarding administrative arbitration, the respective legal framework (approved by Law No. 7/2014, of 28 February) is applicable to the resolution of disputes arising from administrative legal relations, which typically are executed with the intervention of the state or legal entities subject to a public law regime. In this context, administrative arbitration does not cover the entirety of disputes that can be triggered within the mentioned administrative legal relationships, but surely covers disputes of central importance in the economic activity. In fact, and with greater relevance, disputes that have as their object administrative contracts, such as contracts for public works, public service concessions or public works concessions, concessions for the operation of particular economic activities, are included within the scope of this type of arbitration procedure.

Main features

Legal principles

In one of its initial articles, the ACML identifies and defines the set of core principles applicable to arbitration. These are the principles of liberty, flexibility, privacy, integrity, promptness, equality and due process and they are the main pillars of arbitration in Mozambique.

On this regard, a special reference should be made to the principle of integrity as an overarching principle to the functioning of the arbitral tribunal. It applies to arbitrators and seeks to capture the well-established prerequisites of arbitrators’ independence and impartiality throughout the dispute. It is in the context of the implementation of this principle that arbitrators are required to remain in a position of equidistance from the parties and from the interests underlying the position of each of the parties, by observing the ethical rules set forth in Law No. 11/99, of 12 July, apart from fulfilling any requirements laid down in the arbitration agreement. And it is also in the context of the implementation of this principle that the same piece of legislation ensures procedural mechanisms for refusal of arbitrators, enforceable by either party along the course of the arbitral proceedings and with the possibility of appeal to the state courts.

Mention should also be made to the relevance that the principles of equality and due process are given by the ACML, which requires that the parties are given, throughout the process, equal treatment, with identical possibilities of intervention and presentation of their case. The ACML expressly provides that both parties should be given the possibility of intervening, in oral hearings or in writing, before a decision is granted by the arbitral tribunal. These are guarantees of a fair trial, applicable to any decision of a jurisdictional nature and its non-observance may compromise the validity of the arbitration award.

Arbitration agreement

The submission of any dispute to an arbitral tribunal is made through an arbitration agreement, that can have the nature of a specific agreement to arbitrate, while respecting to a (existing) specific dispute, or of an arbitration clause when covering disputes that could (potentially) arise in the context of a concrete legal relationship.

In the light of Mozambican law, the arbitration agreement should always be executed in writing, otherwise it is considered to be null and void. It shall be executed in any document signed by the parties, including exchange of letters, telex, fax or other means of communication to prove its existence, or in which the existence of an agreement has been alleged by one party and has not been challenged by the opposing party. The agreement can also be incorporated by reference to another document that includes an arbitration agreement, as long as the reference is made in (and to) a written document and in terms that make clear the intention to incorporate the arbitration agreement on the contractual instrument at stake.

Arbitral procedure

Beginning of the proceedings

Arbitration is triggered through a written communication sent by (at least) one of the parties in the arbitration agreement to the other(s). This communication must accurately describe the object of the dispute and, where appropriate, designate the arbitrator to be appointed by the requesting party.

The regime will be different if the arbitration agreement so provides or if autonomous rules providing for a different mechanisms of constitution of the arbitral tribunal are expressly incorporated into the arbitration agreement.

Arbitrators’ appointment

The arbitral tribunal may consist of a sole arbitrator or of several, in an uneven number. Should the parties fail to agree on the number of members of the arbitral tribunal, it shall be composed of three arbitrators. In the case of a collective tribunal, the appointment of the first arbitrator must be accompanied by an invitation to the counterparty to carry out its respective appointment, failing which this appointment shall be made by the appointing authority identified by the parties as competent for that purpose or, in the absence of such indication, by the state courts.

Following the appointment of the second arbitrator, directly by the counterparty or by a different entity, the two appointed arbitrators will appoint the third arbitrator (or the arbitrators already appointed will appoint the presiding arbitrator, when the composition of the arbitral tribunal does involve more arbitrators), being therefore concluded the constitution of the arbitral tribunal. From that moment on, the deadline for the arbitral tribunal to issue a decision begins.

The two legal regimes described above, related to the ACML and the law applicable to administrative arbitration, also differ in terms of the deadline for issuing a decision. Both are consistent with regard to the supplementary nature of the regime provided for in such pieces of legislation, allowing the parties to agree on specific deadlines. However, in the absence of such agreement, the rules are distinct. In the case of administrative arbitration, the deadline for a decision is of six months and can be extended by a period corresponding to half of its initial duration. In contrast, according to the ACML the deadline is also of six months but its extension can be determined by the arbitral tribunal or agreed between the parties for a period up to twice the initial term.

Procedural rules

In terms of the applicable procedural rules, parties are free to design the procedure they wish to adopt for their arbitration. In case the parties fail to provide for such rules, the arbitral tribunal will be given the power to determine the applicable procedural rules.

The procedural rules must comply with the principles mentioned above and it is unequivocal that such rules are widely flexible. In terms of evidence, any means of evidence which are accepted by civil procedure law are admissible, which means that, in the context of arbitration, all means of evidence that are not prohibited by an imperative legal provision may be used. In general, the rule is that the admissible evidence is always presented in a context of an adversarial hearing.

State courts’ intervention

Although the arbitral tribunals are constitutionally recognised as actual courts, there are several circumstances in which state courts intervention is required in disputes covered by an arbitration agreement. The ACML provides for the typical cases of state court intervention in the context of arbitration.

Injunctions and provisional measures

In the context of interim remedies, the parties may request state courts to order interim measures in respect to a dispute covered by an arbitration agreement. In this respect, it should be noted that the request before the state courts and its subsequent decision in no way interferes with the competence of the arbitral tribunal to decide the underlying dispute, nor implies the waiver by the requesting party to the arbitration agreement entered into previously. In fact, where there is an arbitration agreement, it is to the arbitral tribunal to issue the first binding decision in matter of competence (Kompetenz-Kompetenz). As a consequence, the filing for interim measures before the state courts, which may also be required within the arbitration, has no impact on the delimitation of the scope of the arbitration agreement. As a result, the choice of the appropriate court to ensure precautionary remedies is influenced only by the specific circumstances of the case and the stage at which said dispute is.

State court assistance in taking of evidence

Intervention of the state courts may still take place in the presentation of evidence, by way of assistance to arbitral tribunals where one of the parties or a third-party is resistant or unwilling to observe the duty of collaboration with the arbitral tribunal. This position of resistance should not mean the impossibility of access to relevant evidence, reason why, in these situations, state courts may be requested to assist in taking evidence, using their coercive powers if necessary. To such effect, it is only required that this request is made by the relevant arbitral tribunal or authorised by it in cases where the request is made by one of the parties.

Setting aside and enforcing an arbitral award

Following an arbitral award, state courts may also be called to intervene. In this case, intervention may relate to two distant realities: in the context of an appeal for annulment; or for the purposes of its enforcement.

On the first point, the award is in principle final. Its respective challenge is only permissible by way of an action for annulment, whose major pleas, in turn, are quite limited and do not involve the examination of the merits of the arbitral award (except for one specific situation). In this sense, appeal for annulment (set aside) of the award can only be based on the following grounds:

  • the parties to the arbitration agreement were under some incapacity;
  • the said agreement is not valid under the law to which the parties have subjected it to or, failing any indication thereof, under the law of the Mozambican state;
  • a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
  • the award deals with a dispute not referred to in the arbitration agreement or not contemplated in the submission to arbitration or contains decisions on matters beyond the terms of the arbitration agreement or of the submission to arbitration, provided that if the provisions of the award in respect of matters submitted to arbitration can be separated from those not so submitted, only that part of the award that contains decisions on matters not submitted to arbitration may be set aside;
  • the composition of the arbitral tribunal or the arbitral procedures are not in accordance with the agreement of the parties, unless such agreement is in conflict with a provision of the ACML that the parties cannot derogate from; and
  • the subject matter of the dispute is not subject to settlement by arbitration under the laws of Mozambique.

Apart from this grounds for annulment, the ACML also admits the challenge of an award contrary to the public policy of the Mozambican state.

In terms of enforcement, the arbitral award is considered as having the same degree of enforceability of a state court decision. Enforcement procedures should be brought before state courts, under the terms of the specific procedure provided for in civil procedural legislation.

Closing remarks

Mozambican law does promote arbitration as a dispute resolution mechanism. In fact, the Mozambican state acceded to international conventions that present in essence the relevance of arbitration as an alternative dispute resolution mechanism. Similarly, the procedural legislation in force is in favour of arbitration and in implementing it there are several sectoral pieces of legislation in relevant and strategic areas that identify arbitration as a central mechanism, and surely with a very significant margin for growth in resolving disputes.

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