Introduction – Angola becomes the 157th contracting state of the NY Convention
Fulfilling a long-standing wish, on 16 June 2016 the Angolan parliament passed a Resolution, published as Resolution 38/16 of 12 August, approving the accession to the New York Convention of 1958 (NYC). On 19 December, Accession Charter No. 10/16, of 19 December, issued by the President of the Republic was published in the Official Gazette of the state, confirming the accession. Finally, on 6 March 2017 the instrument of accession was deposited with the Secretary-General of the United Nations, as provided by article IX, paragraph 2 of the NYC and the Constitution of the Republic of Angola.1 Angola has become the 157th contracting state of the Convention.
Pursuant to article XII of the NYC, the provisions of the Convention will come into force in Angola as of 4 June 2017, 90 days after the deposit of the instrument of accession. Although the entry into force of the Convention will have immediate effects, it does not necessarily imply the enactment of new laws, as the existing arbitration law and procedural law are compatible with the NYC system.
This has been a long-awaited moment and a decisive step towards arbitration in Angola, which has been welcomed by investors and Angolan companies, since it represents an attraction for drawing investment to the country, in particular foreign investment.
Indeed, since the end of the civil war in 2002, Angola has been experiencing an economic boom, attracting a multitude of foreign investors from all corners of the world. Investors have been looking to profit not only from the extensive resources the country has but also from participation in the gigantic state reconstruction programme that started after the end of hostilities. Roads, railways, ports and airports are being reconstructed or improved, and the same is happening to energy production facilities, notably dams (Angola has vast water resources) and the national grid. Hundreds of thousands of state-funded houses are also being built alongside schools and hospitals, etc. In the private sector, all sorts of projects are being developed, with the goal of replacing imports by national production. The evidence of that boom is clearly shown by the evolution of GDP, which, according to the World Bank,1 increased from US$15.3 billion in 2002 to US$138.4 billion in 2013.
The current fall in oil prices has been taking its toll on the Angolan economy and, although the situation of the country is stable, projects are being delayed and situations of default have become more common.
In this scenario, it is easy to understand that a fast-growing economy, high-value and high-margin contracts, a multitude of foreign investors, investment contracts with the government and partnerships with local players, followed by a sudden shortfall in funds, constitute the perfect ingredients for disputes and, consequently, the perfect scenario for the affirmation of arbitration as a favoured dispute resolution method in Angola.
Below we will address the Angolan law on arbitration, the enforcement of arbitral awards, the situation on the ground, and practical challenges and trends. We will try to draw some conclusions particularly regarding the very recent conclusion of the accession procedure of Angola to the New York Convention.
The arbitration law
Arbitration in Angola is currently regulated by Law 16/03 of 25 July, entitled the Voluntary Arbitration Law (VAL).
Despite the first VAL being enacted in 2003, the institutionalisation of arbitration, as an alternative method of dispute resolution, dates back to the Portuguese Code of Civil Procedure (CCP) of 1876, when Angola was still a Portuguese colony. With the approval of the VAL, the provisions of the current CCP, of 1961, relating to voluntary arbitration, have mostly been revoked.
The VAL was inspired by the Portuguese Arbitration Law from 19862 and, although it cannot be said that this law strictly follows the UNCITRAL Model Law, it includes many solutions that are common to the ones found in that Model Law. On the other hand, despite following the 1986 Portuguese text, in many respects it went far beyond that statute, solving some of the problems or issues that had been raised in Portugal over a period of many years. Even if it cannot be dubbed a state-of-the-art law, it is clearly a modern law and, as we expect to demonstrate below, a law that allows arbitration proceedings to be conducted effectively in Angola.
The VAL regulates domestic and international arbitration and most of the provisions of the law are common to both. Therefore, regardless of the existence of some different provisions for each type of arbitration, the VAL should still be deemed a monist law. Although a separate section will be devoted to international arbitration, it is important to bear in mind that what will be said below applies in principle to both international and domestic arbitration.
Any disputes relating to rights that may be exercised at the discretion of the parties can be submitted to arbitration (except if reserved by law to the state courts or to some other type of proceedings) (article 1 of the VAL). The concept of ‘disposable rights’ – as opposed to rights that cannot be waived – is not completely straightforward and has some grey areas, but it is still wide enough to allow us to say that virtually all commercial disputes are capable of being subject to arbitration.
There are, however, some relevant limitations, to the extent that, although the law admits arbitration, in many cases it requires the lex arbitri to be Angolan law and Portuguese to be the language of the process. It also imposes Angola as the place of arbitration.
When it comes to state and public entities, they are entitled to enter into arbitration agreements provided that they relate to situations where the state acts as a private entity and in the case of administrative contracts.
Despite not being a contracting state of the NYC at the time the law was enacted (in 2003), the most relevant provisions of the Angolan VAL are already in accordance with the standards arising out of that Convention.
For example, under article 3, the arbitral agreement has to be in writing, although the meaning of ‘in writing’ includes the exchange of any form of written correspondence directly referring to arbitration or some other document that contains an arbitration agreement, which meets a modern interpretation of article II of the NYC.
If the above is standard, there are, however, some particular points relating to the survival of the arbitration agreement. Contrary to what happens in most laws, if an arbitral award is not rendered within the applicable time limit or if, for some reason, the tribunal becomes incomplete and a new arbitrator is not appointed, the proceedings will not only be dismissed, but the arbitral agreement itself will be deemed to have lost its validity (for that specific dispute) (article 5). In those cases, parties will have to resort to state courts.
The law allows the parties to agree the time limit to render the award, but if nothing is said until the acceptance of the first arbitrator, that time limit will be six months and will only be extended by agreement of the parties (article 25). For this reason (and others) it is strongly recommended that instead of agreeing on a specific limit, the parties may refer the dispute to institutional arbitration (providing that the rules of the institution contemplate the extension of the time limit to render the award).
Arbitrators must be independent and impartial and should disclose to the parties any circumstances that may raise doubts regarding their independence and impartiality (articles 10 and 15). In case of failure to appoint one arbitrator and unless the parties agreed on another appointing authority (as would be the case in institutional arbitration or proceedings in accordance with the UNCITRAL Rules), the missing arbitrator will be nominated by the president of the local state court (article 14). Tribunals may be constituted by any uneven number of arbitrators and failing agreement on the number (in the arbitration agreement or after), three arbitrators will be appointed (article 6).
Arbitrators can be challenged on the basis of not being impartial or independent, or because they do not have the qualifications agreed by the parties. If they do not step down, the decision on this is made by the tribunal, with the possibility of an appeal to the state courts (article 10).
In line with the Model Law, the parties are free to agree on the procedural rules and, in the absence of such an agreement, the tribunal will have the power to determine the rules. In this instance, the law expressly states that the parties may opt to elect the rules of an institution administrating arbitrations (article 16). As to the place of arbitration, the parties are free to agree on this and, if they fail to do so, the tribunal will decide. The law also makes it clear that, regardless of the place of arbitration, the tribunal may hold meetings or hearings anywhere it deems appropriate (article 17).
In addition to the reference to the absolute equality of the parties and the need to give them a full opportunity to present their case, article 18 also mentions the adversarial principle and the need for the proceedings to be duly served on the respondent. These are the fundamental principles that must be respected in any procedure and their breach may lead to the setting aside of the award.
The law reproduces the original version of article 17 of the Model Law and entrusts the tribunal with the power to order any interim measures, including asking for security (article 22), although it does not regulate the procedure for that. It also states that this power is without prejudice to the power of the state courts to order interim measures.
The law also states that the tribunal’s fees must be expressly agreed with the parties, unless the parties have opted for institutional arbitration and that matter is covered by the rules of the institution (article 23).
Besides generally stating that the parties may produce all legally admitted evidence before the tribunal and regulating the assistance by state courts in the production of evidence (article 21), the law is silent on any other aspects of the proceedings (unlike the Model Law). This omission (which also existed in the former Portuguese law) often leads to the application of the civil procedure rules, with obvious damage to the purpose of arbitration. In particular, it should be highlighted that, under the Civil Procedure Code, if the respondent does not file a defence, all allegations of fact may be deemed admitted.
Representation of the parties
Among the provisions regulating the proceedings, there is one that has been raising some concern and thus deserves to be addressed separately.
It is the provision that deals with the representation of the parties (article 19). This provision states that the parties may be assisted or represented by lawyers. This provision was again inspired by the text of the former Portuguese law, which stated that the parties could designate anyone to assist them in the proceedings. In the Portuguese law, the goal was not to limit the representation of the parties in any way, but to explain that the parties were not obliged to be represented by lawyers. The text in the Angolan law has been interpreted to mean exactly the opposite, so that the parties either represent themselves or have to appoint a lawyer and, in that case, it must be a lawyer allowed to practise in Angola (ie, an Angolan lawyer). As membership of the Angolan Bar Association is limited to Angolan lawyers, the practical consequences of this interpretation may be substantial.
A debate has been going on around this subject and there are authors that propose a third way, arguing that it is enough that the party is assisted by at least one Angolan lawyer. This would not prevent the party from also being assisted by foreign counsel or other professionals. This third way has been gaining some traction and has been adopted, at least once, by the Bar Association. It is hoped that this practice will evolve, otherwise there will be a trend to move the place of arbitration (or the hearing venue) outside Angola, not to mention the risk to the party that decides to prevent international lawyers from appearing as counsel, to the extent that if enforcement is to be made in other jurisdictions, such conduct may be construed as a case of violation of due process (a blatant one).
There is still not a clear answer to this problem, which casts some shadow on the future of Angola as a seat of arbitration.
The law contains a number of provisions regarding the award and its preparation (articles 24 to 33). None of them raises any special concern (except the one addressing the time limit for the award, which has already been mentioned above).
In the same chapter, the law deals with the Kompetenz-Kompetenz principle, clearly enshrining it and establishing that any decision by the tribunal in this regard may only be challenged after the award is rendered (article 31). In parallel, the Civil Procedure Code contains a provision stating that state court judges should dismiss any proceedings filed before them if there is evidence that there is an agreement to arbitrate.
The last provision of this chapter states that (domestic) arbitral awards produce the same effects as court judgments and may be directly enforced (article 33).
Challenging the award
For domestic arbitrations, the law establishes two challenge methods, appeal (article 36) and request to set aside (article 34). Appeal can be waived by the parties but setting aside cannot.
An award can be set aside if:
- the dispute could not be settled through arbitration;
- the tribunal had no jurisdiction, provided that this matter has been raised in due time by one of the parties in the course of the proceedings;
- the arbitral agreement has lost its validity;
- the tribunal was not constituted in accordance with the law or will of the parties, provided that this matter has been raised in due time by one of the parties in the course of the proceedings;
- the award contains no grounds whatsoever, unless the parties expressly agreed on that (also, in case of an award rendered ex aequo et bono, the tribunal only has to provide grounds for the decision on the facts);
- the tribunal violated the fundamental principles established in the law (equality, right to present the case and adversarial), provided that such failure had a decisive influence in the decision;
- the tribunal decided ultra petita (but only this part will be set aside) or failed to decide matters that had been submitted to it (but only if such failure influenced the outcome of the dispute); and
- the tribunal was authorised to decide ex aequo et bono but the decision does not respect the principles of public policy of the Angolan state.
Both the appeal and the request to set aside are lodged directly with the Supreme Court. However, if the parties have not excluded the possibility of appeal (in the case of domestic arbitration) or if they have agreed expressly on it (in the case of international arbitration), the grounds for setting aside will have to be discussed within the appeal. Therefore, although two means of challenge are presented, in practice the parties may only resort to one.
In addition to these means of challenge, a party may also oppose the enforcement of the award, and is entitled to use a wide array of arguments (see below).
As mentioned at the outset, the large majority of the provisions of the VAL are applicable to both domestic and international proceedings, but there are some provisions that are exclusive to international arbitration.
Beginning with the definition of what ‘international’ means, the VAL adopts the French definition referring to ‘international trade interests’, but then goes on to complete it along the lines of article 1 of the Model Law (article 40 of the VAL).
Besides this definition, the chapter contains a provision regarding the definition of the language of the proceedings (article 42), somehow implying the conclusion that the legislator did not consider the possibility of domestic proceedings being conducted in a foreign language.
Article 43 of the VAL deals with the law applicable to the merits and it is practically a translation of article 28 of the Model Law.
Finally, article 44 states that the award rendered within an international arbitration is not appealable, unless the parties have expressly agreed such possibility and regulated the terms of the appeal.
As to the rest, international arbitration is regulated by the same provisions applicable to domestic arbitration (article 41).
Enforcement of arbitral awards
Awards rendered in domestic arbitrations
Domestic awards are enforceable exactly as if they were decisions rendered by the state court, but the parties are allowed to invoke certain additional grounds for challenge. In fact, besides the list of grounds for opposition common to all Angolan enforcement proceedings (ranging from the forgery of the enforcement title to res judicata), article 814 of the Civil Procedure Code adds (1) the loss of validity or nullity of the arbitration agreement; and (2) the nullity of the award if the parties have waived the right to appeal. The causes for nullity appear to be the same as the ones that could ground a request to set aside and, therefore, we may find a third way to challenge arbitral awards in the opposition to the enforcement.
Awards rendered in Angola within international arbitrations
These awards are enforceable in exactly the same way as if they were domestic awards.
Awards rendered abroad
The entry in force of the New York Convention will have effects on the requirements for the enforcement of foreign awards, although those impacts are smaller than one might anticipate, to the extent that the provisions of the Angolan Civil Procedure Code dealing with that subject matter had been drafted to facilitate the enforcement of foreign decisions.
In fact, under article 1094 of the Angolan Civil Procedure Code, no foreign award may be enforced in Angola without being reviewed and confirmed. However, despite the name, this process did not involve a revision of the merits of the decision to be confirmed (although it is more than a formal verification process).
Under articles 1096 and 1097 of the Angolan Civil Procedure Code, in order for an arbitral to be reviewed and confirmed it is necessary that:
- there are no doubts regarding the authenticity of the decision;
- it is res judicata according to the laws of the country where it was rendered;
- lis pendens or res judicata cannot be invoked regarding any case judged by an Angolan court;
- the respondent has been duly served;
- it does not contain decisions contrary to the public policy of the Angolan state; and
- if rendered against an Angolan citizen, it does not violate Angolan private law when, according to Angolan conflict rules, the Angolan material law should have been applied to the merits of the dispute;
The request for review is filed at the Supreme Court and once the exequatur is granted, the enforcement may be filed in the first instance court, as if it were a domestic award.
As can be seen, except for the last paragraph of article 1096, where a wider margin of discretion is currently granted to state courts, the grounds for refusal of confirmation are not, after all, substantially different from the ones listed in article V of the New York Convention. Angolan Constitution law grants automatic effects to the treaties once they are approved by the Angolan state, so parties from contracting states may invoke the provisions of the New York Convention regardless of any amendment to the law.
Even so, it is anticipated that the accession to the New York Convention will result in higher predictability and less time being spent in the process of recognition and enforcement of foreign decisions in the country, thus increasing the confidence of foreign investors.
Up to this point, we have been going through the provisions of the law. The aim is now to understand how matters are being dealt with in practice.
Decisions from the Supreme Court are neither published nor easily accessible. This means there is no information regarding the number of requests to set aside, appeals or revision and confirmation procedures ever filed or decided. The same applies to the enforcement of arbitral awards, so we have to rely on our experience in the field to provide some practical input.
There is a continuous interest in the arbitration field on the part of the legal community, which is a sign that arbitration is already – or, more likely, is expected to become – popular. In spite of this, Angolan doctrine on arbitration continues to be scarce.
Likewise, the level of expertise shown in arbitrations in Angola has yet to develop. Even in large international arbitrations, there is still a long way to go, and the level of sophistication is low, with parties still relying on the procedural framework established by the local procedural law. Another downside is that Angola is an expensive country, with entry visa requirements that may not be easy to meet (at least quickly).
Despite all this, we have no doubt that as a consequence of the high volume of foreign investment in the past decade associated with the still recent fall in the oil prices, the number of disputes is increasing and the same seems to apply to the number of arbitrations. For this reason, we are certain that we will start to hear more and more about major arbitration cases involving Angola in the not too distant future.
Recourse to arbitration and institutionalised arbitration
From a legislative point of view, the Council of Ministers adopted a resolution in 2006 recommending that the state and state companies should include arbitration clauses in the agreements they conclude and the Angolan state often includes arbitration clauses in the investment contracts it enters into with foreign investors.
In the same way, a number of laws have been passed making direct references to arbitration, even if in some cases arbitration is allowed only to the extent that it is regulated by the VAL, which has been interpreted as an imposition that the seat of arbitration must be Angola.
State courts have a poor record for efficiency and quality. This circumstance alone justifies recourse to arbitration and, as a matter of fact, it is very common to find contracts (even state contracts), even involving only Angolan parties, that refer disputes to arbitration.
Although no statistics exist, it is commonly accepted that arbitration is being used with greater frequency.
The opening of an arbitration centre for institutionalised arbitration is subject to state authorisation and in 2012 and 2013 four centres were authorised. However, according to the information available, all the centres have engaged in little activity. An additional arbitration centre, also involving a structure to promote arbitration and mediation, was created and started operating in 2015. The centre, directly administrated by the Ministry of Justice, has been successful in dealing with mediation, but while it is still waiting for arbitration cases it is suffering the effects of the current economic downturn and its activity has been reduced.
As to enforcement, little information is available so it remains a major area of uncertainty.
On the basis of the above, we are convinced that GAR readers will agree that the Angolan law is suitable to allow domestic or international arbitration proceedings in accordance with modern standards.
This conclusion has been highlighted with Angola accession to the NYC which is not only great news for the legal and arbitral community, but, even more importantly, to foreign and Angolan investors. this is because it represents a statement that the Angolan state is willing to abide by international standards when dealing with foreign arbitral awards.
From the point of view of its legal framework, Angola is in the process of becoming an arbitration-friendly jurisdiction.
Clearly, arbitral proceedings are ongoing and the number of cases seems to be increasing.
There are, however, a number of questions over how things are going to evolve: Will foreign lawyers be authorised to act in the proceedings? Will the entry visa constraints make the appointment of foreign arbitrators more difficult in practice? How will state courts respond when their intervention is requested? Will they uphold arbitration awards? Will foreign awards be enforced?
What happens in practice will provide an answer to these questions and the coming years will be decisive.
- See the depository notification C.N.118.2017, available in https://treaties.un.org
- Law 31/86 of 29 August, replaced by Law 63/2011 of 14 December.