Companies must understand risks and rewards of arbitration for Southern African expansion

While arbitration can be a useful tool for dispute resolution, organisations must be conscious of the practical challenges of recognising and enforcing arbitral awards.

This was highlighted in July 2025, when the US Court of Appeal for the District of Columbia circuit declined to enforce an arbitral award and court order, made in Zambia, against the Zimbabwe Mining and Development Corporation (ZMDC), a state entity owned by the government of the Republic of Zimbabwe.

Two Mauritian companies, Amaplat Mauritius and Marai Nickel Holdings Zimbabwe, had been awarded more than US$45million between them – plus 5% annual interest – in 2014 after going to arbitration in a dispute over the cancellation of joint venture with Zimbabwe’s government, Mining Commissioner and the ZMDC for the development of nickel and platinum mines in Zimbabwe.

The arbitral award, by the International Court of Arbitration, was made in Zambia, then subsequently recognised by the High Court of Zambia which made the award enforceable as a judgment of the High Court of Zambia, had risen to US$93 million through interest by the time it reached the US Court of Appeal, where the Mauritian firms tried to have the judgment recognised and enforced after the ZMDC failed to settle the amounts due to the claimants under the award.

But the US Court of Appeal rejected the request, saying it did not have jurisdiction over the matter as the implied waiver exception of signing the New York Convention and agreeing to arbitration in Zambia did not mean – as the original US Court ruling had said – that the defendants had waived their immunity under the Foreign Sovereign Immunities Act.

A key consideration in planning for the arbitration process, both on a legal and practical level, is ensuring an appropriate seat is determined when drafting any arbitration clause in contracts.

The seat of arbitration – in effect, its home base – is not necessarily the same as the actual physical location the hearing will take place. Instead, the chosen state for the seat will generally determine the procedural law governing the arbitration, and which court has supervisory jurisdiction over the arbitration,  a crucial factor in determining challenges and enforcement of awards. This makes the arbitration clause in a contract incredibly important. Agreeing a seat in country that is a signatory to the New York Convention with a pro-arbitration track record of recognising and enforcing arbitral awards requires expert advice and analysis beforehand.

A further consideration is that while a successful arbitration might lead to an award in a party’s favour, getting that award recognised and enforced by a court may be time consuming and challenging, as was seen with the Amaplat case. The case also highlights the procedural risks of delay. The Mauritian companies did not seek to confirm the award directly in the US within the three-year limitation period under the Federal Arbitration Act, instead relying on a Zambian court judgment. This strategic choice ultimately compromised their ability to enforce the award in the US.

In many territories, parties are required to engage domestic legal and court structures to have the award recognized by a court and enforced.  Domestic law can also create barriers where the local judiciary rules against upholding awards on public policy grounds.

Figures from the International Chamber of Commerce suggest as many as one in five arbitration cases involve state-owned organisations, with some research indicating state entities display significantly lower tendencies to abide by the terms of arbitral awards.

This brings significant challenges for organisations turning to arbitration in such disputes, with both legal and practical risks for them in trying to enforce awards.

States can also attempt to have awards against them annulled via the annulment procedure at the International Centre for Settlement of Investment Disputes (ICSID), an application process which on average takes two years to resolve, potentially dragging proceedings out even further.

The Amaplat decision illustrates that obtaining, recognising and enforcing an arbitral award abroad can be complex. For parties seeking to resolve dispute through arbitration, foresight, timely and strategic action is essential to maximize the chances of successful enforcement of any award in other jurisdictions.