By Priyesh Daya, Partner, Nick Alp, Partner, Prianka Soni, Senior Associate, Brittany Leroni, Senior Associate and Rufus Ranhlakgwe, Candidate Attorney at Webber Wentzel
The Lobito Corridor, a 1,300 km railway project, is set to become a vital trade route, linking the mineral-rich regions of the Democratic Republic of the Congo (Congo) and Zambia to Angola's Port of Lobito. The project promises significant benefits, including infrastructure development (rail, road, and water), increased trade, economic growth, and reduced logistics costs.
However, given the multi-jurisdictional nature of the Corridor, spanning countries with differing legal dispensations, along with multiple stakeholders and critical resources at play, investors must be proactive in ensuring that their contracts contain robust dispute resolution clauses to facilitate the efficient resolution of disputes. The Lobito Corridor has been identified as a transformative economic route that will accelerate regional trade and drive growth in key sectors such as mining, energy, construction, and agriculture. Its key objectives include:
- reducing transport time and logistic costs;
- lowering the carbon footprint of metal and agricultural exports; and
- facilitating the transport of critical raw materials, strategic minerals, and electric vehicle (EV) battery components.
With strong commitments from global stakeholders, including the United States and the European Union, the Lobito Corridor is already attracting substantial investment. Notably, a EUR 50 billion partnership between the European Commission and the African Development Bank Group aims to channel funding into strategic infrastructure corridors such as the Lobito Corridor. Additionally, investments from the Africa Finance Corporation and the Development Bank of Southern Africa are further accelerating its development.
Given the scale of economic activity, development, and investment in the Corridor, investors must be aware of the potential for various disputes, including contractual disputes, environmental impacts, human rights violations, corruption, community conflict, and compliance-related complaints.
Investors should structure and adopt dispute resolution mechanisms that are expeditious, cost-effective, and aligned with best practices to safeguard their investments. These should include appropriate protections between contracting parties inter se and suitable mechanisms for investment protection against host states.
Importantly, Zambia, Congo, and Angola are all signatories to key international legal instruments, including:
- The New York Convention, which is one of the most important instruments for the recognition and enforcement of foreign arbitral awards.
- The African Continental Free Trade Area Agreement (AfCFTA), which has created the world's largest free trade area in Africa, provides parties with various dispute resolution options, including mediation and arbitration, and prevents national courts from intervening in disputes subject to the AfCFTA.
- The Lobito Corridor Transit Transport Facilitation Agency (LCTTFA) Agreement, which aims to provide an effective and efficient trade route by facilitating the transportation of goods between the three Corridor member states through the harmonisation of policies, laws, and regulations.
Together with bilateral and multilateral investment treaties, these instruments provide investors with a strong legal framework for resolving disputes through international arbitration. Arbitration offers a neutral legal forum, impartial arbitrators, and a structured dispute resolution process, ensuring a fair hearing and fostering a stable investment environment.
Leading international arbitral institutions offer investors access to well-established dispute resolution frameworks. These include:
- The International Chamber of Commerce (ICC).
- The International Centre for Settlement of Investment Disputes (ICSID).
- The Arbitration Foundation of Southern Africa (AFSA).
These internationally recognised institutions provide neutral arbitration forums and regulate procedural aspects of arbitration in line with best practices for resolving complex cross-border commercial disputes between businesses, investors, and states.
With increasing investment in the Lobito Corridor, international arbitration is a critical tool for protecting investor rights and ensuring efficient dispute resolution. Webber Wentzel is available to advise on the appropriate arbitration forum, rules, and dispute resolution clauses for investment contracts, helping you protect your rights, investments, and assets.
