Energy arbitration in Africa: parallel proceedings

In summary

This article discusses the growing trend of parallel proceedings in energy disputes in Africa. It explores the legal issues arising out of the interaction between jurisdictional fora, recent case law, and the challenges that parallel proceedings pose to arbitral coherence and efficiency.

Discussion points

• Parallel proceedings
• Intersection of treaties, contracts and domestic laws
• Waiver of arbitration rights
• Fork-in-the-road and exhaustion of local remedies provisions
• Res judicata and lis pendens

Referenced in this article

• Tanzania Electric Supply Company Limited (TANESCO) v Independent Power Tanzania Ltd. (IPTL)
• ZCCM v First Quantum Minerals
• Petroleum Code of Senegal (2019)
• DRC Electricity Law (2014)
• SNG S.A. v SAFRICOM S.A.
• EICB v Groupe Eoulée
• Salini Costruttori S.p.A. and Italstrade S.p.A. v Kingdom of Morocco
• H&H Enterprises v Egypt
• Helnan International Hotels A/S v Egypt

Introduction

Foreign investments in Africa’s energy sector, driven by the continent’s abundant oil, gas and mineral reserves, have always been a regular source of complex disputes. These disputes often involve a combination of contractual and treaty-based provisions as well as regulatory frameworks, resulting in an intricate interplay between national courts, investment arbitration and commercial arbitration. The jurisdiction of these courts and tribunals, along with the diverse legal regimes governing investment protection, natural resource exploitation and regulatory oversight, has contributed to the increasing number of parallel proceedings.

Parallel proceedings, in this context, refer to the simultaneous adjudication of related disputes across multiple fora, including domestic courts, ICSID or UNCITRAL tribunals, and commercial arbitration panels. These disputes often involve a plurality of actors, such as states, state-owned enterprises and administrations, shareholders, corporate entities and joint venture (JV) partners, each asserting claims under different sources of law: sector-specific national laws and regulations, contractual arrangements such as JV agreements or production-sharing agreements (PSAs), financing contracts, investment laws and investment treaties.

The strategic forum selection by claimants further exacerbates jurisdictional fragmentation, as investors and state entities each seek to take advantage of overlapping legal frameworks to advance their interests. This fragmentation fuels tensions between arbitral tribunals and domestic courts, particularly where competing decisions challenge the primacy of arbitration agreements and the enforceability of arbitral awards. If they are not properly co-ordinated, parallel proceedings can give rise to difficult issues including conflicting decisions, double or multiple recovery (when the same damage is claimed in multiple fora), enforcement hurdles, protracted disputes and wasted costs.

Far from being a mere procedural inconvenience, parallel proceedings bring into play fundamental principles of international arbitration and legal concepts such as waiver of rights, lis pendens and res judicata, as well as fork-in-the-road or exhaustion of local remedies provisions. The broader impact also extends beyond individual cases, raising concerns regarding legal certainty, procedural efficiency, and investor confidence in African energy markets, where stability is crucial to long-term investment.

The foundations of parallel proceedings in energy arbitration in Africa

A wide range of actors

Parallel proceedings in energy disputes stem not only from overlapping jurisdictions but also from the multiplicity of actors involved. Energy projects involve numerous stakeholders, each with distinct legal standing, all of whom are potential claimants or respondents.

Shareholders, project companies, governments or state-owned entities, JV partners, lenders or even local communities and NGOs may initiate separate proceedings leveraging bilateral investment treaty (BIT) protections, contractual undertakings, sector-specific or regular law provisions. A state's actions or measures might infringe upon various legal frameworks, each offering its own set of remedies, thereby providing multiple paths for aggrieved investors to seek redress. For instance, the foreign shareholder of a JV that operates a power plant may wish to pursue treaty-based arbitration under a BIT for breach by the host state of the fair and equitable treatment requirement, while the JV or local affiliates may seek contractual relief through commercial arbitration, or even challenge tax measures or customs restrictions before the local courts. Similarly, disputes involving state-owned enterprises often blur the lines between commercial and sovereign acts, particularly when such entities operate with a degree of autonomy from the host state yet still benefit from sovereign defences.

This jurisdictional friction is particularly common in the energy sector, where projects often involve layered agreements, multi-tiered ownership structures, and regulatory frameworks that intersect with investment protections.

The intersection of treaties, contracts and domestic laws

The intersection of treaties, contracts and domestic laws creates a complex legal framework that offers parties multiple choices of forum, often leading to procedural fragmentation and parallel proceedings. The growth in treaty-based arbitration, bolstered by more than 3,000 BITs, has dramatically increased cases filed under these mechanisms, complicating their co-ordination with local jurisdictions. BITs provide foreign investors with substantive protections and direct access to arbitration under ICSID or UNCITRAL rules. These treaties frequently coexist with domestic legislation, such as investment codes, petroleum laws, and mining regulations, each prescribing distinct pathways for resolving disputes. In addition, energy contracts, particularly PSAs and JV agreements, commonly incorporate arbitration clauses specifying the forum, procedural rules, and governing law. Consequently, it is common for domestic measures or contractual actions to be assessed both by national courts through the lens of domestic constitutional, administrative, tax, or civil law and by international arbitral tribunals based on investment law standards. The concurrent application of these legal instruments results in overlapping jurisdictional options, creating strategic litigation opportunities but also increasing the risk of conflicting rulings.

An example of this friction can be found in the case of Tanzania Electric Supply Company Limited (TANESCO) v Independent Power Tanzania Ltd (IPTL)², in which the Tanzanian courts became embroiled in disputes over electricity tariffs, even though the parties had expressly agreed to ICSID arbitration. In 1995, TANESCO, Tanzania’s state-owned electricity supplier, entered into a power purchase agreement (PPA) with IPTL, a private entity, for the design, construction, and operation of a power generation facility in Tanzania, which was to supply power to TANESCO for 20 years. Disputes arose concerning the calculation of construction costs and the tariffs charged by IPTL. Despite the clear arbitration clause contained in the PPA, TANESCO contested the costs and sought relief before the High Court of Tanzania, requesting interim measures, including an injunction to prevent IPTL from collecting certain payments under the agreement. IPTL filed a petition in the High Court of Tanzania, directed against TANESCO and three officials of the Government of Tanzania, seeking a declaratory judgment and an order for payment to IPTL by TANESCO. In parallel, TANESCO, relying on the arbitration clause contained in the PPA, initiated arbitration proceedings before the ICSID, asserting that it was entitled to terminate the PPA or, alternatively, to obtain a material reduction of the tariff. This resulted in concurrent proceedings: while ICSID arbitration was ongoing, litigation continued before the Tanzanian courts. In 2001, the ICSID tribunal rendered a decision addressing tariff adjustments and other disputed issues under the PPA, clarifying the parties' respective contractual obligations. However, despite the tribunal’s ruling, the national court proceedings persisted, generating friction with local arbitral proceedings.

This case saw further developments in the ICSID cases Standard Chartered Bank (SCB) v United Republic of Tanzania³and Standard Chartered Bank (Hong Kong) Limited (SCB HK) v TANESCO⁴. In the first case (which was dismissed for having lack of jurisdiction), SCB, as assignee of IPTL’s rights under the PPA, claimed protection under the UK-Tanzania 1994 BIT as it considered that measures taken by various organs of the Government of Tanzania, which took control of the power plant, prevented it from recovering money owed to it by TANESCO. In the second case, SCB HK successfully claimed that IPTL had assigned to it its rights under the PPA as security for a loan, and that because IPTL was in default, SCB HK was entitled to PPA payments due from TANESCO.

Another illustrative case of parallel proceedings is the dispute between the JV partners of the Kansanshi mine in Zambia, ZCCM v First Quantum Minerals (FQM)⁵. In this dispute concerning money transfers, the state entity ZCCM (owner of a 20% interest in the JV) commenced two parallel proceedings of behalf of the JV. First, ZCCM started fraud claims against FQM (the indirect owner of an 80% interest in the JV) and several directors of the JV in the Zambian courts. Two days later, ZCCM filed an UNCITRAL arbitration in London against Kansanshi Holdings Limited (KHL) (its JV partner and FQM’s subsidiary) under the JV shareholders’ agreement. Despite the arbitral tribunal’s dismissal of ZCCM’s claims, finding no evidence of misrepresentation or harm, ZCCM persisted with litigation before the domestic courts, asserting that key issues remained unresolved. The Zambian High Court ultimately dismissed ZCCM’s case; it found that ZCCM’s claims in the arbitration had no material differences to those in the litigation and affirmed the prior ruling of the arbitral tribunal (res judicata) even though the parties to the two proceedings were not identical, noting the risk of conflicting decisions.^[6] The Kansanshi mine has also been involved in disputes against the Zambian national power supplier, Zesco, over the payment of increased power tariffs, which resulted in an UNCITRAL arbitral award in favour of the mine.^[7] In 2020, the Kansanshi JV also commenced ICSID arbitration against the state of Zambia, which was later discontinued pursuant to a settlement agreement between the parties.^[8]

National laws

The persistence of domestic court proceedings demonstrates how national legal frameworks in Africa often reinforce judicial recourse despite arbitration agreements. Indeed, in many African countries, domestic legal frameworks often provide for litigation before national courts, even in the presence of arbitration agreements. This is particularly evident in the energy sector, where various sector-specific laws govern the rights and obligations of investors and States.

Petroleum and hydrocarbons laws play a pivotal role in structuring dispute resolution frameworks for oil and gas contracts, often navigating the intersection between state regulatory authority and contractual autonomy. Article 71 of Senegal’s 2019 Petroleum Code⁹ illustrates this balance by setting jurisdictional boundaries between the Senegalese courts and alternative dispute resolution mechanisms. The provision vests the national courts with jurisdiction over violations of petroleum laws and regulations, reinforcing state control over compliance matters. However, disputes arising from the interpretation or application of petroleum agreements fall within the remit of dispute resolution mechanisms expressly agreed upon by the parties. These mechanisms include consultation, mediation, conciliation, arbitration, or other judicial or non-judicial methods. Article 71 reflects a dual approach: while it reserves jurisdiction for Senegalese courts in cases of regulatory disputes, it grants parties significant latitude to select alternative dispute resolution methods for contractual disputes, in line with international practices in the energy sector.

Similarly, electricity codes, which regulate the production and distribution of power, often include provisions for domestic litigation. For instance, in the Democratic Republic of Congo, Article 98 of the Electricity Law of 2014^[10] grants the electricity regulatory authority primary jurisdiction over disputes between operators, as well as between operators and consumers, requiring parties to seek resolution through this body before resorting to judicial intervention. This requirement reflects a broader regulatory trend in the sector, where administrative bodies serve as preliminary adjudicatory forums, effectively delaying or conditioning access to arbitration or national courts. While designed to ensure sectoral expertise in dispute resolution, such frameworks also raise questions regarding jurisdictional hierarchy, potential delays in investor recourse, and the interaction between contractual arbitration clauses and regulatory proceedings.

Navigating these frameworks requires careful analysis of both national legislation and treaty obligations to safeguard arbitration rights. Indeed, investors should be careful not to be deemed to have waived their right to arbitration and must take into consideration various legal concepts such as interim measures, fork-in-the-road and exhaustion of local remedies provisions, res judicata and lis pendens. We discuss these issues below.

Waiver of arbitration rights: commercial and investment arbitration

The issue of whether recourse to domestic courts or administrative tribunals constitutes a waiver of arbitration rights remains a central consideration in both commercial and investment arbitration. The assessment, however, may diverge between these two frames of reference given the distinct legal foundations, scope, and purposes. In commercial arbitration, the focus is set on contractual obligations, and waiver typically hinges on the scope of the arbitration clause and the parties’ actions. In contrast, investment arbitration involves treaty-based protections that often coexist with local remedies, making waiver a more complex and context-dependent issue.

In commercial arbitration, waiver of arbitration rights typically arises when a party initiates judicial proceedings in relation to a dispute that falls within the scope of an arbitration agreement. The central issue is whether such recourse to the courts constitutes a clear and unequivocal waiver of the right to arbitrate.

This reasoning was adopted by the Common Court of Justice and Arbitration of the Organisation for the Harmonisation in Africa of Business Law (CCJA), whose decisions are binding on 17 states in central and west Africa.

In SNG S.A. v SAFRICOM S.A.,^[11] the parties had agreed to arbitrate, however SNG initiated proceedings before state courts through a payment order injunction, bypassing the arbitration clause. SAFRICOM failed to invoke the arbitration agreement at the first instance and during the appeal, raising the jurisdictional objection only before the CCJA. The CCJA ruled that failing to challenge jurisdiction at the earliest procedural stage constituted an implied waiver of the right to arbitrate. The decision reaffirmed the principle that a party’s silence or failure to promptly invoke an arbitration clause before domestic courts may be construed as a relinquishment of arbitral jurisdiction, reinforcing the need for prompt and unequivocal assertion of arbitral rights.

In EICB v Groupe Eoulée,^[12] the issue was whether a party’s procedural choices and the other party’s conduct could justify a shift from arbitration to litigation. The parties had agreed to arbitrate under the Court of Arbitration of Abidjan. However, after unsuccessful attempts to secure payment, EICB notified Groupe Eoulée of its waiver of the arbitration agreement and opted to file for a payment order before national courts. The Abidjan Court of Appeal upheld the arbitration agreement, declaring the state court incompetent. However, the CCJA overturned this ruling, finding that EICB’s recourse to litigation was justified by Groupe Eoulée’s lack of response and cooperation. The CCJA emphasised that good faith and procedural fairness are central to arbitration, and a party’s strategic inaction or disregard for amicable resolution efforts can legitimise a shift to state courts, even in the presence of an arbitration clause.

In investment arbitration, waiver issues are inherently more complex. Investment arbitration raises broader jurisdictional concerns, particularly when an investor engages with administrative or judicial bodies in the host state before initiating arbitration under a BIT. The core issue is whether such engagement constitutes a waiver of the right to arbitrate, given that BIT claims extend beyond contractual disputes to encompass protections against expropriation, unfair treatment, and discriminatory state conduct. This distinction makes waiver assessments in investment arbitration factually and legally complex, often requiring tribunals to distinguish between procedural steps taken to preserve rights and actions that may be perceived as a waiver of the right to arbitrate.

This issue was discussed in Salini v Morocco.^[13] In this case, a contract for the construction of a Moroccan highway included a dispute resolution clause giving jurisdiction to the Moroccan administrative courts, while the Italy-Morocco BIT gave the investor an option between domestic courts and ICSID arbitration. When the investor initiated ICSID proceedings, Morocco objected to the jurisdiction of the ICSID panel on the ground that the parties were bound by the dispute resolution clause to confer jurisdiction on the Moroccan administrative courts, and the investor could no longer choose to submit the dispute to ICSID jurisdiction due to its participation in the contractually agreed dispute-settlement process. The ICSID tribunal dismissed the jurisdictional challenge, ruling that the consent to ICSID jurisdiction should prevail over the domestic courts. The tribunal underlined that the reference to the administrative courts, which was a mandatory consequence of the administrative nature of the contract, could not be considered a choice by the parties (according to the principle of the parties’ autonomy) to capture claims pertaining to the BIT. The tribunal nevertheless specified that it did not have jurisdiction over breaches of the contract that did not simultaneously constitute a violation of the BIT, thus emphasising the respective areas to which the dispute resolution agreements applied. This focus on the parties’ intent, with a strict approach to the construction of waivers and the assessment of the effects of contractual dispute resolution clauses, is the position most commonly adopted by subsequent investment tribunal decisions, including in SGS v Paraguay: ^[14]

"[g]iven the significance of investors’ rights under the Treaty, and of the international law ‘safety net’ of protections that they are meant to provide separate from and supplementary to domestic law regimes, they should not lightly be assumed to have been waived.”

In other cases, the investor’s conduct in domestic proceedings was held to amount to a waiver of the right to arbitrate. For instance, in European American Investment Bank v Slovakia,^[15] the claimant pursued similar claims for breach of the provisions of the BIT in both arbitration and before the domestic courts. The claimant argued that the domestic proceedings were a mere placeholder to guard against a statute of limitation should the arbitral panel deny jurisdiction, which the tribunal accepted in principle. However, because the claimant failed to take steps to progress its application for a stay of the domestic proceedings pending the outcome of the arbitration, or to inform the domestic court of the status of the arbitration proceedings, the tribunal ruled that the litigation was not treated as a mere safeguard by claimant, whose conduct amounted to a waiver of the right to arbitrate.

Interim measures: preserving rights without prejudicing arbitration rights

Interim measures play a significant role in energy disputes resolution, as they are often the only tool to preserve the rights of the parties and prevent irreparable harm, freeze assets, suspend regulatory actions, or preserve critical evidence without prejudging the merits of the dispute.

Unlike judgments on the merits, interim measures are provisional and do not engage with the substantive legal issues at stake. This distinction is particularly relevant in scenarios involving parallel proceedings, where the recourse to domestic courts for interim measures, rather than representing a threat to arbitration, can be a valuable support.

Recourse to domestic courts, even for interim measures, is not, however, a tool suitable for every situation and must be used with caution. It is particularly relevant in emergency situations and when the arbitral tribunal has not yet been constituted. By focusing on maintaining the status quo, safeguarding assets, or preventing undue prejudice, domestic courts can issue interim relief that coexists with international arbitration, mitigating jurisdictional tensions and ensuring procedural balance.

Fork-in-the-road provisions and exhaustion of local remedies

Fork-in-the-road clauses, which are a recurrent feature in BITs, serve as a jurisdictional gating mechanism in investment arbitration by compelling investors to make an exclusive election of forum.^[16] These provisions preclude claimants from pursuing the same dispute before multiple fora, thereby mitigating procedural fragmentation, forum shopping, and the risk of conflicting decisions. Once an investor initiates proceedings before domestic courts or other national adjudicatory bodies, it is deemed to have waived its right to international arbitration, barring any subsequent recourse to an arbitral tribunal under the BIT.

The practical application of theses clauses hinges on the tribunal’s characterisation of the disputes, specifically, whether the claims raised in domestic proceedings and in arbitration are substantially identical in terms of the parties, legal grounds, and relief sought. The assessment is often fact-intensive, as states may argue that an investor’s prior engagement with national courts, whether for contractual enforcement, regulatory challenges, or administrative appeals constitutes a fork-in-the-road election, thereby extinguishing BIT claims. Conversely, tribunals have been cautious in applying these clauses too rigidly, particularly where domestic proceedings address contractual or administrative matters, while arbitration claims engage broader treaty protections such as expropriation, fair and equitable treatment, and full protection and security.

^[17] H&H Enterprises v Egypt illustrates the application of fork-in-the-road clauses in investment arbitration. The dispute arose from a 1989 management contract between H&H Enterprises (a US investor) and Grand Hotels of Egypt (GHE) regarding the Ain El Sokhna Hotel. After GHE initiated contractual arbitration in Cairo in 1993, H&H counterclaimed, and an award was issued, partly in H&H’s favour. However, H&H later pursued domestic litigation in Egypt before its eviction from Egypt in 2001. In 2009, H&H filed for ICSID arbitration under the US-Egypt BIT, alleging expropriation, denial of justice, and breaches of fair and equitable treatment. Egypt objected, arguing that H&H had already triggered the fork-in-the-road clause by litigating in both Cairo arbitration and the Egyptian courts, thus precluding ICSID jurisdiction. H&H countered, asserting that its domestic claims were contract-based, whereas the ICSID arbitration invoked treaty protections and did not meet the triple identity test (same parties, same cause of action, same relief). Initially, the tribunal deferred its ruling on the fork-in-the-road objection, linking it to the merits. However, in its final award, it accepted Egypt’s argument, holding that H&H had triggered the clause by submitting the same dispute to both fora since the claims shared the same fundamental basis, even though the parties were not identical in the two proceedings. The case aligns with the decision in Pantechniki v Albania^[18], confirming that claims arising from the same entitlement under a contract cannot later be reframed as treaty claims. It reinforces the need for investors to strategically assess forum selection to avoid inadvertently waiving access to treaty arbitration.

Conversely, some BITs impose an exhaustion of local remedies requirement as a precondition to arbitration, ensuring that host states may address disputes through domestic mechanisms before engaging in international adjudication. While intended to uphold state sovereignty and judicial efficiency, this requirement can prolong proceedings and create procedural obstacles that deter investors from accessing arbitration.

The tension between this requirement and the autonomy of arbitration remains a contentious issue, as illustrated in Helnan International Hotels A/S v Egypt¹⁹. The dispute arose when Egypt’s Ministry of Tourism downgraded the Shepheard Hotel managed by Helnan under a long-term management contract with the Egyptian Organization for Tourism and Hotels. The latter initiated contractual arbitration demanding termination of the management and the arbitral tribunal, which found the contract impossible to execute, declared the contract terminated. In 2005, Helnan initiated ICSID arbitration under the Denmark-Egypt BIT, alleging expropriation and breach of fair and equitable treatment. Egypt objected, arguing res judicata and asserting that Helnan had waived its right to arbitration by failing to challenge the downgrade in domestic courts. The ICSID tribunal, while rejecting a requirement of exhaustion of local remedies before recourse to ICSID arbitration, nevertheless dismissed Helnan’s claims in light of its failure to file local court action to challenge the downgrade. Helnan sought annulment of the decision to dismiss, arguing that the tribunal had wrongly imposed an exhaustion requirement. The ad hoc annulment committee partially granted the application, finding a manifest excess of powers but leaving the tribunal’s dismissal intact.

Res judicata and lis pendens

The principle of res judicata prohibits the relitigation of disputes already conclusively resolved by a competent forum. This principle is frequently invoked to challenge overlapping claims. Arbitral tribunals often hesitate to apply it rigorously unless cases meet stringent identity criteria, including parties, causes, and relief sought. While some tribunals adopt a strict identity-based approach, others have favoured a broader functional analysis, considering whether the underlying disputes arise from the same factual and legal matrix (see for instance the above-mentioned case ZCCM v First Quantum Minerals (FQM)).

The doctrine of lis pendens, on the other hand, which aims to prevent the same dispute being the object of concurrent proceedings, is less frequently applied by arbitral tribunals. Unlike res judicata, which applies retrospectively after a final decision, lis pendens operates prospectively, allowing tribunals to decline jurisdiction or stay proceedings when a parallel dispute is pending elsewhere. While some tribunals have been reluctant to apply lis pendens, arguing that arbitration operates independently from domestic court systems, others have recognised its utility in avoiding unnecessary procedural duplication and enhancing procedural economy.

Conclusion

The overview provided above highlights the recurrence of parallel proceedings in energy disputes in Africa, a trend that is expected to continue to grow, and the importance of analysing this issue carefully, both when drafting arbitration agreements or structuring an investment, and when it comes to choosing the right forum or fora for action.

Endnotes