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The
case for the establishment of a fair and transparent arbitration on debt
African Forum and Network on Debt and Development (AFRODAD)
September 23, 2004
LUSAKA
- AFRODAD, the African Forum and Network on Debt and Development, in conjunction
with other civil society organisations and concerned parties, is convening
an indaba of experts at the Pamodzi Hotel, in Lusaka,
Zambia on 29 and 30 September, 2004, to deliberate on a campaign for the
establishment of a Fair and Transparent Arbitration on African
debt. AFRODAD is a civil society organisation born of the desire
to see lasting solutions to Africa's mounting debt problem which
has impacted negatively on the continent's development process.
AFRODAD aspires for an equitable and sustainable development process and
a prosperous African society
The Experts'
indaba shall take the form of presentations by some officials specifically
based on topical issues. During the deliberations participants shall at
some point break into smaller committees to discuss in detail the presentations
of the experts. Thereafter the smaller committees will present their findings
to the conference for resolutions.
AFRODAD hopes that
the experts' meeting shall create the basis for the creation of
an FTA mechanism on debt. A Fair and Transparent Arbitration (FTA) mechanism
on Debt should be established under the United Nations.
Most importantly,
the meeting is expected to:
- Channel the thinking
of debt campaigners into an appropriate body and an advocacy strategy
for FTA on debt.
- Explore ways and
means of consolidating and building structures of global civil society
support for the FTA on debt.
- To seek advice
and direction on the way forward that would put pressure on stakeholders,
especially policy makers from the West, for the establishment of the
FTA mechanism on debt.
- To increase awareness
of the existence of arbitration as an alternative dispute resolution
mechanism.
- Provide a platform
to share knowledge on the use of the arbitration mechanism in resolving
the debt problem.
- Highlight failures
of the current debt relief initiatives and the global power imbalance
that continues to perpetuate the debt problem and the lack of governance
structure to provide checks and balances.
- Exploring mechanisms/structures
or processes outside government structures through which citizens can
participate in the debt management process.
Some of the presentations
to be made are titled:
- The nature and
legal aspects of the African Debt
- Legal issues surrounding
external debts-Odious and Illegitimate debts; and the contractual or
legal implications of external debts.
- A critical assessment
of the weaknesses and failures of the current debt management framework
- Arbitration - an
alternative dispute resolution mechanism - General Principles
- General principles
and characteristics of arbitration
- The rationale for
arbitration Court on debt
· The legality, technical feasibility and formal instruments
for an FTA Court on debt.
- FTAP - a new road
to debt resolution
- Debt arbitration
mechanisms
- Debt arbitration
mechanisms in a global perspective
- Forging a strategic
campaign for the establishment of an FTA court
Some of the experts
invited are Geoffrey W. Simukoko, of the Zambia Centre for Dispute Resolution
Ltd, Phillip Hersel from Blue21, The Berlin Working Group on Environment
& Development, Germany, Professor Kunibert Raffer, Department of Economics,
University of Vienna, Austria and Katarina Sehm Patomäki of the Network
Institute for Global Democratization
Background
Most of Africa's debt can justifiably be classified as either illegitimate
or odious largely because a large part of it was incurred by unrepresentative
and dictatorial regimes or through wrong policy advice by creditors. The
concept of odious debt exists as a doctrine in international law, and
this legal precedent (dating back over 100 years when the US captured
Cuba from Spain) which became law in 1923 could allow for the cancellation
of such debts by international agreement. The Doctrine of Odious Debt
holds that debt incurred by dictatorships for their own benefit or for
the purposes of enforcing the dictatorship is 'odious', and therefore
not the responsibility of the population or of subsequent democratic governments.
The Doctrine has two main aspects: the legitimacy of the borrower's purpose
in seeking the loan and whether the lender was recklessly indifferent
to the status of the contracting state.
The current
debt management framework
The whole world now agrees that the current debt framework is failing
Sub-Saharan Africa in many ways largely because all debt relief initiatives
are loaded with conditionalities which merely aggravate the economic and
social conditions of the indebted countries. The involvement of the IMF
and the World Bank in debt management that seriously began in 1982 has
yet to show any respectable measure of success.
Most creditors acting
through the IMF and WB have merely been using debt relief as a weapon
to enforce repayments and an instrument for control and perpetuating the
unequal power imbalance. For instance the Paris and London clubs would
not consider giving debt relief unless and until there is an agreed austerely
economic programme with the IMF and the World Bank. Some commentators
have further accused the current debt framework of violating basic human
rights; according to the UN Declaration of Human Rights of 1948-1998.
They point to Debt servicing in the majority of Sub-Saharan Countries
that has led to the denial of basic human rights as defined in the UN
charter.
An understanding of
general principles of Arbitration, its characteristics and application
is critical for use in the arbitration process on debt. Arbitration offers
more advantages in resolving disputes than other means. Disadvantages
of arbitration though do exist; but are fewer compared to the other means.
In the current world
economic architecture the highly indebted poorer African countries have
been pressurised to accept and implement a range of strategies designed
by outsiders in an attempt to stabilise and restructure economies to ensure
full settlement of the debt. AFRODAD contends that time has come to refer
the debt problem to an independent arbitrator to arbitrate over the debt.
Past and present attempts
to address the current crisis have lamentably failed. In his message delivered
on his behalf by Mr. Nitin Desai, Under-Secretary-General for Economic
and Social Affairs to the UN, to the World Social Forum in Porte Allegre,
2003, Kofi Annan, UN Secretary-General reiterates that: "Now is
the time when we must redouble our efforts to build a system of rules
and laws, a system that is open and fair, a system that will not tolerate
poverty or injustice, a system that responds to the needs of the real
people''.
Indeed time is now
that we must build new structures and systems that shall deliver relief
from the debt overhang as previous attempts have resulted in failures.
The growing importance of arbitration as a means for international commercial
dispute resolution necessitates independent platforms for the development
and application of international arbitration on debt. The call for arbitration
on debt has been made in the context of addressing the power imbalance
in the current debt management mechanism; and the debate over the way
forward has generated divergent and opposing views between the Debtors
and the Creditors that should be subjected to arbitration.
Proposals on the instruments
and institutions that could be created to specially deal with the debt
problem include the option to use existing structures like the United
Nations Permanent Court of Arbitration, setting up an international court
of arbitration on debt and global treaty on debt.
The existing institutions
could either have the existing mandates extended to include Debt issues
or a new Commission specifically for Debt could be established. We are
of the view that in the end, the optimal solution is to set up an International
Arbitration Court on Debt through a Treaty passed by the UN General Assembly.
The institutions so created are more suited to deal with the debt issue
outside the current framework that is dominated by creditors.
The indaba will also
deliberate on practical proposals on short , medium and long term Action
points for CSOs and other players in Africa and beyond for the establishment
of an FTA Court.
For more information, contact
the Secretariat:
Joseph Lungu, Tirivangani Mutazu
African Forum & Network on Debt and & Development
14 Lagos Road, Rhodes Park
Lusaka, Zambia
Tel: 00 260 1 256997 Fax: 00 260 1 255735 Mobile phone: 00 260 97 851083
E-mail: afrodad@zamtel.zm
Website: www.afrodad.org
Visit the AFRODAD
fact
sheet
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