FOCUS ON WEST AFRICA: OHADA – JONATHAN LANG

Tuesday, June 07, 2005
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The Organisation for the Harmonisation of Business Law in Africa (OHADA) comprises 16 contracting states:

Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.

The Democratic Republic of Congo is expected to join in the near future.

In November 1997 the OHADA contracting states signed the Treaty on the Harmonisation of Business Law in Africa with the objective of harmonising business law in each of their countries by the adoption of common rules (Uniform Acts), the establishment of judicial procedures in respect of these rules and encouraging arbitration for the settlement of contractual disputes. Business law for these purposes includes laws relating to companies, trade and commerce, security and the enforcement of debts, insolvency and bankruptcy, commercial arbitration as well as employment, accounting principles and policies, transportation and sales.

Uniform Acts are adopted by the Council of Ministers (representing each of the contracting states) in consultation with the Common Court of Justice and Arbitration (CCJA). Uniform Acts are directly applicable in contracting states and do not require ratification by the legislature of each contracting state (in much the same way that regulations applying in the European Union).

To date six Uniform Acts have been adopted:

· Uniform Act relating to the General Commercial Law
· Uniform Act relating to Commercial Companies and Economic Interest Groups
· Uniform Act Organising Security
· Uniform Act Organising Simplified Recovery Procedures and Measures of Execution
· Uniform Act Organising Collective Proceedings for Wiping Off Debts
· Uniform Act on Arbitration

Rules of arbitration and procedure of the CCJA have also been adopted. Other uniform acts on employment and sales to consumers are expected to follow.

Of particular interest to foreign investors, lenders and exporters are laws governing the establishment, maintenance and winding-up of corporations and the raising of capital. A centralised commercial registry has also been established facilitating access to information about companies incorporated in OHADA contracting states. Laws governing the granting and enforceability of guarantees and security have been modernised. In addition to mortgages over real property, security may also be granted over immovable assets, receivables and bank accounts.

Where the Uniform Acts apply, litigation is settled at first instance in local courts. The CCJA (comprising seven judges appointed by contracting states) acts as a court of final appeal and judgments are final and binding. Proceedings are adversarial and public and conducted in the French language. To date there have been over 1200 reported cases in respect of the Uniform Acts.

The Uniform Act on Arbitration enables arbitration awards to be enforceable in each contracting state. If parties to a contract elect for arbitration in respect of disputes, national courts of contracting states may not exercise jurisdiction over any dispute. The CCJA confirms or, failing agreement between the parties to a dispute, appoints the arbitrators. Before granting a final award, an arbitration tribunal must submit its proposed decision to the CCJA for approval.

The principal benefits of the harmonisation process is the modernisation and standardisation of business law across 16 countries to create a legal and judicial system more conducive to foreign investment and trade.

We are proposing to host a seminar on OHADA laws for foreign investors, lenders and exporters later this year.