Recent Developments in OHADA Arbitration
The Organisation for the Harmonization of Business Law in Africa (OHADA) was created by the treaty signed at Port-Louis, capital of Mauritius, on 17 October 1993 (the OHADA Treaty) and modified at Quebec in Canada on 17 October 2008.
The purpose of the OHADA Treaty is to promote the development of the contracting states by elaborating a business law that is simple, modern and adapted in order to stimulate and secure investment in the OHADA territory, both at legal and judiciary level.
OHADA is made up of the 17 contracting states that follow: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, the Democratic Republic of Congo, Ivory Coast, Gabon, Guinea Conakry, Guinea Bissau, Equatorial Guinea, Mali, Niger, Senegal and Togo.
OHADA has five institutions:
- the Conference of the Head of States and Governments of the Contracting parties. It solves OHADA problems relating to the OHADA Treaty that the Council of Ministers has deemed out of its competence;
- the Council of Ministers, made up of the ministers in charge of justice and those in charge of finance of the contracting states. This is the legislative body of OHADA, it adopts the regulations including the new common business law called uniform acts;
- the Common Court of Justice and Arbitration (CCJA), a supranational state court, based in Abidjan in Ivory Coast: its task is to ensure the common interpretation and application of the OHADA business law and also to administer arbitration proceedings under the CCJA arbitration rules;
- the Regional High Judiciary School based in Porto-Novo in Benin, in charge of the training of judges and other lawyers from contracting states in business law; and
- the Permanent Secretary based in Yaounde in Cameroon, in charge of the administration of OHADA.
According to article 10 of the OHADA Treaty, the uniform acts are directly applicable and overriding in the OHADA states.
To date, 10 uniform acts have already been adopted by the Council of Ministers, relating to:
- general commercial law;
- commercial companies and economic interest groups law;
- sureties law;
- debt recovery law and enforcement law;
- bankruptcy law;
- arbitration law, together with the Rules of Arbitration of the Common Court of Justice and Arbitration (the CCJA Rules);
- accountancy law;
- carriage of goods law;
- cooperatives law; and
- mediation law.
Some of these uniform acts have been modified, to take into consideration the recent international developments concerning the subject of the said uniform acts. In this regard, the General Commercial Law, the Commercial Companies and Economic Interest Group Law, the Sureties law, the Bankruptcy Law and more recently, in November 2017, the OHADA Arbitration Law have been modified by the OHADA Council of Minister that has at the same occasion adopted a uniform act on mediation.
OHADA arbitration is governed by two bodies of rules: the Uniform Act on Arbitration (UAA) and the CCJA Rules.
Concerning the recent developments in OHADA arbitration, we will raised two points: the modification in 2017 of the bodies of rules that governed OHADA arbitration and the ruling issued on the 26 April 2018 by the CCJA relating to the immunity from execution of public corporate bodies, this ruling highlighting an evolution of the CCJA case law on the topic.
The modification of the bodies of rules governing OHADA arbitration
As already indicated, OHADA arbitration is governed by the UAA and CCJA Rules.
The initial versions of these two bodies of rules were adopted on 11 March 1999 and after nearly 20 years of application, they were modified by the Council of Ministers on 23 November 2017, to take into consideration the recent developments in international arbitration.
The Uniform Act on Arbitration
The provisions of the UAA take into consideration some important principles of French, Belgium and Swiss international arbitration law, while being more closely inspired by the UNCITRAL Model Law on International Arbitration.
Concerning its scope of application, the UAA applies if the seat of arbitration is within the OHADA territory, for the settlement of a contractual dispute when the contract is to be applied, partially or totally, in the OHADA territory or if at least one contractual party has its domicile or residence in the OHADA territory.
One important development to mention here is that investment arbitration has been added to the scope of application of the UAA. In this regard, the new article 3 of the UAA states that arbitration can take place on the basis of an arbitration agreement or investment law, notably an investment code or a bilateral or multilateral investment treaty.
The arbitral tribunal is composed of one or three arbitrators, and the competent state judge of the seat of arbitration can be solicited if a party fails to appoint an arbitrator or when the two arbitrators already appointed do not agree on the choice of the chairman of the arbitral tribunal.
The state court may also be solicited, if need be, for the extension of the arbitration deadline.
The UAA outlines that the duration of arbitration is six months from the time the last of the three arbitrators or the sole arbitrator has accepted his or her appointment. An extension of this time can be agreed by the parties or ordered by the competent state court upon request of one of the parties or of the tribunal.
The state court decision to appoint an arbitrator is rendered by motion on notice and the said decision is not subject to any appeal.
The parties shall conduct the proceedings with celerity and shall avoid dilatory tactics and, going further with this innovation, the updated UAA states that the tribunal shall take all necessary measures to conduct the proceedings with celerity.
Another innovation to mention here is that the new UAA text indicates that the arbitral procedure may be terminated either with the rendering of the final award or with a procedural order if:
- the claimant withdraws its request, unless the respondent objects;
- the parties agree to terminate the proceedings;
- the arbitral tribunal finds that it is useless to move forward with the proceedings;
- the initial or extended arbitral time limit for rendering the award expire; or
- the claim is acknowledged, settled or discontinued.
After the rendering of the award, the interested party can set it aside one month later and the new text provides that the parties can renounce to the setting aside of the award, provided that this award is not contrary to international public policy.
A party wishing to enforce the award shall act by an ex parte procedure. The decision of the state court that grants exequatur is non-recourse whereas its decision dismissing the request for enforcement can only be reversed by a ruling of the CCJA.
Rules of the Common Court of Justice and Arbitration
Apart from being the Supreme Court of the 17 current OHADA states, the CCJA is also an international arbitration centre modelled on the International Chamber of Commerce (ICC) Court of Arbitration
However, contrary to ICC arbitration where the terms of reference are elaborated 60 days after the arbitral tribunal has received the file, the CCJA terms of reference, called ‘report framing’, is to be established rather in 45 days.
Here, also, the parties are requested to avoid dilatory tactics and the arbitral tribunal (also one or three arbitrators) must conduct the proceedings with celerity.
Arbitrators acting under the CCJA Rules are granted diplomatic immunities (like international employees of OHADA and CCJA judges) and they shall be and remain available, impartial and independent vis-à-vis the parties.
Like the UAA, the CCJA Rules provide that the arbitration may be terminated either with a final award or with a procedural order. CCJA awards may also be set aside on the same grounds as those provided for in the UAA. If the CCJA award is not spontaneously executed by the loosing party, the winning party can look for an exequatur in view of the forceful execution of the said award. The president of the CCJA, or one of the CCJA judges designated by the former, is solely competent to grant exequatur within 15 days from the filing of the request. The CCJA president’s decision granting exequatur is final and not subject to any recourse.
If the request for the enforcement of the award is rejected by the president of the court, the interested party shall introduce an appeal before the whole court within 15 days and shall notify this appeal to the other party.
Even though the rules are silent concerning the deadline that the court must issue its ruling related to this appeal, the idea here is that the court must act with speed and should not render its ruling beyond six months after its seizure, by analogy with the six months the text foresees for the court to set aside a CCJA award.
Concerning the setting aside of the CCJA award, the updated CCJA Rules contain a provision in article 24.4 according to which:
If the circumstances of the case exceptionally so require, the Court may fix, at its own initiative or upon motivated request of the arbitrator, the fees of the arbitrator at a higher or lower rate than would apply pursuant to the schedule of fees.
Any decision on the fees made without the approval of the Court is null and void, but may not be used as a ground for annulment of the award.
This provision that is to prevent arbitrators and parties from concluding agreement on fees different from what the CCJA scale of fees foresees, contains the important detail that, in any case, an agreement that violates the CCJA Rules cannot give rise to the setting aside of the CCJA award. Otherwise said, a separate agreement between the parties and the arbitral tribunal on fees different to those provided for by the CCJA scale of fees on arbitration is not a ground for the setting aside of the CCJA award.
Indeed, the grounds for the setting aside of such an award are contained in article 29.2 of the updated CCJA Rules. These grounds are the same as those stated by the UAA and do not comprise the separate agreement on fees between the parties and the arbitral tribunal.
The purpose of this innovation is to prevent the situation that arose in the GETMA case where the CCJA annulled the award rendered by the arbitral tribunal because, contrary to the opinion of the court, the arbitral tribunal and the parties concluded an agreement on the fees that permitted the arbitrators to receive from the parties fees higher than those provided for by the CCJA scale of fees.
The new CCJA ruling concerning immunity from execution of public corporate bodies
Immunity from execution of public corporate bodies is governed in OHADA states by article 30 of the Uniform Act Organizing Simplified Recovery Procedures and Enforcement Measures.
The said provision states as follows:
Compulsory execution and protective measures shall not apply to persons who enjoy immunity from execution.
However, any debt which is certain, due and owed by state corporations or firms, regardless of their legal form and mission, shall give rise to a set-off against debts which are also certain, due and owed them, subject to an agreement of reciprocity.
The debts of the state corporations and firms referred to in the preceding paragraph may only be considered certain, within the meaning of this article, where they arise from either an acknowledgement by the said corporations and firms of the debts or from a writ which is enforceable within the territory of the State where the corporations and firms are located.
The CCJA has applied this provision in absolute.
In this context, even semi-public companies engaged in commercial activities were protected by the court through the all-encompassing expression of ‘public enterprises’, which extended immunity from execution to semi-public companies, explaining that these companies being nevertheless partially public, enjoy immunity from execution despite their commercial activities.
This was the case in the CCJA ruling of 7 July 2005 (No. 043/2005 Aziablévi Yovo v Togo Telecom). The facts in this case were simple: the Togolese semi-public mobile phone company, Togo Telecom, was condemned to indemnify some of its employees for unfair dismissal.
With the Togolese courts having authorised the seizure of the Togo Telecom bank account for the payment of the amount of the said indemnity, the appeal introduced by Togo Telecom before the CCJA offered this court the opportunity to state that even semi-public companies engaged in commercial activities enjoyed immunity from execution.
The OHADA court has modified its position since a decision handed down on 26 April 2018 in the Mbulu Museso case (Ruling No. 103/2018 of 26 April 2018).The facts here were also simple: the justiciable beneficiary of the ruling made a seizure of garnishment on the amount owed to Grands Hotels du Congo by many banks in Kinshasa.
Arguing that the Grands Hôtels du Congo enjoys immunity from execution according to article 30 of the above-cited uniform act, the Democratic Republic of Congo internal courts released that seizure.
Following an appeal against this released decision, the CCJA issued its ruling in 26 April 2018.
In said ruling, the CCJA determined the beneficiaries of the immunity from execution and, as per article 30 of the a uniform act in subsection 2, indicated a first category of public entities that enjoy immunity from execution. This category comprises state, public corporate bodies and public enterprises, regardless of their form and mission.
The CCJA specified in the same ruling that for the other public entities, the criteria to take into consideration is the nature of the activity of such entities and the form in which these entities carry on those activities.
As for the semi-public entities, the CCJA specified that the semi-public corporate bodies, as is the Grands Hôtels du Congo, do not enjoy immunity from execution, owing to the commercial nature of their activities, even though the state is a shareholder of such a company.
Applying this CCJA ruling in a decision rendered on the 26 June 2018, the president of the tribunal of the first instance of Douala Bonanjo in Cameroon, in a case where the Cameroonian national aircraft – Camair-Co – was seized by an England creditor, the president of the court indicated that, as the state of Cameroon was the only owner of the aircraft company, the latter enjoyed immunity from execution, in accordance with article 30 of the Uniform Act Organizing Simplified Recovery Procedures and Enforcement Measures.
It follows from this decision that a public entity belonging to a state, because that state it the only shareholder of that public entity, enjoys immunity from execution, even though its activities are of commercial nature.
The CCJA ruling nevertheless specifies that a semi-public company where the state has a 50 per cent of the capital, and the other 50 per cent belongs to non-public persons, this semi-public company does not enjoy immunity from execution.
Even though one must acknowledge that the CCJA has evolved in its jurisprudence concerning immunity from execution, it is important for that supranational court to reach the position put forward by the 2004 United Nations Convention on jurisdictional immunities of states and their property. According to articles 13, 14, 15 and 16 of that convention, not yet in force but already introduced in the domestic law of a country such as France, the immunity from execution of a state or of other public corporate bodies disappears when such state or other public entity has undertaken commercial activities.
Hence, more than the public nature of a company, or the public nature of the state or the other public entities, the commercial nature of their activities should also, in the OHADA territory, be the decisive criterion to restrict, or not, their immunity from execution. In other worlds, the principle here should remain immunity from execution in favour of states or of public corporate bodies in OHADA; but as stated in the 2 December 2004 United Nations Convention on jurisdictional immunities of state and their property, the commercial activities of a public corporate body should give rise to the restriction of such immunity.