OHADA
A Regional Legal System to Support Economic Integration in Africa
INTRODUCTION
Regional integration initiatives in Africa have a long history, dating back to the establishment of the South African Customs Union (SACU) in 1910 and the East African Community (EAC) in 1919. Since then a number of regional economic communities have been formed across the continent, particularly since the 1970s.[1] Throughout the years, the number of regional economic communities has increased and has culminated to about ten or so regional economic groupings, every country in Africa being member of at least one regional economic group. These multiple initiatives and efforts towards more integration are the evidence that economic integration occupies a critical place in the agenda of the majority of countries on the continent. This can be reflected by the extrapolation of these initiatives to the continental level with the attempts to create economic cooperation among all African countries.
The attempts to create economic integration on the continental level have culminated in the signing of the Treaty of Abuja in 1991, which established the African Economic Community (AEC). The Treaty, which came into force in 1994, provides for the establishment of a continent-wide economic cooperation through the strengthening of eight existing regional economic communities across the continent. These regional economic communities, which are the pillars of the AEC recognised by the African Union, have been given the mandate to progress gradually, ultimately with the view of merging and form the AEC. However, successive attempts towards this goal have been largely ineffective and unsuccessful.[2]
Nowadays, the need for African states to integrate their economies to enhance their growth and development is widely accepted. However, how it should be pursued remains contested and well debated. This paper is an attempt to answer this question and highlights the role law can play in supporting economic integration in Africa. The paper focuses on the Organisation for Harmonisation of Business Law in Africa, which is the largest legal integration initiative on the continent, and studies how the legal system established by OHADA can be used to support the establishment of the AEC. Comparative law theories are used to analyse the organisation and understand it within its context, in order to identify the most efficient way the OHADA efforts could be used to support the establishment of the AEC.
Introducing OHADA
The Organisation for Harmonisation of Business Law in Africa (OHADA) was created by the signing of the Port-Louis Treaty on 17 October 1993.Current member states include Benin, Burkina-Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, D.R. Congo, Cote d’Ivoire, Gabon, Guinea, Guinea-Bissau, Equatorial Guinea, Mali, Niger, Senegal and Togo.According to article 1 of the Treaty, the aim of the organisation is to harmonise the business law of its Member States by issuing uniform laws which are directly applicable in every member state. These unified laws, inspired from western laws, are meant to be simple and modern. A regional court – the Common Court of Justice and Arbitration (CCJA) – has been established to ensure a uniform application of these unified laws. The application of these Uniform Acts through a special judicial system is meant to help establish a secure and reliable framework in order to attract more investment in the member states.
This paper provides an analysis of the OHADA framework as a regional legal system, which is aimed at producing transnational rules applicable in every OHADA member state.Legal history is used to analyse the creation and development of commercial law in the region. Here the paper engages in the discussion on legal diffusion and studies the use of legal transplants in the OHADA law making process. OHADA is analysed as a perfect example of legal diffusion, which uses legal borrowing to improve the legal systems that its member states inherited from colonisation.
The paper also focuses on the OHADA judicial system, with a particular emphasis on the interaction between the CCJA and the member states’ national courts. The analysisfocuses on the vital role of the CCJA and identifies the various challenges faced by the OHADA framework in existing alongside its Member States' legal systems and bringing them together under the regional jurisdiction of the CCJA.A particular focus is put on the different issues that arise throughout the process in order to situate them in the relevant legal theory. The concepts of harmonisation, legal systems, legal transplants and legal culture are used to analyse both the process carried out by OHADA and the rules that result from this process.
The establishment of a legal and regulatory environment where private transnational exchanges can safely take place has become essential for developing countries to attract further investment, as well as to promote the development of the local private sector.[3] Particularly in Africa, there is a need for reforms to support further economic development. These reforms are meant to support economic growth by facilitating transnational business transactions.[4]
The Organisation for Harmonisation of Business Law in Africa (OHADA), which is the focus of this paper, was created with the objective of harmonising business law in order to facilitate business transactions in its different Member States. As stated in the preamble of the OHADA Treaty, the founding members of the organisation were motivated by the desire to establish a secure and reliable legal framework by creating common rules meant to be simple and modern. This legal framework is meant to attract more investment and thereby incite development in the region. To achieve its goal, OHADA issues unified law laws called Uniform Acts, which are directly applicable in every Member State and supersede any previous national legislation on the same topic.
Literature on OHADA claims that most of the Uniform Acts were strongly inspired from French business law, with an overall legal framework based on the Civil law tradition.[5] The majority of founding members of the organisation were former French colonies, which inherited their legal systems from France. Guinea-Bissau and Equatorial-Guinea, the two Member States which joined OHADA later on, inherited their legal systems from Portugal and Spain, which are also considered to belong to the Civil law tradition. These observations, and the fact that OHADA is supposed to “harmonise” the business law of its Member States, supposes that the laws that are created as a result of the harmonisation process are strongly rooted in Civil law.
Another goal of the organisation is to expand beyond its original members and to reach out to other countries in Africa that do not necessarily operate legal systems based on Civil law tradition.[6] This aspiration of the founders of the organisation was cast in article 53 of the Treaty, which provides that the Treaty is open to all Member States of the African Union. Building up on this expansion goal of the organisation, legal scholarship on OHADA has recently made some timid efforts to cover the subject of harmonisation between the Common law and Civil law. There is a general tendency to encourage Common law countries bordering the OHADA area to join the organisation in order to benefit from its original structure.[7]Some authors have even suggested that reconciling the Common law and Civil law within OHADA should rather be easy, as “business is business; commerce is commerce. Whatever language the parties use, whatever legal system, the goal is commercial success, and the role of law is to create a backdrop of predictability”.[8] However, as it will be highlighted in this paper, the path OHADA has taken in its harmonisation process might not be appropriate to gather together African countries belonging to different legal traditions.
Introducing OHADA as a legal system
As stated in the OHADA Treaty, OHADA was created in order to provide its Member States with a legal framework meant to be secure and reliable, capable to attract more investment and incite economic development. The different theories that are analysed in this chapter are meant to help understand the specific context in which OHADA was created and further developed. These theories are also used to identify any special features provides by OHADA, which makes it different from other legal harmonisation models in the world.
The abundant literature on OHADA presents it as an international organisation created by a treaty (the OHADA Treaty).[9]Most authors have commented on the originality of OHADA as an international organisation aimed at harmonising commercial law, provided with special institutions established to reach this goal. Contrary to other organisations which are normally monitored by a body composed of Head of States and Governments, the Council of Ministers is the most important institution which prepares the OHADA laws with the support of the Permanent Secretariat. This procedure is meant to provide a smoother law-making mechanism. Authors also highlight the key role of the CCJA as the highest court and ERSUMA as a regional training centre in ensuring a uniform application of the OHADA laws.[10]
In an interesting article published in 2005, Professor Claire Moore Dickerson pushes the discussion further and, for the first time, clearly describes OHADA as “a unified legal system designed to protect and enhance the pro-investment qualities of the OHADA laws”.[11] In another contribution, Professor Dickerson argues that OHADA provides sophisticated laws, which are implemented by a supranational system designed to promote predictability and transparency, and meant to be uniform across all the Member States. She argues that OHADA provides much more than laws, because it has also established fundamental legal institutions.[12]
Three characteristics are analysed to verify that OHADA is a legal system:
-The OHADA Council of Ministers promulgates new laws and modifies old ones.
-The CCJA interprets OHADA laws in order to preserve those laws' uniformity across the entire OHADA region.
-The regional school serves to reinforce and enhance all these efforts by providing continuing legal education in the region.[13]
Discussing the Uniform Acts, authors highlight the share of competence between the organisation and Member States in the subjects covered by the uniform laws: national laws which are not contrary to uniform laws remain in force and are still applicable and used as sources of law.[14] The Uniform Acts provide an overall legal framework which is in general based on civil law and has to a certain extent borrowed from modern French business law.[15]Because the majority of the OHADA Member States are former French colonies, there is a general assumption that the French legal system has inspired most of the OHADA legislation.[16]
In discussing the OHADA law-making process, most authors focus on the involvement of three key institutions in the law-making process: the Permanent Secretariat produces the draft of the new text which is discussed and adopted by the Council of Ministers after analysis and favourable opinion by the CCJA (article 6). The involvement of the Member States governments is also highlighted, as the final draft submitted to the Council of Ministers by the Permanent Secretariat includes comments and modifications submitted by each member state.[17]
The OHADA law-making process has been criticised by some authors who have highlighted the insufficient national participation in the process. Their argument is that a total disregard of national parliamentary involvement in the drafting process will eventually create further political problems and raise several issues which might affect the good functioning of the organisation.[18]The literature also discusses the establishment of national commissions by the Permanent Secretariat as a pragmatic unofficial channel to solve this issue by increasing national participation.[19]
Commenting on the OHADA judicial system, authors highlight the fact that national courts have jurisdiction over OHADA related matters in first and second instance. These courts have therefore a critical role to play in the application of the OHADA laws. The hybrid nature of the OHADA judicial system is also highlighted, as it is composed of Member States’ national courts headed by the CCJA, which is a supranational court. Authors point out the issue raised by this kind of system, which could become an impediment to the uniform application of OHADA laws if national courts keep applying national laws abrogated by the OHADA uniform acts.[20]
Therefore, the literature focuses on the vital role of the CCJA in the uniform application of OHADA laws.[21] The literature also points out some issues related to the location of the court and the fact that Member States' national courts are at times reluctant to accept OHADA's supranational decisions. This situation has somehow been inhibiting the CCJA power. Some authors have proposed the creation of national benches handling OHADA law disputes to help solve the conflict on jurisdiction between the CCJA and national courts which impedes the efficiency of the dispute settlement mechanism.[22]
The process conducted by OHADA is deemed to offer several advantages.
OHADA member states wanted a Western/Northern system, not a customary or traditional one. They believed that foreign investors would be more comfortable with an essentially familiar system; in all likelihood, it would substantially reduce transaction costs.[23]Because OHADA laws are uniform, because their Northern form seems familiar both to foreigners and to the regional bar and bench, and because they are meant to be clear and accessible, they are deemed to reduce transaction costs into the region and among the states within the OHADA territory. Moreover, it is assumed that because legal professionals in the region respect the quality and integrity of the decisions of OHADA's supranational court, transaction costs may fall even further.[24]However, the literature does not provide any empirical evidence on the impact of OHADA legislation on transaction costs. Focusing too much on foreign investors and local legal community might produce negative results and turn out to be an impediment to domestic investment and local business.
The literature also argues that harmonisation promotes economic integration. As legal integration cannot be achieved through Regional Economic Communities, OHADA can be used as a locomotive for economic integration in Africa, and thereby support the establishment of the AEC. Harmonisation is thereby deemed to “allow the African continent to enter into the channels of international trade, strengthen African unity, facilitate cross-border trade and encourage the relocation of large companies in Africa”.[25]However, these several benefits of harmonisation are listed without any empirical data evidencing them.
Considering the expansion of OHADA to the entire continent, authors have argued that OHADA can strengthen the credibility of Africa, improve the flow of investment, accelerate development and influence of the globalisation of business law in its entirety.[26]OHADA is also depicted as providing individual countries with the opportunity to attract more foreign multinational corporations. By creating an environment which is commercially viable, with a single form of business laws which are uniformly applied, OHADA would enable individual states to require that foreign-based multinational corporations comply with local law if they are to invest anywhere within the OHADA territory.[27]
Some issues arise in the process carried out by OHADA.
OHADA has been criticised as being a form of colonialism because it bears the influence of a Northern legal system. In her 2005 contribution, Professor Dickerson rebutted this criticism, arguing that the affirmative commitment to OHADA is rather based on the admiration of the OHADA structure for the elegance and simplicity of the OHADA laws by legal professionals within the OHADA territory. Her conclusions are based on interviews she conducted in three OHADA Member States.[28] However, the author did not question the deeper reasons which could explain the admiration for the OHADA structure, such as the legal culture in the region.
Sovereignty is yet another issue discussed by the literature on OHADA. Sovereignty is an issue in two aspects: the simple adoption of uniform laws is a relinquishment of sovereignty contemplated by the OHADA Treaty: a law that OHADA adopts is automatically and immediately an internal law of each OHADA's member state.[29]The CCJA as well represents a transfer of indicia of national sovereignty to a supranational authority.[30]As a result, courts are sometimes protective of their own authority. National courts are in fact not sending all their business-related cases to the CCJA and parties apparently often do not insist that their case be removed – because of the location (Abidjan) and the related cost.[31]
The OHADA Member States have recently evidenced a keen interest in welcoming Anglophone African countries and their common-law heritage in the organisation. OHADA institutions are also making more efforts to include concepts from other legal systems when drafting new laws, rather than to follow chiefly the French pattern.[32] This is evidenced in the drafting process of a new Uniform Act on Contract Law, through which OHADA is deemed to reach out to its neighbouring countries from the Common Law tradition. However, other authors argue thatOHADA should not expand, as the organisation would become a heavy and costly structure, making the law-making process and negotiation of new uniform acts rather impossible. The establishment of the OHADA framework in its current Member States was easy because of their shared legal tradition and might be impossible with countries from other traditions, with different legal cultures and legal concepts. Therefore, some authors have suggested that the efficiency of the OHADA laws and structure should be considered before espousing continuing support for those laws in their West and Central African context and before encouraging their extension to Anglophone neighbours.[33]