LJD
LAW
JUSTICE and
DEVELOPMENT
LAW, JUSTICE AND DEVELOPMENT WEEK 2011
INNOVATION AND EMPOWERMENT
FOR DEVELOPMENT
November 14-17, 2011 Washington DC
C233 cn Conf
Legal Harmonization as a Tool for Regional
Integration: The OHADA Experience
Private Sector View and Perspective from
Legal Practitioners
Marc FRILET

Managing Partner – Frilet Société d’Avocats,

DRBF Country Representative for France,

Secretary General of the French Association of
International Legal Experts (IFEJI),



Chair of the PPP Working Group of the Paris Bar,
Advisory member of the World Organisation
Committee (IBA), Visiting Professor,
University Paris V-René Descartes
LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT
FRILET
_______________
Société d’Avocats
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Genesis : Need of a reliable legal
framework
 As a veteran international lawyer advising international investors in
Africa, I remember the old time of African Company Law.
 Company law in what has become the “OHADA Region” was based on a
French Act of 1867, which was no longer in force in France for many
years.
 It was often critical to ascertain the interpretation of the old law for
developing the corporate activities or completing a particular
transactions or investments.
 The interpretation by local courts was often hazardous and few reliable
precedents could be used.
 This was an opportunity for international law firms like ours to deliver
“authoritative interpretation” often based on a documentation not
available in Africa.
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Genesis : Need of a reliable legal
framework
(Cont.)
 The “MEISSONIER Treatise of Company Law” virtually unknown in
Africa and old French case law were gold mines for us.
 This example demonstrates the difficulties for the international
investors and the African business community to ascertain applicable
legal principles in company law leading to disputes and often punitive
financial consequences.
 Such legal uncertainties have been one of the rationale for the
ambitious OHADA project, which so far is unique in the world.
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Evaluation of OHADA: The Positive Features
 Several OHADA Uniform Acts have replaced the old business
regulations (inter alia for company law).
 This move has been welcome by the international and local business
community at least for the ones interested to develop their business in
a secure framework and with good governance.
 This community has also recognized that the Uniform acts are wellborn.
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Thanks to the “African Fathers” of the Mauritius treaty, the process of drafting, approving, and
promulgating the Uniform Acts have been very efficient by all modern standards.
Problems often found in other countries or regions for drafting and adopting new pieces of
legislations have been minimized.
The major problem of striking an appropriate balance between principles and concepts and the
specific provision has been well resolved : the Acts are worded in plain language.
This has been facilitated by the fact that the Acts are limited to some key areas of business laws
and as such not too much politically sensitive.
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Evaluation of OHADA: The Positive Features

The Acts are conductive to good governance and economic development
– Various features induce the informal sector of the economy to develop its
activities in the formal sector:
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•
•
•
•
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(cont.)
Registrar of commerce and movable credit (RCCM)
Disclosure of corporate documentation
Accounting
Progressive access to line of credits through mortgages, pledges, etc
Simple forms of company and including mandatory provisions for their organization and
operations facilitating the understanding of the new players, etc
The surveys carried out with the business community over the years are
globally positive. CIAN surveys, local chamber of commerce/IFEJI surveys, etc.
Very early, the international legal community has also evaluated positively the
OHADA Acts (in particular a landmark IBA Conference in Cameroon in 1999,
where a distinguished ABA panel conducted by Bill Hannay made a thorough
evaluation of the Acts and proposed useful guidance in various areas.)
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Evaluation of OHADA: The Negative Features:
The implementation Challenge
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As any new law/legal system, the understanding and compliance is an issue
and implementation on the ground is a real challenge.
In Africa, this is compounded by the low level of income, the poor state of the
judiciary, the size of the informal sector, and lack of governance.
Some key challenges for the business community and investors are well
illustrated by the issues of enforcement of the Acts, which are a condition for
their actual implementation.
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THE JUDICIARY INTERPRETATION AND ENFORCEMENT OF THE ACTS is and will
remain for a long term a major problem, which deserves to be well appraised.
o At the highest level, the OHADA Supreme Court track record is impressive.
o CCJA renders very authoritative judgments on interpretation of the Act. The
landmark cases are published : 50 cases reported in a reference book. However
many decisions are on procedure and jurisdiction and few on the substance.
o CCJA is also providing advice to the State or judiciary: they are very
authoritative but so far limited in number.
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Evaluation of OHADA: The Negative Features:
The implementation Challenge
(cont.)
o The real issues in a nutshell
o CCJA location (only Abidjan) and limited resources do not permit to CCJA to play the role it
deserves.
o Resistance for the State Courts and Supreme Court to the CCJA ultimate jurisdiction.
o Little knowledge of the OHADA by local judiciary
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THE ALTERNATIVE TO JUDICIARY INTERPRETATION: ARBITRATION
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OHADA arbitration system is comprehensive and quite unique:
o CCJA arbitration: CCJA has a dual authority to administrate arbitration and to rule on the
administrative issues. So far not much confidence by the private sectors and few awards.
o OHADA arbitration rules for traditional arbitration: those rules are modern according to
international standards, but they need to be implemented by good administration centers.
So far limited track record.
o The real issues in a nutshell:
o Arbitration is not organized and adapted yet for being user friendly for the private sector.
OHADA should design and promote simple arbitration organization and proceedings,
affordable, and results oriented.
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Evaluation of OHADA: Several Legal or
Regulatory Areas are not regulated
 A typical risk matrix designed for evaluating the risks of a large
investment projects in the OHADA region shows that many of the
investment risks are not covered by OHADA Uniform Acts. Examples:
– Tax: certainty and conditions of implementation: particular issues of
parafiscality
– Customs and related costs certainty and procedure
– Exchange control and currency fluctuation issues
– Private contract law content and interpretation
– Permitting risks: (risks deriving from governmental or bureaucracy attitude
for clearances, non objection, approval and other permits)
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Evaluation of OHADA: Several Legal or
Regulatory Areas are not regulated
(cont.)
– Land availability and land use risks including the expropriation process and
related issues
– Environmental impact studies and related permits
– Public contract law content and interpretation
– Administrative or Judicial review of adverse bureaucratic decisions
– Public private partnership issues
– Employment law risks
 In practice and for large international investment projects, which are
essential for economic development such as public service
infrastructure projects and mining projects the benefits of OHADA
remain in practice limited : most of the major risks are outside of the
OHADA radar screen.
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The Future of OHADA: A View from the
Business Community Expectations
 Better and efficient implementation of the existing Acts: three main directions:
1) Reinforcing the program of training of the judiciary
2) Promoting aggressively arbitration after having designed a user-friendly system
taking into account the particular issues of the region and the capacity of the
players. Providing comfort to the business community on the followings:
– Guarantee of the appointment of an arbitral tribunal independent, professional, and
efficient
– Guarantee of simple and well understood proceedings in line with local traditions for
dispute resolutions
– Guarantee of issuance of a fair and enforceable award within a reasonable time
– Guarantee to have an arbitration administration center efficient, reactive, fair, and
cheap
– Possibility to evaluate in advance costs and duration of the proceedings.
3)
Promoting the development of uniform implementation regulation and
procedures for the OHADA Acts
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The Future of OHADA: A View from the
Business Community Expectations: Examples
(cont.)
 Considering additional Acts: Priority areas for securitizing the most
needed international investments in Africa
1) Designing the institutional framework permitting to facilitate long term public
private relationship in the core public service sector with appropriate
guaranties for the stakeholders with limited impact on future State budgets or
development aid. (This is in line with the conclusion of the G20 Summit)
2) Designing public contract law and procedures providing all reasonable
guaranties of fair implementation of the various types of contracts to be
entered into between the private and the public sectors (together with
efficient procedures).
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Conclusion
 OHADA is no more an experience, it is a reality with many positive
features. For us, it is clearly an example for other regions in the world.
 The existing Uniform Acts deserve to be better understood and
promoted and this will contribute substantially to the improvement of
investment climate and to the securitization of current transactions.
 However, this is not sufficient since entire regulatory sectors essential
for the economic development of Africa are not regulated by Uniform
Acts.
 Those sectors are not well regulated so far by national laws or regional
organizations.
 It is important therefore to consider also new Uniforms Acts in some
key areas where a good regulatory framework has proven to be
essential for the success of the investments or other transactions.
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Thank you!
Me Marc Frilet
Frilet - Société d’Avocats
94, boulevard Flandrin
75016 Paris, France
Tel : + 33 1 56 26 00 40
Fax : + 33 1 56 26 50 21
e-mail : avocats@frilet.com
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