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What you need to know about OHADA

OHADA is a French acronym “Organisation pour l’harmonisation en Afrique du droit des affaires”, with an English equivalence of “Organisation for the Harmonisation of Corporate Law in Africa”. The OHADA came to life after the treaty signed by 14 States on October 17, 1993 in Port – Louis (Mauritius Island) and later revised on October 17, 2008 in Quebec, Canada. Three other states Guinea, Comoros, and the Democratic Republic of Congo later adhered to boosting the number of states to 17 namely Benin, Burkina Faso, Cameroon, Central African Republic, Côte d’Ivoire, Congo, Comoros, Gabon, Guinea, Guinea Bissau, Equatorial Guinea, Mali, Niger, the Democratic Republic of Congo (DRC), Senegal, Chad, and Togo.

The OHADA organisation has as mission “to harmonize business Law in Africa in order to guarantee legal and judicial security for investors and companies in its Member states”[1]. Seen likewise, OHADA was created to promote foreign investment by enacting a secure legal framework for the conduct of business in Africa, through the harmonisation of its business laws. Ultimately, the objective of OHADA is to promote African economic integration and attract investment to the region.

Why OHADA

OHADA was needed to improve the legal security and predictability in doing business in Africa. Business in itself is risky enough to add to the legal and judicial risk that is posed when foreign investors sought to invest in the OHADA member states. There were many laws that differed in each member state, some fairer than others and others with more to be desired. Even though most of the member states derived their business laws from French law (as former French colonies), there were some variations that existed, and also, other states came in with their business laws derived from England, Spain, and Portugal.

Also, many of these laws were outdated and did not meet current realities in the global business world. Other laws that were practiced were unpublished and uncertain. Many of the laws in the member states remained untouched for over 30 years. This had to be corrected.

OHADA was not only meant to favour foreign investors. Signatories needed that such business laws be made that will also serve to protect the Africans during trade among themselves as well as trade with foreign powers. OHADA coming to serve Africa as well as harmonize business laws and keep them up to date will improve the investment
the climate within the organization.

 

The Institutional Framework of OHADA

The OHADA is structured with the Conference of Heads of State at its helm, followed by the Council of Ministers made up of the justice and finance ministers of member states, the Permanent Secretariat, and the respective OHADA national commission for each member country[].

The OHADA also has two institutions attached to it: the Common Court of Justice and Arbitration (CCJA) and the Regional Superior Magistrate School (ERSUMA). These institutions have specific roles and responsibilities as will be discussed below.[]

Achievements of the OHADA

The OHADA Uniform Acts

Adopted in Conakry (GUINEA) on 11/23/2017 and published in the OHADA Official Gazette n ° Special of 12/15/2017
Adopted in Conakry (GUINEA) on 11/23/2017 and published in the OHADA Official Gazette n ° Special of 12/15/2017
Adopted in Brazzaville (CONGO) on 01/26/2017 and published in the OHADA Official Gazette n ° Special of 02/15/2017
Adopted in Grand-Bassam (COTE D'IVOIRE) on 09/10/2015 and published in the OHADA Official Journal n ° Special of 09/25/2015
Adopted in Ouagadougou (BURKINA FASO) on 01/30/2014 and published in the OHADA Official Journal n ° Special of 02/04/2014
Adopted in Lomé (TOGO) on 12/15/2010 and published in the OHADA Official Journal n ° 22 of 02/15/2011
Adopted in Lomé (TOGO) on 12/15/2010 and published in the OHADA Official Journal n ° 21 of 02/15/2011 Open law here
Adopted in Yaoundé (CAMEROON) on 03/22/2003 and published in the OHADA Official Journal n ° 13 of 07/31/2003
Adopted in Libreville (GABON) on 04/10/1998 and published in the OHADA Official Journal n ° 6 of 06/01/1998 Open law here

How does the OHADA law affect investment

1- Harmonisation of legal rules

Legal rules are now uniform and predictable in the member states and investors can rely on common definitions of terms, common procedures, etc.

2- Quick procedures

The OHADA laws have put in place speedy procedures like the debt recovery procedure where not only is time saved when applying the procedure, but also it is an inexpensive and efficient method of debt collection[].

3- Efficient out of court dispute resolutions

African courts have a characteristic of great time consumption and as we know, time is money. The OHADA laws have put in place the Arbitration law which provides a medium of resolving disputes with the use of an independent arbiter with rapid procedures that are controlled by the parties. Resolutions after this procedure are enforceable in court. The Arbitration Law is especially for resolving disputes where one of the members has not signed the New York Convention of 1958.

4- The implementation of a supreme court for all issues relating to OHADA texts

The Common Court of Justice and Arbitration (CCJA) instituted by the OHADA organisation acts as the highest authority in the interpretation of and application of the OHADA laws. It has control over all national courts as they implement OHADA texts as it is the final appellate court when decisions handed down by national courts of appeals are not satisfactory.
Investors can count no peculiarity of any national court in the interpretation and application of the OHADA laws. If they do exist, they will be reversed by the CCJA.

OHADA challenges

Potential conflicts with other existing regional economic organisations.

The OHADA organisation hosts countries which also have regional economic treaties which they have signed and implemented. These regional treaties are:

  • The West African Economic and Monetary Union (UEMOA) made up of 8 members – Benin, Burkino Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo. This is an organisation created to promote economic integration among its countries and which also has a common currency, the Franc CFA. The UEMOA organisation organises free circulation of goods, services, and capital and also harmonises the legislation of its member states.
  • The Economic and Monetary Community of Central Africa (CEMAC), made up of 6 states – Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea, and Chad. The members of the CEMAC organisation are all in central Africa and have the Franc CFA as a common currency. The CEMAC has as objective to promote economic integration among its members by the institution of free trade, a common market, and maintenance of a common tariff system on imports from non-CEMAC states.
  • The Economic Community of West African States (“ECOWAS”), made up of 15 countries – Benin, Burkino Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierre Leone, and Togo. The ECOWAS exists to foster economic integration and cooperation within its member states.

The question here is which law will be used among countries that both belong to the OHADA and another organisation if the two organisations stipulate differently on the same subject matter?

Linguistic barriers

Until recently in 2016 after the revendication from anglophone lawyers in the anglophone parts of Cameroon, all the uniform acts in vigour were in French, the official language of the organisation according to article 42 of the treaty establishing OHADA.
This language barrier, if not confronted, will be a hindrance for other English-speaking nations like Nigeria and Ghana to join the OHADA organisation.

Finding a balance between the codified civil law system and the judge-made law tradition of the common law system.

Whereas the civil law used in former french colonies has as principal characteristic to be written, in the former British colonies, the common law system largely uses judge-made laws. These are jurisprudence or legal decisions made by higher courts that become law to lower courts.
The OHADA borrows the codified nature from the French civil law system and uses no characteristics of the common law system.
Prospective members of the OHADA, like Nigeria, who use the common law system may prefer some of the characteristics of the common law system. For such states to feel at home in the OHADA organisation, a balance between the two systems has to be reached.

Bias against the CCJA

Some judges in the member states are biased to resorting to their national jurisdiction on appellate matters instead of forwarding the matter to the CCJA as they should in applying the treaty. This reduces the influence of the CCJA as well as defeats its purpose altogether. If national courts are to be preferred over the CCJA, then there will not be a uniform interpretation of the OHADA texts and hence the uncertainty. For uniformity and harmony to be achieved in the OHADA organisation, then the CCJA has to be properly used if not empowered all the more to handle what is within its jurisdiction.

Delayed funding from member states

For the OHADA organisation to be sustainable, the member states are supposed to fund its existence. Most member states so far are reluctant to fund the organisation as agreed or pay their dues late. It shows a lackadaisical attitude among the members as concerns the OHADA organisation. With limited funds, the organisation will fail in the implementation of its projects.

Slow implementation of adopted laws

Even though the adopted laws of the OHADA organisation go into force from the time they are adopted, there are areas in the laws that are still not implemented. For example, the computerization of the Trade and Personal Property Credit Register (TPPCR) or known in french as the registre du commerce et credit mobilier (RCCM), which is authorised under the new legal framework, still requires the effort of each member state to develop accompanying procedures and acquire equipment for its implementation.

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