Thesis topic: Reforming the Legal Framework of the Organization for the Harmonization of Business Law in Africa (OHADA) to Protect Foreign Direct Investment in Africa (original) (raw)

2017, Reforming the Legal Framework of the Organization for the Harmonization of Business Law in Africa (OHADA) to Protect Foreign Direct Investment in Africa.

Foreign Direct Investment (FDI) plays a key role in the world economy. It further has a strong potential to contribute to the acceleration of economic growth and sustainable development. In other words, it is welcomed and, indeed, actively sought by all countries in the word. The way in which FDI can contribute to the economic development and integration in the global economy is especially recognized for African Countries. In fact, too often, potential investors discount the African countries as a location for investment because of a negative image of the region as a whole. However, such picture conceals the complex diversity of economic performance and that potential investment opportunities in individual countries indeed exist. So far, African countries have not fully realized the potential of the type of capital that FDI is. Thus, it is one of the reasons explaining why the Economic growth in Africa has been low over a long period of time. To solve such problem, many African countries have made efforts to create a more business-friendly environment and to promote not only local investment but also foreign investment such as Foreign Direct Investment (FDI). In this regard, seventeen African countries gather together so as to create the OHADA. The organization precisely aims to restore legal and judicial security in the region to create more investment and attract investors. Even though one of the OHADA objectives is to promote investment, the title of the founding treaty reveals that it not a dedicated instrument for investments. This can be observed with regard to other treaties upon which the regional organizations are based and which explicitly provide for investment in their title. For example, the Investments Protection and Promotion Agreements (IPPA), the Washington Convention creating the International Centre of Investment Disputes (ICSID) or also the Seoul Convention establishing the Multilateral Agency for Investment Guarantee (MIGA). However, no hasty conclusions should be drawn from this observation. Indeed, there are many international treaties not exclusively dedicated to investments but with chapters of very high practical importance on this matter. Such is the case of NAFTA (North American Free Trade Agreement) and his famous Chapter XI of the Treaty on the Energy Charter, or FTA’s (the Free Trade Agreements). They all are bilateral agreement built on the model of NAFTA Treaty which contains a chapter dedicated to investment. And we know the importance that plays such Chapter XI of the NAFTA in investment law. There are various legal sources on the issue of investment in the OHADA region at the national, regional and sub-regional level. They regulate the treatment of foreign investments such as the Economic Community of Central African States (ECCAS) and West African the Economic and Monetary Union (WAEMU) investment charters. Moreover, OHADA states sign Bilateral Investment Treaties (BITs) to protect foreign investments. The relationship between the different sub-regional laws on investment and OHADA is not yet clear, but case law suggests that CEMAC and UEMOA courts recognize the supremacy of OHADA law and their lack of competence to hear matters regulated under OHADA. This means that, even if OHADA treaty does not explicitly mention investment, but still contains relevant provisions which are able to foster the protection of investment. In order to understand what the OHADA law provides in term of investment, we must examine its contents and instruments. The plural as to the latter is appropriate because Articles 1 and 5 of the OHADA Treaty reveal that it is designed as a matrix within which common rules are to be developed and grouped in Uniform Acts. To date, nine (9) Uniform Acts have been adopted in diverse areas such as the Uniform Act relating to General Commercial Law, the Uniform Act relating to Commercial Companies and Economic Interest Group, the Uniform Act Organizing Securities, the Uniform Act Organizing Simplified Recovery Procedures and Measures of Execution, the Uniform Act Organizing Collective Proceedings for Wiping off Debts, the Uniform Act on Arbitration, the Uniform Act Organizing and Harmonizing Undertakings’ Accounting System, the Uniform Act relating to Contracts of Carriages of Goods by Road and the Uniform Act relating to Cooperatives Societies, and at least two other Uniform Acts are in preparation, one on Contract Law and the other on Labour Law. It must be noted however that none of these uniform acts and none of the OHADA Treaty chapters is expressly dedicated to investments. The real purpose of the present work is to determine what are the problems or drawbacks that OHADA laws contain and how to solve them in such way to protect investment in Africa. In order to give answers to this main research question, any contributions or links between the OHADA law and investment law must be sought within the body of rules that constitute the Treaty of OHADA, as well as the Uniform Acts adopted pursuant to it. The proposed approach to determine these potential contributions or links is to be found in the provisions in which the OHADA lawmakers mention investment and /or investor. Furthermore, it is not sufficient to restrict the work there. Even if these terms are not explicitly addressed, certain provisions can still be very useful for investments and investors. Thus, beyond appearances, it is about to examine, contributions or possible links between the OHADA law and investment law. As pointed out above, Africa still remains a region which is very often misunderstood by many foreign investors. Such conception impacts negatively as well on the OHADA region. This is the reason why we think it is important to conduct the present research; in order to provide clarity as to the legal framework for any future potential investor. After a general introduction into the research subject (chapter 1), I will firstly give a presentation of the investment environment and identify the different challenges related to investment existed in Africa (chapter 2) and secondly present the OHADA and its search of harmonization (chapter 3). This chapter will include the background of the organization and point out the present issues faced by the organization. I will dwell upon the need to reform the OHADA legal system by providing directions and suggestions (chapter 4) before concluding. In this view, and as long as OHADA space still attract foreign investors, it is important to analyze the different legal mechanisms put in place to protect foreign investment. Thus, the actual question that is sought in this research study is whether there are protection mechanisms related to investment stipulated into the OHADA law and if yes, whether the protections stipulated in are actually strong enough to protect foreign investors from all around the world and if not, what legal mechanisms and remedies can be put into place.