Actions by Sub-Saharan OHADA-Member Nations Promote Arbitration

by Jones Day

Jones Day

In Short

The Situation: In November 2017, 17 sub-Saharan African states reformed both their uniform arbitration law and the arbitration rules of their regional arbitration center.

The Result: The revision of the Uniform Act on Arbitration and of the Arbitration Rules of the Common Court of Justice and Arbitration are a turning point that serves to promote arbitration in the OHADA region, which since its introduction in 1999 has failed to gain a significant following.

Looking Ahead: Will the arbitration reform boost the practice of arbitration in the OHADA region and provide foreign investors with the necessary safeguards to arbitrate with their counterparts from the region?

Arbitration in the OHADA Region

The Organization for the Harmonization of Business Law in Africa ("OHADA") is an international organization based in Yaoundé, Cameroon. It comprises 17 Central and Western African nations, representing a total population of around 200 million inhabitants. The objective of OHADA is to harmonize the business laws of its member states, including in the field of arbitration, to promote a secure business environment, and thereby increase investment in the region. Since 1999, arbitration has been regulated by a uniform law applicable in all 17 member states.

The Common Court of Justice and Arbitration, acting both as the supreme court of the 17 member states with respect to OHADA laws, and as an arbitration center with its own set of Arbitration Rules, has seen results of mixed success. Between 1999 and 2016, its arbitration center registered only 96 cases. Despite this limited caseload, local arbitration centers in a few OHADA member states have emerged with a small but consistent set of new cases each year. Yet, recourse to arbitration in the OHADA region has been limited. This explains in part why OHADA sought a reform. As reported previously, Jones Day advised the Permanent Secretary of OHADA on its arbitration and mediation. Overall, the reform seeks to enhance legal certainty by improving the existing texts and contribute to the promotion of arbitration in the region.

The revised Uniform Arbitration Act ("UAA") and the revised Arbitration Rules of the Common Court of Justice and Arbitration ("CCJA Arbitration Rules") contain several innovative provisions that seek to make arbitration in the region more attractive.

The revised UAA notably includes the following innovations:

A New Cost-Effective Tool Allowing Arbitral Tribunals to Dispose of Allegations of Noncompliance with Pre-Arbitral Procedure

Many contracts condition recourse to arbitration upon the fulfillment of a prior step, such as mediation. In practice, respondents often raise inadmissibility claims pursuant to these multi-tier dispute resolution clauses. Such claims can even result in the annulment of awards if a judge finds that the claims should not have been admitted in the arbitration because a mandatory step was not complied with. Therefore, the revised UAA contains a pragmatic and cost-effective solution, allowing an arbitral tribunal to suspend arbitral proceedings for a short period of time when a pre-arbitral procedure has not been followed. The tribunal may fix a time limit for the parties to comply with that procedure, after which the arbitration will resume in the event the parties failed to settle. This truly innovative provision is one of the first of its kind in modern arbitration laws worldwide and will considerably reduce time and costs that parties spend to deal with such issues.

Time Limits for Domestic Judges to Decide Arbitration-Related Matters

The rapid resolution of disputes is an important objective of arbitration, which should not be undermined by delays where assistance from domestic courts is required. Court intervention may become necessary during ad hoc arbitral proceedings and after these proceedings when a party seeks to annul or to enforce an award. To avoid abuse, the UAA fixes short time limits for domestic judges to issue their decisions. If the domestic court does not make a decision within the prescribed time limit, a party may directly refer the matter to the CCJA, which will issue its decision, also within a short time period.

Duty of Celerity and Loyalty of the Parties

This new provision intends to prevent parties to arbitral proceedings from engaging in dilatory practices, which often go unsanctioned by domestic courts.

The CCJA Arbitration Rules have also been amended, notably introducing provisions regarding multi-contract and multi-party arbitration, thereby largely following the corresponding provisions of the ICC Rules of Arbitration. Moreover, the CCJA Arbitration Rules now clarify that parties cannot directly agree with arbitrators on the amount of their fees. The CCJA alone is entitled fix or approve the fees of the tribunal. However, the new rules clarify that a breach of this principle is not a valid ground to annul an arbitral award. This last point results from a wave of criticism that followed the annulment of the award issued in GETMA v. Republic of Guinea by the CCJA on November 19, 2015.

Overall, the new texts adopted in their final versions by the sovereign OHADA states improve the arbitration environment in the region. They address some of the concerns raised by international users. Nonetheless, further improvements remain possible and desirable, for instance the introduction of emergency arbitration. The otherwise much-needed reform of the CCJA (criticized for wearing both an administrative hat as an arbitration center as well as a judicial hat as a supreme court) will no doubt be addressed when the OHADA Treaty is amended, which one hopes will happen in due course.

Three Key Takeaways

  1. 17 African states forming OHADA just revised their Uniform Act on Arbitration and Arbitration Rules of the Common Court of Justice and Arbitration, which dated back to 1999.
  2. The revised texts contain several innovative provisions to make arbitration in the region more attractive.
  3. A revision of the OHADA Treaty would allow major improvements to the arbitration system in the region.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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