[co-author: Bogdan Popescu]
In a decision that will be welcomed by investors, businesses, and practitioners of arbitrations brought under Organisation for the Harmonisation of Business Law in Africa (OHADA) rules, the Common Court of Justice and Arbitration (CCJA) has confirmed the view that arbitration can take place even where elements of public policy are concerned.
The CCJA, the Supreme Court for OHADA legislation (the Francophone Africa organization with harmonized business law across the 17 OHADA state parties)1, recently reinforced a pro-arbitration approach in Grant Thornton and others v. Pape Ndiaga Mbengue (No. 193/2020), which upheld the arbitrability of a dispute and the arbitrator's power to apply public policy provisions.2
On 9 April 2013, Mr. Mbengue and Mr. Gaye, respectively the manager of Excellence Consulting Group and the general manager of Grant Thornton (GT), signed a memorandum of understanding (MoU) on behalf of their companies, which provided a framework of cooperation through which they would share human, logistical, and financial resources to develop their activities. On the basis of this MoU, Mr. Mbengue became the director and chairman of the board of directors of GT, while Mr. Gaye remained general manager of GT. The MoU contained an arbitration clause referring disputes ultimately to the CCJA as the arbitral institution.
Mr. Mbengue was removed from his post as director and chairman of the board in May 2018, and was replaced by a new chairman. This decision was approved in subsequent shareholder and board meetings. Mr. Mbengue applied to the Commercial Court of Dakar to cancel the relevant minutes in an effort to prevent the appointment of the new chair. In response, GT argued that the Commercial Court of Dakar did not have jurisdiction over the dispute due to the MoU's arbitration clause. While the Commercial Court of Dakar upheld the arbitration clause and declined jurisdiction, the Court of Appeal overturned the decision in June 2019. The decision held that the dispute pertained to certain public policy provisions of the OHADA law (i.e., the convening and holding of general meetings and meetings of the board of directors)3 and that, as such, it was not arbitrable.4 The OHADA Uniform Act on Arbitration states that a party may agree to arbitrate any rights over which it has free will.5 The Court of Appeal of Dakar took the view that, as the rights being debated included obligatory requirements for companies to respect with regard to their meetings, there was no such "free will”. It further held that the dispute had to be decided by national court judges.
GT appealed to the CCJA (in its role as Supreme Court), arguing that the arbitration clause in the MoU conferred jurisdiction on the CCJA as the arbitral institution.
The CCJA granted the appeal of GT on the basis that:
In light of these reasons, the CCJA ruled that it was appropriate to set aside the judgement of the Court of Appeal of Dakar, without needing to examine other limbs and grounds of appeal.
It is well recognized that there are certain disputes that cannot be referred to a private forum such as arbitration, and are deemed to be non-arbitrable by relevant legal provisions (such as national laws or international conventions).6 However, as demonstrated in this CCJA case, there are also instances when public policy provisions can impact a natural or legal person's contractual rights, and resolution by arbitration is nevertheless still possible. In this decision, the CCJA confirmed that the sole fact that a dispute may lead the arbitrator to apply public policy provisions does not mean that the dispute should automatically be deemed non-arbitrable, and that a distinction should be made between the application of public policy provisions and the arbitrability of a dispute.
This approach comes in line with decisions previously upheld in other jurisdictions. In as early as 1975, a Swiss court in Ampalgas held that "a dispute concerning the validity or termination of a contract can be referred to arbitration even if one of the parties raises an argument based on a public policy rule."7 In France, in both the Ganz8 and Labinal9 cases, the Court of Appeal held in substance that "in international arbitration, the arbitrators have jurisdiction to rule on the arbitrability of a dispute which is submitted to them, having regard to the notion of international public policy, and if they conclude that the dispute is arbitrable, they may apply any rules relevant to the dispute, regardless of whether these are public policy rules."10 In Fulham Football Club (1987) Ltd v Richards, a corporate dispute concerning a breach of the articles of association (which contained an arbitration agreement), the English Court of Appeal held that unfair prejudice claims under Section 994 of the Companies Act 2006 (i.e., a form of statutory actions brought by aggrieved shareholders against their company) are capable of being arbitrated, provided they do not involve the making of any winding-up order (a remedy that would invoke the court's supervisory jurisdiction).11
The CCJA has confirmed the view prevailing in other major pro-arbitration jurisdictions that arbitration can take place even where elements of public policy are concerned, and that public policy rules will be included in the rules of law that arbitrators can apply in resolving the disputes submitted to them. This decision will be welcomed by investors, businesses, and practitioners of arbitrations brought under OHADA rules, and will continue to develop the growing profile of the CCJA as an arbitral institution.
1 Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo.
2 A full copy of the decision is available at: http://biblio.ohada.org/pmb/opac_css/doc_num.php?explnum_id=4764.
3 Articles 2 and 2-1 of the Uniform Act on Commercial Companies and Economic Interest Groups.
4 Despite the arbitration clause agreed between the parties in the MoU, this decision precluded an arbitral tribunal from exercising its jurisdiction to resolve the dispute by arbitration under the applicable law.
5 Article 2 of the Uniform Act on Arbitration.
6 Gary Born, International Commercial arbitration, Kluwer Law International, 2021, p. 1028 et seq; See also Christophe Seraglini, Jérôme Ortscheidt, Droit de l'arbitrage interne et international, LGDJ, 2019, para. 636 et seq.
7 Antoine Kirry, Arbitrability: Current Trends in Europe in William Park, Arbitration International, Oxford University Press, Volume 12, Issue 4, 1996, p. 378; Chambre des Recours du Canton de Vaud, Ampalgas, 28 October 1975.
8 Court of Appeal of Paris, Société Ganz and Others v Société Nationale des Chemins de Fer Tunisiens, 29 March 1991.
9 Court of Appeal of Paris, Société Labinal v Société Mors & Westland Aerospace, 19 May 1993.
10 Antoine Kirry, Arbitrability: Current Trends in Europe, Oxford University Press 1996, Volume 12 Issue 4, pp. 376 – 377.
11 Fulham Football Club (1987) Limited v. Sir David Richards, The Football Association Premier League Limited  EWCA Civ 855.