TagTime with Yemi Candide-Johnson SAN – Intra-Africa trade and the future of commercial dispute resolution on the continent*

Author: Brenda Efurhievwe**

The following post summarizes Yemi Candide-Johnson† SAN’s TagTime discussion with Dr. Kabir Duggal and Amanda Lee regarding the current state of intra-African trade, its potential for growth and the future of arbitration in Africa.[1]

Mr. Candide-Johnson began by stressing the significance of economic integration, both for the African continent and for the world.

THE COLONIAL LEGACY

It is “settled wisdom” that the law follows trade. Similarly, economic opportunity is what frequently drives political action. These realities have been dramatized in the history of Africa, marred by the extraction of value executed by force. This historical context serves as an apt starting point for the analysis of the current struggles and emerging opportunities within the continent.

The legacy of colonialism has left Africa with, often conflicting, European legal traditions. Beyond the dichotomy of civil and common law left behind by the dominant activity of France and the UK, the colorful picture of Africa includes Roman-Dutch, Portuguese, German and Islamic law influences. The continued operation of these post-colonial systems necessitates the harmonization of the legal framework across African states.

International trade has long been recognized as the primary instrument for economic development.[2] Considering the interconnection between trade and law, the diversity of legal systems in Africa remains an impediment, which must be addressed. Ghana and the Côte d’Ivoire provide a perfect example for this need—despite sharing a border, the states remain divided by their divergent legal systems. As a result, even a simple trade transaction would necessitate a legal dispute over the application of common or civil law being appropriate.

The ragged remnants of these colonial legal systems have remained after the economic and political purposes of European states have eclipsed. They continue to drive economic activities between Europe and Africa despite the hopes and ambitions of those on the African continent. Significantly, the dysfunctionality of these legal systems, which have “no real anchor in the habits and history of Africa”, have impeded economic progress in individual countries across the continent.

However, while we cannot change history, we can work to overcome it. This statement, made in the year which saw the surge of the Black Lives Matters movement across the globe, felt particularly powerful. Mr. Candide-Johnson suggested that Africa’s colonial past would remain an insurmountable obstacle if there was no possible coherence between the countries in question. However, despite the prevalence of mutual ignorance, suspicion and fear, a level of coherence does exist. Relying on his arbitration experience, the speaker provided a number of examples of these fundamental overlaps.

The South African Supreme Court of Appeal decision in Golden Fried Chicken (Pty) Ltd v. Sirad Fast Foods CC is the leading case discussing the legal doctrine of “tacit relocation.”[3] The legal issue considered whether the facts or dealings between parties after the expiry of their written contract contractually bound them after that time on any terms. The tribunal was required to find whether the parties conducted themselves in a manner that gave rise to the inescapable inference that both intended the revival of their former contractual relationship under the terms of the underlying consultant agreement.[4] While the South African concept of “tacit relocation” derives from Scottish law, it has developed a life of its own under Roman Dutch law. However, confirming the assertion of coherence between Africa’s diverse legal systems, this doctrine is also very similar to an implied or oral contract under the common law “officious bystander” test, recognized in Nigeria.

A similar underlying consistency can be noted with respect to the term “Ijarah,” used, under Islamic financial law, to denote the provision of goods and services temporarily in exchange for a wage. On the other hand, the legal concept of good faith in contractual dealings is another doctrine which appears to separate African territories. The implementation of this concept into contracts differs in civil and common law traditions.

TRADE LINKS WITH CHINA

Today, the legacy of Europeans and Americans of the last 200 years is increasingly impacted by the surge of Chinese trade and investments in Africa in the last few decades. As of 2009, China has surpassed the U.S. to become Africa’s largest trading partner; there are now bilateral trade agreements between China and 40 countries on the African continent. Between 2000 and 2014, China-Africa trade has increased from $10 billion to $220 billion. This growth has disrupted historical European trade ties with Africa, creating both a burden and an opportunity for the continent.

Similar to Europe and America, China requires the natural resources of Africa. However, where its predecessors left little infrastructure which could be used to integrate Africa as a trading unit, the Chinese are aiding the creation of power plants, railways, airports, seaports and roads, which will physically and logistically integrate the continent.

Naturally, the increasing commercial transactions between China and Africa have generated a wide variety of disputes, contractual as well as relating to property and family law. Attempts at dispute resolution in state courts have created a multiplicity of problems relating to jurisdiction and choice of law, as well as recognition and enforcement of foreign judgements. The absence of systematic and comprehensive commercial codes represents further obstacles to settle disputes through litigation. The antiquity of inherited European legal systems and legislation has proved inefficient and provided very little certainty or coherence in dealing with matters involving foreign parties. The China-Africa Joint Arbitration Center (“CAJAC”) was created with the aim of resolving these issues by providing efficient arbitral facilities tailored to this particular relationship. A further motivation for the development of the CAJAC framework was dissatisfaction with the existing international tribunals outside of Africa. The criticisms included both the significant delays and costs involved, as well as the fact that, in most cases before the established tribunals, African parties would come out unsuccessful, despite availing themselves with the assistance of the most prominent global advocates.

AfCFTA

The future of trade and commercial dispute resolution of the continent cannot be contemplated without considering the significance of the landmark African Continental Free Trade Agreement (“AfCFTA”).[5] The agreement seeks to liberalize African trading systems for the purpose of achieving greater economical harmony, free trade and investment. AfCFTA aims to create a single African market of 1.3 billion consumers and a total GDP in excess of US$3 trillion, which would represent the largest free trade area in the world. The ambition behind this venture is both economical and political, through the opening and consolidation of intra-African trade.

In order to achieve its goal of removing tariffs on 90% of goods, the block will have to also overcome a number of non-tariff barriers, including political suspicion, linguistic and cultural divisions, as well as the above mentioned antagonistic European legal traditions. Uniform legal regulation and dispute resolution are fundamental to the generation of trade and commerce across Africa.

AfCFTA establishes a dispute settlement mechanism which applies only to the settlement of disputes arising between its state parties. The future of investor-state disputes in the architecture of this treaty remains unclear at present. However, the need for it stems from the unfortunate reality that Investor-State dispute settlement (“ISDS”) has never favored Africa.

A unified African approach to dispute settlement remains a compelling goal. The absence of a substantive commercial law and a unified dispute resolution framework does not favor the objective of economic integration and poses a challenge to the promotion of intra-African trade. A continent-wide solution to this need is necessary.

OHADA AND THE PATH TO UNIFICATION

The Organization for the Harmonization of Business Law in Africa (Organisation pour l’Harmonisation en Afrique du Droit des Affaires; “OHADA”) established by the Port Louis Treaty of 1993 represents a significant move in this direction.[6] While it was founded by 17 small African countries’ economies, few legal instruments have assigned themselves more ambitious legal objectives.

OHADA’s preamble proclaims the countries’ determination to “make more progress on the path to African unity” and to create a climate of trust in the economic systems of the contracting states with a view of establishing a new center of development in Africa.[7] This ambition appears remarkable, given the fact that these 17 Franco-African countries represent a small part of the African economy. However, it is Mr. Candide-Johnson’s thesis that OHADA demonstrates an act of leadership, which ought to be followed by the rest of the continent.

The purpose of the OHADA Treaty is to promote the development of the contracting states by elaborating a business law that is simple, modern and adapted in order to stimulate and secure investments within its territory. Through its 9 Uniform Acts, which now apply in its member states exclusively, above national laws, OHADA has managed to unify regional business laws to an extent unheard of in any other context. The extension of this system to English-speaking African states is therefore particularly compelling. Due to its position as the largest economy in Africa, the inclusion of the English-speaking Nigeria in such an African alliance would be especially beneficial.[8]

The idea of unification of African laws has been considered as the only solution to eliminate obstacles to development from judicial differences amongst the African countries. The cultural and geographic limits that have been historically used to distinguish between the common and civil law families are no longer what they once were. The potential conflict between OHADA, as the expression of the civil legal system, with the common law is in fact a political or a juridical issue. For African states, the imperative is to establish an easy, effective and reliable instrument to govern commercial activity.

OHADA’s Common Court of Justice in Arbitration (“CCJA”), seated in the Côte d’Ivoire, functions as a supranational Supreme Court, tasked with ensuring the common interpretation and application of the OHADA laws. It also acts as an arbitral institution, administering its own arbitration rules. There is a consistent increase in the number of cases coming before this court, from just one decision in 1998 to 77 cases being decided in 2009. Interestingly, CCJA operates on a system of judicial precedents, a pillar of the common law. This, coupled with the increasing codification under common law systems, makes it apparent that the traditional distinctions between the two systems of law continue to weaken. Furthermore, CCJA’s decisions have become a source of law across OHADA member states and have also been relied on by foreign courts, contrary to civil law traditions.

Perhaps counterintuitively, the profile of the CCJA increased in the wake of concerns and adverse publicity following the annulment of the arbitral award in GETMA International.[9] The CCJA annulled the arbitration award after it was found that the arbitrators had breached their mandate and the rules of the court when negotiating directly with the parties to secure an increase in their fee. A particular feature of this long running saga was the unusual step that the arbitrators took in publicly criticising the CCJA in an open letter to the international arbitration community, thus spurring extensive comment and discussion. When considering this matter, a U.S. court reviewed CCJA’s rules, the exercise of its administrative functions and ruled that it had the ultimate authority to confirm or annul an award made in a CCJA arbitration. The U.S. court took the view that the New York Convention does not endorse a regime in which courts routinely second guess the judgment of a foreign court and rejected Getma’s arguments that the CCJA annulment should be ignored and disregarded.[10]

It must be acknowledged that certain members of the international arbitration community believe that the above saga has harmed the CCJA’s reputation. However, the speaker takes another view. What remains important is the promotion of the commercial and political interest that African disputes should be arbitrated in Africa, with greater involvement of African counsel and arbitrators. OHADA has subsequently revised its arbitration legal framework, which no longer allows for a decision to be annulled on the basis that the fee rule was breached. Further changes to the framework include an increased focus on arbitrator impartiality, a clearer process for arbitrator appointments and strict time limits for local courts when enforcing awards. A new scope for investment disputes was also introduced and, shortly thereafter, the Côte d’Ivoire adopted a new national investment code which set CCJA as a preferred investor-state dispute resolution forum.

The CCJA continued to establish procedural and substantive commercial law, applicable on the territory of OHADA member states. For example, in its decision of April 21, 2016, the CCJA held that the OHADA treaty and the Uniform Acts do not have retroactive effect on final court decisions, making them enforceable before their entry into force.[11] The CCJA’s jurisdiction has also been more widely recognized. For example, a decision by the Paris Court of Appeal rendered in 2018 rejected a request by the state of Cameroon for annulment of an arbitral award that had applied OHADA law over Cameroonian law.[12] Pursuant to OHADA’s constitutive treaty, the Uniform Acts are directly applicable and binding in the member states as substantive law, notwithstanding any contrary provision of municipal law that either precedes or postdates them. The Paris Court of Appeal’s decision gives full effect to the text of the OHADA Treaty and to the Uniform Acts that have been made under it, as well as helping to consolidate OHADA law as a legal system which takes precedence over municipal laws of OHADA member states.

A CCJA ruling of July 7, 2005, concerning immunity from execution of public corporate bodies demonstrates the development of its own rules on sovereign immunity.[13] In its decision, the CCJA referred to the regularization of the law on sovereign immunity under the Uniform Act in a manner consistent with the understanding of this doctrine under the common law. It is significant that this ruling might as well have been a decision made under the common law.

CONCLUSION

Mr. Candide-Johnson concluded with a commendation of the CCJA as an African commercial court, particularly when it is contrasted with the weaknesses of colonial court systems “inherited” by African states. These antiquated and insufficient systems make arbitration a far more desirable choice for dispute resolution. The continued weakness of national arbitration remains impeded by the supervisory and support functions performed by national courts in Africa (e.g., the uninformed annulment of decisions, the inordinate delay to proceedings or the administration of applications for interim relief). The persistence of these difficulties demonstrates a growing need for a supranational African arbitral entity.

Arguably, as a tried and tested organization, OHADA ought to be the solution to this need. The organization has already succeeded in enforcing consistent standards across its member states and attaining recognition from the international community. The CCJA has developed rules which fit the interests of its member states and which also represent the harmonized law in those territories. Significantly, the CCJA serves in a dual role as an arbitral institution and a supervisory court within the OHADA framework, which enables it to adequately support the arbitration process. With its specialist, business-minded approach to decision making, the court is capable of bridging the biggest gap, evident in the approach of ‘colonial courts’ on the continent.

OHADA and the CCJA succeeded in increasing confidence in African arbitration, controlling the proliferation of regional institutions as well as meeting the challenge presented by political instability across various territories. There is therefore a strong case for Anglophone African states to consider “buying into the OHADA project”.

Bringing all African states under the existing OHADA umbrella would allow the CCJA to ensure the unification of relevant jurisprudence across the continent. While this remains a difficult and controversial topic, it also presents a revolutionary opportunity. While OHADA currently represents only a third of African countries, its success in unifying such a high number of participants makes it a prime candidate to lead on the ambitious project of harmonizing the legal framework across the continent.

Mr. Candide-Johnson conceded that it may appear easier, from a political perspective, to create a new continent-wide legal regime under the widely accepted AfCFTA framework. However, in his opinion, it would be more efficient to unify substantive law and dispute resolution across Africa by consolidating the gains of the OHADA treaty. As an anglophone, common law lawyer, he recognized that conducting business in French and unifying the, already universal, ideas of trade and commerce under a common regime would not be harmful to “anything other than egos.” The “game changer” of integrating laws and dispute resolution across Africa, could only benefit from this opportunity to start building economy and trade within the continent.

[1] Yemi Candide-Johnson SAN, Intra-Africa trade and the future of commercial dispute resolution on the continent, TagTime (Date), available at https://delosdr.org/index.php/past-webinars/.

[2] UN G.A. Res. 1707 (XVI), International trade as the primary instrument for economic development (Dec. 19, 1961).

[3] Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC (158/2000) [2001] ZASCA 124; [2002] 2 All SA 551 (A) (22 November 2001).

[4] Id., para. 4.

[5] Agreement Establishing the African Continental Free Trade Area, Mar. 21, 2018, available at https://au.int/sites/default/files/treaties/36437-treaty-consolidated_text_on_cfta_-_en.pdf.

[6] Amended treaty on the harmonization of business law in Africa, Oct. 17, 1993, available at https://www.droit-afrique.com/uploads/OHADA-Treaty-2008-harmonization-business-law.pdf.

[7] Id.

[8] Bloomberg, Nigeria Tops South Africa as the Continent’s Biggest Economy, (March 3, 2020), https://www.bloomberg.com/news/articles/2020-03-03/nigeria-now-tops-south-africa-as-the-continent-s-biggest-economy.

[9] See Getma Int’l v. Republic of Guinea, 862 F.3d 45, 47 (D.C. Cir. 2017).

[10] Id. at 48-49.

[11] Tshiaba Mbangama v. Banque Centrale du Congo (BCC), No. 071/2016 (CCJA Apr. 21, 2016), http://biblio.ohada.org/pmb/opac_css/doc_num.php?explnum_id=2976.

[12] Cour d’appel [CA] [regional court of appeal] Paris, civ., Dec. 20, 2018, 16/25484 (Fr.).

[13] Azaiablévi v. Togo Telecom, No. 043/2005 (CCJA July 7, 2005), https://biblio.ohada.org/pmb/opac_css/index.php?lvl=notice_display&id=5974.

* This post is part of a series summarizing episodes of Delos Disputes Resolution TagTime webinars. A list of past TagTime webinars is available at https://delosdr.org/index.php/past-webinars/.
** Brenda Efurhievwe (Poland/UK) is a Fulbright Grantee and Human Rights Fellow (2020-2021) pursuing an LL.M. degree at Columbia Law School.
† Charles Adeyemi (Yemi) Candide-Johnson SAN is a Senior Advocate of Nigeria, a former chairman of the Section on business Law of the Nigeria Bar Association, a past president of the Lagos Court of Arbitration, the chairman of the Nigerian Mortgage Refinance Corporation, and the convenor of the Nigerian Justice Reform Project. He is also a commercial litigator and international commercial arbitrator who has chaired, co-arbitrated and conducted arbitrations under the ICC, LCIA and LMAA Rules, in addition to domestic and ad hoc arbitrations in the construction, oil and gas, banking and Islamic banking industries.