Little known, the Organization for the Harmonization of Business Law in Africa is nevertheless one of the major players working for African economic development.
What is OHADA law?
The Organization for the Harmonization of Business Law in Africa (OHADA) is an intergovernmental organization established to create a common legal framework for business law in African countries.
It was created on October 17, 1993 by the Treaty of Port Louis relating to the harmonization of business law in Africa. This treaty was revised on the same date in 2008 in Quebec.
The organization currently has 17 member states : Benin, Burkina Faso, Cameroon, Central African Republic, Ivory Coast, Congo, Comoros, Gabon, Guinea, Guinea-Bissau, Equatorial Guinea, Mali, Niger, Democratic Republic of Congo (DRC), Senegal, Chad and Togo.
How does the organization for the harmonization of business law in Africa work?
OHADA is based on 5 bodies.
• The Conference of Heads of State and Government: this is the political body. Operating on a rotating presidency system (in 2018, Gabon), its role is to define the general policy guidelines to be pursued within the organization.
• The Council of Ministers of Justice and Finance: this is the legislative body. The Council of Ministers has the power to make decisions, oversee institutions, and authorize the budget. It also deliberates and adopts common standards called "uniform acts," regulations, and decisions.
• The Permanent Secretariat: This is the executive body. Headed by a Secretary-General elected for a four-year term, the Secretariat prepares draft uniform acts, regulations, and decisions. It represents the organization in its relations with third parties.
• The Common Court of Justice and Arbitration (CCJA): This is the common judicial body. It takes precedence over national courts. Composed of 13 judges elected for seven-year terms, it hears appeals against court decisions rendered under OHADA law by the courts of member states. It also plays a leading role in arbitration. Above all, it ensures the interpretation of decisions made under the treaty in order to promote the harmonious application of treaty law. With the power to review cases, the Court can rule directly on the merits of a dispute if it deems it necessary.
• The Regional Higher School of the Judiciary (ERSUMA): the School is responsible for training future magistrates and magistrates already in office.
Why does Africa need an organization like OHADA?
Created to control legal insecurity, this organization aims to achieve a stable climate that gives confidence to economic investments.
How to obtain more legal certainty? The most important project of OHADA is the unification and harmonization of the standards in force.
Thus, the organization's aim is to establish common rules. The ultimate goal is greater clarity in standards, which is essential for simplifying business relationships.
These common and stable rules have the enormous advantage of making the law predictable. A cardinal value for both foreign and African investors, predictability provides reassurance. With this security, business can proceed smoothly without fear of sudden and unpredictable legislative changes.
A real plus for its members, OHADA gives them a competitive advantage over other countries. For example, in 2018 in Madagascar, 70% of private sector actors were in favor of the country's entry into OHADA.
Finally, another major undertaking for the African organization is the training of personnel. Again, with the aim of ensuring legal certainty, the image projected by the justice system must be impeccable and it must demonstrate unwavering independence.
Positive economic and legal effects for the African continent
Concretely, in 20 years, 10 uniform legal acts have been adopted covering a broad spectrum of business law: general commercial law, mediation, transport of goods by road, cooperative societies, commercial companies, arbitration, accounting and financial information, collective procedures, means of execution and securities. Of immediate application if adopted unanimously by the Council of Ministers, these uniform acts are therefore distinguished by their speed.
For example, OHADA sought to promote arbitration. In 2017, a uniform act facilitated the enforcement of arbitral awards, making them more effective. Similarly, alternative dispute resolution methods such as mediation are being promoted. In 2017, a uniform act even made mediation legally binding, thus filling a legal void that existed in some member states.
In 2010, OHADA agreed on common definitions for certain key concepts in commercial law: the status of trader, goodwill, etc. Not to mention the abundant case law of the Court.
From a purely economic perspective , the benefits of OHADA were immediate. In 2016, the World Bank estimated the GDP of the OHADA region at $275 billion. Since then, this GDP has been increasing steadily and significantly.
Looking ahead, the organization faces numerous challenges in harmonizing African law. One current challenge is to make OHADA law more aligned with digital technologies, particularly through Legaltech. For example, Legaltech could work to make legal services more accessible to small African businesses.