The Paris Court of Appeals recently upheld an arbitral award applying OHADA law. The application to set aside the award had been brought by the State of Cameroon based on arguments made under Cameroonian law. However, the Court applied OHADA law over Cameroonian law, in the process confirming the supranational nature of OHADA law. This is therefore an interesting decision which shows the courts of a state external to OHADA confirming that law’s pre-eminent stature.
After a brief review of the facts and procedure of the Garoubé saga leading to this decision, taking us from Yaoundé to Belgium to Paris (1), we summarize the decision below (2) and review briefly its significance in upholding OHADA law (3).
1. Facts and procedure
Projet Pilote Garoubé (“Garoubé“) was a company established in Yaoundé, Cameroon, one of the founding OHADA States. The company was therefore governed by the OHADA law on companies – the Uniform Act relating to Commercial Companies and Interest Groups.
Garoubé entered into concession agreements with Cameroon in 2001 to conduct game ranching and related farming activities. After five years, Cameroon unilaterally suspended the concession agreements. Garoubé then transferred its registered offices to Belgium, thus becoming a company governed by Belgian law.
The ensuing dispute has been ongoing for several years. Garoubé initiated arbitration proceedings on the basis of an ICC arbitration clause in the agreements. A first arbitration award was rendered but then annulled due to a conflict of interest on the part of one of the arbitrators. A second tribunal was constituted and issued two partial awards, first on jurisdiction and later on liability. These awards formed the basis of Cameroon’s request for annulment in the present case.
Amongst the various arguments made in support of its request for annulment, Cameroon argued that Garoubé’s transfer of registered office from Cameroon to Belgium – although permitted by OHADA law – was in breach of Cameroonian regulations relating to wildlife exploitation. Therefore Garoubé, in its status as a Belgian company, did not have standing to bring arbitration against Cameroon and therefore the tribunal did not have jurisdiction.
2. The Court upholds the supranational nature of OHADA law
The Paris Court dismissed all of Cameroon’s arguments, applying a particularly strong reasoning on the superseding nature of OHADA law.
The Court endorsed the arbitral tribunal’s decision on jurisdiction holding that: “The OHADA treaty sets a supranational rule by providing for the mandatory and direct application in member States of Uniform Acts and it establishes, in addition, their supremacy over former or subsequent internal legal dispositions“. Further, it set out: “the Uniform Act relating to Commercial Companies and Interest Groups establishes that its provisions are public policy and are also immediately and directly applicable“. In other words, OHADA law provisions protecting the transfer of a company’s registered office were interpreted as overriding any contrary OHADA State regulation.
As a result, Cameroon’s regulation relating to wildlife could not prevent the transfer of Garoubé’s registered office and therefore had no effect on the arbitration agreement’s enforceability and the jurisdiction of the arbitral tribunal.
In addition, Cameroon claimed that its regulations on wildlife were overriding mandatory rules and that in by failing to take these rules into account the award had breached international public policy. The Paris Court also dismissed this argument, reminding Cameroon of the high threshold required to show a breach of international public policy under French law.
Courts beyond the boundaries of the 17 OHADA States will rarely get the opportunity to consider the status of OHADA law. When faced with allegedly competing provisions of OHADA and local law, the Paris Court, perhaps unsurprisingly, upheld the supremacy of the international OHADA law, and in doing so used strong terms to ensure the matter remained beyond doubt.
Indeed, the strong wording used by the Court – assimilating OHADA law to public policy – suggests that it will be difficult for parties to get around OHADA law. This reference to public policy raises some of its own questions, such as whether a breach of OHADA law could form the basis for an annulment application under OHADA or New York Convention principles. Such issues remain open for clarification at a later date.
By endorsing the superseding nature of OHADA law, the Paris Court of Appeals gives effect to the OHADA Treaty’s initial promise: a “harmonized business law in order to improve companies’ business“, including by giving visibility and predictability to companies instituted under that international legal system. This decision should therefore help to ensure that other companies like Garoubé can avail themselves of OHADA law for their own benefit.