The panel was convened at 10:45 a.m., Saturday, March 31, by its moderator, Doak Bishop of King & Spalding, who introduced the panelists: Adesegun Akin-Olugbade of the African Development Bank; Jack Coe of Pepperdine University School of Law; Susan D. Franck of the University of Nebraska College of Law; W. Michael Reisman of Yale Law School; and Javier Robalino of Perez Bustamante & Perez.
THE AFRICAN DEVELOPMENT BANK'S CONTRIBUTION TO THE HARMONIZATION OF INVESTMENT LAWS IN AFRICA AND PROSPECTS FOR FUTURE HARMONIZATION OF SUCH LAWS
By Adesegun A. Akin-Olugbade *
THE CASE FOR THE HARMONIZATION OF LAWS
There are fifty-three countries in continental Africa, and yet Africa accounts for only 2% of global trade. Four countries--Algeria, Egypt, Nigeria, and South Africa--contribute approximately 60% of this GDP while the other forty-nine countries account for only 40%. Several African countries are lagging behind in meeting the Millennium Development Goals and need substantial resources in addition to Official Development Assistance (ODA) to alleviate extreme poverty on the continent. These additional resources can only come from increased trade and investment through Foreign Direct Investment (FDI) and local investment. However, despite having signed over 500 Bilateral Investment Treaties (BITs) and 360 Double Taxation Treaties (DTTs), African countries still fail to attract substantial FDI.
Regional and sub-regional organizations or initiatives such as the Regional Economic Communities (RECs) and the New Partnership for Africa's Development (NEPAD) are mandated to promote investment, but this needs to be complemented by predictable and enforceable investment laws in order to deliver results. Harmonization of laws is particularly necessary in order to promote cross-border transactions, trade (including South-South and intra-African trade), regional integration, and private-sector development. Harmonization of investment laws will also complement positive trends in FDI flows to Africa (estimates range between two or three times ODA) and support the scaling-up of the African Development Bank's private-sector operations.
CONSTRAINTS TO THE HARMONIZATION OF LAWS
Several factors may be considered as challenges to the harmonization of laws in Africa:
The diversity of legal cultures and traditions: in addition to customary legal systems, (Roman) civil law, Roman Dutch law, Islamic Sharia law, and common-law systems co-exist on the continent.
The diversity of languages.
The absence of well-developed and efficient institutional arrangements to coordinate and facilitate the harmonization of business laws on the continent.
The difficulty of enforcing laws across legal boundaries in the absence of continent-wide supra-national enforcement or interpretation mechanisms.
NASCENT INSTITUTIONAL ARRANGEMENTS TO FACILITATE THE HARMONIZATION OF BUSINESS LAWS
The Organization for the Harmonization of Business Law in Africa (OHADA)
The OHADA was established by treaty in 1993 and currently has sixteen member countries, mostly francophone Roman civil-law countries. Non-francophone countries are Cameroon, Equatorial Guinea, and Guinea Bissau.
Mission: Its principal aim is to establish a modern and accessible system of unified business law in Africa--directly applicable in all the member states and superseding the national legislation on the subject concerned. While influenced predominantly by French civil law, its ambition is to create a truly African system.
Uniform Acts: To date, the OHADA has adopted eight Uniform Acts concerning general commercial law, corporate law, bankruptcy, securities, accounting, recovery and enforcement procedures, arbitration, and contracts for the transport of merchandise by road.
Common Court of Justice & Arbitration: The OHADA has established a supranational Common Court of Justice & Arbitration (CCJA) to ensure that the judicial interpretation of OHADA laws will sustain and not compromise their uniformity.
Limitations: One of the major challenges that the OHADA faces is the extension of its membership to African countries of the common-law tradition. Furthermore, the caseload of the CCJA has not reflected its membership coverage, and the CCJA suffers from severe funding constraints.
The African Law Institute (ALI)
The ALI was launched in Durban, South Africa, in 2002 after a preparatory meeting held under the auspices of the ADB in Abidjan, Cote d'Ivoire, in 2001.
Mission: The mission of the ALI is "to serve as an independent non-governmental centre of professional excellence, a think-tank, and a research centre on law and law-related matters including promoting the clarification, simplification, and harmonization of laws that affect the socio-economic development of African States."
Structural Arrangements: The ALI has a Board of Governors and an Executive Secretary (currently interim).
Model Investment Law: A cooperation between the Commercial Law for Development Program of the U.S. government and ALI has resulted in the preparation and adoption in December 2003 of a model law on investment in Africa designed to help improve the legal incentives for investment in sub-Saharan Africa. This ten-article law incorporates both civil and common-law principles and best practices in the area of international investment.
Limitations: The ability of the ALI to fulfil its ambitious continent-wide mandate is limited by its capacity and financial constraints.
The Regional Economic Communities (RECs)
Africa has eight RECs officially recognized by the African Union, as well as a number of others. Each REC has a different mandate with different emphasis on the promotion of investment and the harmonization of laws.
On March 24, 2007, in Lome, Togo, ECOWAS experts adopted harmonized laws on competition and investment. However, the number of RECs, their differing mandates, the fact that they overlap in a number of countries, and their limited institutional capacity may impede the harmonization effort at the continent level.
The African Union (AU)
A successor to the Organization of African Unity (OAF), the AU was formally launched at the Durban Summit (2002) where the first assembly of the heads of states of the AU was convened.
Mission: The AU is Africa's premier institution and principal organization for the promotion of accelerated socioeconomic integration of the continent; among the objectives of the AU is the coordination and harmonization of the policies between the existing and future RECs.
Institutional Structure: The institutional structure, when fully established, will include an Assembly, an Executive Council, a Commission; a Permanent Representatives' Committee, a Peace and Security Council (PSC), a Pan-African Parliament; an Economic, Social and Cultural Council; a Court of Justice and Specialized Technical Committees.
Harmonization strategy: The 2004-2007 Strategic Framework of the Commission of the AU and its Plan of Action contain components for the Harmonization of Business Laws.
Limitations: The AU remains a very young organization which needs to build its institutions and strengthen its capacity.
THE BANK'S ACTIVITIES IN THE FIELD OF HARMONIZATION OF INVESTMENT LAWS
Regional integration and regional projects in Africa need an honest "broker" to succeed, and the ADB is increasingly assuming this role, consistent with its mandate and purpose. The ADB adopted a Good Governance policy in 1999. The ADB implements the legal and judicial reform aspects of this policy through its Law for Development Strategy, adopted in 2001. The adoption of modernized and harmonized laws and the assistance in building the requisite legal and judicial infrastructure for the implementation of these laws constitute one of the pillars of the action plan of the ADB. The Law for Development Strategy also places particular emphasis on regional harmonization in approaches to legal and judicial matters.
Support to ALI
The ADB has played a catalytic role for the creation and operation of the Institute by providing technical and human resources as well as financial backing.
Support to OHADA
Recent support includes a grant of nearly $175,000 to finance a central database of the Commerce and Real Estate Credit Register, a grant of nearly $1 million to the CCJA, a grant to support the OHADA advocacy initiative towards an integrated common-code of justice in West Africa. The ADB is also encouraging the consultations with Anglophone countries of Africa.
The Investment Climate Facility (ICF)
An AU/NEPAD initiative, the ICF was formally launched on June 1, 2006, at the World Economic Forum in Cape Town. An independent trust established for seven years, the ICF will support the design and implementation of investment climate reform programs. The ADB is currently in the process of submitting to its decision-making authorities a proposal to support this facility.
Research and Publication
The ADB's Legal Services Department publishes:
* the Law for Development Review, a scholarly law review on topics germane to legal discourse in Africa, published once every two years; the first issue of the Review (2006) contains an extensive review and analysis of the Model Investment Law for Africa which is described above;
* the Law for Development Bulletin, an annual legal publication highlighting some of the key activities of the Bank in the preceding year and underscoring some significant developments by the Bank that affect legal and judicial reform work in Africa; the 2004 and 2006 issues of the Bulletin contained articles describing the harmonization of business laws and legal and judicial reform in Africa.
CONCLUDING REMARKS AND THE WAY FORWARD
A growing number of legal scholars and development law practitioners consider that in the context of investment laws, legal doctrines, and principles underpinning the differences between the diverse legal systems of the African continent may not be as wide as was earlier believed. However...