CCJA Arbitration: 10 things Turkish investors should know when investing in West Africa
African economies are rapidly growing despite continuous difficulties arising from low commodity prices. Other industries, related to the continent’s natural resources, infrastructure, banking and telecommunication projects, are also booming and such growth naturally creates the potential for legal disputes. For example, China’s so-called Belt and Road Initiative has invested billions of dollars into infrastructure projects in Africa creating high levels of debt which may, ultimately, prove to be unsustainable leading to substantive legal disputes.
In recent years, Turkey has also increased its engagement through investments in Africa. Although these undoubtedly contribute to the development of the continent and have the potential to provide excellent return on investment, it is important that Turkish investors be aware of opening the door to potential disputes. In 2018, Turkey became, for the first time, one of the top 10 countries represented in arbitration proceedings before the International Chamber of Commerce (ICC). With 62 Turkish parties involved in proceedings, this tendency is expected to rise in the coming years1.
Although African-related disputes have traditionally been settled in Paris or London under the Rules of the ICC or the London Court of International Arbitration (LCIA) Arbitration Rules, many African jurisdictions have developed their own arbitration centers with comprehensive rules. In West Africa, the Organization for the Harmonization of Business Law in Africa (OHADA), which comprises 17, mostly francophone, Member States2 and provides for an arbitration institution, the Cour Commune de Justice et d’Arbitrage (CCJA), based in Abidjan, Cote d’Ivoire. Various leaders of African States have contributed to the growing popularity of the CCJA by expressly pronouncing their desire to require that all disputes arising out of foreign investments be submitted to arbitration under CCJA rules3.
The Rules of Arbitration of the CCJA (CCJA Arbitration Rules), which were last updated and revised in 2017, provide for a modern arbitration framework, similar to the rules of the ICC or other modern arbitration institutions, and take into account recent developments in international arbitration. Although the rising trend of CCJA arbitrations should not be a cause of concern for Turkish investors, given the recent increase in interest in this dispute mechanism, Turkish investors may wish to become familiar with the specific features and scope of the CCJA Arbitration Rules.
Below, we outline the 10 main features of the CCJA Arbitration Rules:
1. The dual role of the CCJA
The CCJA is a one-of-a-kind institution as it is both a supranational court responsible for supervising the consistent interpretation and application of the various OHADA uniform acts and an arbitration institution.
Moreover, in this dual role, the CCJA not only administers arbitration proceedings like other arbitration institutions such as the ICC, but it also has the powers to set aside CCJA arbitral awards and to grant an exequatur valid in all OHADA Member States.
2. CCJA arbitration / UAA arbitration
In addition to the creation of the CCJA, the OHADA also enacted the Uniform Act on Arbitration (UAA), which constitutes a common arbitration law for all 17 OHADA Member States. The UAA is similar to Turkish Law No. 4686 enacted on 21 June 2001.
The coexistence of two sets of arbitration rules within the OHADA – the CCJA Arbitration Rules and the UAA – is sometimes confusing for foreign investors. What should be borne in mind is that the CCJA Arbitration Rules are applicable when the arbitration agreement between the parties refers to the CCJA arbitration and i) when one of the parties is either domiciled in an OHADA Member States or ii) when the contract was performed or must be performed either in part or in whole in the territory of an OHADA Member State. The UAA, on the other hand, is applicable when the seat of arbitration is located in an OHADA Member State (with the exception of some provisions of the UAA regarding the recognition of foreign awards that apply to arbitral awards made outside of the OHADA).
Even if in most CCJA arbitration proceedings the seat of arbitration will be located in the OHADA region and the UAA will be the lex arbitri, it stems from the above that it is also possible for a CCJA arbitration to be seated outside the OHADA region4. Although this option may seem tempting for foreign investors, it should be carefully considered as this approach may lead to parallel proceedings regarding set-aside proceedings of arbitral awards, which could be heard before both the courts of the seat and the CCJA.
3. Constitution of the Tribunal
Parties are free to decide whether the arbitral tribunal will be composed of one or three arbitrators. To facilitate the appointment of qualified arbitrators, the CCJA annually draws up a list of appropriate individuals. It should be noted that this list includes a wide variety of profiles (i.e., academics or practitioners) and that most of arbitrators on the list are of African nationality (primarily from OHADA States). Parties are also free to nominate arbitrators from outside of the CCJA list. Selection of an arbitrator should be done carefully on the basis of their experience and the nature of the dispute.
Where the parties have agreed that the dispute shall be settled by a sole arbitrator, the latter will be appointed by mutual agreement of the parties subject to confirmation by the CCJA. Failing mutual agreement by the parties, the CCJA will appoint an arbitrator.
Where the dispute is to be referred to three arbitrators, each party shall request, subject to CCJA confirmation, the appointment of one arbitrator in the request for arbitration with the third arbitrator designated by the CCJA. The parties also have the right, however, to agree that the two designated arbitrators shall appoint the third arbitrator within a given time limit.
4. Speed
CCJA Arbitration Rules provide for a speedy conclusion of the proceedings. This usually tends to be faster than the ICC with regards to the scoping meeting to determine the merits and the claim which will be settled as well as the provisional timetable for the arbitral proceedings5. In practice, however, the conduct of the proceedings does not always comply with the timetables provided for under the CCJA Arbitration Rules. One reason for this is that given the dual role of the CCJA and the limited number of sitting judges (nine) the Court often has a backlog of cases.
5. Confidentiality
Unlike the ICC rules of arbitration, CCJA Arbitration Rules provide that all participants to a CCJA arbitration (parties to the dispute, arbitrators, experts and any person involved in the arbitral proceeding) are subject to confidentiality. This confidentiality rule also applies to all documents submitted to or drafted by the Court. The CCJA Secretary General may, however, publish excerpts of CCJA awards provided that the parties to the dispute remain anonymous.
6. Fees
The total costs of CCJA arbitrations (including the fees of the arbitrators and of the CCJA) tend, in practice, to be lower than those of the European arbitration centers such as the ICC or the LCIA.
The parties are not entitled to directly agree arbitrators’ fees. The CCJA alone is entitled to determine and approve the fees of the arbitral tribunal. It should be noted, however, that a breach of this principle does not constitute a valid ground to annul an arbitral award
7. Intervention and multiple parties/contracts
CCJA Arbitration Rules provide, subject to the consent of the parties, for third party intervention in the arbitral procedure. Such intervention may either be voluntary (unlike the ICC) or forced.
CCJA Arbitration Rules also include rules for arbitration proceedings involving more than two parties as well as for claims arising out of multiple contracts.
8. Advance on arbitration costs
Much like under ICC rules, parties to a CCJA arbitration are required to provide an advance to cover the cost of arbitration incurred by the claims and counterclaims. Payment of this amount, which is fixed by the CCJA, is shared equally between the claimant and the respondent. It is possible, to move proceedings forward, that one party may agree to pay the whole of the advance should the other party fail to pay its share. The amount of the advance on costs may be revised by the CCJA in the event new circumstances render such readjustment necessary. The CCJA may also fix separate advances on costs for the claims and the counterclaims if so requested by a party.
The arbitral tribunal shall then fix the costs of arbitration in the arbitral award and decide which of the parties is responsible for payment of these costs, or in what proportion costs are to be shared between the parties.
9. Annulment of the award
Any party subject to the arbitration may submit a request to the CCJA for annulment of the award on the following, limited grounds:
- the arbitral tribunal has ruled without an arbitration agreement or on an agreement that is void or expired;
- the arbitral tribunal was improperly composed, or the sole arbitrator was improperly appointed;
- the arbitral tribunal ruled without conforming to the mandate with which it has been entrusted;
- the principle of due process has not been respected;
- the arbitral award is contrary to international public policy; or
- the award fails to state the reasons on which it is based.
Parties are also free to waive their right to seek annulment of the award, provided the award is not contrary to international public policy.
The CCJA shall issue a decision on annulment within six (6) months of the referral of the matter.
10. Exequatur of the award
This is one of the main features of the CCJA arbitration. The exequatur of a CCJA award is granted after a limited review within fifteen (15) days of the filing of a request by the presiding judge of the CCJA or the judge appointed for this purpose and has effect in all OHADA Member States. Because the exequatur is valid in 17 member states, it can be very powerful during the enforcement phase where the debtor’s assets may be located in multiple countries.
Footnotes
1 https://iccwbo.org/media-wall/news-speeches/icc-arbitration-figures-reveal-new-record-cases-awards-2018/
2 The OHADA Member States are : Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Cote d'Ivoire, Mali, Niger, Senegal, and Togo.
3 The President of the Republic of Chad recently declared the requirement “to provide as a matter of priority for recourse to institutional arbitration by the CCJA” (report of the Chad Council of Ministers in March 2019)
4 Under the CCJA Arbitration Rules, the seat of arbitration can be freely determined by the parties and, failing so, will be chosen by the CCJA
5 Gaston Kenfack Douajni, Recent Developments in OHADA Arbitration, Global Arbitration Review, 2019
6 Under the CCJA Arbitration Rules, “any fixing of fees without the approval of the Court shall be null and void without it constituting a ground for setting aside the Award.” (article 24.4)
