Stéphane Brabant, co-Chair of the Africa Practice interview with Business Africa Magazine

Business Africa Magazine has published an interview with Stéphane Brabant, who is the co-Chair of the firm's Africa Practice and a business and human rights specialist, which discusses concerns over respect for the Rule of Law in certain African jurisdictions. 

Translated extracts. The original full interview published in French by Business Africa on 19/04/2019 is available here

Stéphane Brabant, Partner and Co-Chair of Africa Practice Group
HERBERT SMITH FREEHILLS

In collaboration with

Me Syvain SOUOP, Avocat d'Affaires – Souop Law & Finance – Member of the Youandé (Cameroon) Bar Association

As a lawyer and legal practitioner with a focus on Africa, how do you see the practice of law on the continent?
We need to look at things in an African context. When independence came, the first heads of State were focused on building nation-States. The extremely diverse ethnic makeup of these new countries encouraged the development of strong central powers. Unfortunately, in certain countries those powers were misused and the law was not always followed.

Today, we see that the way in which power is exercised in some African countries is still not consistent with what, for the sake of simplicity, I will refer to as the "rule of law". As understood in the Anglo-Saxon tradition, this means the entire body of laws enforceable over all individuals and entities in a given society. According to Franklin Nyamsi, the rule of law is "Africa's greatest challenge in the 21st century".

In your view, what are the main reasons for this?
Some countries lack objective, transparent oversight of the executive and judicial branches. Is this because of solidarity between certain groups of people? Systemic corruption? The reliance of some Governments on the military, or on a harsh security apparatus? The influence of foreign powers or interests? In each case different factors may combine to prevent public institutions from playing their roles fully and effectively.

Yet the number of counterexamples is rising as many countries take steps to resolve these issues. However it will take time and political determination to overcome certain practices. Like elsewhere in the world, this change must begin at the top. Only then can the principles of good governance legitimately be imposed on everyone, spreading to the private sector which sadly has often been "contaminated".
Along with certain African intellectuals, it could also be reasoned that there needs to be a more coherent relationship between the institutional structures in certain African States and the realities of their cultural environments.

Don't individuals also bear responsibility?
For political leaders to overstep the powers entrusted to them is almost "human", but for the sake of the people who elect them, there must be a penalty for doing so. Montesquieu wrote in The Spirit of the Laws that "Experience in all ages has proved that every man who possesses power is inclined to abuse it; he goes on exercising it until he comes up against the limits. Who may say? Virtue itself needs limits".

The problem is precisely that where there is no rule of law, there is, by definition, no assessment, admissibility or accountability, much less a penalty. In certain countries in Africa, local and foreign investors alike run into situations where the rule of law – and therefore governance – is either lacking or very weak. In such cases, either they ultimately choose not to invest or to withdraw, or they limit the risks as much as possible by protecting themselves through increasingly costly and complicated contractual structures.

On similar lines, isn't the growth of arbitration also a sign that State legal systems are failing?
Not necessarily. The mechanism of international arbitration is different; selecting the appropriate arbitrators makes it possible to debate a company's business and argue its disputes on a more international footing, one that is better suited to foreign investments.

It is true, however, that the more unstable a national legal system is, the greater the tendency to opt for arbitration. Certain countries have followed the example of the 17 OHADA Member States, and encouraged the use of arbitration to resolve contract disputes in the interests of greater legal certainty. But arbitration cannot resolve every issue, and many disputes involving criminal or employment law, for example, are exclusively within the jurisdiction of local courts. A State that follows the rule of law therefore remains a key condition for investors seeking legal stability and certainty.

In mining, petroleum or infrastructure projects requiring significant long-term investment, investors generally prefer arbitration for their disputes with host States. It is also worth noting that banks also insist on this type of dispute resolution as a condition to the financing of projects in Africa.

In the end, the most important factor is to develop trust in the national system. To do this, political will is all that really matters, but unfortunately political will is often expressed in words rather than in actions. Everybody ends up disappointed, in particular investors, entrepreneurs and local populations.

Another path worth exploring is structured, voluntary mediation. Here it is worth pausing to congratulate OHADA for having adopted specific laws on mediation, which came into force in 2018.

What political solutions might be found? Legal reform? Better staff training in the judicial branch?
Despite what some say, African laws are generally very well structured, although certain texts can be difficult to access (although this is less and less the case). We need not have concerns about the law itself, or about the capabilities – especially the technical skills -- of those who work in the legal system even though, like everywhere, there is always room for improvement (for example tax audits in some countries in Africa lead to extravagant tax adjustments at confiscatory rates). Sadly, what usually tips the scales against justice in certain jurisdictions is corruption.

Again, changing this state of affairs requires political will more than anything else. In parallel, as some have suggested and following the examples of other countries, consideration could be given to granting better status to judges and, probably, other parts of the civil service.

Generally speaking and like elsewhere globally, it is important to cultivate and maintain awareness of the harmful effects of corruption and the need for a sense of civic responsibility, starting at school.

I readily admit that certain investors could demonstrate more civic responsibility themselves through more balanced contractual arrangements, and by refraining from using tax workarounds and respecting the rights of all stakeholders in a project, especially the local population. As well as raising awareness, corrupt behaviour needs to be tackled more assertively through clear, universally applicable anti-corruption legislation.

There are some promising signs of change, especially among certain African entrepreneurs and politicians, offering legitimate hopes for the future. As the University of African Knowledge (Université des Connaissances Africaines) has repeated time and again, social innovations on the ground are slowly bringing the rule of law into alignment with local dynamics in Africa. This entrepreneurial trend, the effects of which have become increasingly noticeable in recent years (in local investment, property investment, and the growth in financial services and microfinance), has prompted the holders of executive power to cooperate with economic stakeholders to improve the business environment. African Governments have realised that in doing so they generate a virtuous and unstoppable circle of development that will ultimately lead to the emergence of the entire continent for the mutual benefit of all. It should be noted that creating this type of economic development cycle is a long, multidimensional learning process and the benefits are spread over the long term, generating far more prosperity for the population as a whole, than for the individual through short-term individual arrangements.

For more information, please contact Stéphane Brabant or your usual Herbert Smith Freehills contact.