At the OHADAC convention, which took place on 21 and 22 September 2015 in Pointe-à-Pitre, Guadeloupe, a special workshop was dedicated to “The OHADAC Model Law of Commercial Companies”. This text was written by the team of researchers and academics under the aegis of Professor Rodolfo Davalos Fernandez.

The panel was chaired by:

• Christophe Cuartero, lawyer at the Guadeloupe bar, standing in for the absent chair, Jamil Houda

and brought together the following speakers:

• Rodolfo Davalos Fernandez, Professor of Law at the Alma Mater University of Habana - President of the Cuban Arbitration Court - Cuba,
• Fernando Estéban de la Rosa, Professor of Law at the University of Granada - Spain,
• Rafael Arenas Garcia, Professor of Law - Universitat Autonoma de Barcelona - Catalonia - Spain,
• Omar de Jésus Fernàndez Jiménez, Professor of Law at the Alma Mater University of Habana - Secretary General of the Chamber of Commerce of the Republic of Cuba - Cuba,
• Sébastien Manciaux, lecturer at the University of Bourgogne, France.

Rodolfo Davalos Fernandez spoke first on the subject of “The OHADAC Model Law of Commercial Companies: its aim, structure and technical and regulatory characteristics”. He explained that business law responds to purely instrumental considerations and that its appearance and development is closely connected to the realization of objectives of social and economic integration of various countries in an area likely to create a common market, or to establish connections through the elimination of institutional barriers, such as fiscal obstacles, in order to create an extended economic area in which commercial operators can act in conditions that are analogous to those of a national market.

He added that it is in this context that the OHADAC Model Law of Commercial Companies pursues various objectives, namely to:

• clarify and ensure legislative cooperation that takes into consideration the respective legal traditions of these countries,
• maintain the legitimate freedom of the States,
• exchange information to better understand the regulations relating to commercial companies and legal systems,
• obtain harmonization whilst making economic relations more fluid.

He pointed out that the subject of commercial companies is, in international commercial law and private international law, one of the subjects which requires the most codification, whether this is through substantive uniformity or the harmonization of legislation, so that legal relations between the commercial companies of different countries are not affected by the differences in applicable legislation and so that the specific legal system of a foreign company, through a lex societatis, can be recognized in other countries without any major difficulty.

Professor Davalos Fernandez added that there was an international consensus in favour of recognizing groups of countries as legal entities, within which businesses maintain their independence and that these groups were a reality of economic development and generally well-received in the Caribbean area.

He finished by pointing out that, although the OHADAC Model Law tackles the question of insolvency, it is nonetheless the case that the approval of an OHADAC Model Law of Commercial Companies that aims to eliminate the differences between national legislation relating to the international activities of companies but which leaves each State the substantive ranking of internal activity, will contribute to a process of cooperation and provide international commercial operators in the Caribbean with an effective instrument for international trade, by providing the legal certainty needed for company regimes.

In fine, he emphasized that the Model Law made it possible not only to facilitate the work and role of the national legislator, but that it also provided entrepreneurs with useful tools for creating their codes and regulations.

Fernando Estéban de la Rosa then spoke about the “determination and reach of the lex societatis in the OHADAC Model Law of Commercial Companies: the system of establishing foreign companies” Professor Esteban de la Rosa introduced the proposals found in the Model Law of International Business Law, concerning the determination of the lex societatis and its field of application, as well as the system for establishing foreign companies, explaining that in the two cases the uniform rules proposed, both in terms of substantives and disputes, aim to provide legal clarity, thanks to a collection of rules that aim to ensure satisfactory treatment of the interests present, to the standardization of state requirements and the limitation of the establishment of foreign companies.

He explained that this was part of a framework that aimed to respect the different regulatory models of the states and territories of the Caribbean and that these legal standards need to be clearer and to favour the homogenization of the requirements of each State, taking inspiration from the progress made in business law and respecting private international business law.

He pointed out that Model Law stated a principle of non-discrimination of companies exercising their rights and that, currently, only two countries in the OHADAC area benefit from this protection and that it should be extended to the entire Caribbean area in order to rationalize international commercial law and to create legal flexibility, whilst guaranteeing its stability, regardless of the territory and field of activity concerned.

He added that, regarding business law, three possibilities has been accounted for:

• the law of the country in which the company is incorporated;
• the company has not been fully incorporated;
• the free will of the founding partners of the company (if it is not possible to determine which law applies to the company), with the lex societatis framing a series of questions: incorporation of the company, ability to act, internal procedures, the representation and responsibility of the company's commercial partners.

Regarding the recognition of foreign companies, Professor Estéban de la Rosa recalled that it has its legal basis in the Inter-American Convention, with recognition in one country leading to recognition by the other countries.

Regarding the establishment of foreign companies, he said that it was necessary to clarify the conditions required and to standardize them so that they correspond to the needs of parties and third parties.

He finished by explaining that, for joint ventures, it was important to determine the legal systems of external agreements, given that the Model Law recommends the respect of two laws.

Rafael Arénas Garcia spoke on “International structural changes to companies”, by explaining that a company's dynamic sometimes led to international changes, such as international mergers or splits; with the international transfer of the headquarters making it possible to adapt the company's form to the changing needs of the business activity.

He examined the Model Law's suggestions regarding this, looking at which form these operations would be regulated under and, in particular, the form in which the legal regulation of such operations would be structured, taking into account the different laws present, and the procedure relating to these changes, whether the companies involved would be governed by the laws adopted by the Model Law or whether other specific cases applied, particularly when it involves companies governed by the regulations of States that haven't adopted it.

He pointed out that the idea was still to favour economic integration in the context of increasingly international economic activity, whilst maintaining the States' control.

To do this, he explained that the regulations proposed need to take into account the differences in the laws of different countries in the Caribbean area as well as the experience in Europe, particularly in terms of the mergers of international companies and the transfer of headquarters, all the while guaranteeing the legal certainty and protection of parties concerned.

He outlined the main organizational principles inherent to companies:

• international mergers must be possible for States that have accepted the Model Law;
• approval of principles for the incorporation of companies;
• coordination between the competent authorities of the companies.

He closed by proposing regulations concerning the dissolution of companies present in multiple States.

Omar de Jésus Fernàndez Jiménez presented “Comments on the OHADAC Model Law relating to commercial companies”. In his opening remarks, he recalled that the 21st century had been characterized by globalization with an assimilation of international regulations by national legal systems and that the influence of various models had become a reality in the Caribbean and Latin American area. He expressed his regret that this increasing assimilation is not always analysed with a sufficiently critical eye, using concepts such as “diffusion”, “penetration”, “resistance” (when there is no “shock” or “competition”) to describe the effect produced by the various rankings and legal systems in the procedures for creating laws in other states.

He explained that the OHADAC Model Law addresses:

• fragmentation between different economic operators (see previous statement),
• the recognition of foreign commercial companies,
• the activities of foreign companies with or without establishment,
• the registering of foreign companies.

and that the challenge assumed by the OHADAC projects, and more specifically, that of the Model Law on Commercial Companies, consists of thinking critically about the future, taking the “best” of each system, with viable formulas, to obtain more legal certainty in the regulation of international commercial relations. He closed with some thoughts on the systems for subsidiaries of foreign companies in Cuba.

Sébastien Manciaux closed the workshop by presenting the “Report on the OHADAC Model Law of Commercial Companies”. He explained that the OHADAC model law of commercial companies project is of a very high-standard, but that its subject did not correspond to its title, in so much as, far from wanting to be a substitute for law relating to commercial companies in force in the Caribbean States (as is the case with the Ohada uniform act on commercial companies in the French-speaking States of West Africa), it is limited to the international activities of companies in the region.

He recalled that the OHADAC project on commercial companies included both dispute resolution regulations (laws and jurisdictions) and substantive rules (less numerous) and that it aimed primarily to determine the lex societatis, i.e. the law which will be applied to govern the incorporating, operation and dissolution of commercial companies in the Caribbean area, as well as their relationships with third countries, the proposed rules applicable to changes made to commercial companies (mergers, splits, transfer of headquarters, liquidation), and the phenomenon of groups of companies. He claimed that altogether it was a consistent text and that it addressed the most important issues raised by the international activities of commercial companies.

He explained that he felt some choices where still questionable, such as the law of the place of incorporation for determining the lex societatis, or the dissolution of companies being addressed under the Title dedicated to changes to companies rather than under the Title dedicated to liquidation.

He pointed out that the way in which Article 8.5 had been written created ambiguity: “the States will be able to exceptionally reject the recognition of the foreign company when its headquarters... are in the territory of another State” and said that several developments concerning the “nationality” of companies seem to be compulsory and would constitute a significant counterweight faced with the criterion of the selected place of incorporation to determine the lex societatis that allows for legal manoeuvring, not all led by good intentions. In this regard, he explained that the removal of the company veil enabled in the framework of a group of companies when it appeared that a subsidiary had only been created or used for fraudulent ends (articles 34(35) represents a first step towards the recognition of foreign companies, though it would nonetheless probably not be sufficient.

These talks were followed by discussions between speakers and convention attendees.

For further information, please contact:

Dr. Jean Alain Penda
Email: japenda@ohadac.com