Download enforcement of contracts

ENFORCEMENT OF CONTRACTS
ENFORCEMENT:
element
of
constraint, involuntary execution as
opposed to voluntary performance and
voluntary execution.
ENFORCEABILITY: deals with validity
of a contract, and the terms and
provisions that ensure the validity of the
contract.
I- Formation of a valid contract
COMMON LAW:
−an offer
−an acceptance
−the intention to create a legal relation,
−the legality of the obligations.
CIVIL CODE:
Agreement between one or more persons to give or
to do something. S. 1101 Civil code
Consent, capacity, subject mater of engagement ,
and lawful legal obligations S. 1108 CC
WHAT CAN VITIATE A CONTRACT
 Lack of consent (S.1109 of Civil Code),
- Mistake,
duress, Fraud etc.
- Effect - nullity- voidable
 Lack
of capacity of contracting parties
Party must have the capacity or be
represented by someone with required
capacity. (S.1123 of Civil Code),
-
The legality of the contract (S.1131 of
Civil Code)
-
Law Prohibits illegal causes or a cause
contrary to Public policy.
The cause must not be immoral.
-
II- FORMS OF CONTRACTS



General rule is that parties are free to choose the form of
their contract.
ORAL
- Section 240 – OHADA Uniform Act GCL.
- Leases, Sale.
- Some labor contracts – any proof will suffice to show
existence of K.
WRITING
- Security agreements- Pledges, mortgages, etc.
- Labor contracts of specified duration, Expat, temps,
probationary hiring, etc.
- Sale of business, lease management –S, 138,139 and
149- OHADA Uniform Act GCL.
ELECTRONIC
− Section 10 of law N°2010/021 of December 21,
2010 on electronic trade,
− Section 12 (1) A contract can be considered as validly
concluded only if the offeree previously had the
opportunity, to check the details of his order and its
total price, and to correct any errors before confirming
it in order to express acceptance.
− Section 9 of Decree nº 2011/1521/PM of June 15,
2011 settling the modalities of implementation of law
N°2010/021 of December 21, 2010 on electronic
trade.
III- OTHER ISSUES OF FORM AFFECTING
ENFORCEABILITY
 NOTARIZATION
OF CONTRACTS
− Mortgages, sale of land, Articles of Association of
companies.
S. 201 of OHADA Uniform Act on securities,
S. 5 of Decree No. 79-17 of 13 January 1979 on private real
estate transactions.
S. 354 and 355 of the General Tax Code.

REGISTRATION ( S. 276 GTC) within:
− 1 month Notarized Agreements,
− 3 months for others- loans, leases, sales, assignments, etc.
STAMP DUTY: same as above
 FILING AT THE RCCM: S. 50 (2) UA on Securities) –
Securities on movable properties.
 Renewal of the filing: (Sections 58 (3) of Uniform Act on
securities). 10 years, but parties may agree on lesser period.
 Filing at the land registry of mortgages S.195(1) of the
OHADA Uniform Act on Security);
 Consequences of not filing:
Contract is not binding on third parties and unenforceable
against third parties. The contract is not perfected..
 Consequences of non-registration
Cause of action in court based on unregistered K not
entertained
Liability of judges may be engaged for non-compliance.

IV-THE PROVISIONS OR FORMALITIES MADE IN
ANTICIPATION OF EFFICIENT ENFORCEMENT:





1)
2)

Notarisation- giving effect of final judgment
Penalty clauses
Warranties: covers, undertakings, to cover issues
discovered during Due Diligence and KYC
discoveries prior to contract.
Securities and undertakings in Finance
transactions, exhaustive list of events of defaults
that would trigger enforcements.
Collateral
Surety bonds,
Autonomous guaranty- third party
Securities – pledges, mortgages, pledges of business,
bank accounts, assignment by way of security, pledge
of IP assets etc
V- OTHER PROVISIONS IN ANTICIPATION OF
EFFECIENT ENFORCEMENT:
•
Choice of Law and venue
• Disputes Resolution Clauses:
 Litigation or Arbitration

Specific performance; Injunctions (S. 1 & seq
OHADA Uniform act on Simplified recovery procedures);

Provisional measures through competent or
specialized courts.
Provisions for direct attribution of secured asset to
lender in event of a default
Uniform Act on Simplified Recovery Procedures
-pledge of receivable S 85(1) and 91(2)
-Pledge of movable property S 104(2)
-Mortgage of building S 198 and S199
 Problem?-- “Cautio Judicatum Solvi” For foreign
investors, foreign contracting parties.

How can it be resolved contractually,? Contract to
provide for a cap in the agreement of direct waiver of
the right.
1- LITIGATION BEFORE THE COMPETENT COURT
A- Simplified recovery procedures provided by the
OHADA Uniform Act
B- Measures of execution OHADA Uniform Act on recovery.
Provisional/Attachment/ sequestration
S. 54-89 of OUA Simplified Recovery Procedures):


Seizure for sale S. 90- 152:

Garnishee proceedings S.153-172)
Attachment and transfer of earnings. S. 173-217
 Attachment of partnership rights and transferable
securities S.218-245
 Attachment of real property S.246-323

C-Role of bailiffs during execution:
Key role, diligence or complacency would affect efficiency of
enforcements
APPEAL PROCEDURES

Appeal of Lower Court decisions within a deadline of 3 months
after the pronouncement of the court judgment.

Appeals irrespective of their validity would slow enforcement
A- Courts of Appeal
The court of appeal is competent to hear appeals against judgments
delivered by lower courts, with the exception of those delivered by
the Supreme Court and the Court of Appeal Itself;
Duration of appeal process slows enforcement especially frivolous
Appeals
B- SUPREME COURTS
Stay of execution CA rulings and judgment pending Supreme Court
reviews
S C is only instituted to control the regularity under the law of
decisions and judgments rendered in last resort by the courts and
tribunals. It is competent to hear Commercial matters, be it civil, or
commercial.
C- THE COMMON COURT OF JUSTICE AND ARBITRATION.
Commercial matters from high courts or appeal courts can be appealed at the
level of the CCJA. The Court reviews the decisions pronounced by the
appellate courts of Contracting States in all business issues raising
questions pertaining to the application of Uniform Acts and to the
Regulations provided by the OHADA Treaty (S.14 of the OHADA Treaty).
The judgments of the CCJA are final and conclusive (S. 20 of OHADA
Treaty). a decision contrary to a judgment of the CCJA cannot be lawfully
executed in a territory of Cameroon.
INCIDENTAL PROCEDURES TO FRUSTRATE
EXECUTION PROCESS

Incidents occurring during execution- oppositions

Contestations relating to procedures of execution
e.g. mistakes, abuses by bailiff,

Multitude of Enforcement disputes
B.ARBITRATION
• OHADA Uniform Act provides for local arbitration. Awards are
enforced after obtaining exequatur from competent courts
• Awards are not appealable- except action for nullity at court of
appeal but grounds are limited
• Exequatur is obtain via a motion exparte
• Cameroon is a signatory of the "New York" Convention of 1958, on
the Recognition and Enforcement of Foreign Arbitral Awards.

Also, Cameroon is, since September 23, 1965, a signatory of the
International Convention on the Settlement of Investment
Disputes (ICSID), between States and Nationals; which entered
into force on February 2, 1967.(S.21 and 22 of the OHADA Treaty).
VI-
PROBLEMATIC AREAS
1.
Translation of Arbitration awards
2.
Delays in obtaining exequatur – wrong application by local judges
Enforcement against companies with Public Capital
Enforcement of contracts against Public Companies governed by private
law is still problematic which is the extension of immunity of execution of
the state
4. Enforcement against the state: state immunity of execution
Effects of a Waiver of immunity by the state
 The waiver of immunity of action:
 The waiver of immunity of execution
S. 30 (1) and (2) of OHADA Uniform Act on Simplified Recovery
Procedures
3.

VII- ADVICE TO INVESTORS
Prior to the signature of a contract, an investor or
contracting party should look for:

A proper counselling upstream;
A local Expert that can explain the tax implications of the
proposed contract;
Anticipation ligations and make cautionary provision
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VIII- Unfortunately
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
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Volume of pending procedures quite high
Duration to complete an enforcement (easily 800 days)
cost of claims, filing, services, registration, security for
cost of enforcement.
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Thank You