ENFORCEMENT OF CONTRACTS ENFORCEMENT element of constraint involuntary

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 contract 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 S 199 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 ARBITRATION. COURT OF JUSTICE AND 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 VIII- Unfortunately 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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