Inside Africa blog

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Protection for Foreign Investors in the DRC

Julia Belcher
Deborah Ruff

The Democratic Republic of the Congo (the DRC) is one of the largest countries in sub-Saharan Africa. It is also one of the richest in natural resources, a substantial proportion of which are still untapped and estimated to be worth over US$20 trillion. The country is particularly rich in minerals and precious metals; unsurprisingly,  mining is one of the  dominant sectors of the economy. 

Following the civil war which engulfed the country in the late 1990s and early 2000s, in the last decade the DRC has been largely successful in attracting foreign investment. The country’s economy remains largely unaffected by the global financial crises, and even the effect of the downturn in the global commodity prices. Drawn to a relatively stable economy with a good growth rate and a sustained positive economic outlook, foreign investment has been pouring into the country, particularly into the energy, mining, transportation and agricultural sectors. 

Does the country offer international investors a good level of protection?

There is no doubt that in the recent years the DRC’s government has initiated a wide array of measures to attract investors and improve protection, from fiscal and macroeconomic reforms to the creation of the legal framework for Special Economic Zones – physical spaces which will facilitate access to essential infrastructure and provide a simplified mechanism for business operation.

The DRC has signed (although not yet ratified, with the exception of those with France, Germany, Switzerland and the USA) a number of bilateral investment treaties with other countries, and is in the process of negotiating new ones. Furthermore, two years ago, the DRC joined the Organization for the Harmonization of Business Laws in Africa (OHADA), whose aim is to create a better investment climate in the member countries through Uniform Acts on various aspects of business law including modernising business code and standardising contract enforcement.

As regards dispute resolution and enforcement, the DRC is a member of the ICSID Convention. Currently there are no reported disputes pending resolution, though the DRC has previously been sued nine times in ICSID proceedings (mostly in the mining sector). In February 2015, the DRC became a contracting state to the New York Convention, albeit with certain reservations, as set out in the DRC’s legislation facilitating its accession, namely: reciprocity, commerciality, non-retroactivity and non-application to immovable property or related rights. The latter reservation is the most important one, as it potentially carves out disputes relating to mining rights from the scope of the Convention.

Under OHADA, the DRC adopted the Uniform Act on Arbitration, which sets out the basic rules applicable to an arbitration with a seat in an OHADA member state. The OHADA regime has created institutional arbitration under the auspices of the Common Court of Justice and Arbitration based in Abidjan, Côte d’Ivoire, and also provided for ad hoc arbitration. The Common Court administers dispute resolution process under the OHADA regime, and hears commercial appeals from national courts of OHADA member countries.  Arbitration awards rendered under OHADA have the same legal effect as judgments rendered by national courts.

Will these efforts increase the confidence of investors into the country? It is difficult to say. The DRC has been successful in attracting Chinese and Indian investors into the mining, forestry and infrastructure sectors. It is hoped that political uncertainty will not destabilise the country and dampen investor appetite.

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