DRC: Non-Transferability of Telecom Licenses Challenged by OHADA
The principle of non-transferability of telecommunications licenses challenged by the OHADA Law as a result of the accession of the Democratic Republic of the Congo to OHADA
Since September 12, 2012, OHADA Law (Organization for the Harmonization of Business Law in Africa) is directly applicable and binding, as a domestic positive law, in the Democratic Republic of the Congo (“DRC”). In accordance with article 53, section 2 of the OHADA Treaty, all provisions thereof, regulations and Uniform Acts (“OHADA Law”) adopted before the accession of the DRC come into force in the DRC sixty (60) days after the date of effective filing of the instrument of accession, which occurred on July 13, 2012.
Pursuant to article 2 of the OHADA Treaty, OHADA Law currently covers the following matters: legal status of merchants, debt collection and enforcement, security interests, bankruptcy and collective proceedings, arbitration law, labor law, accounting law, sales law , law on transportation of goods by road , commercial corporation law and Economic Interest Groups, as well as Law on cooperative enterprises . OHADA Law may be extended to other fields of law or to “any other matter that the Council of Ministers would unanimously decide to include therein” which may relate to the Treaty.
As of today, although OHADA Law does not have any Uniform Act on telecommunications or on telecommunications licenses, some provisions of certain Uniform Acts are directly applicable to the telecommunications sector in the DRC which may not only derogate from the rules of law enacted by domestic substantive law due to their supremacy, but may also challenge the governmental policy of the Congolese State on the transfer of telecommunications licenses in the DRC.
Therefore, the issue being discussed in this article is whether the principle of non-transferability of telecommunications licenses devoted by the domestic law is being challenged by the accession of the DRC to the OHADA.
To address this issue, we need to look at the legal basis of non-transferability of telecommunications licenses in the DRC (I), to define the concept of business goodwill as being transferable in accordance with OHADA Law (II), to review the transferability of business goodwill and its constitutive elements as described by OHADA law (III) in order to challenge the Congolese principle of non-transferability of telecommunications licenses with the principle of supremacy of OHADA Law over domestic law (IV) and with the principle of specialty of telecommunications law in OHADA General Commercial Law (V). Any representation or abusive, integral or partial reproduction, without the consent of the author, will be sanctioned by articles L335-2 and in accordance with of the Code of intellectual property.
I. Legal basis of non-transferability of telecommunications licenses
To define the legal basis of non-transferability of telecommunications licenses, we need to review the different types of telecommunications networks regulated in the DRC and the operation systems applicable thereto.
The Law 013/2002 of October 16, 2002 on telecommunications (« The Framework Law on telecommunications ») sets forth three types of telecommunications networks applicable throughout the whole country: the reference network or basic network, the licensee network of public services and the third-party network. To operate these three networks, the law organizes three systems whereby the Congolese Government calls upon private or public third parties for the exploitation of the public service of telecommunications. The three operation systems are: concession, authorization and declaration.
The major difference between the different systems lies in the nature of services to which they entitle and in the types of operating license which relates thereto. The different systems and related types of licenses are the following:
1. The Concession system is established through the concession of telecommunications public services by the granting of an operating license to the licensee to provide services for fixed telephonic operations and telex; the setting up and operation of radio networks as well as network of telecommunications open to public.
2. The Authorization system is applied to telecommunications services other than the services covered by the concession system and uses hertz frequencies provided that the applicant receives the authorization and specifications from the Regulatory Authority after approval by the Minister.
3. The Declaration system is related to telecommunications activities other than those subjected to the previous systems, in particular the publication of lists of subscribers to networks open to the public, through a prior declaration to the Regulatory Authority of telecommunications, which provides required guidelines for operation of such telecommunications services.
Actually, the operating systems of telecommunications networks grant each beneficiary the intangible right to operate in such networks through telecommunications operating license for the concession of telecommunications public services, the authorization issued to use hertz frequencies and the declaration particularly for the publication of lists of subscribers to networks open to the public.
In accordance with the current Congolese legislation on telecommunications, such intangible rights are moveable and non-transferable rights as they are granted in consideration of the individual applicant. Paragraph 1, article 42 of the above mentioned law clearly states that “licenses of concessions of public telecommunications services and authorizations granted under the law are granted in consideration of the individual applicant and are non-transferable.”
II. Transferability of business goodwill and elements of business goodwill in OHADA law
The review of the Unified Act on general commercial law shows that business goodwill is described as a set of means, which enables the merchant to attract and maintain customers. The business goodwill necessarily includes customers and trade name or customers and the business name, without prejudice to the addition of customers and trade and business names. It may include different movables, tangible and intangible assets including operating licenses.
The business goodwill is transferable. It may be transferred as a whole or each element forming the business as for example, an operating license, may be separately transferred. The word « Operating Licenses » does not have a restrictive definition. Therefore, it concerns any operating license or authorization, even a granted public service, such as operating licenses of telephonic networks, mining, oil or gas licenses, unless a specific text limits the transfer or subjects the transfer of business goodwill or its elements to specific conditions or formalities. Thus, it is advisable to indicate that such texts do not prohibit the transfer of business or elements thereof, but they depart from general sales law as described in the Civil Code.
III. Non-transferability of telecommunications licenses challenged by the supremacy of OHADA Law
During the accession process of the DRC to OHADA, some people stressed that the principle of non-transferability of telecommunications licenses included in the Framework Law on telecommunications was doomed due to the supremacy of the Uniform Acts, in particular the AUDCG in respect of the transferability of the business goodwill and/or elements thereof.
In support of this assertion, they highlighted article 215 of the DRC Constitution which stipulates that international treaties and agreements lawfully entered into have, upon their publication, an authority higher than the authority of laws. Thus, as they have an authority on laws, the OHADA Treaty has imposed supremacy of its regulations and Uniform Acts, including the AUDCG, to any Congolese laws and regulations as described in article 10, which stipulates: « Uniform Acts are directly applicable and binding in States members notwithstanding any opposite provisions of domestic, previous or subsequent laws ».
In this case, as a result, OHADA law, as from its entry into force, replaces domestic rules formerly applicable which are contrary to the legal status of merchants, transfer of business goodwill and essential elements thereof. In this respect, the Common Court of Justice and Arbitration (« CCJA »), delivered two opinions: opinion 002/99/EP of October 13, 1999 of the Malian Government and opinion 001/2001/EP of April 30, 2001 of the Ivorian Coast Government to reassert the supremacy of OHADA law over domestic law of States members of the OHADA Treaty.
According to the opinion 002/99/EP of October 13, 1999, the CCJA confirmed the principle of direct applicability and the repealing effect of the Treaty and Unified Acts over domestic law by asserting that « article 16 of the Malian Bill derogates from article 39 of the Unified Act because it enacts new, compulsory and restrictive requirements for the debtor to benefit from the grace period and is therefore contrary and inconsistent with article 39 of Unified Act on Simplified Recovery Procedures and Enforcement Measures (AUPSRVE).»
Furthermore, according to the opinion 001/2001/EP of April 30, 2001, the CCJA confirmed that the provisions of the Unified Act on Commercial Companies and Economic Interest Groups are of public policy nature and applicable to any commercial corporations regardless of their form and purpose. Such Act also governs companies subject to a specific regime. However, concerning these companies subject to a specific regime, such specific rules remain in force in accordance with article 916, paragraph 1 of the Unified Act on Commercial Companies and Economic Interest Groups (AUDSCGIE).
Therefore, concerning the transfer of business goodwill or elements thereof, some authors have concluded that because of the direct applicability and the repealing effect of the AUDCG, article 42 of the Framework Law on telecommunications which is the legal basis of the non-transferability of telecommunications licenses is deemed repealed because it is contrary to the AUDCG. The State should stop interfering in transactions or transfers of Licenses between telecommunications operators and third parties.
IV. Non-transferability of telecommunications licenses with regard to the specification of telecommunications law
In reaction to the theory developed above, other authors voiced that the AUDGC would not challenge and revoke article 42 of the Framework Law on telecommunications because the Framework Law is a specific act. They rely on the principle “Specialia generalibus derogant” (special laws derogate from general laws).
Such authors base their point of view on the fact that the AUDGC provisions on the transfer of business may not be applied to telecommunications activities in the DRC to the extent that, such activities are not within the scope of OHADA law in accordance with article 2 of the Treaty, which defines its areas of applicability, and in accordance with article 147 of the Uniform Acts, the transfer of business goodwill complies with general rules of sales, subject to specific texts of certain commercial activities. For such authors, article 42 of the Framework Law of October 16, 2002 on telecommunications in the DRC is a specific text on telecommunications activities in the DRC. And, such text specifies that licenses of concession of public telecommunications are granted in consideration with the individual applicant and are non-transferable.
Also, based on the final section of the opinion 001/2001/EP of April 30, 2001 of the CCJA, such authors notice that by confirming the supremacy of the Uniform Acts of OHADA Law, the CCJA, however, rules that for companies subject to a specific regime, those specific legal provisions to which such companies are subject shall remain in force.
Thus, by combining article 147 of AUDCG and paragraph 1 of article 916 of Uniform Act on Commercial Companies and Economic Interest Groups, the authors of such theory affirm that article 42 of the Framework Law on Telecommunications in the DRC is a specific text subject to the regime and activities of public services of telecommunications in the DRC. Consequently, non-transferability of licenses of Congolese public telecommunications services as provided in article 42 of the Framework Law on telecommunications does not violate the OHADA law.
At a first glance, the issue on non-transferability of telecommunications licenses seems to be regulated by the Framework Law 013/2002 October 16, 2002 on telecommunications in the DRC.
However, after benchmarking, we are of the opinion that article 42 of the Framework Act on telecommunications in the DRC which prohibits the transfer of telecommunications licenses is not a specific text as understood in article 147 of the AUDG which enshrines the principle of transferability and provides for the possibility to depart from it by organizing the sales in accordance with specific texts. This is, however, not the case for article 42 of the Framework Law of 2002.
In our opinion, article 147 of the AUDG concerns specific texts other than the text of article 42 of the Framework Law which strongly prohibits the transfer of telecommunications licenses in the DRC.
Given the impasse, we believe that the DRC Government should submit to the Common Court Justice of Arbitration (“CCJA”) the issue whether the specific provisions of article 916, paragraph 1 of AUDSCGIE, as well as the provisions of article 147 of AUDCG are applicable to commercial corporations subject to a specific regime, such as telecommunications companies, since specificities common to the telecommunications sector require certain adaptations that are not taken into consideration by the Uniform Act on General Commercial Law, the Uniform Act on Security interests or the Uniform Act on Commercial Companies and Economic Interest Groups.
OHADA Treaty, called by Contracting Parties « Treaty of Port-Louis » was signed at Port-Louis (Mauritius) on October 17, 1993 and came into force on September 18, 1995. Then, some provisions of the Treaty were reviewed through the Treaty of Québec of October 17, 2008.
See Unified Act of General Trade Law, « AUDGC », adopted by the Council of Ministers of OHADA on April 17, 1997 and came into force on January 1, 1998 (JO OHADA #1 of October 1, 1997). It was reviewed by the Council of Ministers of OHADA on December 15, 2010 in Lomé and published in the Official Gazette #23 of 15/02/2011.
See Uniform Act respecting organization of simplified collection procedures and enforcement, adopted on April 10, 1998 and effective on July 10, 1998 (JO OHADA #6 of June 1, 1998).
See Uniform Act on the organization of sureties, adopted on April 17, 1997 and came into force on January 1, 1998 (JO OHADA #3 of July 1, 1998).
See Uniform Act respecting organization of collective procedures of settlement of liabilities, adopted on 10/04/1998 and effective on January 1, 1999 (JO OHADA #7 of July 1, 1998).
See Uniform Act on Arbitration law, adopted on March 11, 1999 and effective on June 11, 1999 (JO OHADA #08 of May 15, 1999).
Unified Act on Labor Law is under development.
To refer to Uniform Act on the organization and harmonization of Enterprises’ accounts, adopted on February 22, 2000 and effective on January 1, 2001 (JO OHADA #10 of November 20, 2000).
 Not existing to date a Uniform Act on Sales Law.
To refer to Uniform Act relative to contracts of goods carriage by road Act adopted on March 22, 2003 and effective on January 1, 2004.
To refer to Uniform Act on Commercial companies and Economic Interest Groups, adopted on April 17, 1997 and came into force on January 1, 1998 (JO OHADA #2, October 1997).
To refer to Unified Act relative to Cooperative Corporation Law, adopted on December 15, 2010 in Lomé (Togo) and published in the Official Gazette #23 of 15/02/2011.
In DRC, the telecommunications sector is currently governed by a special domestic law mentioning some provisions on the assignability of licenses on telecommunications, viz., the blueprint law 013/2002 of October 16, 2002 on telecommunications.
14Article 9 of the Framework Act on telecommunications.
Article 17 of the Framework Act on telecommunications.
Articles 18, 19, 23, 25, 27 and 28 of Framework Act on telecommunications.
Article 137 of AUDCG.
Articles 147 and 148, paragraph 2 of AUDCG.
Articles 39 AUPSRVE.
Articles 916 AUDSCGIE