Mining companies urged to note differences in laws

Failure by mining companies to understand the differences between anglophone and francophone legal systems in Africa countries can prove costly, according to a study by Price Waterhouse.

African countries such as Burkina Faso, Niger, Mali, Senegal, Guinea and Ivory Coast have legal systems based on the Romanist, or civil, system as opposed to the British-based, or common, system such as that used in Canada, Australia, South Africa and the U.S.

“These systems are diametrically different and, without compensating for the difference, mining companies can get themselves into expensive and disruptive legal trouble that could have been avoided,” says Stephane Brabant, a lawyer with the accounting firm.

He says the most problematic issue is security of ownership, the laws regarding which may not be as clear under a civil system as under a common one. Ownership agreements based on common law, for example, may not hold up in an African court that recognizes only a civil-based legal system.

Companies interested in pursuing projects in French-speaking African nations should also be cautious when entering partnerships with companies native to a particular country. No two partnerships are the same, Brabant cautions, and each venture should be approached with that uniqueness in mind. Deals that work with one partner in a particular francophone African country may not work with another.

Also, the role of the state is different in the one system of law from its role in the other. Mining companies accustomed to common law tend to regard the state as a distant regulator, whereas the state has a more active role under civil law. Canadian, U.S. and Australian companies often assume they have the sole responsibility of resolving disputes with natives or workers and expropriation. Under a civil system, however, companies must seek state assistance. “The state believes it has a legitimate role and significant presence in any dispute,” he explains. “Leaving the state out can lead to trouble.”

According to Brabant, the solution to these problems is to ensure that the legal departments of mining companies are versed in civil law and have business experience in French Africa. “And if you don’t already have the experts, find them,” he says. “Failure to do so can be very, very costly.”