Transparency of the Regulatory System
In January 2012, the National Assembly adopted a new investment code, which prescribes equal treatment for Togolese and foreign businesses and investors; free management and circulation of capital for foreign investors; respect of private property; protection of private investment against expropriation; and investment dispute resolution regulation. The new code meets West African Economic and Monetary Union (WAEMU) standards. There are no informal regulatory processes managed by nongovernmental organizations or private sector associations and the rule making and regulatory authority is located at the Ministry of Commerce.
As a member of West African Economic and Monetary Union (WAEMU), Togo participates in zone-wide plans to harmonize and rationalize regulations governing economic activity within the Organization for the Harmonization of Business Law in Africa (OHADA – Organisation pour L’Harmonisation en Afrique du Droit des Affaires). OHADA includes sixteen African countries, including Togo, and one of the principal goals is a common charter on investment. Togo directly implements WAEMU and OHADA regulations without requiring an internal ratification process by the National Assembly.
Although draft bills and proposed regulations are not made available for public comment, ministries and regulatory agencies in Togo generally give notice of and distribute the text of proposed regulations to relevant stakeholders. Ministries and regulatory agencies also generally request and receive comments on proposed regulations through targeted outreach to business associations and other stakeholders.
Togo is a member of UNCTAD’s international network of transparent investment procedures http://togo.eregulations.org . Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time and legal bases justifying the procedures. The site is generally up-to-date and useful.
The Public Procurement Regulatory Authority (ARMP) ensures compliance and transparency with respect to government procurements. Each responsible ministry ensures compliance with its regulations which are developed in conformity with international standards and agreements such as WTO or WAEMU norms. Regulations are not reviewed on the basis of scientific or data-driven assessments. The government has not announced any upcoming changes to the regulatory enforcement system.
International Regulatory Considerations
Togo is a member of the World Trade Organization (WTO). It is not known if the government notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Legal System and Judicial Independence
Togo practices a code-based legal system inherited from the French system. The judiciary is recognized as the third power after the executive and the legislative (the press being the 4th) and thus remains independent of the executive branch. Togo, as a member of the OHADA, has a judicial process that is procedurally competent, fair and reliable. Regulations or enforcement actions are appealable like any other civil actions and are adjudicated in the national court system.
A Court of Arbitration and Mediation created in 2011 legally enforces contracts. The main law covering commercial issues is the Investment Code adopted in 2012. Togo created in 2013 three commercial Chambers within the Lome tribunal with specialized magistrates who have exclusive trial court level jurisdiction over contract enforcement and business disputes.
Laws and Regulations on Foreign Direct Investment
The 2012 Investment Code allows the resolution of investment disputes involving foreigners through: (a) bilateral agreements between Togo and the investor’s government; (b) arbitration procedures agreed to between the interested parties; or (c) through the offices of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The OHADA also provides a forum and legal process for resolving legal disputes in 16 African countries.
The primary one-stop-shop created in 2013 is managed by SEGUCE Togo (Société d’Eploitation du Guichet Unique pour le Commerce Extérieur), and can be accessed at www.segucetogo.tg
Togo is a member of UNCTAD’s international network of transparent investment procedures http://togo.eregulations.org . Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time and legal bases justifying the procedures.
Competition and Anti-Trust Laws
The Public Procurement Regulatory Authority (ARMP) ensures compliance and transparency for competition-related concerns.
Expropriation and Compensation
The government can legally expropriate property through a Presidential decree submitted by the cabinet of ministers and signed by the President.
There have been only two major expropriations of property in Togo’s history. The first was the February 1974 nationalization of the then French-owned phosphate mines. The second was the November 2014 nationalization of the Hotel du 2 Fevrier after it had ceased operations for several years. Shortly after the nationalization of the hotel, Togo announced that it was establishing a commission to determine the fair market amount owed as compensation to the hotel’s Libyan owners/investors. Setting aside the case of the Hotel du 2 Fevrier (currently managed as a Radisson Blu) as an isolated example, there is little evidence to suggest a trend towards expropriation or “creeping expropriation.” The 2012 Investment Code is designed to protect against government expropriations even though there are some claimants from lands expropriated for recent road construction and the procedure to investigate and resolve those claims is slow.
ICSID Convention and New York Convention
Togo is not a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Togo is, however, a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention – also known as the Washington Convention), which it ratified in 1967.
Investor-State Dispute Settlement
Togo does not have Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter with the United States.
Togo does not have a history of extrajudicial action against foreign investors, notwithstanding the two historical examples above. There do not appear to be any investment disputes involving U.S. persons from the past ten years. Local courts recognize and enforce foreign arbitral awards issued against the government.
International Commercial Arbitration and Foreign Courts
The dispute resolution alternative is the Court of Arbitration of Togo (CATO) which conforms to standards as established by The Investment Climate Facility for Africa (ICF). Local courts recognize and enforce foreign arbitral awards and there are no known State Owned Enterprise investment disputes that have gone to the domestic court system.
The World Bank’s International Finance Corporation (IFC) worked with the Government of Togo to improve commercial justice through the strengthening of alternative dispute resolution mechanisms. The aim of the project was to increase the speed and efficiency of settlement of commercial disputes through the procedures used by the CATO.
As a result of the project, 30 new arbitrator and 100 magistrates and professionals received training in mediation/arbitration techniques. Further, the new CATO procedure manual is explicit that the time between filing and judgment shall be a maximum of 6 months as per article 36 of the ruling procedures.
Togo uses the standards set forth under the Organization for the Harmonization of Business Law in Africa (OHADA). That law states that if bankruptcy occurs, the competent jurisdiction designates an expert that concludes an agreement with creditors and stakeholders (preventive arrangement). The Manager (or managers) can be put under “patrimonial sanctions”, meaning they can be personally liable for the debts of the company. The manager is then forbidden to do business, to manage, administer, or control an enterprise, or hold political or administrative office, for three to ten years. Bankruptcy is criminalized, but generally as a last resort.
According to data collected by the World Bank, insolvency proceedings take three years on average and cost approximately 15 percent of the debtor’s estate, with the most likely outcome being that the company will be sold off in pieces. The average recovery rate is 27.9 cents on the dollar. The World Bank’s Doing Business 2017 places Togo at 87 of 190 for the “Resolving Insolvency” indicator, well above the Sub-Saharan Africa regional average.