African Law & Business
by Natasha Mellersh
With growing economic prosperity and continuing political stability, Morocco continues to attract foreign investors. With an increasing focus on encouraging international commercial dispute resolution in Casablanca, the country is seeking to present itself as a business hub, as law firms push to open up in the region.
For Morocco, its proximity to Europe has been significant throughout its history. The late King Hassan of Morocco described Morocco as “a tree whose roots reach deep into the African soil and whose leaves breathe in the winds of Europe”.
However, the former French colony is also attracting foreign investment from outside traditional European trade partners, from emerging market economies such as from India, Russia and China. Casablanca, Morocco’s most populous city and home to its largest commercial port, is also one of the largest financial centres in Africa. Its strategic location, as well as its existing business infrastructure, has also attracted numerous global law firms in recent years.
Kamal Nasrollah, a partner at Baker & McKenzie in Casablanca, notes that “Morocco’s political stability and geographic location make it a natural gateway, port and trading hub for international businesses investing in Morocco, the wider Maghreb region and even Francophone West Africa”. He adds: “It is the fact that it is a gateway for our clients’ business that makes Casablanca important, as it is the best place in the region to meet client needs.”
With growing business interests comes a flourishing commercial disputes market, in support of which Casablanca is increasingly looking to arbitration. Mehdi Kettani, a partner at DLA Piper Casablanca, explains why Morocco has developed as an international arbitration hub for various reasons. “It is an economic leader in the region, [one] which enjoys political stability, more than any other country in the region, as well as geographical proximity to sub-Saharan Africa and Europe.”
In November 2014, the Casablanca Finance City Authority (CFC) – a public-private partnership, which is seeking to position itself as a commercial and financial gateway for wider African operations for businesses looking to invest in the region – opened the Casablanca International Mediation and Arbitration Centre (CIMAC). The centre evolved from the more European-focused Centre Euro-Méditerranéen de Médiation et d’Arbitrage, although CIMAC, unlike its predecessor, aims to become the main international dispute resolution hub in the region as well as for the whole of Western and sub-Saharan Africa.
A HISTORY OF ARBITRATION
Arbitration in the North African kingdom is nothing new. Kettani points out that Morocco was one of first countries to adhere to the New York Convention, and, more recently, in 2007 the country adopted reforms relating to domestic and international arbitration. “These [new] standards are very effective in encouraging arbitration in Morocco, by allowing parties to work under rules of an international arbitration institution. It also allows investors to choose the applicable law, and Moroccan courts will enforce arbitration rulings even if these have not been decided under Moroccan law,” he says.
Kettani notes that aside from introducing these major reforms, the Moroccan government also schedules regular training and seminars for judges to encourage them to support arbitration proceedings and to enforce awards accordingly. “There is also training available for lawyers and other professionals and Morocco also entered into partnerships with the World Bank and USAID [United States Agency for International Development] on programmes to promote arbitration.”
Although CIMAC is yet to make a wider impact on the arbitration world, Kettani notes that“CIMAC is certainly in the process of developing”. “[The CFC] aims to make it a regional centre for arbitration to rival Dubai and Mauritius.” The new rules are currently being drafted and the registration of new arbitrators is already in progress, and the institution is likely to develop further during the course of the year, he says.
“A lot of foreign investors have shown their interest in CIMAC and are now waiting for it to be active. Sometimes arbitration is not only about legal issues but also about political and geographical advantages,” says Kettani.
He adds that “a lot of sub-Saharan countries have shown an interest in CIMAC as an arbitration hub, although investors in Africa are mostly European”. He emphasises that the Casablanca centre is “well-situated, both geographically and linguistically, to attract Francophone countries”.
In addition, Morocco’s civil procedural code, similar to that in many West African states, has been inspired by French law. Having a comparable culture of civil law in the region also promotes Casablanca as a dispute resolution hub, says Kettani, as familiarity helps underpin confidence in the local rule of law, especially on enforcement issues.
FOREIGN INTERESTS
Numerous international firms, including Magic Circle firms Clifford Chance and Allen & Overy have recently opened in Casablanca, using Morocco’s commercial hub as a gateway to the wider African region. The geographical location has played a key factor in the positioning of these strategic offices, allowing for an African presence on the ground only a short flight from most European capitals. For firms that are more cautious about making a leap into Africa this provides for a suitable compromise.
International firms, which generally act as legal advisors, are not generally competing for the same work in Morocco, unless perhaps the matter involves large complex arbitrations. Moroccan firms generally work together with international firms, as foreign firms can only open offices in association with Moroccan law firms.
Nasrollah explains that there are a number of factors attracting foreign firms to set up shop in Morocco. He counts renewable energy as one of the key areas of investment. “The world’s largest solar plant has just come on stream, while other renewable energy sources, such as wind, have been very active.”
International firms are also active in helping clients enter the market or set up regional hubs, which, he says, “generates significant corporate and commercial work, while domestic clients continue to grow, especially agribusiness and the service sector for example”.
Nasrollah also points out that “Morocco is well-established as the leading non-EU supplier of fruit and vegetables to Europe and has a growing middle class needing more sophisticated services such as banking”.
Boris Martor, head of the Eversheds Africa group in Paris, agrees that international law firms have been developing a presence in Morocco, most notably thanks to extensive reforms and a diversified economy.
“Casablanca is becoming a hub for financial services with the creation of Casablanca Finance City. It is also trying to develop as an arbitration centre for North Africa following models of emerging economies in Asia and Indian Ocean.”
Additionally, Tangiers, Martor notes, “has become a major industrial hub with the largest harbour in the Mediterranean basin and a number of factories being present”. He attributes the attractiveness of the zone to its location and the development of commerce and manufacturing in combination with specific rules and advantages offered by the Tangier free zone.
“All the above sectors attract firms and their clients in Morocco. Also a number of Moroccan entities such as banks, cement producers, insurers or trading companies and conglomerates are going South in sub-Saharan countries. This explains why Morocco is a key market.”
Martor points out that as a result of all this, “the local legal sector is developing with a lot of firms doing advisory legal services whereas this was not so developed. A number of lawyers are now more and more specialised”.
FRENCH CONNECTION
Morocco’s close relationship with Europe in both trade and culture is evident, with foreign influences lingering in its architecture, language and art. The French influence runs deep, as it does in the legal sector, with established French firms like Gide Loyrette Nouel having been based in Casablanca since 2003.
Martor tells CDR that Moroccan ties with France remains extremely strong. “France is the largest partner economically speaking”. He adds: “The TGV [high-speed rail link] between Tangier and Casablanca is one of the most obvious examples [of such investment]. French firms are still present and the Moroccan system of law remains extremely close with the French system, the two being based on civil law.”
However, things are changing as Morocco begins to look beyond France. Nasrollah states: “France is still Morocco’s largest business partner and foreign investor, so of course there are ties in all sectors of the economy, but the big French companies are as global as they are French these days.”
Martor states “it is also worth noting that a number of firms like ours operate with Moroccan and North African teams being present in Paris and Morocco due to strong cultural, migration and family links, and many students and lawyers operate on the two markets.”
Kettani also attributes DLA Casablanca’s strong ties with the Paris office to cultural and linguistic bonds, but adds that the rest of the EU is not overlooked by Moroccan businesses, and singles out the UK, the US and other countries such as Spain and Germany.
He adds: “Morocco started to emancipate itself from the French influence some time ago and while some French firms are actively acting in Morocco, these only make up a third of the international firms in Morocco. Morocco is developing but is not only relying on France – as the country develops it is beginning to look further afield.”
