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    The practice of state contracts in Algeria

    Adda Lakhdar


This article provides an overview of research which Adda Lakhdar intends to submit in partial fulfilment of the requirements for the degree of Doctor of Law.

The fundamental idea of underlying the research, the notion of economic law, is defined and discussed in detail in the Introduction. Consideration is given to its status as a new concept, its development, the dynamics of the evolution of the concept, its position within the juridical and economic sciences, as well as its consequence. Because of the political and economic framework of Algeria, most of Algerian international trade transactions are state contracts.

Chapter One, "The tentative stabilisation of prices of raw materials in the international market", deals with the creation of international organisations by developing countries, for example OPEC, and their agreements concerning price stabilisation. A type of economic imperialism will be shown to exist. The Lome conventions, which can be taken as an example of such imperialism, protect the interests of the European Economic Community. These interests are often in contradiction to those of underdeveloped nations, which make up the majority of the world's population, and therefore constitute an important market. For example, Africa is a continent which is rich in mineral resources and has a large population, but the Lome conventions are contrary to its interests as a whole. The positions of Algeria and OPEC are analysed from the standpoint of economic imperialism as understood here.

Chapter Two deals with Eastern Europe, and the trade relations of the developing nations in terms of an old institutional model involving countries having an agricultural economy under the influence of the former USSR. The former COMECON is seen to have had a functional status similar to that of developing nations. The fundamental difference between COMECON and Africa is that the latter began economic integration in 1970. An example of such a regional economic community is the Ecowas (Economic community of West African states) founded in 1975 and it has also succeeded in most of its objectives. Compared to Ecowas, the Maghreb Union, another inter-regional framework, can easily be seen to have been less successful than expected. Its existence is primarily limited to charters and conferences. One area which the Maghreb might enhance its economic development objective is through the recent proposal put foreward by the European Union Commission to encourage Foreign Direct Investment (F.D.I.) in the Maghreb.


"Key in hands"

Chapter Three deals with the economies of the developing nations. These are based on the export of raw materials intended to be used by the technologies of Western Europe, North America, and Japan. This chapter analyses international trade of the industrialised nations with the Third World, particularly Algeria. Exchange rates which affect international trade, and are unfavourable to the less developed countries are discussed. Technology is shown to be sold to the developing countries under various types of contracts, with the "Key in hands" mode being the traditional form, and the more sophisticated alternative "Product in hands" and "Market in hands" models involving more a long-term co-operative relationship. The transfer of technology within the block of industrialised countries is shown to be harmonious and the source of economic growth due to the collective know-how and financial assets of these countries.

Chapter Four deals with the position of Algeria and international economic institutions. The Third World has only recently been decolonialized, for which reason it has limited financial reserves. This chapter discusses the role of the World Bank and the International Association of Development which give loans that allow American, European, Japanese, and South Korean multinational firms to undertake industrial projects in the developing countries. International credit is not the easiest solution, since the economies of the developing countries are mainly based on the export of raw materials which are subject to significant price fluctuations.

After the Second World War, North America and the Breton Woods System imposed the American dollar as the currency of international trade. Soviet developmental assistance was limited to a strategy of containing the American influence in the world.

Chapter Five is an analysis of the structure of the judicial policies of technology transfer by multinational corporations. Multinational enterprises are becoming increasingly significant as a subject of research in international law.

The United Nations resolutions on a code of conduct for multinationals have not achieved their goals, having been limited in their scope. International enterprises are important economic agents of the industrialised nations in addition to being legal entities.


Algeria as a case study

The chapter analyses the unwillingness of leading American and European corporations to transfer licenses and know-how to foreign companies as a means of limiting competition. On the other hand, it is shown that the developing countries need to import technology from North America, Europe and Japan if they are to extract, exploit, and export their raw material resources, thus creating an industrial infrastructure, achieving self-sufficiency, and eventually producing goods for export. Algeria is discussed as a case study.

For the Third World, joint ventures are industrial and economic investments, as well as social investments. The multinational enterprises in Asia help this conversion from rural labour to industrial specialisation, as exemplified by Hong Kong.

The conflicting interests of multinationals as both sources of employment in the nations and as pressure groups in the countries where they become established is analysed.

Chapter Six deals with the notion of guarantees in international contracts concerning industrial equipment. Different types of guarantees are used: the guarantee of constituents, the guarantee of conception, and edification. The guarantees in international trade are oriented not only juridically but also economically. The less developed countries not only require machines, they are also seriously lacking in spare parts and components, as well as long-term plans for import and product development. The juridical dimension linked with all these aspects is shown to be increasing in relevance.

Chapter Seven is devoted to judicial and financial issues, such as the contractual solutions in Algeria, the international law of development, this being a new concept, and conflicts that arise between enterprises.


With special emphasis on arbitration

Chapter Eight, the longest in this study, deals with arbitration, an important process in international trade. Its temporal and spatial modes of functioning, as well as the international conventions governing it, enable arbitration to be utilised as a means for finding quick solutions. Arbitration is exemplified by the New York Convention of 1958 and the 1961 European regional Geneva Convention.

The thesis deals with the issue of how many international centers of arbitration have been organised by special rules, proposing a procedure of conciliation totally different from the arbitration mechanism currently used.

In particular, articles 28 to 35 of the Convention of Washington on March 18, 1965 created by the CIRDI focused upon conciliation. A rule relative to the instances of conciliation was promulgated in 1967, and subsequently revised on September 26, 1984.

The New York Convention of 1958 allowed a distinction to be made as far as their regimes are concerned, between commercial and non-commercial arbitration.

Many regional conventions exist, their number having sharply increased after the New York Convention. Despite their limited scope they have achieved genuine progress. The Geneva Convention of 21 April 1961 is one of the few regional conventions to have succeeded in surpassing the results achieved in New York.

The UNCITRAL has contributed to tendencies towards the harmonisation of rules given by the Member States, for example the Model Rules (1976) and the Model Law of Arbitration (1985) and some international aspects of the Arbitration Act 1996. This thesis makes use of many international commercial court cases and decisions. Chapter Eight, Section 3 f, discusses the Algerian law dealing with arbitration.

The International Settlement Center of Investment Disputes (ISCID) of the World Bank is important for the enforcement of arbitration awards. The settlement mechanism of the World Trade Organisation (WTO) has made it possible to settle more contractual disputes since its establishment in 1994 than in the entire 50-year existence of the International Court of Justice.

The technology market is as important for developing nations as it is for industrialised countries. The Third World lacks Technology, know-how, and financial resources, and thus serves as a ready market for exporters of technology. After the decolonialization of Africa, and with the United States having become the leading industrial power in the international economic system, the World Bank, the International Monetary Funds, and the International Development Agency have been functioning using primarily American capital. They grant loans with a low interest rate which then facilitate the technology transfers necessary for the construction of factories and infrastructures in Africa and Asia by American multinational corporations.

In fact, American and British multinational enterprises have established themselves in Asian countries as a consequence of low local wage levels. This has resulted in rural manual labour being replaced by industrial labour in the countries concerned.

The transfer of technology is an important issue because the developing nations lack machinery. The judicial problems arising from the transfer of technology are shown to be important from the standpoint of international business.

The juridical sciences should consider the evolution of the international economic situation, as is shown, for example, in Chapter Three, Section 2: "The commercial relations between the industrialised countries and the Third World" and Chapter Four: "The relations between the international economic institutions and Algeria," thereby considering the concept of economic law. This thesis deals with state contracts, especially the judicial regime of large Algerian firms which are public companies from the perspective of economic law.