Omanghana
The state-owned Libyan Foreign Bank has initiated arbitration proceedings against Burkina Faso over the nationalization of a commercial bank previously owned jointly by the two parties.
The dispute has been filed before the World Bank Group’s International Centre for Settlement of Investment Disputes and registered as Libyan Foreign Bank v. Burkina Faso, under case number ARB(AF)/26/3.
At the center of the case is the Libyan Foreign Bank’s 50% stake in Banque Commerciale du Burkina, which was taken over by the Burkinabè state in May 2024.
Banque Commerciale du Burkina was established in 1997 as an equal partnership between the government of Burkina Faso and the Libyan Foreign Bank, a subsidiary of the Central Bank of Libya.
Each party held a 50% interest in the financial institution. The partnership formed part of Libya’s broader investment strategy and long-standing bilateral economic relationships across Africa.
Burkina Faso’s military-led government, headed by Captain Ibrahim Traoré, assumed full control of the bank in May 2024.
The government justified the nationalization by alleging that the Libyan shareholder had failed to provide the operational and financial support required to sustain the bank’s activities.
The Libyan Foreign Bank has strongly rejected that explanation and maintains that it fulfilled its obligations under the agreements governing the joint venture.
LFB also argues that it operated in compliance with the corporate regulations of the Organization for the Harmonization of Business Law in Africa and the requirements of the West African Monetary Union.
According to the Libyan institution, Burkina Faso’s unilateral takeover of its stake amounted to an unlawful expropriation and violated bilateral agreements and international protections covering foreign investments.
The arbitration proceedings are expected to examine the legality of the nationalization, the obligations of both shareholders and whether compensation is due to the Libyan Foreign Bank.
The case comes as Burkina Faso’s military administration continues efforts to increase state control over assets considered important to the national economy.
The government has taken similar steps in strategic sectors, particularly gold mining and financial services, as part of a broader policy aimed at strengthening domestic ownership of key resources and institutions.
The outcome of the arbitration could have implications for Burkina Faso’s investment climate and its relationships with foreign state-owned companies operating in the country.
Source: Omanghana
