The contribution of French and British colonialisms towards Banking Security Laws in Mauritius.

Mauritius, land bridge between Asia and Africa, is becoming one of the leading international financial centres of the world. The present governing legislations are keeping pace with the international expectations. However, one should not lose sight of the contributions of the French and the British, the then rulers, who brought along their respective laws. Over the years, the Republic of Mauritius has left no stone unturned to achieve its goal by creating a safe and sound hybrid legal banking environment.

The Republic of Mauritius, with a surface of 720 square miles (1 865 km2) is strategically located in the Indian Ocean. It lies about 800 km on the eastern coast of Africa and some 4 000 km from the southwest coast of India. It is of volcanic origin and has an exclusive economic zone. The island-state stands on what was once a land bridge between Asia and Africa called the Mascarene Archipelago. The Arabs first visited the island in the 12th century followed by the Dutch in late 16th when they found the famous bird called DODO. It is said, though not written, that on or about 1598 during the 80 years war, a Dutch ship under the name WORTELS LEXUS visited our island on its way to the Spanish Colonies near India. The French sometime after, visited Mauritius and stayed for a while until ‘’L’Acte de Capitulation’’, when they ceded Mauritius to the British in 1810.Under the said “Acte”, it was agreed that the British, who remained in the country until the latter became independent on 12th March 1968, would keep the French Laws. In 1992 Mauritius became the Republic of Mauritius.
The present legislations regulating the Banking sector in Mauritius are now mostly found under the Bank of Mauritius Act 2004 and the Banking Act 2004 which were enacted in October 2004 after the amendments and the repeal of several previous legislations to cater for the new economic and financial environment. The Bank of Mauritius Act 2004 governs the Central Bank principally whereas the Banking Act 2004 governs the banking business in general. The Banking Act has primarily merged the global business sector and the domestic sector by abolishing the following banking licenses: category 1 banking licence and category 2 banking licence which was allocated to banks in the domestic and global business sector respectively. The same banking licence now applies to both sectors. Strict rules apply in respect of confidentiality and opening of accounts. Rules and Regulations have however been made by both the Bank of Mauritius and the Financial Services Commission to control respectively the banking and the non banking activities of the Banks.

In the 19th Century, there were three separate commercial banks, now all defunct, which operated under the name of Bank of Mauritius. The first Bank of Mauritius started operations in 1813 or so, but survived only until 1825.The second Bank of Mauritius was a British overseas bank with two boards of directors, one in London and the other in Port Louis. It began operations in 1832 and favored the interests of the planter class. In 1838, several British merchants and traders, including James Blyth and William Hollier Griffiths, established the “Banque Commerciale de l’îsle Maurice” to compete with the only other bank, the Bank of Mauritius, which favored the planters on the island. The financial crisis of 1847 in London resulted in the collapse of the sugar market, and severe losses to both of Mauritius's banks. Bank of Mauritius ceased business in 1848, whereas the Mauritius Commercial Bank, in turn has survived to the present. The Banking Ordinance (Ord 1 of 1958) came into force on 17th April 1958 to regulate the business of banking and the licensing authority was the then Financial Secretary. At that time there were only three banks namely Barclays D.C.O, MCB Limited and Mercantile Bank limited. In 1966 the Bank of Mauritius Ordinance (Ord 43 of 1966) came into force and empowered the Bank of Mauritius to act as banker of the Government. In 1971 a new Banking Act was voted sweeping away the Banking Ordinance of 1958 whereby the Bank of Mauritius became the Licensing Authority. Today, we have more than 20 banks operating in Mauritius and the status of the people with whom they are doing business, the nature of the transaction, the security offered have evolved towards a more stringent and regulated environment. On the other hand, our legislations are keeping the pace with the coming into operation of new banks along with international complexities. Several legislations have been repealed to pave the way for new provisions under of our Civil Code, namely, Act no 8 of 1983 which had repealed the Lien on Motor vehicles Act (originally Ordinance no 39 of 1939) to ease the way for the concept of ‘’Nantissement’’ with its principles of ‘’gage sans déplacement’’ commonly resorted to for the creation of a guarantee on a motor vehicle, professional ,industrial or agricultural equipments and its principles ‘’gage avec déplacement’’ on share certificates for example. Act no 12 of 1984, in turn, has repealed the Loans, Charges and privileges ( Authorised Bodies)Act 1970 to pave the way for a new concept called ‘’ fixed and floating charges’’. The Double Tax Treaties with many countries are attracting more foreigners, where our rates of income tax are seductive, with the added result of expanding our banking business. The licenses granted to our Banks are two-fold, on the one hand, following authorisation from the Bank of Mauritius they do banking business strict senso and, on the other, following authorisation from the Financial Services Commission (FSA) they deal in financial services as well, contrary to what is obtained in England with the Financial Services Authority where in June 1998 responsibility for banking supervision was transferred to the FSA from the Bank of England.

What follows is a non exhaustive list of legislation which has melted and resulted in the creation, though not codified, of what we may safely call the Mauritian Banking Laws.
If the French brought mainly their “code de commerce” and their civil code also called “Code Napoleon”, the British came with more legislation scattered in various enactments. Our Courts of law have in turn played a major role as time passes by with interpreting the various legislations of different origins. Their judgments now form part of our sources of law in addition to the Acts of Parliament and the delegated legislations.

A. French period

• Several articles of the Civil Code in respect of the identity of the customers.
• Article 1326 in respect of the mention to be inserted on all unilateral obligations whereby the sum due or quantity to be delivered should be written in words and figures.
• Article 2015 whereby any person standing as guarantor should expressly declare his capacity as such.
• Article 2173 on ‘’ les hypothèques judiciaires’’ i.e judicial mortgage in favor of a creditor although where no judgment was yet delivered in its favor.
• ‘’Caution réelle and caution personnelle” i.e real guarantee and personal guarantee.
• Article 2202-6 Anatocisme (capitalisation d’ intérets) whereby all accrued interest may be capitalised in respect of a loan for which the reimbursement exceeds three years.
• “Le cautionnement” i.e personal guarantees in general to secure the repayment of a debt.
• “Le droit de suite” i.e the right of the creditor to follow the property in whoever’s hands it is found.
• “Le nantissement” i.e Pledge over movable property with or without dispossession of same.
• “Le bénéfice de division et le bénéfice de discussion”; in cases of ‘’Nantissement’’ and in case where there are several debtors/guarantors, any of the latter may move that the indebtedness be divided among them or may move that the other debtors/guarantors be sued first.
• ‘’La solidarité’’ or ‘’conjointement et solidairement’’ i.e jointly and in solido which removes the benefits of ‘’ Le bénéfice de division et le bénéfice de discussion ’’
• The principles of imputation of payments articles 1253 and 1256 of the civil code.( see judgment in C.below)

B.British period
• Laws in relation to promissory note.
• The Bills of Exchange Act.
• Ordinance 1 of 1936 for the purpose of granting long-term loans for the agricultural workers.
• Ordinance no 39 of 1939 lien on Motor Vehicles Act through its various amendments until its incorporation into Book 3,Title 17 Chapter 1 section 2(1) of the civil code , more precisely in articles 2100-2111.
• The Savings Bank Ordinance 1950 for the purpose of transferring the control of the Government Savings Bank to the postmaster General.
• Ordinance 24 of 1951 , the Exchange Control Ordinance to confer powers and impose duties and restrictions, in relation to gold, currency, payment, securities, debts and the import-export, transfer and settlement of property, and for purposes connected with the matters aforesaid.
• Ordinance 1 of 1958 The Banking Ordinance to regulate the business of banking. The licensing authority was the Financial Authority with the then existing Banks namely Barclays Bank D.C.O., Mauritius Commercial Bank Limited, Mercantile Bank limited Ordinance no 30 of 1959 to make provisions.
• Loans, Charges and privileges (Authorised Bodies) Act 1970.
• Ordinance 30 of 1959 The Moneylenders Ordinance making provisions in relation to money lending and for purposes connected therewith. This Ordinance was designed to the Cooperative Society, Banks, Insurance Companies, Pawnbrokers and those having a Moneylender’s license.
• Ordinance 34 of 1963 The Development Bank of Mauritius Ordinance with the aim of facilitating the industrial, agricultural and economic development of the Colony.
• Ordinance 43 of 1966 The Bank of Mauritius Ordinance with the aim of creating a Bank to be the banker of the Government.
• Act 50 of 1968 The Treasury Bills Act to allow the Government to borrow money by issuing Treasury Bills. Powers were given to the Bank of Mauritius to act as depository.
• Act 31 of 1971 repealing Ordinance 1 of 1958 Banking Act where the licensing authority is vested with the Central Bank and the latter having control over all Banks.

C.The role of the Courts of law
As and when required, the Mauritian Courts of law have intervened and successfully found their way as good sailors. The judges have known how to navigate between the French and the British Laws comprising very often of strong element of Latin. In so doing, they have blended those legislations into such a combination to what is from then on called ‘’Banking Laws in Mauritius’’ or ‘’ Le Droit Bancaire à Maurice”. As from early 1862 the Supreme Court of Mauritius, composed of British Judges, was called upon in the case of “Charon v/s Leishman & Co – 1862 MR* 102’’ to pronounce itself on the method of imputation of interest by referring to French principles as obtained under articles 1253 and 1254 of the Code Napoleon. In ‘’ Oriental Bank Corporation v/s David Barclay Chapman, Overend, Gurney, and others – 1862 MR 107 the point in respect of the authority of a minor child to mortgage an estate was mooted. In “The Chartered Mercantile Bank v/s Scott & Co 1879 MR 93’’ the Court was called upon to pronounce itself on the applicable law in respect of a bill of exchange expressed in sterling which was accepted in Mauritius.
What is written above gives an idea as to how the French and the British have marked our banking laws in Mauritius. After its independence, Mauritius is easing its way towards becoming an international financial centre.
The competitive banking world will without uncertainty lead Mauritius towards doing away with old legislations thereby easing the way for modernity to better meet the challenges.

*MR means Mauritius Reports

Potayya, S. 2011, The contribution of French and British colonialisms towards Banking Security Laws in Mauritius., mauritius.