Transparency of the Regulatory System
Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. While the legal and regulatory framework is in place for transparent governance, many Seychellois believe that those well-connected to the government of Seychelles, whether foreign or local, receive preferential treatment. There is potential for this to change with the new government. For example, President Danny Faure has appointed supporters of the opposition in positions such as Ombudsperson.
In an attempt to promote greater transparency in the public procurement system, Seychelles’ National Tender Board publishes all its tenders on its website (http://www.ntb.sc ) and local newspapers. It also publicizes the contracts that have been awarded, including the name of the successful bidder as well as the bid amount in all local newspapers. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body.
During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In particular, there has been an unprecedented legislative debate on the 2017 Budget which was presented in December 2016. This debate, which lasted for more than three months, resulted in changes to the budget such as proposed cuts to the military and the Ministry of Tourism. This is a significant change from previous budget debates, which typically lasted only several hours. Furthermore, the preparation of the 2017 budget involved a series of focus group discussions with stakeholders such as the business community and NGOs.
Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed a number of new laws, including a Freedom of Information Act. Additionally, Ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.
International Regulatory Considerations
The Seychelles National Assembly ratified WTO accession in March 2015, making Seychelles the 161st member. Seychelles has also signed trade agreements with regional blocs such as the Common Market for Southern and Eastern Africa (COMESA), Southern African Development Community and the Interim Economic Partnership Agreement with the European Union.
Legal System and Judicial Independence
Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the Company Law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Although the judicial branch is independent of the executive branch, many Seychellois believe that well-connected individuals receive special treatment in the courts. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by the Foreign Judgments (Reciprocal Enforcement) Act of 1961, Section 3. The World Bank ranked Seychelles 129th out of 190 in enforcing contracts in its 2017 Ease of Doing Business Report.
Laws and Regulations on Foreign Direct Investment
The GOS established the Seychelles Investment Board as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and to facilitate the investment process within the administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The Embassy has received no formal comments from U.S. businesses in Seychelles with regard to the foreign direct investment screening mechanism. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles. More information is available at http://www.sib.gov.sc/index.php/investment-guide/investment-appeals.
Competition and Anti-Trust Laws
The SIB reviews all transactions for competition-related concerns (whether domestic or international in nature).
Expropriation and Compensation
The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the new GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. There have been no expropriations since the 1990s aside from public works and infrastructure projects, and in these cases there is a process for obtaining compensation. We see no indications of possible major expropriation in the future and no pattern of discrimination against U.S. persons.
ICSID Convention and New York Convention
In 1978 Seychelles became a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Seychelles has not signed the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Investor-State Dispute Settlement
Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act of 2010 created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Supreme Court (Court of Appeal) in the event they are not satisfied with the decision of the Investment Appeal Panel. In the World Bank’s 2017 Ease of Doing Business Report, Seychelles ranked 106th out of 190 for protecting minority investors.
International Commercial Arbitration and Foreign Courts
Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act of 2010.
Bankruptcy in Seychelles is governed under the Insolvency Act of 2013. According to the Act, an individual may be discharged from bankruptcy 3 years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2017 World Bank’s Doing Business Report, Seychelles ranks 62nd out of 190 countries on the Resolving Insolvency index. It takes on average two years to complete a bankruptcy.