Transparency of the Regulatory System
Legal, regulatory and accounting policies, applicable to both domestic and foreign investors, are transparent and promote competition. However, historically red tape and bureaucratic procedures, particularly at the local government level, presented problems for foreign and domestic investors. There is not a policy of public comment on draft legislation, although the executive branch does consult with the legislative branch and key stakeholders.
The government is gradually implementing policies to improve competition and foster transparency in implementation. These reforms aim to change an existing system influenced in the past by family affiliations and business ties. The Jordan Investment Commission (JIC), through its Fast Track Investment Window, introduced a number of measures to streamline the investment process.
For further details please contact:
Jordan Investment Commission
Telephone: +962 (6) 5608400/9 Ext: 120
Amman 11821 Jordan
International Regulatory Considerations
Jordan recognizes and accepts most U.S. standards and specifications. However, Jordan has sometimes required that imports meet additional product standards. Some measures with the potential to be viewed as barriers to trade are imposed periodically, such as a 2014 restriction imposed on packaging sizes for poultry available for retail resale.
As a member country of the WTO, Jordan is obliged to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Jordan is a signatory of the WTO Trade Facilitation Agreement. As of March, 2018, Jordan implemented 81.5 percent of its commitments. Jordan has submitted its notifications for Category A before the agreement came into force, and is currently in the final review for categories B and C.
Legal System and Judicial Independence
Jordan has a mixed legal system based on civil law, Sharia Law (Islamic Law), and customary law. The Constitution establishes the judiciary as one of three separate and independent branches of government. Jordanian commercial laws do not make a distinction between Jordanian and non-Jordanian investors. However, plaintiffs complain of judicial backlogs and subsequent delays in legal proceedings.
Laws and Regulations on Foreign Direct Investment
Jordan’s Investment Law governs local and foreign investment. The law consolidated three entities – the Jordan Investment Board, the Jordanian Development Zones Commission, and the Free Zones Corporation – into the Jordan Investment Commission. The law incorporates a statement of investors’ rights and a legal framework for the newly established Investment Window, which is located at the Investment Commission's headquarters.
The law requires governing regulations for a number of investment aspects. Currently, a number of economic regulations are under different stages of review and approval by the government.
In September 2017, Parliament passed the Monitoring and Inspection of Economic Activities Law No. 33 / 201, and amendments to Jordan’s Companies Law No. 34 /2017, which provides for legal requirements necessary to establish venture capital companies established for purposes of direct investment or for creating funds to contribute or invest in high-growth companies that are not listed in the stock market.
Other legislation in the pipeline include: the Bankruptcy Law, Movable Assets and Secured Lending Law and the Income Tax Law.
With respect to ownership and participation in Jordan's major economic sectors, there is no systematic or legal discrimination against foreign participation other than the restrictions outlined in the governing regulations. In fact, many Jordanian businesses actively seek engagement with foreign partners as a way to increase their competitiveness and access to other international markets. The government's efforts have made Jordan's official investment climate welcoming; however, some U.S. investors have reported hidden costs, due to bureaucratic red tape, vague regulations, and conflicting jurisdictions.
Competition and Anti-Trust Laws
The Jordanian parliament passed amendments to Competition Law No. 33/2004 in 2011 to strengthen the local economic environment and attract foreign investment by providing incentives to improve market competitiveness, protect small and medium enterprises from restrictive anticompetitive practices, and give consumers access to high quality products at competitive prices. The Competition Directorate at the Ministry of Industry, Trade, and Supply conducts market research, examines complaints, and reports violators to the judicial system.
Expropriation and Compensation
Article 11 of the Jordanian Constitution stipulates that expropriations are prohibited unless deemed in the public interest. In cases of expropriation, the law also mandates the provision of fair compensation to the investor in convertible currency.
Since 1972, Jordan has been a contracting state to the International Centre for Settlement of Investment Disputes (ICSID convention). Only a small number of cases between foreign investors and the Jordanian government have been brought before ICSID tribunals. Jordan is also a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention).
In January 2018, the Parliament passed amendments to Arbitration Law 2017, which aims to facilitate the use of arbitration as an alternative to dispute settlement procedures.
Investor-State Dispute Settlement
Under domestic law, foreign investors may seek third party arbitration as a means of settling disputes. Jordan abides by WTO dispute settlement mechanisms, and dispute settlement mechanisms under the U.S.-Jordan FTA are consistent with WTO commitments. Article IX of the United States-Jordan Bilateral Investment Treaty (BIT) establishes procedures for dispute settlements between Jordanians and U.S. persons.
Investment disputes are dealt with as any other commercial or civil dispute in the Jordanian judicial system. Large investment agreements with the Jordanian government as a party generally contain a dispute resolution clause that would refer cases to arbitration in Jordan.
On average, it takes three to four years for cases that go through the local court system to reach a verdict. Cases settled through arbitration take between 12 to 18 months. The main challenge regarding litigation cases is being able to conduct proper process of service upon all concerned parties. Another challenge is the lack of specialized investment and commercial courts limiting the judges’ capacity to review cases.
International Commercial Arbitration and Foreign Courts
Rulings by U.S. courts or other international arbitration committees can be upheld through the successful filing in a Jordanian court of a motion called Enforcement of Ruling.
The Commercial Code, Civil Code, and Companies Law collectively govern bankruptcy and insolvency proceedings. In December 2017, the cabinet endorsed a bankruptcy bylaw which stipulates procedures for optional and compulsory liquidation, along with the mechanism, liquidation plan, and required documentation and reporting. A draft Insolvency and Bankruptcy Law is currently pending Parliamentary review.