Transparency of the Regulatory System
The government of St. Kitts and Nevis provides a legal framework to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. The Ministry of Finance and SKIPA provide oversight of the system’s transparency as it relates to investment. While officially all sectors are open to attracting foreign investment, potential investors are cautioned that the Government of St. Kitts and Nevis has a history of expropriation practices that could put investments at risk.
Additionally, the incorporation and registration of companies in country differs somewhat on its two constituent islands. In St. Kitts, the process is regulated by the Companies Act. The incorporation of companies in Nevis is regulated by the Nevis Island Business Corporation Ordinance. There are no nationality restrictions for directors in a company, and in general, national treatment is applied. All registered companies must have a registered office in St. Kitts and Nevis.
Rulemaking and regulatory authority lies with the Unicameral Parliament of St. Kitts and Nevis. The Parliament consists of 11 members elected in single-seat constituencies (8 from St. Kitts and 3 from Nevis) for a five-year term.
All regulations regarding foreign investment in St. Kitts and Nevis are governed by the relevant laws of St. Kitts and Nevis. These laws are developed within the respective ministries and drafted by the Ministry of Justice, Legal Affairs and Communications. These laws are enforced by the applicable ministry or ministries. The attraction of foreign investment is governed principally by the laws that oversee the SKIPA and the Citizenship by Investment Program.
Although St. Kitts and Nevis does not have legislation that guarantees access to information or freedom of expression, access to information is generally available in practice. The government maintains an information service and a website, where it posts information such as directories of officials and a summary of laws and press releases. The government budget is available on the website: https://www.gov.kn/ . Accounting, legal and regulatory procedures are generally transparent and consistent with international norms. The International Financial Accounting Standards, which stem from the General Accepted Accounting Principles, govern the accounting profession in St. Kitts and Nevis.
The Office of the Ombudsman is a constitutional provision to guard against excesses by government officers in the performance of their duties. The Office of the Ombudsman is independent and is not subject to the direction or control of any other person or authority. The Ombudsman is responsible for investigating any complaint relating to any decision or act of any government officer or body in any case in which a member of the public claims to be aggrieved or appears to the Ombudsman to be the victim of injustice as a result of the exercise of the administrative function of that officer or body.
Regulations are developed nationally and regionally. At the national level, the relevant ministry reviews and recommends the legal authority that would enable it to effectively perform at the desired levels to reach optimum development objectives. These reviews are then submitted to the Ministry of Justice, Legal Affairs and Communications for the preparation of the draft legislation. Subsequently, the Ministry of Justice, Legal Affairs and Communications reviews all agreements and legal commitments (national, regional and international) to be undertaken by St. Kitts and Nevis, to ensure consistency prior to finalization. SKIPA has the main responsibility for investment supervision, whereas the Ministry of Finance monitors investments to collect information for national statistics and reporting purposes.
St. Kitts and Nevis’ membership in regional organizations, particularly the OECS and its Economic Union, commits the state to implement all appropriate measures to ensure the fulfillment of its various treaty obligations. For example, the Banking Act, which establishes a single banking space and the harmonization of banking regulations in the Economic Union, is uniformly in force in the eight member territories of the Eastern Caribbean Currency Union, although there are some minor differences in implementation from country to country.
The enforcement mechanisms of these regulations include penalties or legal sanctions.
International Regulatory Considerations
As a member of the OECS and the Eastern Caribbean Economic Union, St. Kitts and Nevis subscribes to a set of principles and policies outlined in the Revised Treaty of Basseterre. The relationship between national and regional systems is such that each participating member state is expected to coordinate and adopt, where possible, common national policies, aimed at the progressive harmonization of relevant policies and systems across the region. Thus, St. Kitts and Nevis is obligated to implement regionally developed regulations unless specific concessions are sought.
The St. Kitts and Nevis Bureau of Standards is a statutory body established under the National Bureau of Standards Act No 7 of 1999. It develops, establishes, maintains and promotes standards for improving industrial development, industrial efficiency, promoting the health and safety of consumers, as well as protecting the environment, food and food products, the quality of life for the citizenry and the facilitation of trade. It also conducts national training and consultations in international standards practices. As a signatory to the WTO Agreement on the Technical Barriers to Trade, St. Kitts and Nevis, through the St. Kitts and Nevis Bureau of Standards, is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.
The Federation of St. Kitts and Nevis ratified the WTO Trade Facilitation Agreement (TFA) in June 2016. Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade. It will also improve the speed and efficiency of border procedures, facilitate trade costs reduction and enhance participation in the global value chain. St. Kitts and Nevis is ranked 66th out of 190 countries in the World Bank’s 2018 Doing Business Report. The report highlighted the changes made by the government which made trading across borders easier by updating its website and implementing ASYCUDA, an automated customs data management system and by reducing documentary compliance time for exports and imports.
Legal System and Judicial Independence
The Federation of St. Kitts and Nevis bases its legal system on the British common law system. The Attorney General, the Chief Justice of the Eastern Caribbean Supreme Court, junior judges and magistrates administer justice. The Eastern Caribbean Supreme Court Act establishes the Supreme Court of Judicature, which consists of the High Court and the Eastern Caribbean Court of Appeal. The High Court hears criminal and civil matters and makes determinations based on the Constitution. Appeals are made in the first instance to the Eastern Caribbean Supreme Court, an itinerant court that hears appeals from all OECS members. Final appeal is to the Judicial Committee of the Privy Council of the United Kingdom.
The Caribbean Court of Justice is the regional judicial tribunal, established in 2001 by the Agreement Establishing the Caribbean Court of Justice. The Caribbean Court of Justice has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas. In its appellate jurisdiction, the Caribbean Court of Justice considers and determines appeals from Member States of CARICOM, which are parties to the Agreement Establishing the Caribbean Court of Justice. Currently, St. Kitts and Nevis is subject only to the original jurisdiction of the Caribbean Court of Justice.
The United States and St. Kitts and Nevis are both parties to the WTO. The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes.
Laws and Regulations on Foreign Direct Investment
St. Kitts and Nevis’ Foreign Direct Investment (FDI) policy is to attract FDI into the priority sectors as identified under the National Diversification Strategy. These include financial services, tourism, real estate, agriculture, information technology, education services, and limited light manufacturing. However, investment opportunities also exist in renewable energy and other services. The main laws concerning foreign investment include the Fiscal Incentive Act, the Hotels Aid Act and the Companies Act.
While officially all sectors are open to attracting FDI, potential investors are cautioned that the Government of St. Kitts and Nevis has a history of expropriation practices that could put investments at risk. All potential investors applying for government incentives are reviewed by the SKIPA to ensure the project is consistent with the national interests and provides economic benefits to the country.
The SKIPA provides “one-stop shop facilitation” services to investors to guide them through the various stages of the investment process. SKIPA has a website that is useful in navigating the laws, rules, procedures and registration requirements for foreign investors: www.investstkitts.kn.
Under St. Kitts and Nevis’ Citizenship by Investment Program, foreign individuals can obtain citizenship in accordance with subsection (5) of Section 3 of the Citizenship Act of 1984, which grants citizenship (without voting rights) by investment. Program applicants are required to undergo a due diligence process before citizenship can be granted. The government announced changes to the investment options under the Citizenship by Investment program in March 2018. The minimum that would now entitle an investor to qualify is USD 200,000 in real estate or a USD 150,000 contribution to the Sustainable Growth Fund. Applicants must also provide a full medical certificate, and evidence of the source of funds. Applications for Citizenship by Investment status for real estate projects should be submitted to the St. Kitts Investment Promotion Agency for review and processing. Further information is available at: http://www.ciu.gov.kn/.
Competition and Anti-Trust Laws
Chapter 8 of the Revised Treaty of Chaguaramas outlines the competition policy applicable to CARICOM States. Member States are required to establish and maintain a national competition authority for implementing the rules of competition. CARICOM established a Caribbean Competition Commission to apply rules of competition regarding anti-competitive cross-border business conduct. CARICOM competition policy addresses anti-competitive business conduct, such as agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction or distortion of competition within the Community, and actions by which an enterprise abuses its dominant position within the Community. No legislation is yet in operation to regulate competition St. Kitts and Nevis. The OECS agreed to establish a regional competition body to handle competition matters within its single market. The draft OECS bill is with the Ministry of Ministry of Justice, Legal Affairs and Communications for review.
Expropriation and Compensation
St. Kitts and Nevis uses eminent domain laws allowing the government to expropriate private property for the betterment of the public. The government is required to compensate owners. There are also laws that permit the acquisition of private business, and the government claims such laws are constitutional. The concept of eminent domain and the expropriation of private property is typically governed by laws that require governments to adequately compensate owners of the expropriated property at the time of its expropriation or soon thereafter. In some cases, the procedure for compensation of owners favors the government valuation at the expense of the owner.
Currently the United States Embassy in Bridgetown is aware of one outstanding case involving the seizure of private land by the government. The previous government agreed to pay the U.S. citizen claimant in installments, and completed the first two installments. The current government defaulted on two installments, and despite a court in St. Kitts and Nevis ordering the government to complete the 2015 and 2016 installments, the government has yet to do so. The government claims another individual made a claim on the property, and that it must wait until a court determines the outcome of the other claim before completing payments to the U.S. citizen owner. The United States Embassy in Bridgetown continues to recommend caution when conducting business in St. Kitts and Nevis.
ICSID Convention and New York Convention
St. Kitts and Nevis is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, however it is not a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Arbitration Convention. The Arbitration Act 1950 is the main legislation that governs arbitration in St. Kitts and Nevis. St. Kitts and Nevis adheres to the New York Arbitration Convention.
Investor-State Dispute Settlement
Investors are permitted to use national or international arbitration with regards to contracts entered into with the state. St. Kitts and Nevis does not have a Bilateral Investment Treaty or a Free Trade Agreement with an investment chapter with the United States.
The U.S. Embassy Bridgetown is not aware of any current investment disputes in St. Kitts and Nevis.
St. Kitts and Nevis is ranked at 50th out of 190 countries in resolving contracts in the World Bank’s 2018 Doing Business Report. According to the report, dispute resolution in St. Kitts and Nevis generally took an average of 578 days with a cost of claim of 26.6 percent. The slow court system and bureaucracy are widely seen as main hindrances to timely resolutions to commercial disputes. Through the Arbitration Act of 1950, the local courts recognize and enforce foreign arbitral awards issued against the government.
International Commercial Arbitration and Foreign Courts
The Eastern Caribbean Supreme Court is the domestic arbitration body and the local courts do recognize and enforce foreign commercial arbitral awards. The Arbitration Act 1950 applies in St. Kitts and Nevis by virtue of Cap 3:01. The Eastern Caribbean Supreme Court’s Court of Appeal also provides meditation.
Under the Bankruptcy and Insolvency Act (2013), St. Kitts and Nevis has a bankruptcy framework that grants certain rights to debtor and creditor. The World Bank’s 2018 Doing Business Report addressed the strength of the framework and its limitations in resolving insolvency in St. Kitts and Nevis. St. Kitts and Nevis is ranked 168th of 190 countries in this area.