3. Legal Regime
Transparency of the Regulatory System
All regulatory processes are managed by the national government. Accounting, legal, and regulatory procedures, as written, are considered consistent with international norms, although the decision-making process is opaque.
There is no specific mechanism for public comment on draft laws. Typically, government officials give testimony to the Parliament on draft legislation, which receive press coverage, and occasionally copies of bills are leaked to the media. However, full-text copies of draft laws are not made publicly accessible before enactment. All laws and some regulations are published in the Official Gazette (www.joradp.dz ) in Arabic and French, but the database has only limited online search features.
In some cases, authority over a matter may rest among multiple ministries, which imposes additional bureaucratic steps and the likelihood of either inaction or the issuance of conflicting regulations due to errors or unusual circumstances. The development of regulations occurs largely away from public view; internal discussions at or between ministries are not usually made public. In some instances, the only public interaction on regulations development is a press release from the official state press service at the conclusion of the process; in other cases, a press release is issued earlier. Regulatory enforcement mechanisms and agencies exist at some ministries, but they are usually understaffed and enforcement remains weak.
International Regulatory Considerations
Algeria is not a member of any regional economic bloc or of the WTO. The structure of Algerian regulations largely follows European—specifically French—standards.
Legal System and Judicial Independence
Algeria’s legal system is based on the French civil law tradition. The commercial law was established in 1975 and most recently updated in 2007 (www.joradp.dz/TRV/FCom.pdf ). The judiciary is nominally independent from the executive branch, but U.S. companies have reported allegations of political pressure exerted on the courts by the executive. Regulation enforcement actions are adjudicated in the national courts system and are appealable. Algeria has a system of administrative tribunals for adjudicating disputes with the government, distinct from the courts that handle civil disputes and criminal cases. Decisions made under treaties or conventions to which Algeria is a signatory are binding and enforceable under Algerian law.
Laws and Regulations on Foreign Direct Investment
The 51/49 rule in the 2016 annual finance law requires a majority Algerian partner for any foreign investment (see section 2), but otherwise there are few laws restricting foreign investment. In practice, the many regulatory and bureaucratic requirements for business operations provide officials many avenues to advance informally political or protectionist policies. The investments law enacted in 2016 charged ANDI with creating four new branches to assist with business establishment and the management of investment incentives. ANDI’s website (www.andi.dz/index.php/en/investir-en-algerie ) lists the relevant laws, rules, procedures, and reporting requirements for investors. However, much of the information lacks detail—particularly for the new incentives elaborated in the 2016 investments law—and refers prospective investors to ANDI’s physical “one-stop shops” located throughout the country.
Competition and Anti-Trust Laws
The National Competition Council (www.conseil-concurrence.dz/ ) is responsible for reviewing both domestic and foreign competition related concerns. Established in late 2013, it is housed under the Ministry of Commerce.
Expropriation and Compensation
The Algerian state can expropriate property under limited circumstances proscribed by law, with the state mandated to pay “just and equitable” compensation to the defendants for the property. Expropriation of property is extremely rare, with no cases within the last 10 years.
ICSID Convention and New York Convention
Algeria is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention) and the Convention on the International Center for the Settlement of Investment Disputes (ICSID Convention). The Algerian code of civil procedure allows both private and public-sector companies full recourse to international arbitration. Algeria permits the inclusion of international arbitration clauses in contracts.
Investor-State Dispute Settlement
Investment disputes sometimes occur, especially on major projects. These disputes can be settled informally through negotiations between the parties or via the domestic court system. For disputes with foreign investors, most cases are decided at international arbitration. The most common disputes in the last several years have involved state-owned oil and gas company Sonatrach and its foreign partners concerning the retroactive application since 2006 of a windfall profits tax on hydrocarbons production. Sonatrach won a case in October 2016 against Spanish oil company Repsol and two Korean firms. Sonatrach recently settled a dispute with French oil company Total.
The most recent investment dispute involving a U.S. company dates to 2012. The company, which had encountered bureaucratic blocks on the expatriation of dividends from a 2005 investment, did not resort to arbitration. The dispute was resolved in 2017, with the government permitting the company to expatriate the dividends.
International Commercial Arbitration and Foreign Courts
The Algerian Chamber of Commerce and Industry (CACI), the nationwide, state-supported chamber of commerce, has the authority to arbitrate investment disputes as an agent of the court. The bureaucratic nature of Algeria’s economic and legal system, as well as its opaque decision-making process, means that disputes can drag on for years before a resolution is reached. Businesses have reported cases in the court system are subject to political influence and generally tend to favor the government’s position.
Local courts recognize and have the authority to enforce foreign arbitral awards. Disputes between state-owned enterprises (SOEs) and foreign investors are rarely decided in domestic courts, since nearly all contracts between foreign and Algerian partners include clauses for international arbitration. The Ministry of Justice is in charge of enforcing arbitral awards against SOEs.
Algeria’s bankruptcy law generally follows international norms. While bankruptcy per se is not criminalized, management decisions (such as company spending, investment decisions, and even procedural mistakes) are subject to criminal penalties from fines to jail time, so decisions that lead to bankruptcy could be punishable under Algerian criminal law. However, bankruptcy cases rarely proceed to a full dissolution of assets. Public companies on the verge of bankruptcy are generally propped up by the Algerian government via cash infusions from the public banking system.
According to the World Bank’s Doing Business report, both debtors and creditors may file for both liquidation and reorganization. The report ranked Algeria 71st on its resolving insolvency indicator for 2018 (http://www.doingbusiness.org/data/exploreeconomies/algeria/#resolving-insolvency ).
11. Labor Policies and Practices
There is a chronic shortage of skilled labor in Algeria in all sectors. Business contacts report difficulty in finding sufficiently skilled plumbers, electricians, carpenters, and other construction/vocational related areas; many of the engineers employed by foreign construction companies active in the country are Chinese or Turkish. Oil companies report they have difficultly retaining trained Algerian engineers and field workers because these workers often leave Algeria for higher wages in the Gulf. White collar employers also report a lack of skilled project managers, supply chain engineers, and even sufficient numbers of office workers with requisite computer and business skills.
Official unemployment figures are measured by the number of persons seeking work through the National Employment Agency (ANEM). Official Algerian government statistics listed overall unemployment in 2017 as 11.7 percent, up 1.2 percent from the previous year, and 23.9 percent for youth aged 16-24, down 0.1 percent from the previous year. The International Labor Organization (ILO) estimates that more than one-third of all labor in Algeria is employed in the informal economy.
The Ministry of Vocational Training sponsors programs that, according to government figures, train 40-50,000 Algerians annually in various professional programs. There are no current laws requiring companies to hire nationals, although contacts at foreign companies report pressure to do so under implied threat of not approving the visa applications for expatriate staff. Employers are required to pay severance, with slight variations in the law regarding lay-offs and firings. There are no special economic zones or foreign trade zones in Algeria.
The constitution provides workers with the right to join and form unions of their choice provided they are citizens. The country has ratified the International Labor Organization’s (ILO’s) conventions on freedom of association and collective bargaining but failed to enact legislation needed to implement these conventions fully. The General Union of Algerian Workers (UGTA) is the largest union in Algeria and represents a broad spectrum of employees from both the public and private sectors. The UGTA, an affiliate of the International Trade Union Conference, is an official member of the Algerian “tripartite,” a council of labor, government, and business officials that meets annually to collaborate on economic and labor policy. The Algerian government chooses to liaise almost exclusively with the UGTA, sometimes putting other labor unions in Algeria at a disadvantage. Collective bargaining is permitted under a law passed in 1990 and modified in 1997, but is not mandatory, and in practice the UGTA is the only union authorized to engage in collective bargaining. Algerian law provides mechanisms for monitoring labor abuses and health and safety standards, and international labor rights are recognized within domestic law, but are only effectively regulated in the formal economy.
Sector-specific strikes occur often in Algeria, though general strikes are less common. The law provides for the right to strike, and workers exercise this right, subject to conditions. Striking requires a secret ballot of the whole workforce, and the decision to strike must be approved by majority vote of workers at a general meeting. The government may restrict strikes on a number of grounds, including economic crisis, obstruction of public services, or the possibility of subversive actions. Furthermore, all public demonstrations, including protests and strikes, must receive prior government authorization. By law, workers may strike only after 14 days of mandatory conciliation or mediation. The government occasionally offers to mediate disputes. The law states that decisions reached in mediation are binding on both parties. If mediation does not lead to an agreement, workers may strike legally after they vote by secret ballot to do so. The law requires that a minimum level of essential public services must be maintained during public-sector service strikes, and the government has broad legal authority to requisition public employees. The list of essential services included services such as banking, radio, and television. Penalties for unlawful work stoppages range from eight days to two months’ imprisonment.
Stringent labor-market regulations likely inhibit an increase in full-time, open-ended work. Regulations do not allow for flexibility in hiring and firing in times of economic downturn. Unemployment insurance eligibility requirements are so stringent as to discourage many job seekers from collecting benefits probably due them. Employers must have contributed up to 80 percent of the final year salary into the unemployment insurance scheme in order for them to qualify for unemployment benefits.
The law contains occupational health and safety standards that are not fully enforced. There were no known reports of workers dismissed for removing themselves from hazardous working conditions. If workers face such conditions, they may reserve the right to renegotiate their contract or, failing that, resort to the courts. While this legal mechanism exists, the high demand for employment in the country gave an advantage to employers seeking to exploit employees. Labor standards did not protect economic migrants from sub-Saharan Africa and elsewhere working in the country without legal immigration status, which made them vulnerable to exploitation. The law does not adequately cover migrant workers employed primarily in construction and occasionally as domestic workers.
The Labor Ministry generally enforces labor standards, including providing for compliance with the minimum wage regulation and safety standards. Companies that employee undeclared workers are subject to fines.
The law prohibits participation by minors in dangerous, unhealthy, or harmful work or in work considered inappropriate because of social and religious considerations. The minimum legal age for employment is 16, but younger children may work as apprentices with permission from their parents or legal guardian. The law prohibits workers under age 19 from working at night, but there is no list of hazardous occupations prohibited to minors. Although specific data was unavailable, children reportedly worked mostly in the informal sales market, often in family businesses, or on family farms. There were isolated reports that children were subjected to commercial sexual exploitation. According to UNICEF, six percent of children ages 5 to 14 were economically active.
The Ministry of Labor is responsible for enforcing child labor laws. There is no single office charged with this task, but all labor inspectors are responsible for enforcing laws regarding child labor. The ministry conducted inspections and in some cases investigated companies suspected of hiring underage workers. Monitoring and enforcement practices for child labor were inconsistent.
The Ministry of Labor leads a national committee composed of 12 ministries and NGOs that meets yearly to discuss child labor issues. The committee was empowered to propose measures and laws to address child labor as well as conduct awareness campaigns. In 2017, the committee established a new national program calling for several initiatives to combat child labor, including efforts to increase awareness of the issue and to provide assistance to needy families.