Transparency of the Regulatory System

The government states that its policies are transparent and the implementation of laws is consistent with international norms to foster competition and establish clear rules of the game.  However, independent economic experts note that private sector businesses are often discriminated against in relation to public sector businesses. In particular, SOEs often receive government subsidies, benefits and exemptions, including cheaper loans and debt forgiveness.  Such beneficial treatment is generally unavailable to private sector companies.

According to Belarusian legislation, drafts of laws and regulations pertaining to investment and doing business are subject to public discussion.  Draft legislation is published on government agencies’ websites.

International Financial Reporting Standards (IFRS) have been a part of Belarus’ legislative framework since 2016.  Public-interest entities, which include banks, insurance companies, and public corporations with subsidiary companies are required to publish their financial statements, which comply with IFRS.  Such statements are subject to statutory audit.

IFRS in Belarus can be accessed through the Ministry of Finance at the following links:

• http://www.minfin.gov.by/accounting/inter_standards/docs/71f9f73c3eb44bb2.html  ;
• http://www.minfin.gov.by/accounting/inter_standards/docs/fa70d11e0cb14c56.html  ;
• http://www.minfin.gov.by/accounting/inter_standards/docs/f8f75f4fd1e848df.html  ;
• http://www.minfin.gov.by/accounting/inter_standards/docs/eb7753f40f6f49f0.html  ;
• http://www.minfin.gov.by/accounting/inter_standards/docs/9d4e40da559e40d4.html  .

Belarus has no informal regulatory processes managed by nongovernmental organizations or private sector associations.

International Regulatory Considerations

Belarus is not a WTO member but announced in April 2016 it will step up efforts to join the organization by June 2020.  The Working Party on Belarus’ Accession to the WTO group meets regularly in Geneva and as of January 2019, still needs to hold talks on trade in services with the European Union, the United States, Canada, and Ukraine.  After the completion of bilateral market access talks with WTO member states, Belarus will still have to integrate these agreements into national regulations.

Belarus is a member of the Eurasia Economic Union (EAEU), a political and economic union driven by Russian leadership and modeled after the European Union.  The EAEU’s goal is to ensure the free movement of goods, capital, services, and people across the territories of its five members – Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia.  The EAEU envisages common economic policies on customs, foreign trade and investment, technical regulation, competition and antitrust regulation. The Eurasian Economic Commission is the EAEU executive body.  The EAEU has completed free trade agreements with Vietnam, China, and Iran and is in negotiations with Serbia, Singapore, India, Israel, and Egypt.

Legal System and Judicial Independence

The Belarusian legal system is a civil law system with a legal separation of branches and institutions and with the main source of law being legal act, not precedent.  For example, Article 44 of Belarus’ Constitution guarantees the inviolability of property. Article 11 of the Civil Code safeguards property rights. Presidential edicts and decrees, however, typically carry more force than legal acts adopted by the legislature, which risks weakening investor protections and incentives previously passed into law.  There is sometimes a public comment process during drafting of legislation or presidential decrees, but the process is often not transparent or sufficiently inclusive of investors’ concerns. Belarus has a written and consistently applied commercial law, which is broadly codified but contains inconsistencies and is not always considered to be business friendly.

Each of Belarus’ six regions and the capital city of Minsk have economic courts to address commercial and economic issues.  In addition, the Supreme Court has a judicial panel on economic issues. In 2000, Belarus established a judicial panel on intellectual property rights (IPR) protection.  Under the Labor Code, any claims of unfair labor practices are heard by regular civil courts or commissions on labor issues. However, the judiciary’s lack of independence from the executive branch impedes its role as a reliable and impartial mechanism for resolving disputes, whether labor, economic, commercial, or otherwise. According to Freedom House’s 2018 Nations in Transit report, executive authorities can directly influence a judge’s decision-making if their political or economic interests are involved, and such influence usually takes the form of direct instructions from officials.

Laws and Regulations on Foreign Direct Investment

Foreign investment in Belarus is governed by the 2013 laws “On Investments” and “On Concessions,” the 2009 Presidential Decree No. 10 “On the Creation of Additional Conditions for Investment Activity in Belarus,” and other legislation as well as international and investment agreements signed and ratified by Belarus.

The GOB regularly updates the following websites with the latest in laws, rules, procedures and reporting requirements for foreign investors:

http://www.investinbelarus.by/en/  

http://www.economy.gov.by/  

http://president.gov.by/en/official_documents_en/  

Competition and Anti-Trust Laws

The June 3, 2016, presidential edict number 188 authorized the Ministry of Antimonopoly Regulation and Trade to counteract monopolistic activities and promote competition in Belarus’ markets.

Expropriation and Compensation

According to Article 12 of the Investment Code, neither party may expropriate or nationalize investments both directly and indirectly by means of measures similar to expropriation or nationalization, for other purposes than for the public benefit and on a nondiscriminatory basis; according to the appropriate legal procedure; and on conditions of compensation payment.  Belarus has signed 66 bilateral agreements on the mutual protection and encouragement of investments.

In 2018, there was one nationally-reported case of nationalization, however the Belarusian government compensated the Ukrainian owner market value for shares of the Motor Sich aircraft repair factory in Orsha.  In the past five years, there have been no instances of confiscation of business property as a penalty for violations of law.

Post has not received any expropriation claims from U.S. companies, and is not aware of any particularly high-risk sectors prone to expropriation actions.

Dispute Settlement

There were no known investment disputes with American investors in 2018.

ICSID Convention and New York Convention

Belarus is a party to both the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.  The GOB states that local courts recognize and enforce foreign arbitral awards in compliance with the above conventions, national laws, and regulations. The enforcement of arbitral awards in Belarus is governed by Chapter 28 of the Code of Commercial Procedure.

Most of the BITs concluded by Belarus include a provision on international investment arbitration as a mechanism for settling investor-state disputes and recognize the binding force of the awards issued in investment arbitrations.  Under Belarusian law, if an international treaty signed by Belarus establishes rules other than those established by local law, the rules of the international treaty shall prevail.

Investor-State Dispute Settlement

Local economic court proceedings normally do not exceed two months.  The term of such proceedings with the participation of foreign persons is normally no longer than seven months, unless established otherwise by an international agreement signed by Belarus.

International Commercial Arbitration and Foreign Courts

Judgments of foreign courts are accepted and enforced if there is a relevant international agreement signed by Belarus.  Courts recognize and enforce foreign arbitral awards. International arbitration is accepted as a means for settling investment disputes between private parties.  In principle, the GOB accepts binding international arbitration of investment disputes between foreign investors and the state, although the Embassy is not aware of any cases where this has been put to the test.  As of 2018, there were three known cases against Belarus pending at the ICSID: two from Russian investors in joint ventures in transport and infrastructure sectors, and one from a Dutch holding company in the banking sector.  The Belarusian Chamber of Commerce and Industry has an International Arbitration Court. The 2013 “Law on Mediation,” as well as codes of civil and economic procedures, established various alternative ways of addressing investment disputes.

Bankruptcy Regulations

Belarus’ 2012 bankruptcy law, related presidential edicts, and government resolutions are not always consistently applied.  Additional legal acts, such as the Civil Code and Code of Economic Procedures, also include certain regulations on bankruptcy-related issues.  Under the bankruptcy law, foreign creditors have the same rights as Belarusian creditors. Belarusian law criminalizes false and intentional insolvency as well as concealing insolvency.  According to the World Bank’s 2019 Doing Business Report, Belarus was ranked 72 in Resolving Insolvency, down from 68 in 2018 and 69 in 2017 (rankings available at http://www.doingbusiness.org/data/exploreeconomies/belarus  )