3. Legal Regime
Transparency of the Regulatory System
Companies are required to adhere to the International Financial Reporting Standards (IFRS) consistent with international norms. In many instances, however, authorities do not consistently enforce or apply national laws and international standards. Further, no systemic oversight or enforcement mechanisms exist to ensure that government authorities follow administrative processes. Some government ministries and agencies often have overlapping responsibilities, resulting in inconsistent application of the laws.
Although ministries and agencies usually publish finalized regulations, no prior public comment period is required. No central clearinghouse exists to access proposed regulations. Government revenues and debts, while partially captured in national budgets, are not transparent. Some budget documents are accessible online. For more information on regulatory transparency, see .
International Regulatory Considerations
Liberia is a member of two regional economic blocks, the Mano River Union (MRU) and the Economic Community of West African States (ECOWAS). The Liberia Revenue Agency (LRA) continues to standardize and harmonize the country’s customs and tariff systems to incorporate Liberia’s tax regime into the ECOWAS External Tariff. Under its tax system modernization program, the LRA has undertaken new efficiency measures including adopting a Mobile Tax Payment option for citizens to pay taxes and fees via their mobile phones.
As a WTO member, the government has acceded to the terms and conditions of the WTO arrangements including technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures.
Legal System and Judicial Independence
Liberia’s legal system uses common and regulatory law as well as local customary law. The common law based court system operates in parallel with local customary law, which incorporates unwritten, indigenous practices, culture, and traditions. The 2001 Revised Rules and Regulation Governing the Hinterland of Liberia govern the traditional court system. See . Adjudication of law under these two systems often results in conflicting decisions between Monrovia-based entities, local communities outside of Monrovia, and within individual communities.
The Commercial Court hears commercial and contractual issues, including debt disputes of 15,000 USD and above. A commission under the Ministry of Labor hears claims of unfair labor practices. In theory, the Commercial Court presides over all financial, contractual, and commercial disputes, serving as an additional avenue to expedite commercial and contractual cases. The Supreme Court is the final arbiter of all cases and it hears all appeals, which places a significant burden on its panel of five judges. The judicial branch remains functionally independent of the executive, but there have been reports of executive branch interference in judicial matters. There have also been reports of extensive delays and procedural and other errors, casting doubt on the fairness and reliability of judicial decisions. Regulations or enforcement actions are appealable, and appeals are adjudicated in the Supreme Court.
Laws and Regulations on Foreign Direct Investment
No judicial decisions pertaining to foreign direct investment have come out in the past year.
The government does not maintain a “one-stop-shop” website for investment laws, rules, procedures, or reporting requirements. The NIC provides sector-specific investment counseling and/or advisory services upon request. The LCC also maintains a helpdesk to explain relevant information on AGOA regulatory processes and procedures. It assists importers in processing documents to comply with AGOA procedures and Liberian customs regulations.
Competition and Anti-Trust Laws
The Liberia Intellectual Property Office (LIPO), under the Ministry of Commerce and Industry (MOCI), administers, investigates, and enforces competition-related issues in line with the Competition Law. This law incorporates WTO requirements to encourage a free market economy by promoting fair competition. Liberia does not have anti-trust laws.
Expropriation and Compensation
The 2010 Investment Act protects foreign enterprises against expropriation or nationalization by the government “unless the expropriation is in the national interest for a public purpose, is the least burdensome available means to satisfy that overriding public purpose, and is made on a non-discriminatory basis in accordance with due process of law.” Liberia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) Convention.
ICSID Convention and New York Convention
Liberia is a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) – also known as the Washington Convention – and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards – also known as the New York Arbitration Convention. The Commercial Code provides for enforcement of awards under either convention. The Investment Act provides that “the courts of Liberia shall have jurisdiction over the resolution of business disputes, parties to an investment disputes may however specify any arbitration or other dispute resolution procedure upon which they may agree.”
Investor-State Dispute Settlement
Liberia is a member of the ICSID Convention and a signatory to the Multilateral Investment Guarantee Agency (MIGA) Convention that guarantee the protection of foreign investment. The Civil Procedure Law governs both domestic and international arbitrations, but there is not a stand-alone arbitration law. Enforcing foreign or domestic arbitration awards may require several years, from filing an application to the court of first instance to obtaining a writ of execution, with provision for an appeal.
Under the ICSID and the New York Arbitration Conventions, Liberian courts are bound to recognize and enforce foreign arbitral awards issued against the government. Liberia is also a signatory to the ECOWAS Treaty, which contains investor-state dispute settlement (ISDS) provisions.
There have been no recent extrajudicial actions against foreign investors.
International Commercial Arbitration and Foreign Courts
The Investment Act provides for trade dispute settlement between two private parties through either the judicial system or alternative dispute resolution (ADR). Other codes, statutes, and legislative provisions, including the Liberian Civil Procedure Law, govern commercial arbitration and recognize arbitration as a means of resolution between private parties in commercial transactions, based on the model of the United Nations Commission on International Trade Law (UNCITRAL model law).
Investment contracts between private entities and the government frequently include arbitration clauses specifying dispute settlement outside of Liberia.
Given the general weakness of the judiciary, judicial processes are not always procedurally competent and reliable.
Liberia does not have a bankruptcy law. The Commercial Court has limited experience protecting the rights of creditors, equity holders, and holders of other financial contracts.
Liberia suffers from corruption in both the public and private sectors. Some officials engage in corrupt practices with impunity. Liberia has laws against economic sabotage, mismanagement of funds, bribery, and other corruption-related acts, including conflicts of interest. In 2019, Transparency International lowered Liberia’s rank from 120 to 137 out of 180 countries in its corruption perception index. See .
The (LACC) cannot directly prosecute corruption cases. It must first submit/refer cases to the (MOJ) for prosecution. If the MOJ does not prosecute within 90 days, the LACC may then take those cases to court. The LACC continues to seek public support for the establishment of a specialized court to exclusively try corruption cases.
Foreign investors generally report that corruption is most pervasive in government procurement, contract and concession awards, customs and taxation systems, regulatory systems, performance requirements, and government payments systems. Multinational firms often report paying fees not stipulated in investment agreements. No laws explicitly protect NGOs that investigate corruption.
Liberia is signatory to the Economic Community of West African States (ECOWAS) Protocol on the Fight against Corruption, the African Union Convention on Preventing and Combating Corruption (AUCPCC), and the UN Convention against Corruption (UNCAC).
Resources to Report Corruption
Contact at government agencies responsible for combating corruption:
Baba Borkai, Chief Investigator
Liberia Anti-Corruption Commission (LACC), Monrovia,
Toll free: (+231) 777-313131
Contact at a “watchdog” organization (local or nongovernmental organization operating in Liberia that monitors corruption):
Anderson Miamen, Executive Director
Center for Transparency and Accountability in Liberia (CENTAL)
Tel: (+231) 886-818855