Transparency of the Regulatory System
Haitian laws are transparent and theoretically universally applicable, but legal enforcement is not universally applied nor observed. The bureaucracy and “red tape” in the Haitian legal system is often excessive.
Tax, labor, health, and safety laws and policies are theoretically universally applicable. However, they are not universally applied, observed, or enforced. Many in the private sector provide services, such as health care, for employees that Haitian government agencies do not insure.
Draft bills or regulations are available to the public through Le Moniteur, which is the official journal of Haiti. Le Moniteur contains public agency rules, decrees, and public notices that the Les Presses Nationales d’Haiti (PNd’H) publishes.
International Regulatory Considerations
Haiti is a member of the Caribbean Community (CARICOM). The CARICOM Single Market and Economy (CSME), created in 1989, aims to advance the region’s integration into the global economy by facilitating free trade in goods and services, and the free movement of labor and capital. CSME became operational in January 2006 in twelve of the fifteen Member States. Haiti, as a member of CARICOM, expressed an interest in participating fully in CSME. However, to become eligible, Haiti is required to amend its customs code to align with the local tariffs to both CARICOM and World Trade Organization (WTO) standards. In March of 2017 Haiti notified the WTO of its intent to adjust its tariff rates to bring them in line with CARICOM CETs. The changes are under negotiation.
Haiti also adheres to the compulsory jurisdiction of the International Court of Justice on issues of international law, and of the Caribbean Court of Justice (CCJ) for the settlement of trade disputes within CARICOM.
Haiti is an original member of the WTO. As such, it has made several commitments to the WTO in regards to the financial services sector. These commitments include allowing foreign investment in financial services, such as retail, commercial, and investment banking, and consulting. Until recently, before the acquisition of Scotia Bank, there were two foreign banks operating in Haiti: Citibank of the United States and Scotia Bank of Canada. Haiti has also committed to notifying the WTO Committee on Technical Barriers to Trade (TBT) of all draft technical regulations.
Legal System and Judicial Independence
As a former French colony, Haiti adopted the French civil law system. The Supreme Court, also known as the Superior Magistrate Council, is the highest court of the nation, followed by the Court of Appeal and the Court of First Instance. Haiti’s commercial code dates back to 1826 and underwent significant revisions in 1944. There are few commercial legal remedies available. Inadequate law enforcement mechanisms, outdated laws to handle modern commercial practices, and a weak judicial system severely compromise the protection and guarantees that Haitian laws extend to investors. Injunctive relief is based upon penal sanctions rather than securing desirable civil action. Similarly, contracts to comply with certain obligations, such as commodities futures contracts are not enforced. Haitian judges do not have specializations, and their knowledge of commercial law is limited. Utilizing Haitian courts to settle disputes is a lengthy process and cases can remain unresolved for years, and bonds to release assets frozen through litigation are unavailable. Business litigants are often frustrated with the legal process and pursue out-of-court settlements.
The Haitian Chamber of Commerce and Industry (CCIH), in partnership with the Haitian government and with funding from the EU, has a commercial dispute settlement mechanism – the Arbitration and Conciliation Chamber – to provide mechanisms for conciliation and arbitration in cases of private commercial disputes.
Haiti’s inefficient legal system often hinders U.S. citizens trying to resolve legal disputes. There are persistent allegations that some Haitian officials use their public office to influence commercial dispute outcomes for personal gain. However, with international assistance, the GOH is actively working to increase the credibility of the judiciary and the effectiveness of the national police.
Laws and Regulations on Foreign Direct Investment
The Investment Code prohibits fiscal and legal discrimination against foreign investors. The code explicitly recognizes the crucial role of foreign direct investment in promoting economic growth. It also aims to facilitate, liberalize, and stimulate private investment, and contains exemptions to promote investment that will enhance competitiveness in sectors deemed priorities, especially export-oriented sectors. Tax incentives, such as reductions on taxable income and tax exemptions, are designed to promote private investment. Additionally, the code grants Haitian and foreign investors the same rights, privileges and equal protection. Foreign investors must be legally registered and pay appropriate local taxes and fees.
The code also established an Inter-Ministerial Investment Commission (CII) to examine investor eligibility for license exemptions as well as customs and tariff advantages. The Prime Minister, or his delegate, chairs the CII, which is composed of representatives of the Ministries of Economy and Finance, Commerce, and Tourism, as well as those ministries that oversee specific areas of investment. The CII must authorize all business sales, transfers, mergers, partnerships, and fiscal exemptions within the scope of the code. The CII also manages the process of fining and sanctioning enterprises that ignore the code.
Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors, such as electricity, water, and telecommunications, requires a Haitian government concession as well as an authorization from the appropriate state agency. In general, the GOH considers natural resources as State property. Accordingly, exploring or exploiting mineral and energy resources requires concessions and permits from the Ministry of Public Works’ Bureau of Mining and Energy. Mining, and operating permits may only be granted to firms and companies established in Haiti.
Haitian law is deficient in a number of areas, including operation of the judicial system; publication of laws, regulations, and official notices; establishment of companies; land tenure and real property law and procedures; bank and credit operations; insurance and pension regulation; accounting standards; civil status documentation; customs law and administration; international trade and investment promotion; foreign investment regulations; and regulation of market concentration and competition. Although these deficiencies hinder business activities, they are not specifically aimed at foreign firms; they appear to affect both foreign and local companies equally.
Competition and Anti-Trust Laws
There is currently no law to regulate competition. Haiti is one of the most open economies in the region. The investment code provides the same rights, privileges and equal protection to local and foreign investors. Anti-corruption legislation also criminalizes nepotism and the dissemination of inside information on public procurement processes. Haiti does not have an Anti-Trust law.
Expropriation and Compensation
The 1987 Constitution allows expropriation or dispossession only for reasons of public interest or land reform and is subject to prior payment of fair compensation as determined by an expert. If the initial project for which the expropriation occurred is abandoned, the Constitution stipulates that the expropriation will be annulled and the property returned to the original owner. The Constitution prohibits nationalization and confiscation of real and personal property for political purposes or reasons.
Title deeds are vague and often insecure. The Haitian government has an office National Institute of Agrarian Reform (INARA) to implement expropriations of private agricultural properties with appropriate compensation. The agrarian reform project, initiated under the Preval administration (1996-2001), was controversial among both Haitian and U.S. property owners. There are complaints of non-compensation for the expropriation of property. A revision of the land tenure code is expected to address current issues related to the lack of access to land records, surveys, and property titles in Haiti. A recent partnership between the private sector, the GOH, and international organizations developed a useful guide formalizing land tenure.
ICSID Convention and New York Convention
In 2009, Haiti ratified the 1965 International Convention on the Settlement of Investment Disputes between states and nationals of other states (ICSID). Under the convention, foreign investors can call for ICSID arbitration in case of dispute with the state. The Haitian government appears to recognize that weak enforcement mechanisms and a lack of updated laws to handle modern commercial disputes severely compromises the protections and guarantees that Haitian law extends to investors.
Haiti is not a signatory to the Inter-American-U.S. convention on International Commercial Arbitration of 1975 (Panama Convention).
Investor-State Dispute Settlement
Haiti is a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards, which provides for the enforcement of an agreement to arbitrate present and future investment disputes. Under the convention, Haitian courts can enforce such an agreement by referring the parties to arbitration. Disputes between foreign investors and the state can be settled in Haitian courts or through international arbitration, though claimants must select one to the exclusion of the other. A claimant dissatisfied with the ruling of the court cannot request international arbitration after the ruling is issued.
The law provides mechanisms on the procedures a court should follow to enforce foreign arbitral awards issues. In recent years, there have not been any investment dispute cases involving the Haitian government and foreign investors.
International Commercial Arbitration and Foreign Courts
International arbitration is strongly encouraged as a means of avoiding lengthy domestic court procedures. The Haitian Arbitration and Conciliation Chamber created in October 2007 provides mechanisms for conciliation and arbitration in private commercial disputes.
Haiti is actively working with the international community to create a domestic culture that accepts international arbitration as an effective means for dispute resolution. In 2005, The Haitian Chamber of Commerce and Industry (CCIH) and the IDB jointly worked to develop the Conciliation and Arbitration Court of Haiti (CCAH). The Arbitration and Conciliation Chamber provides mechanisms for conciliation and arbitration in cases of private commercial disputes. Foreign judgments are enforceable under local courts.
Haiti’s bankruptcy law was enacted in 1826 and modified in 1944. There are three phases of bankruptcy under Haitian law. In the first stage, payments cease and bankruptcy is declared. In the second stage, a judgment of bankruptcy is rendered, which transfers the rights to administer assets from the debtor to the Director of the Haitian Tax Authority (Direction Generale des Impots, or DGI). In this phase, assets are sealed and the debtor is confined to debtor’s prison. In the last stage, the debtor’s assets are liquefied and the debtor’s verified debts are paid. In practice, the above measures are seldom applied. Since 1955, most bankruptcy cases have been settled between the parties.
Although the concepts of real property mortgages and chattel mortgages – pledging of personal property, such as machinery, furniture, automobiles, or livestock to secure a mortgage – exist, real estate mortgages involve antiquated procedures and may fail to be recorded against the debtor or other creditors. Property is seldom purchased through a mortgage and secured debt is difficult to arrange or collect. Liens are virtually impossible to impose, and using the judicial process for foreclosure is time consuming and often futile. In order to make progress in this area, Haiti needs to enact a credit bureau law and create an electronic collateral registry. Banks frequently require that loans be secured in U.S. dollars.
Debts are normally paid in Haitian gourdes (HTG).