Transparency of the Regulatory System
Angola’s regulatory system is complex, vague, and inconsistently enforced. In many sectors, no effective regulatory system exists due to lack of institutional capacity. The banking system is slowly adhering to International Financial Reporting Standards (IFRS). Public sector companies (SOEs) are still far from practicing IFRS. The public does not participate in draft bills or regulations formulation, nor does a public online location exist where the public can access this information for comment or hold executives accountable for irresponsible actions. The Angolan Communications Institute (INACOM) sets prices for telecommunications services and is the regulatory authority for the telecommunications sector. Revised energy-sector licensing regulations have permitted some purchase power agreements (PPA) participation.
Overall, Angola’s national regulatory system does not correlate to other international regulatory systems. However, Angola is a member of the World Bank, African Development Bank (AfDB), the Organization of Petroleum Exporting Countries (OPEC) (January 2007), the United Nations (UN) and most of its specialized agencies – International Conference on Reconstruction and Development (IBRD), the United Nations Development Program (UNCTAD), the International Monetary (IMF), the World Health Organization (WHO), World Trade Organization (WTO), and has a partnership agreement with the European Union (EU). At the regional level, the GRA is part of the Common Market for Eastern and Southern Africa (COMESA), the Community of Portuguese Speaking Countries (CPLP), and the Southern African Development Community (SADC), among other organizations. Angola has yet to join the SADC Free Trade Zone of Africa as a full member. On March 21, 2018, together with 44 African countries, Angola joined the African Continental Free Trade Area (AfCFTA), an agreement aimed at paving the way for a liberalized market for goods and services across Africa. Angola is also a member of the Port Management Association of Eastern and Southern Africa (PMAESA), which seeks to maintain relations with other port authorities or associations, regional and international organizations and governments of the region to hold discussions on matters of common interest.
Angola became an original WTO Member on 23 November 1996; however, it is not party to the Plurilateral Agreements on Government Procurement, the Trade in Civil Aircraft Agreement and has not yet notified the WTO of its state-trading enterprises within the meaning of Article XVII of the GATT. A government procurement management framework introduced in late 2010 stipulates a preference for goods produced in Angola and/or services provided by Angolan or Angola-based suppliers. Technical Barriers to Trade (TBT) regimes are not coordinated. There have been no investment policy reviews for Angola from either the Organization for Economic Cooperation and Development (OECD) or the United Nations Conference on Trade and Development (UNCTAD) in the last four years. Angola conducts several bilateral negotiations with Portuguese Speaking countries (PALOPS), Cuba and Russia and extends trade preferences to China due to credit facilitation terms, while attempting to encourage and protect local content.
Regulation reviews are based on scientific or data driven assessments or baseline surveys. Evaluation is based on data; however, it is not made available for public comment.
The National Assembly is Angola’s main legislative body with the power to approve laws on all matters (except those reserved by the Constitution to the Government) by simple majority (except if otherwise provided in the Constitution). Each legislature comprises four legislative sessions of twelve months starting on October 15 annually. National Assembly members, parliamentary groups, and the government hold the power to put forward all draft-legislation. However, no single entity can present draft laws that involve an increase in the expenditure or decrease in the State revenue established in the annual budget.
The President promulgates laws approved by the Assembly and signs Government Decrees for enforcement. The State reserves the right to have the final say in all regulatory matters and relies on sectorial regulatory bodies for supervision of institutional regulatory matters concerning investment. The Economic Commission of the Council of Ministers oversees investment regulations that affect the country’s economy including the ministries in charge. Other major regulatory bodies responsible for getting deals through include:
- The Ministry of Petroleum: The government regulatory and oversight body responsible for regulating oil exploration and production activities. The national concessionaire is Sonangol EP, which is the holder of the concession rights and has the authority to conduct, execute, and ensure oil operations in Angola.
- IRSEA: The regulatory authority for renewable energies and enforcing powers of the electricity regulatory authority.
- The Angolan Communications Institute (INACOM): The institute sets prices for telecommunications services and is the regulatory authority for the telecommunications sector. Revised energy-sector licensing regulations have improved legal protection for investors to attract more private investment in electrical infrastructure, such as dams and hydro distribution stations.
Angola acceded to the New York Arbitration Convention on August 24, 2016 paving the way for the first time for effective recognition and enforcement in Angola of awards rendered outside of Angola and subject to reciprocity. Angola participates in the New Partnership for Africa’s Development (NEPAD), which includes a Peer Review Mechanism on good governance and transparency. Enforcement and protection of investors is under development in terms of regulatory, supervisory, and sanctioning powers. Investor protector mechanisms are weak or almost non-existent.
There are no informal regulatory processes managed by nongovernmental organizations or private sector associations, and the government does not allow the public to engage in the formulation of legislation or to comment on draft bills. Procurement laws and regulations are unclear, little publicized, and not consistently enforced. Oversight mechanisms are weak; no audits are required or performed to ensure internal controls are in place or administrative procedures are followed. Inefficient bureaucracy frequently leads to payment delays for goods delivered, resulting in an increase in the price the government must pay.
No regulatory reform enforcement mechanisms have been implemented since the last ICS report, in particular those relevant to foreign investors.
The Diario da Republica (the Federal Register equivalent), is a legal document where key regulatory actions are officially published.
International Regulatory Considerations
Angola’s overall national regulatory system does not correlate to other international regulatory systems and is overseen by its constitution. Angola is not a full member of the International Standards Organization (ISO), but has been a corresponding member since 2002. The Angolan Institute for Standardization and Quality (IANORQ) within the Ministry of Industry coordinates the country’s establishment and implementation of standards. Angola is an affiliate country of the International Electro-technical Commission that publishes consensus-based International Standards and manages conformity assessment systems for electric and electronic products, systems and services.
A government procurement management framework introduced in late 2010 stipulates a preference for goods produced in Angola and/or services provided by Angolan or Angola-based suppliers. Technical Barriers to Trade (TBT) regimes are not coordinated.
Angola acceded the Kyoto Convention on February 23, 2017.
Legal System and Judicial Independence
Angola’s formal legal system is primarily based on the Portuguese legal system and can be considered civil law based, with legislation as the primary source of law. Courts base their judgments on legislation and there is no binding precedent as understood in common law systems. The Constitution proclaims the Constitution as the supreme law of Angola (article 6(1)) and all laws and conduct are valid only if they conform to the Constitution (article 6(3)).
Businesses and non-governmental organizations report that the Angolan justice system is slow, arduous, and not always impartial. Legal fees are high, and most businesses avoid taking commercial disputes to court in the country. The World Bank’s Doing Business 2018 survey ranks Angola 186 out of 190 countries on contract enforcement, and estimates that commercial contract enforcement, measured by time elapsed between filing a complaint and receiving restitution, takes an average of 1,296 days, at an average cost of 44.4 percent of the claim.
Angola has commercial legislation that governs all commercial activities but no specialized court. In 2008, the Angola Attorney General ruled that Angola’s specialized tax courts were unconstitutional. The ruling effectively left businesses with no legal recourse to dispute taxes levied by the Ministry of Finance, as the general courts consistently rule that they have no authority to hear tax dispute cases, and refer all cases back to the Ministry of Finance for resolution. Angola’s Law 22/14, of December 5, 2014, which approved the Tax Procedure Code (“TPC”), sets forth in its Article 5 that the courts with tax and customs jurisdiction are the Tax and Customs Sections of the Provincial Courts and the Civil, Administrative, Tax and Customs Chamber of the Supreme Court. Article 5.3 of the law specifically states that tax cases pending with other courts must be sent to the Tax and Customs Section of the relevant court, except if the discovery phase (i.e., the production of proof) has already begun.
The Judicial system is administered by the Ministry of Justice at trial level for provincial and municipal courts and the Supreme Court nominates provincial court judges. In 1991, the constitution was amended to guarantee judiciary independence. However, as per the 2010 constitution, the President appoints Supreme Court judges for life upon recommendation of an association of magistrates and appoints the attorney general. Confirmation by the General Assembly is not required. The system lacks resources and independence to play an effective role and the legal framework is obsolete, with much of the criminal and commercial code reflecting colonial era codes with some Marxist era modifications. Courts remain wholly dependent on political power.
There is a general right of appeal to the court of first instance against decisions from the primary courts. To enforce judgments/orders, a party must commence further proceedings called executive proceedings with the civil court. The main methods of enforcing judgments are:
- Execution orders (to pay a sum of money by selling the debtor’s assets);
- Delivery up of assets; and,
- Provision of information on the whereabouts of assets.
The Civil Procedure Code also provides ordinary and extraordinary appeals. Ordinary appeals consist of first appeals, review appeals, interlocutory appeals, and full court appeals, while extraordinary appeals consist of further appeals and third-party interventions. Generally, an appeal does not operate as a stay of the decision of the lower court unless expressly provided for as much in the Civil Procedure Code.
Laws and Regulations on Foreign Direct Investment
The newly constituted Agency for Investment and Promotion of Exports of Angola (AIPEX) is the sole investment and export promotion center tasked with promoting Angola’s export potential, legal framework, environment, and investment opportunities nationally and abroad. Housed within the Ministry of Commerce, AIPEX is also responsible for ensuring the application of the new 2018 investment law on Foreign Direct investments.
Competition and Anti-Trust Laws
On May 17, Angola’s National Assembly approved a Law on Competition. The law provides for the creation of the Competition Regulatory Authority, which is tasked with preventing and cracking down on actions of economic agents that fail to comply with the rules and principles of competition. The Competition Regulatory Authority may file a suit based on violations of fair competition rules.
The Pricing and Competition Bureau under the Ministry of Finance was created in 2011 (Presidential Decree 162/11) to ensure the coordination and consistency of pricing and revenue, under which goods and services were divided into three categories: 1) Preco Fixo (Fixed Price): Oil, gas, electricity, water, urban transportation; 2) Preco Vigiado (Monitored Price): Basic Food Basket: Sugar, rice, oil, salt, milk tomatoes, onions, fish, meat, etc., plus transportation (air, surface, rail, sea, ports.); and, 3) Free Price (Preco Libre): items not included in categories one and two. A February 25, 2016 Presidential Decree (28/16), further established price formation on categories two and three.
Expropriation and Compensation
Under the Land Tenure Act of 2004, all land belongs to the state and the state reserves the right to expropriate land from any settlers. The State may also allow for land usage through a 60-year lease, after which the State reserves legal right to take over ownership.
Expropriation without compensation remains a common practice. Land tenure became a more significant issue following independence from Portugal when over 50 percent of the population moved to urban centers during the civil war. The State offered some areas for development within a specific timeframe. After this timeframe, areas that remained underdeveloped reverted to the state with no compensation to any claimants. Almost in all cases, claimants allege unfair treatment and little or no compensation.
Angola is not a member state to the International Centre for Settlement of Investment Disputes (ICSID Convention), but has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Its ratification was endorsed domestically via resolution No. 38/2016, published in the Official Gazette of Angola on August 12, 2016.
Investor-State Dispute Settlement
The Angolan Arbitration Law (Law 16/2003 of 25 July) (Voluntary Arbitration Law — VAL) provides for domestic and international arbitration. Substantially inspired by Portuguese 1986 arbitration law, it cannot be said to strictly follow the UN Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. In contrast the VAL contains no provisions on definitions, rules on interpretation, adopts the disposable rights criteria in regards to arbitration, does not address preliminary decisions, nor distinguish between different types of awards, and permits appeal on the merits in domestic arbitrations, unless the parties have otherwise agreed.
Angola is also a member of the Multilateral Investment Guarantee Agency (MIGA), which can provide dispute settlement assistance as part of its political risk insurance products and eligibility for preferential trade benefits under the African Growth Opportunity Act. The United States and Angola have signed a trade and investment framework agreement (TIFA), which seeks to promote greater trade and investment between the two nations.
The U.S. Embassy is aware of two ongoing formal investment disputes involving American companies that went to arbitration in 2017.
International Commercial Arbitration and Foreign Courts
In June 2014, the Ministry of Justice and Human Rights (MINJHR) opened the Center of Legal Alternatives for Conflict Resolution. Among other functions, the Center is tasked with providing consultation, mediation, and arbitration of contract disputes for both Angolan and foreign businesses. The process is designed to be faster and less costly than the traditional court system. The U.S. Embassy is not aware of any cases reviewed by this court.
Local courts do recognize arbitration, but do not enforce or distinguish between different types of awards, and permit appeal on the merits in domestic arbitrations, unless the parties have otherwise agreed.
Angola is ranked 168 out of 190 on the World Bank’s Doing Business 2018 report on resolving insolvency.
As a former Portuguese colony, Angola inherited the Portuguese insolvency legislation. The current civil procedure code in force since 1961 establishes two different processes: a bankruptcy procedure applicable exclusively to commercial debtors, or an insolvency procedure applicable to non-commercial debtors.
The World Bank Doing Business 2018 report found that no foreclosure, liquidation, or reorganization proceedings were filed within the past 12 months. While Angola’s arbitration law (Arbitration Law No. 16/03) adopted in 2013 introduced the concept of domestic and international arbitration, the practice of arbitration law is still not widely implemented.
The Ministry of Finance, the BNA and the Capital Markets Commission (CMC) oversee credit monitoring and regulation.