Transparency of the Regulatory System
The government generally employs transparent policies and effective laws consistent with international norms. Rwanda is a member of the U.N. Conference on Trade and Development’s international network of transparent investment procedures. The Rwanda eRegulations system is an online database designed to bring transparency to investment procedures in Rwanda. Investors can find further information on administrative procedures at: http://rwanda.eregulations.org/ . Rwandan laws and regulations are published in the Government Gazette and/or online at http://primature.gov.rw/index.php?id=97 . Government institutions generally have clear rules and procedures, but implementation can sometimes be uneven. Cases of investors receiving conflicting information from different officials in one or more government departments have been cited by investors. Breach of contracts and incentive promises, and the short time given to comply with changes in government policies, are cited as hurdles to comply with regulations.
There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review proposed laws. There is no informal regulatory process managed by nongovernmental organizations. There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations. Legal, regulatory, and accounting systems are generally transparent and consistent with international norms, but are not always enforced. The Rwanda Utility Regulation Agency (RURA), the Office of the Auditor General (OAG), the Anticorruption Division of the RRA, the Rwanda Standards Board (RSB), and the National Tender Board (NTB) also enforce regulations. In recent years, the OAG’s annual reports to parliament have prompted wide-ranging criminal investigations of alleged misconduct and corruption. Consumer protection associations exist, but are largely ineffective. The business community has been able to lobby the government and provide feedback on some draft government policies through the Private Sector Federation, a business association with strong ties to the government.
International Regulatory Considerations
Rwanda is a member of the East African Community (EAC) Standards Technical Management Committee. Approved EAC measures are generally incorporated into the Rwandan regulatory system within six months and are published in the National Gazette like other domestic laws and regulations. Rwanda is also a member of the International Standardization Organization (ISO) and African Organization for Standardization (ARSO). Rwanda notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Legal System and Judicial Independence
The Rwandan legal system was originally based on the Belgian civil law system. However, since the renovation of the legal framework in 2002, with a constitution introduced in June 2003 and the country joining the Commonwealth in 2009, there is now a mixture of civil law and common law (hybrid system). Rwanda’s commercial courts address commercial disputes and facilitate enforcement of property and contract rights. Rwanda’s judicial system suffers from a lack of resources and capacity, including well-functioning courts, with cases currently backlogged two to five years. Investors occasionally cite what they perceive as the government’s casual approach to contract sanctity and say the government sometimes fails to enforce court judgments in a timely fashion.
Laws and Regulations on Foreign Direct Investment
National laws governing commercial establishments, investments, privatization and public investments, land, and the protection and conservation of the environment are the primary directives governing investments in Rwanda. In 2011, the government reformed tax payment processes and enacted additional laws on insolvency and arbitration. Under the 2012 penal code, which is currently under revision, the government may compel a firm to disclose proprietary information to government authorities under the auspices of a criminal investigation of fraudulent bankruptcy or other alleged criminal offense. The 2015 Investment Code establishes policies on foreign direct investment, including dispute resolution (Article 9). The RDB keeps investment-related regulations and procedures at the following website: http://businessprocedures.rdb.rw .
Competition and Anti-Trust Laws
Although Rwanda already has legislation in place to regulate competition, the government is setting up the Rwanda Inspectorate and Competition Authority (RICA), a new independent body with the mandate to promote fair competition among producers. The body will reportedly aim to ensure consumer protection and enforcement of standards. RICA will serve as a regulatory body to enforce technical regulations and laws related to trade, while the Rwanda Standards Board (RSB) will continue to set quality standards for goods. To read more on competition laws in Rwanda, please visit: http://mineacom.gov.rw/index.php?id=279 .
Some U.S. companies have expressed frustration that while authorities require them to operate as a formal enterprise that meets all Rwandan regulatory requirements, some local competitors are small and informal businesses that do not operate in full compliance with all regulatory requirements. Other investors have claimed unfair treatment compared to ruling party-aligned or politically connected business competitors in securing public incentives and contracts.
Expropriation and Compensation
The 2015 Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated. In March 2015, a new expropriation law came into force that included more explicit protections for property owners. Though Rwandan law is clear that private property will be expropriated only in the public interest and after appropriate compensation following market rates, property owners have complained about the definition of public interest, valuation procedures, payment levels, and timing of payments. A number of property owners have protested expropriation of their property by the City of Kigali and claimed that the compensation offered was below market value and not in accordance with the expropriation law.
ICSID Convention and New York Convention
Rwanda is signatory to the International Center for Settlement of Investment Disputes (ICSID) and the African Trade Insurance Agency (ATI). ICSID seeks to remove impediments to private investment posed by non-commercial risks, while ATI covers risk against restrictions on import and export activities, inconvertibility, expropriation, war, and civil disturbances.
Investor-State Dispute Settlement
Rwanda is a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the East African Community. Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency (MIGA) convention. Under the U.S.-Rwanda Bilateral Investment Treaty, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels. Disputes between U.S. investors and the government in recent years have been resolved through international arbitration, court judgments, or out of court settlements. Judgments by foreign courts and contract clauses that abide by foreign law are accepted and enforced by local courts, though local courts lack capacity and experience to adjudicate cases governed by non-Rwandan law. There have been a number of private investment disputes in Rwanda, though the government has yet to stand as complainant or respondent in a World Trade Organization (WTO) dispute settlement. Rwanda has been a party to one case at ICSID since Rwanda became a member in September 1963. State-owned enterprises (SOEs) are also subject to domestic and international disputes. In 2017, SOEs party to a suit both won and lost several judgments by the Supreme Court, while other cases were settled under arbitration.
International Commercial Arbitration and Foreign Courts
In 2012, the government launched the Kigali International Arbitration Center (KIAC). According to press reports, the KIAC has reviewed 54 cases worth USD 100 million involving petitions of ten different nationalities since 2012. Some businesses report being pressured to use the Rwanda-based KIAC for the seat of arbitration in contracts signed with the government. Because KIAC has a short track record and the location of its domicile, these companies report difficulty in securing international financing due to this provision in their contracts.
Rwanda ranks 78 out of 190 economies for resolving insolvency in the 2016 World Bank’s Doing Business Report. According to the report, it takes an average of two and a half years to conclude bankruptcy proceedings in Rwanda. The recovery rate for creditors on insolvent firms was reported at 19.2 cents on the U.S. dollar, with judgments typically made in local currency.
Over the last decade, Rwanda improved its insolvency system through a 2009 Insolvency Law clarifying the standards for beginning insolvency proceedings, preventing the separation of the debtor’s assets during reorganization proceedings, setting clear time limits for the submission of a reorganization plan, implementing an automatic stay of creditors’ enforcement actions, introducing provisions on voidable transactions and the approval of reorganization plans, and establishing additional safeguards for creditors in reorganization proceedings. In 2008, the government implemented business reform legislation, which included new bankruptcy regulations and arbitration laws. In 2011, the government reformed tax payment processes and enacted additional laws on insolvency and arbitration. Under the 2012 penal code, the government may compel a firm to disclose proprietary information to government authorities under the auspices of a criminal investigation of fraudulent bankruptcy or other alleged criminal offense.