Transparency of the Regulatory System
The Companies Ordinance and the Foreign Investment Act, in general, govern foreign investments. An investment proposal can only be denied if it is illegal, contrary to public morals, or environmentally unsound. Government inaction on a proposal, however, may have the same effect as outright denial. Foreign investors have complained about a lack of transparency and delays in the investment approval process. Complaints focus on a perceived lack of delineation of authority for final investment approvals among the various ministries and agencies that may be involved in a project. Some prospective investors have abandoned their efforts in TT as a result of long delays.
Legal, regulatory, and accounting systems are consistent with international norms.
Rule-making and regulatory authority exist within the Ministries and regulatory agencies at the national level. The process for development of regulations involves the establishment of a committee comprised of stakeholders from public sector agencies, private sector firms and civil society. The committee is responsible for developing proposed regulations and may sometimes use independent studies as the basis for proposals.
Post is not aware of any informal regulatory processes managed by non-governmental organizations or private sector associations.
Proposed laws and regulations are often published in draft form for public comment, though there is no legal obligation to do so. The government solicits private sector and business community comments on proposed legislation. The government and private sector do not seek to restrict foreign participation in industry standards-setting organizations. Draft bills and regulations are often made public via a unified website managed by the government or printed in an official gazette/journal:
Affected parties can request reconsideration or appeal adopted regulations to the relevant administrative agency.
TT not a member of UNCTAD’s international network of transparent investment procedures.
International Regulatory Considerations
TT is not part of a regional economic block. Legal, regulatory, and accounting systems are consistent with international norms. Proposed laws and regulations are often published in draft form for public comment, though there is no legal obligation to do so; the government solicits private sector and business community comments on proposed legislation.
The government and private sector do not seek to restrict foreign participation in industry standards-setting organizations. Trinidad and Tobago is not a member of UNCTAD’s international network of transparent investment procedures, though it is a member of the WTO. The Government notifies all draft technical regulations to the WTO committee on Technical Barriers to Trade (TBT). Trinidad and Tobago is a signatory to the Trade Facilitation Agreement since 2015.
Legal System and Judicial Independence
TT has a parliamentary democracy modeled on the English Westminster System and has an independent judicial system that is competent and procedurally and substantively fair. However, it is backlogged and generally lacks specialized courts, making the resolution of legal claims time consuming.
Ownership of property is enforced through the court system. Civil cases of less than USD 7,000 are heard by the Magistrate’s Court. Matters exceeding that amount are heard in the High Court of Justice, which can grant equitable relief. Decisions may be appealed to the TT Court of Appeal. The United Kingdom Privy Council Judicial Committee is the final court of appeal. Criminal acts are first heard by the Magistrates’ Court and may also be appealed as high as the Privy Council. Domestic courts are able to refer parties to mediation. A Mediation Board was created in 2004 with responsibility for certifying mediators and accrediting training programs.
The World Bank ranks TT 173 out of 190 countries for enforcing contracts due to the length of time required to resolve a dispute. There is no court or division of a court dedicated solely to hearing commercial cases. An Industrial Court exclusively handles cases relating to labor practices but also suffers from severe backlogs. Regulations and enforcement actions are appealable.
Laws and Regulations on Foreign Direct Investment
TT’s judicial system respects the sanctity of contracts and generally provides a level playing field for foreign investors involved in court matters. Due to the backlog of cases, however, there can be major delays in the process. It is imperative that foreign investors seek competent local legal counsel. Some U.S. companies are hesitant to pursue legal remedies, preferring to attempt good faith negotiations in order to avoid an acrimonious relationship that could harm their interests in the country’s small, tight-knit business community.
The major laws/regulations, and judicial decisions affecting incoming foreign investment are:
- Foreign Investment Act;
- Occupational Safety and Health Act;
- Minimum Wage Act;
- Retrenchment and Severance Benefits Act.
Useful websites to help navigate foreign investment laws, rules, and procedures are:
Competition and Anti-Trust Laws
The Intellectual Property Act of 2000 covers unfair competition, misleading the public, discrediting another’s enterprise and activities, and disclosure of secret information. The Act identifies which agencies review transactions for competition-related concerns. Enforcement of the law is a concern as the procedure for reviewing competition related concerns is lengthy.
The Fair Trading Commission, established in 2014, has the responsibility for promoting and maintaining fair competition in the domestic market. It investigates the various forms of anti-competitive business conduct set out in the Fair Trading Act.
Expropriation and Compensation
The government can legally expropriate property based on the internal needs of the country and only after due process including adequate compensation, generally based on market value.
The Embassy is not aware of any direct or indirect expropriation actions since the 1980s. All prior expropriations were compensated to the satisfaction of the parties involved. There is no indication of policy shifts that might lead to the implementation of expropriations in the near future.
ICSID Convention and New York Convention
TT is a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention).
TT ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention). Local courts recognize and can enforce foreign arbitral awards according to chapter 20 of the Arbitration (Foreign Arbitral Awards) Act 1996.
The 1958 New York convention allows the enforcement of arbitral awards in international arbitration proceedings. TT’s Judgments Extension Act Chap 5:02 grants the reciprocal enforcement in TT of Judgments of the United Kingdom and other Commonwealth countries. It provides a system of registration to facilitate the direct enforcement of money judgments. A foreign judgment that emanates from a jurisdiction which does not fall within the schedule of countries listed in the Judgments Extension Act will be enforceable in Trinidad and Tobago once the following criteria are satisfied:
- The courts of TT recognize the jurisdictional competence of the foreign Court;
- The foreign judgment is for a definite sum of money;
- The foreign judgment is final and conclusive; and
- There is no defense to the recognition of the foreign judgment.
Investor-State Dispute Settlement
The Bilateral Investment Treaty between the United States and TT allows for alternative dispute resolution measures, including binding arbitration.
Investment disputes are not common in TT. Post is only aware of one investment dispute involving a U.S. company in the past ten years. Trinidad and Tobago follows English common law, widely considered efficient in response to foreign arbitral awards. There is no history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
The Bilateral Investment Treaty between the United States and TT allows for alternative dispute resolution measures, including binding arbitration. There is a domestic dispute resolution center that offers arbitration services. Judgments of foreign courts are recognized and enforceable under the local courts. The Highest Court of appeal is the Privy Council in London.
Lack of court automation, delays in case management, and a lack of capacity have caused tremendous backlogs. Dispute resolution for investment/commercial issues takes approximately 1,340 days (3.6 years), according to the World Bank. This includes filing, trial, judgment, and enforcement. Alternative Dispute Resolution is often a preferred route because of shorter timeframes.
The Bankruptcy and Insolvency Act of 2006 was proclaimed by the President in 2014. A dramatic improvement. It introduces a formal mechanism for rehabilitation, establishes a public office responsible for the general administration of insolvency proceedings, and clarifies the rules on appointment of trustees.
In 2017 the World Bank ranked TT at 72 of 190 countries for resolving insolvency in their Ease of Doing Business Index. This reflects TT’s recovery rate (cents on the dollar) which is worse than the regional average and cost as a percentage of estate. In terms of the insolvency framework index, TT is ranked well above the regional average, almost on par with OECD high income countries. Bankruptcy is not criminalized in TT. Creditors, equity shareholders, and holders of other financial contracts (including foreign contract holders) can present a bankruptcy petition to the High Court. Secured creditors are given first preference to liquidated assets.