Transparency of the Regulatory System
As stipulated in the 2014 new constitution, Tunisia has adopted a semi-parliamentary political system where power is shared between the Parliament, which fulfils the legislative role, and the Presidency of the Republic and the Government, composed of the ministerial cabinet led by a Prime Minister. The Presidency and the Government fulfill the executive role.
Most laws and regulations are developed by the Government; however, the Presidency of the Republic as well as the Parliament can also develop and propose laws.
The Parliament debates and votes on the adoption of the laws. Draft laws are accessible to the public via the Parliament’s website.
Ministerial decrees, decisions, and other related regulations are debated at the level of the government and adopted by a Ministerial Council headed by the Head of Government.
After adoption, all laws, decrees, and regulations are published on the website of the Official Gazette and enforced by the Government at the national level.
The Government takes few proactive steps to raise public awareness of the public consultation period for new draft laws and decrees. Civil society, NGOs, and political parties are all pushing for increased transparency and inclusiveness in rule-making. Many draft bills, such as the budget law, were reviewed many times before submission for a final vote under pressure from civil society. Business associations, chambers of commerce, unions, and political parties reviewed the 2016 Investment Law prior to final adoption.
Not all accounting, legal, and regulatory procedures are in line with international standards. Publicly listed companies adhere to national accounting norms.
The Parliament has oversight authority over the Government but cannot ensure that all administrative processes are followed.
The World Bank Global Indicators of Regulatory Governance for Tunisia are available here: http://rulemaking.worldbank.org/data/explorecountries/tunisia .
Tunisia is a member of the Open Government Partnership, a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance. http://www.opengovpartnership.org/country/tunisia .
International Regulatory Considerations
Tunisia has a free trade agreement in goods with the EU. In its effort to achieve a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, the GOT is working on incorporating as many EU standards as possible in its own regulation.
Tunisia has been a member of the WTO since 1995 and notifies the WTO regarding draft technical regulations on Technical Barriers to Trade (TBT).
Tunisia ratified the WTO Trade Facilitation Agreement (TFA) in February 2017, but has yet to submit the ratification to the WTO.
Legal System and Judicial Independence
The Tunisian legal system is secular. It is based upon the French Napoleonic code and meets EU standards. While the 2014 Tunisian constitution guarantees the independence of the judiciary, constitutionally mandated reforms of courts and broader judiciary reforms are still ongoing.
Regulations or enforcement actions can be appealed at the Court of Appeals.
Laws and Regulations on Foreign Direct Investment
The 2016 Investment Law went into effect April 1, 2017. With a total number of 36 articles, the new law is much shorter and clearer than the previous lengthy and complex Investment Code of 1993. It directs tax incentives towards regional development promotion, technology and high added value, research and development (R&D), innovation, small and medium enterprises (SMEs), and toward encouraging investments in certain sectors (such as education, transport, health, and culture) and environmental protection.
The primary one-stop-shop webpage for investors looking for relevant laws and regulations is hosted at the Investment and Innovation Promotion Agency (APII) website http://www.tunisieindustrie.nat.tn/en/doc.asp?mcat=12&mrub=209 . The 2016 Investment Law (article 15) calls for the creation of an Investor’s Unique Point of Contact within the Ministry of Development, Investment, and International Cooperation to assist new and existing investors to launch and expand their projects.
In addition, the Parliament has adopted a suite of economic reform laws since 2015, including a new renewable energy law, competition law, public-private partnership law, bankruptcy law, and central bank statute to enshrine the independence of the Central Bank of Tunisia.
Competition and Anti-Trust Laws
The 2015 Competition Law established a government appointed Competition Council to reduce government intervention in the economy and promote competition based on supply and demand.
The law ensures free pricing of most products and services, with the exception of a list (determined by decree) of protected products and services such as bread and electricity. In exceptional cases of large increases or collapses in prices, the Ministry of Commerce reserves the right to regulate prices for a period of up to six months. The law also voided previous agreements that fixed prices, limited free competition or the entry of other companies, and limited or controlled production, distribution, investment, technical progress, or supply centers. The Ministry of Commerce reserves the right to uphold these competition-inhibiting agreements, however, if parties can convince the Competition Council that these practices are necessary for overall technical or economic progress, and that benefits are fairly distributed.
The Competition Council has the power to investigate cases and make recommendations to the Ministry of Commerce upon the Ministry’s request.
Expropriation and Compensation
The 2016 Investment Law (article 8) stipulates that investors’ property may not be expropriated except for public interest. Expropriation, if and when carried out, must comply with legal procedures, be executed without discrimination on the basis of nationality, and provide fair and equitable compensation.
U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). According to Article III of the BIT, the GOT reserves the right to expropriate or nationalize investments for the public good, in a non-discriminatory manner, and upon advance compensation of the full value of the expropriated investment. The treaty grants the right to prompt review by the relevant Tunisian authorities of the expropriation and compensation’s conformity with the principles of international law. When compensation is granted to Tunisian or third country companies whose investments suffer losses owing to events such as war, armed conflict, revolution, state of national emergency, civil disturbance, etc., U.S. companies are accorded “the most favorable treatment in regards to any measures adopted in relation to such losses.” There are no outstanding expropriation cases involving U.S. interests.
ICSID Convention and New York Convention
Tunisia is a member of the International Center for the Settlement of Investment Disputes (ICSID) and is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Investor-State Dispute Settlement
U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). The U.S.-Tunisia Bilateral Investment Treaty stipulates that procedures shall allow an investor to take a dispute with a Party directly to binding third-party arbitration.
Disputes involving U.S. persons are relatively rare. Over the past 10 years there were four dispute cases involving U.S. investors; two were settled and one is still ongoing. U.S. firms have generally been successful in seeking redress through the Tunisian judicial system.
The Tunisian Code of Civil and Commercial Procedures allows for the enforcement of foreign court decisions under certain circumstances; such as arbitration.
There is no pattern of significant investment disputes or discrimination involving U.S. or other foreign investors.
International Commercial Arbitration and Foreign Courts
The Tunisian Arbitration Code brought into effect by Law 93-42 of April 26, 1993 governs arbitration in Tunisia. Certain provisions within the code are based on the UNCITRAL model law. Tunisia has several domestic dispute resolution venues. The best known is the Tunis Center for Conciliation and Arbitration. When an arbitral tribunal does not adhere to the rules governing the process, either party can apply to the national court for relief. Unless the parties have agreed otherwise, an arbitral tribunal may, on the request of one of the parties, order any interim measure that it deems appropriate.
Parliament adopted in April 2016 a new bankruptcy law which merged and replaced Chapter IV of the Commerce Law and Law N° 95-34 (Recovery of Companies in Economic Difficulties law). These two previous laws had duplicative and cumbersome processes for business rescue and exit and gave creditors a marginal role. The new law increases incentives for failed companies to undergo liquidation by limiting state collection privileges. The improved bankruptcy procedures are intended to decrease the number of non-performing loans and facilitate access of new firms to bank lending.
According to the World Bank 2018 Doing Business report, Tunisia’s recovery rate (which calculates how many cents on the dollar secured creditors recover from an insolvent firm at the end of insolvency proceedings) is about 52 cents on the dollar (compared to 25.5 cents on the dollar for MENA as a whole and 71.2 cents on the dollar for OECD high income countries).