Transparency of the Regulatory System
Haitian laws are written to allow for transparency and to be applied universally. Haitian officials, however, do not widely enforce these laws and the bureaucratic obstacles in the Haitian legal system are often considerable.
Tax, labor, health, and safety laws and policies are also loosely enforced. All regulatory processes are managed exclusively by the government and do not involve the private sector and non-governmental organizations. The private sector often provides services, such as health care, to employees that are not entitled to coverage under government of Haiti agencies or institutions.
Draft bills or regulations are available to the public through Le Moniteur, the official journal of the Haitian government. Some information is available online. Le Moniteur contains public agency rules, decrees, and public notices that the Les Presses Nationales d’Haiti 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, has expressed an interest in participating fully in CSME. However, to become eligible, Haiti must amend its customs code to align with CARICOM and WTO standards. In March of 2017, Haiti notified the WTO of its intent to adjust its tariff rates to align them with CARICOM Common External Tariffs. The proposal is still under consideration. Haiti does not grant tariff preferences to any country, but will grant them when provisions of the CARICOM Treaty come into effect.
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 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 with regard to the financial services sector. These commitments include allowing foreign investment in financial services, such as retail, commercial, investment banking, and consulting. One foreign bank, Citibank, operates in Haiti. Unibank bought the Haitian operations of Scotiabank when Scotiabank exited the Haitian market in 2017. Haiti has committed to notifying the WTO Committee on Technical Barriers to Trade of all draft technical regulations. Haiti is not party to the Trade Facilitation Agreement.
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, in descending order, by the Court of Appeals and the Court of First Instance. Haiti’s commercial code dates back to 1826 and underwent significant revisions in 1944. There are few commercial laws in place and there are no commercial courts. 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. Bonds to release assets frozen through litigation are unavailable. Business litigants often pursue out-of-court settlements.
The Haitian Chamber of Commerce and Industry, in partnership with the government of Haiti and with funding from the EU, has a commercial dispute settlement mechanism, known as the Arbitration and Conciliation Chamber that provides a mechanism for conciliation and arbitration in cases of private commercial disputes.
According to U.S. citizens seeking to resolve legal disputes, Haiti’s legal system often presents challenges. There are persistent allegations that some Haitian officials use their public office to influence commercial dispute outcomes for personal gain. With international assistance, however, the Haitian government 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 investments that 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 to examine investor eligibility for license exemptions as well as customs and tariff advantages. The CFI is the Technical Secretariat of the Commission. The Prime Minister, or his delegate, chairs the Commission, 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 Commission must authorize all business sales, transfers, mergers, partnerships, and fiscal exemptions within the scope of the code. The Commission also manages the process of fining and sanctioning enterprises that disregard the code.
Investment in certain sectors, such as health and agriculture, requires special government of Haiti 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 government of Haiti 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.
The following areas are often noted by businesses as challenging aspects of Haitian law: 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 allegedly hinder business activities, they are not specifically aimed at foreign firms; rather, 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, however, have anti-trust legislation.
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 government of Haiti established the 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 have been complaints of non-compensation for the expropriation of property. Moreover, a revision of the land tenure code, intended to address issues related to the lack of access to land records, surveys, and property titles in Haiti, has been pending in Parliament since 2014. A recent partnership between the private sector, Haitian government, and international organizations developed a useful guide formalizing land tenure, which can be found at: http://www.foncier-developpement.fr/publication/la-securisation-des-droits-fonciers-en-haiti-un-guide-pratique/
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 for disputes with the state. The government of Haiti 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 be issued. The law provides mechanisms on the procedures a court should follow to enforce foreign arbitral awards issues.
International Commercial Arbitration and Foreign Courts
International arbitration is strongly encouraged as a means of avoiding lengthy domestic court procedures. Foreign judgments are enforceable under local courts. During the past ten years, there have not been any major commercial disputes between local and U.S. firms.
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 and the Inter-American Development Bank jointly developed the Haitian Arbitration and Conciliation Chamber, which provides mechanisms for conciliation and arbitration in private commercial disputes.
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). 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 prorated according to their right. The debtor is released from prison once 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 – based on collateral of movable 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. Banks frequently require that loans be secured in U.S. dollars.