Transparency of the Regulatory System
The 2018 Law on Pricing, Freedom, and Competition (the “Competition Act”) created a Competition Commission. DRC law mandates review if a company’s turnover is equal to or exceeds the amount determined by Decree of the Prime Minister upon proposal of the Minister of the Economy; if the party in question also holds a combined market share of 25% or more; or if the contemplated transaction creates / reinforces an already dominant position. DRC law requires notification prior to a corporate merger.
The DRC is a member of the regional competition bodies, the Common Market for Eastern and Southern Africa (COMESA),and the Organization for the Harmonization of Business Law in Africa (“OHADA”), which covers francophone African countries . OHADA does not have an operational merger control regime in place, while COMESA does have merger control. Merger activities in the DRC should should comply with COMESA standards.
There are no informal regulations run by private or nongovernmental organizations that discriminate against foreign investors. However, some U.S. investors perceive the regulations in the mining and agricultural sectors mandating a percentage of local ownership as discriminatory against foreign investment.
Proposed laws and regulations are rarely published in draft format for public discussion and comment; discussion is typically limited to the governmental entity that proposes the draft law and Parliament prior to enactment. Sometimes the government will hold a public hearing after public appeals. The Official Gazette of the DRC is a specialized service of the Presidency of the Republic, which publishes and disseminates legislative and regulatory texts, judicial decisions, acts of companies, associations and political parties, designs, industrial models, trademarks as well as any other act referred to in the law. More information is available at http://www.leganet.cd/ .
There are no formal or informal GDRC provisions that systematically impede foreign investment. Companies often complain of facing administrative hurdles as laws and regulations are often poorly or unevenly applied.
DRC is member of Francophone Africa’s OHADA – the Organization for Business and Customs Harmonization, or Organisation pour l’Harmonisation en Afrique du Droit des Affaires – a system of accounting, legal, and regulatory procedures which covers the legal framework in the areas of contract, company, and bankruptcy law and sets up an accounting system better aligned to international standards. A Coordination Committee in the DRC monitors OHADA implementation.
The GDRC does not promote or require companies’ environmental, social, and governance (ESG) disclosure. However, some companies believe that compliance with international ESG standards can attract new financing and are taking steps to ensure that their companies are ESG compliant. These companies believe that compliance allows them to have a positive impact on the communities in which they operate and protect the environment.
Draft bills or regulations are rarely made available for public comment, or through a public comment process. Discussion is usually limited to the government entity proposing the bill and to Parliament before the bill’s enactment. Sometimes the government will hold a public hearing after public appeals.
The Official Gazette of the DRC is a specialized service of the Presidency of the Republic, which publishes and disseminates legislative and regulatory texts, judicial decisions, acts of companies, associations and political parties, designs, industrial models, trademarks as well as any other act referred to in the law. More information is available at http://www.leganet.cd/ .
Oversight mechanisms are weak, and often the law does not require audits to ensure that internal controls are in place or that administrative procedures are followed. Companies often complain that they face administrative barriers, with the government often poorly or unevenly enforcing laws and regulations. However, there are regulatory authorities in different sectors that ensure compliance with laws, regulations, conventions, etc., in order to guarantee effective and fair competition for the benefit of consumers and to provide legal and regulatory certainty for private investors. Some of them can issue, suspend, or withdraw authorizations and establish corresponding specifications.
In August 2021, the GDRC established the National Agency for Export Promotion (ANAPEX), with the aim of identifying and attracting foreign investments to sectors with export potential.
Following the decree signed in March 2022 by the Prime Minister, a new public establishment called the Agency for the Steering, Coordination and Monitoring of Collaboration Agreements Between the DRC and Private Partners (APCSC) was created. It replaces the Office for Coordination and Monitoring of the Sino-Congolese Program (BCPSC) established by former President Kabila and limited to agreements with Chinese investors. The APCSC will focus particularly on the areas of basic infrastructure and natural resources.
Through the National Agency for the Promotion of Exports (ANAPEX), the DRC can take advantage of its commitments at the regional level and can also target the Asian, European, and American markets to increase exports and further diversify its international markets. APCSC will interface between the various parties and entities interested in collaborating on projects in basic infrastructure and natural resources.
The enforcement process is legally reviewable, sometimes digitalized, and otherwise made accountable to the public. Public and private institutions responsible for monitoring and regulating various sectors make regulatory enforcement mechanisms publicly available. Regulatory agencies regularly publish their data and make it available to the business community and development partners, allowing for scientific and data-driven reviews and assessments.
In 2021, the DRC made significant progress by producing and publicly issuing a revised budget when budget execution deviated significantly from budget projections. Information on debt obligations was publicly available, except for major State-Owned Enterprise debt information. However, the GDRC strives to promote transparency in public finances and debt obligations (including explicit and contingent liabilities) by publishing information on https://budget.gouv.cd/ .
International Regulatory Considerations
The DRC is a member of several regional economic blocs, including the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the Organization for the Harmonization of Business Law in Africa (“OHADA”), the Economic Community of Central African States (ECCAS), and the Economic Community of the Great Lakes Countries (ECGLC). In April 2022, the DRC joined the East African Community. The Congolese Parliament must still ratify the EAC’s laws and regulations before the agreement take effect. The GDRC has made efforts to harmonize its system with these regional bodies.
According to the Congolese National Standardization Committee, the DRC has adopted 470 harmonized COMESA standards, which are based on the European system.
The DRC is a member of the World Trade Organization (WTO) and seeks to comply with Trade Related Investment Measures (TRIM) requirements, including notifying regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Legal System and Judicial Independence
The DRC is a civil code country, and the main provisions of its private law date back to the Napoleonic Civil Code. The general characteristics of the Congolese legal system are similar to those of the Belgian system. Various local laws govern both personal status laws and property rights, including inheritance and land ownership systems in traditional communities throughout the country. The Congolese legal system consists of three branches: public law, private law, and economic law. Public law governs legal relationships involving the state or state authority; private law governs relationships between private persons; and economic law governs interactions in areas such as labor, trade, mining, and investment.
The DRC has written commercial and contractual laws. The DRC has thirteen commercial courts located in its main business cities, including Kinshasa, Lubumbashi, Matadi, Boma, Kisangani, and Mbuji-Mayi. These courts are designed to be led by professional judges specializing in commercial matters and exist in parallel to the judicial system. However, a lack of qualified personnel and reluctance by some DRC jurisdictions to fully recognize OHADA law and institutions have hindered the development of commercial courts. Legal documents in the DRC can be found at: http://www.leganet.cd/ .
The current executive branch has generally not interfered with judicial proceedings. The current judicial process is not procedurally reliable, and its rulings are not always respected.
The national court system provides an appeals mechanism under the OHADA framework.
Laws and Regulations on Foreign Direct Investment
The 2002 Investment Code governs most foreign direct investment (FDI) and provides for investment protection. Law n°004/2002 on the Investment Code, through the provisions of articles 23-30, which provide the mechanisms of security and guarantees for investments as well as customs, tax, and parafiscal exemptions. The country’s constitution and laws state that the property (private and collective) of all persons in the DRC is sacred. The GDRC guarantees the right to individual or collective property acquired in accordance with the law or custom. It encourages and ensures the security of private, national, and foreign investments. No one may be deprived of his or her property except for reasons of public utility and in return for fair and prior compensation granted under the conditions established by law; the State guarantees the right to private initiative to both nationals and foreigners.
The Public Private Partnership (PPP) Act provides for the guarantee of execution of the partnership contract regardless of a change of government (art. 15). Taxation in this law a common application of the law, except for the reduction of the tax on profits and earnings, which is set at 15%. There are other laws that grant customs exemptions, such as the Agricultural Act, the Partnership Act in the Value Chain, etc. The law favors amicable settlement or arbitration in case of investment disputes. Specific sectoral laws govern agriculture, industry (protection of industrial property), infrastructure and civil engineering, transportation (operating license in air transport), mining research and exploitation, hydrocarbons, various electricity sub-sectors, information and communication technologies (ICT) (license to operate telecommunications services), insurance and reinsurance, healthcare, and arms production and related military activities. Notwithstanding the specific provisions governing each of these sectors, all investors are required to submit a copy of their investment file to the DRC investment agency ANAPI ( www.investindrc.cd ).
The Telecommunications Law went into effect in 2021, bringing the first revision of the law since 2002. The government’s decisions in 2021 to establish an agency to monitor foreign investment in infrastructure and natural resources and to create a presidential body to review all mining contracts have affected some of the largest investments in the DRC.
The GUCE provides a One-Stop Shop designed to simplify business creation. The GUCE has reduced the processing time from five months to three days and for corporations, the fee was lowered from $120 to $80. For sole proprietorships, the fee has been reduced from $40 to $30. There is also an Integral One-Stop Shop for foreign trade (GUICE), which is a neutral, transparent, and secure electronic platform, accessible 24 hours a day to the entire foreign trade community. It centralizes all regulatory, customs and logistical components related to the import, export, and transit of goods ( https://segucerdc.com ). GUICE is operated by SEGUCE RDC SA, a private operator under the framework of a public-private partnership.
Competition and Antitrust Laws
Competition Commission – COMCO is the regulatory and supervisory body for competition in DRC under the Organic Law no. 18/020 on Pricing Freedom and Competition and the COMESA Competition Regulation. It ensures that the rules of free competition are respected by economic operators. This commission works to allow all economic operators, according to their capacities, to exercise a fair competition, based on the quality of goods, products, and services, respecting the official price structure. Its priorities are acquisitions and mergers (investigating, evaluating, and monitoring acquisitions and mergers), business practices and exemptions (investigating anti-competitive practices), consumer welfare (acting against violators), and good practice awareness (good practices and anti-competitive consequences).
The U.S. District Court for the District of Columbia ordered the GDRC to pay a liability judgment of $619 million to the South African company Dig Oil due to breach of contract. The GDRC is considering settling the 2020 judgment but has yet to do so. In August 2021, the Minister of Justice informed the GDRC of six emblematic cases of international litigation. The main causes of the DRC’s multiple liabilities in these cases are the poor management of the disputes by the sectoral authorities, the late transmission of files to the Ministry of Justice, and the failure to respect the findings of arbitration procedures. President Tshisekedi has called for better monitoring of cases involving the DRC before the courts in order to reduce the risk of the state being found liable for hundreds of millions of dollars.
As a member of COMESA, the DRC follows the COMESA Competition Regulations and rules, and the COMESA competition body regulates competition.
Agency decisions may be appealed to the courts/judicial system.
Expropriation and Compensation
The GDRC may proceed with an expropriation when it benefits the public interest, and the person or entity subject to an expropriation should receive fair compensation.
There have been no expropriations of property in the past three years.
Some claims have been taken to arbitration, though many arbitral judgments against the GDRC have are not resulted in a payment.
Businesses report that the GDRC levies heavy fines, which is a form of financial expropriation. A government agency imposes fines because a company has not paid a tax, although often the tax system is unclear, and several government agencies impose different taxes. Companies that appeal these fines in court often face a long wait.
ICSID Convention and New York Convention
The DRC is a party to the International Center for Settlement of Investment Disputes (ICSID) Convention and a Contracting State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
There is no specific domestic legislation providing for the enforcement of awards under the ICSID or New York Convention.
Investor-State Dispute Settlement
The DRC is subject to international arbitration. The DRC is a member of the Organization for the Harmonization of Business Law in Africa (“OHADA”), which provides for binding international arbitration of investment disputes.
The DRC has had a Bilateral Investment Treaty (BIT) with an investment chapter with the United States since 1984. A U.S. mining company sued under the BIT to recover losses suffered when FARDC troops sacked its mine in Kasai Central Province in 1995. The arbitration panel ruled the GDRC liable for damages totaling $13 million, and the GDRC started paying back the awarded amount plus interest to the U.S. Company.
No investment disputes involving U.S. entities have occurred in the last ten years.
DRC law recognizes foreign arbitral awards in the countries adhering to ICSID and the New York Convention. It emphasizes the arbitration of disputes arising from commercial relations, in view of its rapidity, neutrality and efficiency. However, in its ratification instrument, the DRC took reservations that: preclude enforcement of arbitral decisions taken prior to DRC’s ratification; exclude cases related to sovereign real estate of the DRC; insist that arbitral awards can only be enforced in commercial disputes and not in other areas. Finally, the DRC will not apply New York Convention to non-parties to the convention.
Under the Kabila government, there have been charges of extrajudicial action against foreign investors, including levying fines and imprisonment. In one case an investor left the country after being jailed on charges of corruption without a trial. Post still occasionally hears of harassment against foreign investors.
International Commercial Arbitration and Foreign Courts
The DRC adopted the OHADA Uniform Act on Arbitration (the UAA). The UAA sets out the basic rules applicable to any arbitration where the seat of arbitration is located in an OHADA member state. The requirements of Article 5 of the New York Convention on the Recognition and Enforcement of Foreign Awards apply where the seat of the arbitration is located outside an OHADA Member State, or where the parties choose arbitration rules outside the UAA.
OHADA’s UAA offers an alternative dispute resolution mechanism for settling disputes between two parties where the place of arbitration is situated in a Member State. Disputes must be submitted to the Common Court of Justice and Arbitration (CCJA) in Abidjan in accordance with the provisions of the OHADA Treaty and the OHADA Arbitration Rules.
The UAA, while not directly based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, is similar in that it provides for the recognition and enforcement of arbitration agreements and arbitral awards and supersedes the national laws on arbitration to the extent that any conflict arises. Arbitral awards with a connection to an OHADA member state are given final and binding status in all OHADA member states, in the same way as a judgment of a national court. Support is provided by the CCJA, which can rule on the application and interpretation of the UAA.
Arbitral awards rendered in any OHADA member state are enforceable before the domestic courts of any other OHADA member state, subject to obtaining an exequatur (a legal act emanating from a sovereign authority and permitting the enforcement of a right within the jurisdiction of that authority) from the competent court of the state in which the award is to be made. Exequatur is granted unless the award clearly violates the public policy of that State. Decisions granting or refusing to grant an exequatur may be appealed to the CCJA.
In domestic cases involving SOEs, courts often rule in favor of the SOEs. Generally, companies that are unable to obtain a favorable judgment in national courts turn to international courts for redress. This often drags out the legal process for years. One attorney estimated that about five percent of cases have some transparency.
The OHADA Uniform Act on Insolvency Proceedings provides a comprehensive framework not only for businesses in financial difficulty seeking to avoid the pressing demands of creditors, but also for creditors to file their claims. The GDRC court system has agreed to apply the OHADA Insolvency Act. Bankruptcy is not criminalized.