Transparency of the Regulatory System
Lack of transparency poses one of the greatest hurdles to FDI, as investors must navigate an opaque regulatory bureaucracy. Companies routinely find themselves embroiled in tax, customs, and labor disputes arbitrated by court officials who make decisions that do not conform with Congolese law and ROC Ministry of Justice regulations.
ROC has no known informal regulatory processes managed by nongovernmental organizations or private sector associations.
The government develops new regulations internally and rarely requests formal input from industry representatives. Various ministries have regulatory authority over the individual industries in their area of responsibility, with overall authority coordinated by the Ministry of Economy. The government does not usually offer a formal, public-comment period.
ROC’s accounting, legal, and regulatory frameworks are transparent in their structure, though the application often lacks transparency and fairness. ROC uses Francophone Africa’s Organization for Business and Customs Harmonization (French acronym OHADA) system of accounting, legal, and regulatory procedures.
The government does legally require extractive industries to conduct environmental impact surveys ahead of activities. Mining and timber sector companies are required to do ongoing environmental and social offset activities. Oversight on these required activities is self-reported from businesses. The GROC lacks the capacity to enforce and assure disclosures.
The government does not make draft bills or regulations available for public comment. The government publishes new laws and regulations in ROC’s Official Journal.
The Official Journal is available for download at the website of the Secretary General of the Government who maintains the Official Journal online at http://www.sgg.cg .
Most government ministries have an inspector general that conduct oversight to ensure that government agencies follow administrative processes. The Office of the President has an inspector general who oversees the entire government.
In 2021, the government passed the new Anti-Corruption Law, aiming to target corruption among public officials across all sectors of government. The new legislation is a complement to the 2017 Public Transparency and Financial Management law that focused on transparency of public funds and the officials managing them. The new law increases fines and potential jail time for corruption and is meant to mitigate loss of funds to corruption. No new reforms were made in the reporting period.
The inspector general process is not legally reviewable, digitalized, nor accountable to the public.
The government publishes some public finances and debt obligations, including explicit and contingent liabilities. The Ministry of Finance publishes the arrangements on its website, https://www.finances.gouv.cg/ .
International Regulatory Considerations
ROC participates as a member in the Economic Community of Central African States (French acronym CEEAC), a regional economic cooperation community, and in the Economic and Monetary Community of Central Africa (French acronym CEMAC), a monetary union of six Central African states. CEMAC forms the base of local regulatory systems, including the stock exchange, the central bank, and the language for rules and regulations on investment and the economy. CEMAC sets the regional debt threshold for member countries and limits external cash transfers for companies based in member countries, and institutes banking regulations shared by member countries.
ROC’s regulatory system for business disputes and regulations governing company registration structure and incorporation incorporates Francophone African regulatory norms promulgated by Organization for the Harmonization of African Business Rights (OHADA).
ROC participates as a member country of the World Trade Organization (WTO). The government did not provide information as to whether it notifies the WTO Committee of all draft regulations relating to Technical Barriers to Trade. ROC signed the WTO Trade Facilitation Agreement but has not begun implementing the agreement.
Legal System and Judicial Independence
The French civil law legal system serves as the basis of the Congolese legal system. Contracts are enforced by referring to the commercial court system.
OHADA provides the basis for ROC’s national commercial law, supplemented by ROC-specific provisions, such as requiring companies to register with the commercial courts. A commercial court exists in ROC but has not convened since 2016.
The judicial system remains independent in principle. In practice, however, the executive branch intervenes in the judicial system on an ad hoc basis. The judicial process is procedurally competent, but its fairness and the reliability of judgments and applications of the legal code are questionable.
Appellate courts exist and receive appeals of enforcement actions. Public Law 6-2003, which established the country’s Investment Charter, states that Congolese law will resolve investment disputes. Judgments of foreign courts are difficult to enforce in ROC. Though the government does not usually deny foreign court judgments outright, it may propose process or procedural delays that prolong matters indefinitely without resolution.
Laws and Regulations on Foreign Direct Investment
ROC’s commercial court has authority over any legal disputes involving foreign investors.
Investors may also file legal complaints in the OHADA court – based in Abidjan, Cote d’Ivoire – which has jurisdiction throughout Francophone Africa. ROC’s Hydrocarbons Law and Mining Code of 2016 contain industry-specific regulations for foreign investments.
The government published no substantive changes to laws, regulations, or judicial decisions related to foreign investment during the reporting period.
The ROC Agency for Business Creation ACPCE is the first stop for establishing a business. Its website has limited information about laws, rules, and reporting requirements: https://dgpme.cg/acpce.php . The newly formed American Chamber of Commerce also serves as a resource for American investors.
Competition and Antitrust Laws
No agencies review transactions for competition-related concerns, either domestic or international in nature. Ministries in general monitor individual industries and review industry-related transactions.
Expropriation and Compensation
The ROC government may legally expropriate property if it finds a public need for a given public facility or infrastructure (e.g. roads, hospitals, etc.).
No recent history of expropriation regarding private companies exists. Historically, however, the ROC government has expropriated private property from Congolese citizens to build roads and stadiums. Law entitles the claimants to a fair market value compensation, but the government distributed such compensation inconsistently.
Beginning in 2012, the ROC government expropriated land of Congolese private property owners in the Kintele suburb of Brazzaville to build a sports complex for the 2015 African Games. The government offered minimal compensation to property owners. At the time, citizens publicly complained of a lack of legal recourse against the government.
The government has not taken any measures alleged to be indirect expropriations such as confiscatory tax regimes or regulatory actions that deprive investors of substantial economic benefits from their investments during the reporting period. However, there is an abundance of corrupt employees within the tax authority who charge companies more than they are due, irrespective of the legal tax regime.
ICSID Convention and New York Convention
ROC is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). The ROC government has yet to ratify the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
There is no specific domestic legislation providing for enforcement of awards under the ICSID Convention.
Investor-State Dispute Settlement
ROC is a member of OHADA, which includes binding international arbitration of investment disputes.
ROC has a bilateral investment treaty with the United States that includes an investment chapter. There are no recent claims under the agreement by U.S. investors.
There have been two investment disputes involving entities with full or partial U.S. ownership in the past ten years. In one, a company successfully negotiated a settlement with ROC authorities after filing suit in a New York district court. In the second, a company successfully sued ROC in U.S. and French courts over non-payment for goods and services, however, the ROC government refused to recognize the judgements. Congolese courts subsequently issued their own judgements in favor of the ROC government. The ROC government no longer responds to attempts by the company or intermediaries to engage on this dispute.
Local courts have rarely recognized and enforced foreign arbitral awards issued against the government.
There is no known history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
There is no known alternative dispute resolution (ADR) mechanism available in ROC. ROC inconsistently abides by international arbitration for any treaty, international convention, or organization of which it is a member. In practice, arbitrary judgments are difficult to enforce.
Commercial courts constitute the domestic arbitration body within the country. The commercial court legislation and structure is based on French commercial legislation and structure.
Local courts inconsistently recognize and enforce foreign arbitral awards. ROC law recognizes foreign judgments when the relevant laws appear sufficiently similar to Congolese law.
Congolese courts have yet to accept any foreign arbitral awards in recent memory. There are no known investment disputes involving state owned enterprises in recent years.
ROC has no specific law that governs bankruptcy. As a member of OHADA, ROC applies OHADA bankruptcy provisions in the event of corporate or individual insolvency. No laws criminalize bankruptcy. ROC does not have a credit bureau or other credit monitoring authority serving the country’s market.