Transparency of the Regulatory System
In a July 25, 2022 referendum, 94.6 percent of voters approved a new constitution, much of which the president personally drafted. The constitution concentrates powers in the presidency, removes checks and balances on the executive, weakens the parliament, and gives the president enhanced authorities over the judiciary and the legislature.
International and domestic observers assessed that December 2022 parliamentary elections were well-administered technically but lacked legitimacy and fell short of international standards. The elections were marred by low turnout (approximately 11 percent), and the introduction in September 2022 of an electoral law that eliminated quotas for women and youth, resulting in lower women’s representation. President Saied was elected in 2019 in the country’s second democratic presidential election, and official election observers generally agreed the 2019 election had no widespread fraud, violence, or attempts to undermine the credibility of the results.
On July 25, 2021 citing widespread protests and political paralysis, President Saied invoked Article 80 of the country’s 2014 constitution and took “exceptional measures” to dismiss the prime minister, freeze parliament’s activities for 30 days, and lift immunity for members of parliament. On August 23, 2021 President Saied announced an indefinite extension of the “exceptional measures” period, and on September 22, 2021 issued a decree granting himself certain executive, legislative, and judicial powers, and the authority to rule by decree, subject to rights guaranteed in the 2014 constitution. On September 29, 2021 President Saied named Najla Bouden Romdhane as prime minister, and on October 11, 2021 she formed a government composed of 24 ministers and one secretary of state.
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 has historically taken few proactive steps to raise public awareness of the public consultation period for new draft laws and decrees. Civil society, NGOs, and political parties have pushed for increased transparency and inclusiveness in rulemaking. Business associations, chambers of commerce, unions, and political parties reviewed the 2016 Investment Law prior to final adoption.
In January 2019, the Tunisian Parliament passed the Organic Budget Law, which is a foundational law defining the parameters for the government’s annual budgeting process. The law aims to bring the budget process in line with principles expressed in the 2014 constitution by enlarging Parliament’s role in the budgetary process and strengthening the financial autonomy of the legislative and judiciary branches. The law requires the government to organize its budget by policy objective, detail budget projections over a three-year timeframe, and revise its accounting system to ensure greater transparency.
Due to the freezing of the Tunisian Parliament as of July 25, 2021, Tunisia’s budget laws for 2022 and 2023 were passed directly through presidential decrees.
In May 2020, the government adopted decree no. 2020-316, establishing simplified conditions and procedures for granting project concessions and their monitoring based on a new public-private partnership (PPP) approach. The decree aims to further promote investment by young entrepreneurs (under the age of 35) and projects of all sizes, including those less than 15 million dinars ($4.85 million).
Not all accounting, legal, and regulatory procedures are in line with international standards. Publicly listed companies adhere to national accounting norms.
Prior to July 25, 2021 the Parliament had oversight authority over the GOT but could not ensure that all administrative processes are followed. Following the exceptional measures implemented by President Saied on July 25, 2021 suspending Parliament, the Council of Ministers led by President Saied and at times, Prime Minister Bouden, have deliberated and approved decree laws. On March 30, 2022 President Saied issued a decree formally dissolving the Parliament. Elections for the first chamber of Parliament, the Assembly of People’s Representatives were held in December 2022. Elections for the second chamber, the National Council of Regions and Districts have not been announced as of April 2023.
The World Bank Global Indicators of Regulatory Governance for Tunisia are available here: http://rulemaking.worldbank.org/en/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 .
Prior to July 25, 2021 most of Tunisia’s public finances and debt obligations were debated and voted on by the Parliament. Since July 25, 2021 the Council of Ministers has discussed and approved Tunisia’s finances.
In general, Tunisia promotes companies’ environmental, social, and governance (ESG) disclosure to facilitate transparency but does not require it.
International Regulatory Considerations
As part of its negotiations toward a comprehensive free-trade agreement with the EU, the GOT is considering incorporating a number of EU standards in its domestic regulations.
Tunisia became a member of the WTO in 1995 and is required to notify the WTO regarding draft technical regulations on Technical Barriers to Trade (TBT). However, in October 2018 the Ministry of Commerce released a circular that temporarily restricted the import of certain goods without going through the WTO notification process, which negatively impacted some business operations without forewarning.
In October 2022, Tunisia implemented a new control system on imports of consumer goods mandating that, in order to acquire an import license for certain products, the importer must provide several documents, including: an invoice from the exporting factory, a certificate from an official authority in the exporter’s country attesting to the factory’s legal status, proof of product trademark, and documents affirming the product’s safety and quality. Imports of raw materials, semi-finished products, equipment and spare parts for industries, services, and handicrafts are exempted. The list of affected products includes: fragrances, cosmetics, underwear, shoes, household appliances, vegetables and fruits, spices, flour, chocolate, and non-alcoholic drinks.
In February 2017, Tunisia domestically ratified the WTO Trade Facilitation Agreement (TFA) and presented its instrument of ratification to the WTO in July 2020 for all categories A, B, and C. However, Tunisia has yet to communicate indicative and definitive dates under category B and is overdue in submitting notifications related to technical assistance requirements and support and information on assistance and capacity building (Article 22.3). Tunisia has also yet to submit two transparency notifications related to: (1) import, export, and transit procedures, contact information of enquiry points, (Article 1.4) and (2) contact points for customs cooperation (Article 12.2.2).
Legal System and Judicial Independence
The Tunisian legal system is secular and based on the French Napoleonic code and meets EU standards. While the 2022 Tunisian constitution mandates an independent judiciary, it gives the president enhanced authorities over the judiciary and the legislature. Citing corruption in the judiciary, on February 12, 2022 Saied dissolved the Supreme Judicial Council, the highest judicial authority responsible for judicial assignments and enforcing ethical standards and discipline and replaced it with a temporary council. Tunisia has a written commercial law but does not have specialized commercial courts. Regulations or enforcement actions can be appealed at the Court of Appeals.
Laws and Regulations on Foreign Direct Investment
The 2016 Investment Law directs tax incentives towards regional development promotion, technology and high value-added products, research and development (R&D), innovation, small and medium-sized enterprises (SMEs), and the education, transport, health, culture, and environmental protection sectors. Foreign investors can apply for government incentives online through the Tunisian Investment Authority (TIA) website: https://www.tia.gov.tn/en .
The primary one-stop-shop webpage for investors looking for relevant laws and regulations is hosted at the Investment and Innovation Promotion Agency 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 in charge of investment to assist new and existing investors to launch and expand their projects.
In addition, the Parliament adopted a number of economic reforms since 2015, including laws concerning renewable energy, competition, public-private partnerships (PPP), bankruptcy, and the independence of the Central Bank of Tunisia, as well as the Start-Up Act to promote the creation of new businesses and entrepreneurship.
Competition and Antitrust 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. This law voided previous agreements that fixed prices, limited free competition, or restricted the entry of new companies as well as those that controlled production, distribution, investment, technical progress, or supply centers. While the law ensures free pricing of most products and services, there are a few protected items, such as bread, sugar, milk, water, and electricity, for which the GOT can still intervene in pricing. Moreover, in exceptional cases of large increases or collapses in prices, such as sharp price increases of surgical masks, sanitizer, and disinfection products during the COVID-19 pandemic, the Ministry of Trade and Export Development reserved the right to regulate prices for a period of up to six months. Furthermore, the ministry imposed a price cap for poultry products and eggs in 2022, and bananas and apples in 2023, in an attempt to control the inflation in food prices but provoked rolling shortages in goods whose real costs exceeded the government’s preset prices for the public. The ministry can also intervene in some other sectors to ensure free and fair competition. However, the Competition Council can make exceptions to its anti-trust policies if it deems it necessary for overall technical or economic progress.
The Competition Council also has the power to investigate competition-inhibiting cases and make recommendations to the Ministry of Trade and Export Development upon the Ministry’s request. Competition Council rulings can range from ordering temporary closures of a business to penalties and fines which could amount to a maximum of 10 percent of business revenue.
Expropriation and Compensation
There are no outstanding expropriation cases involving U.S. interests. The 2016 Investment Law (article 8) states that investors’ property may not be expropriated except in cases of public interest. Expropriation, if 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 conformity with the principles of international law. When compensation is granted to Tunisian or foreign 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 regard to any measures adopted in relation to such losses.”
On October 19, 2022, the GOT issued decree law no. 2022-65, which aims to reduce expropriation and compensation delays. The decree stipulates the creation of an ad hoc government commission that will negotiate directly with owners the value and compensation terms of expropriated properties. The decree also creates administrative committees within all governorates to expedite expropriation procedures at the regional level.
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 BIT 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 three dispute cases involving U.S. investors and all were settled. 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. However, some foreign and local investors currently face difficulties receiving payment for supplied goods and services with state-owned companies due to the government’s fiscal challenges.
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 United Nations Commission on International Trade Law (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 courts 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 that replaced Chapter IV of the Commerce Law and the Recovery of Companies in Economic Difficulties Law. These two laws had duplicative and cumbersome processes for business rescue and exit and gave creditors a marginal role. The 2016 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.