Transparency of the Regulatory System
Morocco is a constitutional monarchy with an elected parliament and a mixed legal system of civil law based primarily on French law, with some influences from Islamic law. Legislative acts are subject to judicial review by the Constitutional Court. The Constitutional Court has the power to determine the constitutionality of legislation, excluding royal decrees (Dahirs). Legislative power in Morocco is vested in both the government and the two chambers of Parliament, the Chamber of Representatives (Majlis Al-Nuwab) and the Chamber of Councillors (Majlis Al Mustashareen). The King can issue royal decrees, which have the force of law. The principal sources of commercial legislation in Morocco are the Code of Obligations and Contracts of 1913 and Law No. 15-95 establishing the Commercial Code. The Competition Council and the National Authority for Detecting, Preventing, and Fighting Corruption (INPPLC) have responsibility for improving public governance and advocating for further market liberalization. All levels of regulations exist (local, state, national, and supra-national). The most relevant regulations for foreign businesses depend on the sector in question. Ministries develop their own regulations and draft laws, including those related to investment, through their administrative departments, with approval by the respective minister. Each regulation and draft law is made available for public comment. Key regulatory actions are published in their entirety in Arabic and usually French in the official bulletin on the website (at http://www.sgg.gov.ma/Accueil.aspx ) of the General Secretariat of the Government. Once published, the law is final. Public enterprises and establishments can adopt their own specific regulations provided they comply with regulations regarding competition and transparency.
Morocco’s regulatory enforcement mechanisms depend on the sector in question, and enforcement is legally reviewable. The National Telecommunications Regulatory Agency (ANRT), for example, created in February 1998 under Law No. 24-96, is the public body responsible for the control and regulation of the telecommunications sector. The agency regulates telecommunications by participating in the development of the legislative and regulatory framework. Morocco does not have specific regulatory impact assessment guidelines, nor are impact assessments required by law. Morocco does not have a specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.
The World Bank’s 2019 Doing Business Report indicates that Morocco implemented reforms in 2018 aimed at reducing regulatory complexity and strengthening legal institutions. The U.S. Mission is not aware of any informal regulatory processes managed by nongovernmental organizations or private sector associations. The Moroccan Ministry of Finance posts quarterly statistics (compiled in accordance with IMF recommendations) on public finance and debt on their website (https://www.finances.gov.ma/en/Pages/Finances-publiques.aspx?m=ACTIVITIES&p=402 )
International Regulatory Considerations
Morocco joined the WTO since January 1995 and reports technical regulations that could affect trade with other member countries to the WTO. Morocco is a signatory to the Trade Facilitation Agreement (https://www.tfadatabase.org/members/morocco ) and has a 92 percent implementation rate of TFA requirements. European standards are widely referenced in Morocco’s regulatory system. In some cases, U.S. or international standards, guidelines, and recommendations are also accepted.
Legal System and Judicial Independence
The Moroccan legal system is a hybrid of civil law (French system) and Islamic law, regulated by the Decree of Obligations and Contracts of 1913 as amended, the 1996 Code of Commerce, and Law No. 53-95 on Commercial Courts. These courts also have sole competence to entertain industrial property disputes, as provided for in Law No. 17-97 on the Protection of Industrial Property, irrespective of the legal status of the parties. According to the European Bank for Reconstruction and Development’s 2015 Morocco Commercial Law Assessment Report, Royal Decree No. 1-97-65 (1997) established commercial court jurisdiction over commercial cases including insolvency. Although this led to some improvement in the handling of commercial disputes, companies have complained of the lack of training for judges on general commercial matters to remain a key challenge to effective commercial dispute resolution in the country. In general, some report litigation procedures to be time consuming and resource-intensive, and lacking legal requirement with respect to case publishing. Disputes may be brought before one of eight Commercial Courts (located in Rabat, Casablanca, Fes, Tangier, Marrakech, Agadir, Oujda, and Meknes), and one of three Commercial Courts of Appeal (located in Casablanca, Fes, and Marrakech). There are other special courts such as the Military and Administrative Courts. Title VII of the Constitution provides that the judiciary shall be independent from the legislative and executive branches of government. The 2011 Constitution also authorized the creation of the Supreme Judicial Council, headed by the King, which has the authority to hire, dismiss, and promote judges. Enforcement actions are appealable at the Courts of Appeal, which hear appeals against decisions from the court of first instance.
Laws and Regulations on Foreign Direct Investment
The principal sources of commercial legislation in Morocco are the 1913 Royal Decree of Obligations and Contracts, as amended; Law No. 18-95 that established the 1995 Investment Charter; the 1996 Code of Commerce; and Law No. 53-95 on Commercial Courts. These courts have sole competence to hear industrial property disputes, as provided for in Law No. 17-97 on the Protection of Industrial Property, irrespective of the legal status of the parties. Morocco’s CRI and AMDIE provide users with various investment related information on key sectors, procedural information, calls for tenders, and resources for business creation.
Competition and Anti-Trust Laws
Morocco’s Competition Law No. 06-99 on Free Pricing and Competition (June 2000) outlines the authority of the Competition Council as an independent executive body with investigatory powers. Together with the INPPLC, the Competition Council is one of the main actors charged with improving public governance and advocating for further market liberalization. Law No. 20-13, adopted on August 7, 2014, amended the powers of the Competition Council to bring them in line with the 2011 constitution. The Competition Council’s responsibilities include: (1) making decisions on anti-competition practices and controlling concentrations, with powers of investigation and sanction; (2) providing opinions in official consultations by government authorities; and (3) publishing reviews and studies on the state of competition. After four years of delays, the Moroccan Government nominated and approved all members of the Competition Council in December of 2018.
Expropriation and Compensation
Expropriation may only occur in the context of public interest for public use by a state entity, although in the past, private entities that are public service “concessionaires,” mixed economy companies, or general interest companies have also been granted expropriation rights. Article 3 of Law No. 7-81 (May 1982) on expropriation, the associated Royal Decree of May 6, 1982, and Decree No. 2-82-328 of April 16, 1983 regulate government authority to expropriate property. The process of expropriation has two phases. In the administrative phase, the State declares public interest in expropriating specific land, and verifies ownership, titles, and value of the land, as determined by an appraisal. If the State and owner are able to come to agreement on the value, the expropriation is complete. If the owner appeals, the judicial phase begins, whereby the property is taken, a judge oversees the transfer of the property, and payment compensation is made to the owner based on the judgment. The U.S. Mission is not aware of any recent, confirmed instances of private property being expropriated for other than public purposes (eminent domain), or being expropriated in a manner that is discriminatory or not in accordance with established principles of international law.
ICSID Convention and New York Convention
Morocco is a member of the International Center for Settlement of Investment Disputes (ICSID) and signed its convention in June 1967. Morocco is also a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Law No. 08-05 provides for enforcement of awards made under these conventions.
Investor-State Dispute Settlement
Morocco is signatory to over 60 bilateral treaties recognizing binding international arbitration of trade disputes, including one with the United States. Law No. 08-05 established a system of conventional arbitration and mediation, while allowing parties to apply the Code of Civil Procedure in their dispute resolution. Foreign investors commonly rely on international arbitration to resolve contractual disputes. Commercial courts recognize and enforce foreign arbitrations awards. Generally, investor rights are backed by a transparent, impartial procedure for dispute settlement. There have been no claims brought by foreign investors under the investment chapter of the U.S.-Morocco Free Trade Agreement since it came into effect in 2006. The U.S. Mission is aware of approximately five cases of business disputes over the past ten years involving U.S. investors, three of which were resolved.
Morocco officially recognizes foreign arbitration awards issued against the government. Domestic arbitration awards are also enforceable subject to an enforcement order issued by the President of the Commercial Court, who verifies that no elements of the award violate public order or the defense rights of the parties. As Morocco is a member of the New York Convention, international awards are also enforceable in accordance with the provisions of the convention. Morocco is also a member of the Washington Convention for the International Centre for Settlement of Investment Disputes (ICSID), and as such agrees to enforce and uphold ICSID arbitral awards. The U.S. Mission is not aware of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
Morocco has a national commission on Alternative Dispute Resolution (ADR) with a mandate to regulate mediation training centers and develop mediator certification systems. Morocco seeks to position itself as a regional center for arbitration in Africa, but the capacity of local courts remains a limiting factor. The Moroccan government established the Center of Arbitration and Mediation in Rabat and the Casablanca International Mediation and Arbitration Center (CIMAC). The U.S. Mission is not aware of any investment disputes involving state owned enterprises (SOEs).
Morocco’s bankruptcy law is based on French law. Commercial courts have jurisdiction over all cases related to insolvency, as set forth in Royal Decree No. 1-97-65 (1997). The Commercial Court in the debtor’s place of business holds jurisdiction in insolvency cases. The law gives secured debtors priority claim on assets and proceeds over unsecured debtors, who in turn have priority over equity shareholders. Bankruptcy is not criminalized. The World Bank’s 2019 Doing Business report ranked Morocco 71 out of 190 economies in “Resolving Insolvency,” a significant improvement from Morocco’s 134th place ranking in 2018. One contributing factor to this improvement is the Moroccan Government’s revision of the national insolvency code in March of 2018.