Transparency of the Regulatory System
Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. However, following the last election in 2016, the new government, pressed by the opposition majority in parliament, has taken a number of measures to combat corruption and nepotism. For example, an Anti-Corruption Commission has been set up, the Auditor General’s Office has begun more frequently publishing special audits of questionable government transactions, and the President appointed opposition supporters to many boards of national organizations and important positions.
In an attempt to promote transparency in the public procurement system, Seychelles’ National Tender Board publishes all tenders both on its website (http://www.ntb.sc ) and in local newspapers. It publicizes contracts that have been awarded and includes the name of successful bidders and bid amounts. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body (http://www.pou.gov.sc/ ).
During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In 2017, there was considerably more legislative debate about the 2017 budget than in prior years. Similarly, in preparation for budgets since 2017, a series of focus group discussions were held with stakeholders such as the business community and NGOs.
Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed several new laws, including a Freedom of Information Act. Additionally, ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.
Seychelles’ budget is easily accessible to the general public: http://www.finance.gov.sc/national-budget/35 . Budget documents, including the executive budget proposal and the enacted budget, provide a substantially full picture of Seychelles’ planned expenditures and revenue streams. Publicly available budgets included expenditures broken down by ministry and revenues broken down by source and type. Information on debt obligations is also readily available. In 2019, for the first time, the government included a fiscal risk statement, which identified substantial fiscal risks emanating from public enterprises in Seychelles. Details on explicit and contingent liabilities are available in the fiscal risk statement, which is available on the following link: http://www.finance.gov.sc/uploads/national_budget/Fiscal%20Risk%20Statement%202019.pdf .
International Regulatory Considerations
Seychelles has signed trade agreements with regional blocs such as COMESA, SADC, and the iEPA. Seychelles has also signed the Tripartite Free Trade Agreement (TFTA) and the African Continental Free Trade Agreement (AfCFTA) but has not yet ratified these agreements. In January 2019, four Eastern and Southern African (ESA) countries including Seychelles signed the UK-ESA Economic Partnership Agreement, which would safeguard trade preferences currently enjoyed under iEPA after Brexit.
Seychelles joined the WTO in 2015, becoming the 161st member. Seychelles does notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Seychelles ratified the Trade Facilitation Agreement (TFA). Further details on Seychelles’ TFA notifications to the WTO can be found here: https://tfadatabase.org/members/seychelles/measure-breakdown
Legal System and Judicial Independence
Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the company law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by Section 3 of the Foreign Judgments (Reciprocal Enforcement) Act of 1961. The World Bank ranked Seychelles 128th out of 190 countries in enforcing contracts in its 2020 Ease of Doing Business Report. Under the current government, the perception among Seychellois is that the judiciary is no longer influenced by the executive.
Laws and Regulations on Foreign Direct Investment
The GOS established the SIB (https://www.investinseychelles.com/ ) as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and facilitate the investment process within the country’s administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority (http://www.sla.gov.sc/ ). The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles.
Competition and Anti-Trust Laws
The SIB only reviews competition cases initiated by other government authorities, private sector entities, or investors. Current legislation does not empower SIB to sua sponte review all transactions for competition related concerns. The Fair Trading Commission (http://ftc.sc/ ) is responsible for investigating competition-related concerns. Such investigations may be initiated by the Commission or may be carried out following a complaint.
Expropriation and Compensation
The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. In 2017, Seychelles set up a Land Compensation Tribunal to look into cases where compulsory land acquisition was made by Government without adequate compensation. Seychellois whose land was taken by the government from 1977 to 1993 have until June 2020 to make their claims. The Land Compensation Tribunal also works in close collaboration with the Truth Reconciliation and National Unity Commission (TRNUC) which is investigating cases of human rights abuses prior and after the 1977 coup. Illegal land acquisition by the government also forms part of the TRNUC’s mandate. The Embassy does not anticipate major expropriations in the near future, nor is it aware of any pattern of discrimination against U.S. persons.
ICSID Convention and New York Convention
In 1978, Seychelles joined the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). In February 2020, Seychelles deposited its instrument of accession to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), which will enter into force in May 2020.
Investor-State Dispute Settlement
The Embassy is aware of at least one investor-government dispute in the reporting period. The dispute involves the operation of a large hotel resort by a company with U.S. shareholders that the GOS also had a small stake in. In 2008, the GOS sought to wind up the company on the grounds that it “had disappeared in its ability to operate as a hotel resort” arguing that the hotel resort had been allowed to fall into disrepair, and resulted in the cancellation of its operating license. The liquidation and subsequent sell-off of the hotel, formerly the country’s second largest hotel, raised suspicions of government corruption among many local press outlets and business institutions, including the chamber of commerce. The former owner of the hotel claimed that he was threatened into selling the hotel by a businessman with ties to the government. The purchasers of the hotel were the lowest bidder, a newly formed group allegedly led by the same businessman with close government ties who threatened the previous owner. In October 2019, the Supreme Court recommended that a Commission of Inquiry be set up to inquire into the matters pertaining to the sale of the hotel. As of June 2020, President Faure appointed a Commission of Inquiry to look into the dispute and a report is expected in six months.
Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Court of Appeal in the event they are not satisfied with the decision of the Investment Appeal Panel. Seychelles has effected the accession to the New York Convention on the recognition and enforcement of foreign arbitral awards. The convention entered into force on May, 3 2020. In the World Bank’s 2020 Ease of Doing Business Report, Seychelles ranked 143rd out of 190 countries for protecting minority investors.
International Commercial Arbitration and Foreign Courts
Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act.
Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 (https://www.seylii.org/sc/legislation/act/2013/4 ). According to the Act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2020 World Bank Doing Business Report, Seychelles ranks 75th out of 190 countries on the resolving insolvency index. It takes on average two years to complete a bankruptcy.