MOROCCO: An Introduction to Dispute Resolution

MOROCCO: An Introduction to Dispute Resolution

Morocco is a dynamic country with a rich culture and blend of influences – European, African, Arab and Berber – and with a specific geographical position: it is the most westerly of the North African countries (only 14 km from Spain), with both Atlantic and Mediterranean coastlines. Morocco has a history of independence and stability.

It has launched numerous strategic sectorial plans that encourage foreign investments in the country and also ensure strong and sustainable economic growth. This strategy was recently marked by an innovative contracting approach that adopted:

• a specific programme for the development of clean energy sector (solar and wind);

• a specific tax incentive and monetary regime for companies operating under the Casablanca Finance City jurisdiction, which furthers the development of Africa and aims to attract international institutions to choose Casablanca as a gateway to access the continent; and

• a PPP (public-private partnership) law to speed the development of strategic sectors such as infrastructure, roads, logistics, energy, agriculture, fisheries, mining and promising sectors such as automotive, aerospace and services of high added value.

Also, a set of mechanisms to increase competition and transparency was put in place to simplify the administrative procedures for businesses and strengthen the business law framework. This includes a new code for public bids and a new law on competition/merger control and cartel rules, a recent law on personal data protection. It also created new constitutional authorities such as the Authority of the Ombudsman (Mediateur) competent for administrative matters.

With regards to competition, a new version of the law on competition has been put in place, including merger control rules (economic concentration transactions with new thresholds and conditions for notification) and a new President with new members of the Authority appointed with extensive rules and attributions.

Also, a new law on reorganisation/insolvency procedures has been implemented, including some rules regarding international cooperation and recognition of foreign decisions in this field.

By positioning itself as a destination of excellence, attractive to capital, skills and new activities, it is aiming for a rise in wealth for its growing population. Morocco intends to position itself as a production and export platform for European know-how.

Its advanced status with the EU under the European Neighbourhood Policy, as well as the conclusion of several Free Trade Agreements respectively with the United States, Turkey and the Arab Free Trade Zone, has encouraged the establishment of numerous foreign companies.

Morocco's legal system is based on a new and modern Constitution dated 2011, and its laws and implementing regulations set the basis for a more open and democratic society, increased decentralisation, modern institutions and a renewed state of law more broadly.

For decades the government has given importance to foreign investment. Foreign investments are considered as a factor to support the growth of the country.

The country’s legal and tax framework have known several reforms and amendments. The purpose is to guarantee a modern and secured business climate with international standards for investors from different backgrounds.

Economy 

Significant social and economic progress have been achieved over the last two decades, due to large public investments and structural reforms. The Moroccan economy is characterised by macroeconomic stability and low levels of inflation, thanks to exports, private investment and tourism.

Dominant Industries 

The main sectors of the Moroccan economy are, historically, natural resources (phosphates), agriculture, fishing, textiles, leather goods, food processing and tourism.

There is strong development in emerging sectors, like renewable energy, electronic assembly, automotive, aeronautic manufacturing, off-shoring, healthcare and infrastructure.

Population and Language 

The population of Morocco is 37 million.
The official languages of Morocco are Modern Arabic and Amazigh (Berber). Moroccan Arabic (Darija) is the spoken native language.

French is widely spoken. Spanish and English are also used.

New Legislation 

The key recent legal changes affecting doing business in Morocco are:

• Enactment of Law no. 49-16 dated 16 August 2016 amending the legal framework applicable to commercial leases.

• Introduction of Moroccan real estate investment trusts (organismes de placement collectif immobilier) by Law no. 70-14 dated 19 September 2016.

• Enactment of Law no. 73-17 (dated 23 April 2018) amending the provisions of the Moroccan Commercial Code on insolvency and bankruptcy proceedings.

• Enactment of Law no. 87-17 (dated 6 August 2018) amending Law no.13-99 (establishing the Moroccan Industrial and Commercial Property Office) which introduced the digitalisation of company creation processes.

• Enactment of Law no. 20-19 (dated 26 April 2019) amending Law no. 17-95 on joint stock companies (sociétés anonymes) and enactment of Law no. 21-19 (dated 26 April 2019) amending Law no. 5-96 on limited liability companies (sociétéà responsabilité limitée).

• Reform of the legal framework applicable to securities over movable assets (sûretés mobilières) introduced by Law no. 21-18 dated 22 April 2019.

• Issuance of a new General Instruction on Foreign Exchange Operations (Instruction Générale des Opérations de Changes) by the Moroccan Foreign Exchange Office on 1 January 2020.

• Enactment of Law no. 19-20 (dated 22 July 2021) amending Law no. 17-95 on joint stock companies (sociétés anonymes) and Law no. 5-96 on limited liability companies (sociétéà responsabilité limitée).

• Enactment of Law no. 46-18 amending Law no. 86-12 on public-private partnership agreements.

• Enactment of Law no. 57-19 relating to the regime of the real estate of the regional and local authorities.

• Enactment of Law no. 62-19 amending Law no. 1-73-645 on the acquisition of agricultural property.

Legal System 

Morocco is a constitutional monarchy with a parliamentary system of government.

The legal system is based on civil law, with Islamic law governing areas like inheritance and family law.

The judicial system is headed by the Supreme Court.

Foreign Investment  

There are generally no limitations on foreign investment, irrespective of the type of company, except in certain specific business sectors including fishery, media, military armament.

There is no distinction between national and foreign investments, except that foreign exchange regulations regulate foreign investors' ability to repatriate their investment capital and proceeds deriving from capital and dividends. Investment loans to a Moroccan corporate entity are also subject to foreign exchange regulations.

Foreign investments are governed by the provisions of:

• The Investment Charter (promulgated by Law no. 18-95 dated 3 October 1995), which simplifies and harmonises the incentives for investments.

• Decree no. 2-00-895 of 31 January 2001 and Decree no. 2-04-847 of 22 October 2004 (issued for the application of Articles 17 and 19 of the Investment Charter).

• Annual Finance Laws.

• The General Instruction and circulars of the Foreign Exchange Office (the last instruction currently in force is that issued by the Moroccan Foreign Exchange Office on 1 January 2020).

Doing Business with Other Countries and Jurisdictions

There are no general restrictions on commercial relations with any other country or jurisdiction. In December 2020, Rabat announced the resumption of ties with Israel, joining the United Arab Emirates, Bahrain and Sudan, who have recently signed normalisation pacts.

Registration Requirements Under Anti-Money Laundering Laws

Exchange control and currency regulations are governed by the provisions of the General Instruction and various circulars and notes of both the Foreign Exchange Office and Moroccan Central Bank (see Question 4).

Law no. 43-05 on the fight against money laundering requires licensed financial institutions to carry out customer due diligence, and in particular investigations on the source of the funds transferred to a given account.

Article 3 of Law no. 43-05 further provides that licensed financial institutions must:

• Collect any piece of information which allows them to determine and verify the identity of their regular or occasional customers and the beneficial owners.

• Confirm the identity of the instructing party (donneur d'ordre) and investigate the source of the funds.

• Pay particular attention to operations carried out by a person from a country with a high level of risk relating to anti-money laundering or terrorist financing.
In case of doubt (including when the identity of the instructing party is uncertain), licensed financial institutions must provide the relevant authorities with a suspicion statement.

Grants or Incentives Available to Investors 

Foreign investors can benefit from incentive programmes or measures (such as loans and financing guarantees, subsidies, and specific tax incentives) provided by the governmental authorities. Their availability depends, among other factors, on:

• Characteristics of the contemplated project in Morocco.

• Location of the project.

• Amount of the investment made in Morocco.

• Line of business or sector of investment.

• Technology transfer.

• Number of jobs created.

• Parts of the incentive programmes are governed by the Investment Charter (see Question 4).

There are also general incentives which apply regardless of the investor's nationality (such as free export zones, export transactions and financial activities).

Moroccan law provides for the following derogated regimes:

• Law no. 19-94 on export processing zones.

• Offshore Financial Centre created by Law no. 58-90 for banking and holding activities, with foreign exchange derogations. However, the 2019 Finance Law removed all the tax advantages resulting from the offshore financial regime.

• Casablanca Finance City, governed by Law no. 44-10 and its implementing decree no. 2-11-323, opened to financial or non-financial companies operating regionally or internationally. This provides for tax and foreign exchange derogations.

DISPUTES  

1. Structure of the court system 

The Moroccan court system comprises ordinary and specialised courts.

The ordinary courts are divided into three levels:

(a) the Courts of First Instance;

(b) the Courts of Appeal, which hear appeals against decisions of the Court of First Instance; and

(c) the Cour de Cassation (Supreme Court), which is the highest court, ruling only on the legal issues at stake in the case and not on the facts.

There are also specialised courts (Commercial Courts and Administrative Courts).

2. Procedure 

Proceedings are brought before courts by a writ signed by the claimant’s lawyer. A copy is served on the defendant by a bailiff.

3. Interim remedies to preserve the parties' interests pending judgment

Judges have power to freeze a party’s assets pending judgment where there is prima facie evidence of a good arguable case against the owner of the assets and a credible risk that they may be dissipated to defeat a judgment.

4. Appeal and recourse 

Judgments and orders may be appealed within 30 days from the date on which the judgment is served on the unsuccessful party.

This timeframe may be reduced to 15 days for judgments rendered by commercial courts.

The appeal suspends in principle the enforcement of the decision. Excluding those decisions that automatically benefit from immediate enforcement and notwithstanding appeals or applications to annul, the court must order immediate enforcement – when requested to do so – in all cases involving an official instrument, an acknowledged obligation.

Parties may also appeal to the Supreme Court within 30 days from the notification of the appeal decision. The Supreme Court rules on legal issues, not on the facts, and may decide to allow an appeal, known as a pourvoi (in which case it quashes the appealed decision and invites the parties to revert to the lower court), or to dismiss it.

5. Recognition and enforcement of foreign judgments

It is possible to enforce a foreign judgment in Morocco by leave of the local Court of First Instance or commercial court, at the place of residence of the defendant or, where applicable, the place of enforcement.

However, this court will not give leave to enforce the judgment unless:

• it was made by a competent court in the relevant jurisdiction;

• the judgment is final under the law in which judgment was rendered;

• the parties have been properly represented and duly notified; and

• the decision is not contrary to Moroccan public policy.

ARBITRATION 

The Code of Civil Procedure contains rules governing arbitration for domestic and foreign awards.

The New York Convention on the recognition and enforcement of foreign arbitral awards has been in force since 7 June 1959 in Morocco, as the second signatory country of the Convention.

It is possible to enforce a foreign arbitral award in Morocco by leave of the Moroccan courts. However, the courts will not grant leave to enforce the award unless:

• it was made by a competent court in the relevant jurisdiction;

• the award is enforceable under the law in which judgment was rendered;

• the parties have been properly represented; and

• the decision is not contrary to Moroccan public policy.

Rachid Benzakour
Avocat
Managing Partner- Admitted Arbitrator
Benzakour Law Firm
Casablanca, Morocco
T : + 212 661 09 05 79
E : r. [email protected]
Web: www.cbllawfirm.com