MOROCCO: An Introduction to Dispute Resolution

Moroccois a dynamic country with a rich culture and blend of influences – European and African alike – and a specific geographical position. It is the most westerly of the North African countries (only 14 kilometres from Spain) and boasts both Atlantic and Mediterranean coastlines.

Morocco is a key, indispensable player in Africa’s economic and geopolitical landscape and one of the highest-ranked countries in the continent’s infrastructure space. More specifically, Morocco:

 - enjoys robust infrastructure which have contributed to its emergence as a regional hub for manufacturing, outsourcing, trade and export services;

 - has an advanced statute with the EU under the European neighbourhood policy and is bound by several free trade agreements (FTA) respectively with the USA, Turkey, and the Arab Free Trade Zone;

 - has concluded multiple bilateral investment treaties for the promotion and protection of investment and non-double taxation; and 

 - is a signatory of the Abraham Accords (joint normalisation statements) with Israel and the UAE.

During recent years, specific attention has been given to the automotive, aeronautical, energy and education sectors. Currently, there is a great focus on healthcare, education, desalination, electric batteries, tech and startups. Moreover, a special monetary regime with tax incentives has been put in place for companies operating under the Casablanca Finance City jurisdiction, which furthers the development of Africa, as well as a PPP law to speed the development of strategic sectors.

As regards 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). A new President and new members of the Authority have been appointed with extensive rules and attributions.

Upcoming big development projects include:

 - the 2030 World Cup organization with Spain and Portugal;

 - the Strait of Gibraltar (Morocco–Spain)underwater railway tunnel project – a 38-kilometre underwater railway tunnel project that is expected to deliver a fixed link between Morocco and Spain (or rather, Africa and Europe);

 - Xlinks Morocco–UK power project; 

 - the Nigeria–Morocco gas pipeline; and 

 - a high-speed train (Al Boraq) between Casablanca and Agadir.

General Business, Economic and Cultural Climate in Morocco

Historically, the main sectors of the Moroccan economy are natural resources (phosphates), agriculture, fishing, textile, leather goods, food processing and tourism. There is strong development in emerging sectors such as renewable energy, electronic assembly, automotive, aeronautic manufacturing, off-shoring, healthcare and infrastructure.

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;

 - 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 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 PPP agreements;

 - enactment of Law No 57-19 relating to the regime of the real estate of the regional and local authorities; and 

 - enactment of new Law on Competition and Merger Control/concentrations rules (23 May 2023).

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 – thereby joining the UAE, Bahrain and Sudan, who have recently signed normalisation pacts

Legal System in Morocco 

Morocco’s legal system is based on a new and modern Constitution (dated 2011). 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.

The legal system is based on civil law, with Islamic law governing areas such as inheritance and family law. The judicial system is headed by the Supreme Court.

Foreign Investment in Morocco 

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

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 the: - characteristics of the contemplated project in Morocco; - location of the project; - amount of the investment made in Morocco; - one of business or sector of investment; - technology transfer; and - number of jobs created. Parts of the incentive programmes are governed by the Investment Charter. There are also general incentives that apply regardless of the investor's nationality – for example, free export zones, export transactions and financial activities.

AML Laws 

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 AML 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

Dispute Resolution in Morocco 

Structure of the court system 

The Moroccan court system comprises ordinary and specialised courts.

The ordinary courts are divided into three levels:

 - the courts of first instance; 

 - the courts of appeal; and

 - the Cour de Cassation (Supreme Court), which is the highest court and rules 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).

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.

Interim remedies to preserve the parties’ interests pending judgment

Judges have the 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.

Appeal and recourse in Morocco  

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.

Parties may also appeal to the Supreme Court within 30 days from the notification of the appeal decision.

Recognition and enforcement of foreign judgments in Morocco

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 of the jurisdiction 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 in Morocco 

There is a new Arbitration Code governing arbitration of domestic and foreign awards. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) has been in force since 7 June 1959 in Morocco. The country was second signatory country of the New York 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 the jurisdiction in which the judgment was rendered;

 - the parties have been properly represented; and

 - the decision is not contrary to Moroccan public policy.