MOROCCO: An Introduction to Dispute Resolution

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

Morocco is a key, indispensable player in Africa’s economic and geopolitical landscape. It is one of the highly ranked countries on the infrastructure dimension in the continent.

More specifically, Morocco:

• enjoys robust infrastructure that has 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 (FTAs) 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 UAE.

During recent years, specific attention was given to automotive, aeronautical, energy and education sectors. Currently, there is a great focus on healthcare, education, desalination, electric batteries, tech and start-ups.

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. There is also a PPP law to speed up 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 with new members of the Authority have also been appointed, with extensive rules and attributions.

In terms of upcoming big development projects, it is worth paying particular attention to:

• hosting the 2030 World Cup with Spain and Portugal;
• Strait of Gibraltar (Morocco‒Spain) underwater railway tunnel project ‒ this is an underwater railway tunnel project (38 km) that is expected to deliver a fixed link between Morocco and Spain (or rather, Africa and Europe);
• Xlinks Morocco‒UK power project;
• Nigeria‒Morocco gas pipeline; and
• high-speed train ‒ Al Boraq between Casablanca and Agadir.

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. However, strong development can be seen in emerging sectors such as renewable energy, electronic assembly, automotive, aeronautic manufacturing, off-shoring, healthcare and infrastructure.

New legislation

The key recent legal changes that affect 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 (sociétés à 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 and Law No 5-96 on limited liability companies;
• enactment of Law No 46-18 amending Law No 86-12 on PPP agreements;
• enactment of Law No 57-19 relating to the real estate regime of the regional and local authorities; and
• enactment of new Law on Competition and Merger Control/concentrations rules (23 May 2023).

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

There are generally no limitations on foreign investment, irrespective of the type of company ‒ apart from in certain specific business sectors such as fishery, media, and 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.

There are no general restrictions on commercial relations with any other country or jurisdiction.

In December 2020, the government announced the resumption of ties with Israel. Morocco thus joins Bahrain and Sudan, who have recently signed normalisation pacts.

Exchange control or currency regulations and registration requirements under AML 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.

Law No 43-05 on the fight against money laundering requires licensed financial institutions to carry out customer due diligence and, in particular, investigations into 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 that 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; and
• pay particular attention to operations carried out by a person from a country with a high level of risk relating to money laundering or terrorist financing.

Where there is doubt (including when the identity of the instructing party is uncertain), licensed financial institutions must provide the relevant authorities with a suspicion statement.

Grants and incentives available to investors

Foreign investors can benefit from incentive programmes or measures 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 and the sector;
• 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.

Disputes

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 ‒ 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). 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

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

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 the judgment was rendered;
• the parties have been properly represented and duly notified; and
• the decision is not contrary to Moroccan public policy.

Arbitration

There is a new Arbitration Code governing the 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, which was the 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 of the jurisdiction in which judgment was rendered;

• the parties have been properly represented; and

• the decision is not contrary to Moroccan public policy.