A New System for the Settlement of
A New System for the Settlement of Investment Disputes May Be Well Intended, But With Some Loopholes
Amendment to the Investment Law
On January 3rd, 2012, the Supreme Council for the Armed Forces (“SCAF”) issued Decree / Law No. 4 of 2012, inserting two new Articles into the Investment Guarantees and Incentives Law No. 8 of 1997 (“Investment Law”) concerning the settlement of criminal disputes with investors (Official Journal, Issue No. 52 bis, January 3rd, 2012). This was issued in response to the need to settle disputes relating to major investment agreements which have come under public scrutiny for suspicion of corruption, in order to open up the way for the continued investments to be resumed.
Conditions for Application
The amendment to the Investment Law states a number of conditions for the application of a settlement of a criminal dispute, which are the following:
1) The settlement must be with the investor for a crime he/she committed in person or in his/her capacity as a representative of a commercial entity, or where he/she was an accessory.
2) The crime must be one of those stated in the Fourth Chapter of the Second Book of the Criminal Code. These are crimes relating to public funds, whether theft, embezzlement or other such offences against pubic money.
3) The crime must have been committed in the course of undertaking one of the Investment Activities listed in the Investment Law. The list of those Investment Activities is a long one and it includes industrial, real estate, tourism, financial services, and other key areas of investment.
4) The crime may be at any stage of prosecution, provided it is prior to the passing of a final verdict.
5) The offender must return all monies, real estate, and movables that are the subject of the crime, or their market value at the time of settlement as determined by experts appointed by the Minister of Justice.
6) In case a preliminary verdict is passed, then the offender must also return the financial penalties determined by the court.
7) The minutes of settlement must be submitted by the head of the Investment Authority and approved by the competent Minister and communicated to the court and the prosecution.
Comment
The amendment to the Investment Law aims at providing a legal framework to settle criminal offences committed under the Investment Law and to pave the way for reassuring investors that there could be a way to close pending files provided public money is preserved. That framework is, unfortunately, marred with various legal problems and inconsistencies, as follows:
1) The Decree / Law explicitly states that only the “investor” may be then beneficiary of the settlement which is in contradiction with a criminal justice principle that a settlement benefits all parties to the crime. Thus under the current framework, only the investor would - for example - benefit from settling a crime of bribery, whereas justice under principles of the criminal law require that the public official who received the bribery benefits as well.
2) There is no clear meaning in limiting the scope of the crimes to be settled to those pertaining to Investment Law only.
3) There should have been a determination of a semi-judicial supervision of the process of settlement in order to ensure its fairness and legitimacy.
4) And finally as the subject remains contentious in the public opinion, the whole matter should have been referred to the newly elected Parliament prior to issuing this Decree / Law in order to ensure that it will be publicly accepted.
Amendment to the Investment Law
On January 3rd, 2012, the Supreme Council for the Armed Forces (“SCAF”) issued Decree / Law No. 4 of 2012, inserting two new Articles into the Investment Guarantees and Incentives Law No. 8 of 1997 (“Investment Law”) concerning the settlement of criminal disputes with investors (Official Journal, Issue No. 52 bis, January 3rd, 2012). This was issued in response to the need to settle disputes relating to major investment agreements which have come under public scrutiny for suspicion of corruption, in order to open up the way for the continued investments to be resumed.
Conditions for Application
The amendment to the Investment Law states a number of conditions for the application of a settlement of a criminal dispute, which are the following:
1) The settlement must be with the investor for a crime he/she committed in person or in his/her capacity as a representative of a commercial entity, or where he/she was an accessory.
2) The crime must be one of those stated in the Fourth Chapter of the Second Book of the Criminal Code. These are crimes relating to public funds, whether theft, embezzlement or other such offences against pubic money.
3) The crime must have been committed in the course of undertaking one of the Investment Activities listed in the Investment Law. The list of those Investment Activities is a long one and it includes industrial, real estate, tourism, financial services, and other key areas of investment.
4) The crime may be at any stage of prosecution, provided it is prior to the passing of a final verdict.
5) The offender must return all monies, real estate, and movables that are the subject of the crime, or their market value at the time of settlement as determined by experts appointed by the Minister of Justice.
6) In case a preliminary verdict is passed, then the offender must also return the financial penalties determined by the court.
7) The minutes of settlement must be submitted by the head of the Investment Authority and approved by the competent Minister and communicated to the court and the prosecution.
Comment
The amendment to the Investment Law aims at providing a legal framework to settle criminal offences committed under the Investment Law and to pave the way for reassuring investors that there could be a way to close pending files provided public money is preserved. That framework is, unfortunately, marred with various legal problems and inconsistencies, as follows:
1) The Decree / Law explicitly states that only the “investor” may be then beneficiary of the settlement which is in contradiction with a criminal justice principle that a settlement benefits all parties to the crime. Thus under the current framework, only the investor would - for example - benefit from settling a crime of bribery, whereas justice under principles of the criminal law require that the public official who received the bribery benefits as well.
2) There is no clear meaning in limiting the scope of the crimes to be settled to those pertaining to Investment Law only.
3) There should have been a determination of a semi-judicial supervision of the process of settlement in order to ensure its fairness and legitimacy.
4) And finally as the subject remains contentious in the public opinion, the whole matter should have been referred to the newly elected Parliament prior to issuing this Decree / Law in order to ensure that it will be publicly accepted.