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Author: Albudery Shariha

Albudery Shariha having previously been a Partner at Clyde and Co. between 2012 and 2016, and previously been the General Counsel at the Libyan Investment Authority (LIA) since 2007, Albudery has nurtured an extensive network of regional and international affiliates, offering expert legal advice and professional services to the multinational corporate client and international governments’ legal counsel on a broad range of complex cross-jurisdictional matters arising under Libyan law.

Environmental Legislation in Libya, Biodiversity: Facts and Challenges

Environmental Legislation in Libya, Biodiversity: Facts and Challenges

Contents:

  1. Introduction
  2. Legal Framework
  3. Entities and Institutions
  4. Challenges
  5. Reported Violations
  6. International support to Libya
  7. Recommendations
  8. Conclusion

1. Introduction

Libya, with its vast deserts and coastal areas, is home to various flora and fauna. However, the ongoing security situation in the country has posed significant challenges to protecting and conserving the country’s biodiversity. This paper aims to provide an overview of the legal framework, challenges, and facts for protecting and conserving biodiversity in Libya.

Protecting and preserving the environment and natural resources related to biodiversity is crucial for the nation’s well-being and future generations. In Libya, a number of laws and decrees have been put in place over the years to regulate and safeguard the country’s biodiversity and resources. These laws and regulations cover a wide range of topics and areas, including the prevention of pollution, regulation of water resources, protection of animals and trees, and organization of grazing and marine wealth exploitation.

Overall, the environment and biodiversity legislations in Libya provide a comprehensive framework for protecting and managing the environment and biodiversity and sustainable use of natural resources. These laws and regulations aim to ensure the preservation of natural and biological diversity, the protection of public health, and the fair distribution of benefits from natural resources.

‘The National Strategy for the Biodiversity Program in Libya 2010’ has not been in implementation yet. However, in general, a national biodiversity strategy is a document that outlines a country’s goals, actions, and priorities for the conservation and sustainable use of its biodiversity. The government usually develops the strategy in collaboration with other stakeholders, such as non-governmental organizations, the private sector, and local communities.

The objective is to highlight ways to protect the different species, habitats and resources unique to a specific country, and how to manage them sustainably. The strategy will typically aim to address the country’s specific biodiversity challenges and opportunities and to align with the country’s national development goals and international biodiversity-related commitments including the commitments of Libya by the international conventions,1 such as:

  • The Convention on Biological Diversity: This treaty, signed in 1992 and ratified by Libya in 1995, aims to conserve biodiversity and sustainably use its components.2
    • The Convention on the Conservation of Migratory Species of Wild Animals: This treaty, known as the Bonn Convention, was adopted in 1979 and ratified by Libya in 1985. It aims to conserve migratory species and their habitats.
    • The Convention for the Protection of the Mediterranean Sea Against Pollution (Barcelona Convention) was adopted on 16 February 1976 in Barcelona and entered into force in 1978. It was amended in 1995.

2. Legal Framework

Libya has several laws and regulations in place to protect and conserve biodiversity. The Environmental Protection and Biodiversity Conservation Law of 2003 is the main law governing this area. The law includes provisions for developing and implementing a national biodiversity strategy, establishing protected areas, regulations for hunting and trade of wildlife, and land-use management.

In addition to national laws, Libya is also a party to several international conventions and treaties related to biodiversity, including the Convention on Biological Diversity, the Mediterranean Sea Protection Treaty, and the Convention on Migratory Species.

This section provides an overview of the legislative framework in place for regulating the environment and managing natural resources in Libya. It examines the constitutional rules outlined in the Constitutional Declaration of 2011 and the Draft Constitution of 2017, which establish the state’s responsibilities and obligations for ensuring a fair distribution of benefits from natural resources, preserving the rights of future generations, and promoting sustainable development. Additionally, this section discusses specific laws and regulations for preserving and protecting natural resources, such as alternative development projects, water management and renewable energy. The passage also highlights the inclusion of the Draft Constitutional Rule (7 January 2023), which lays out the state’s obligations and measures taken to preserve and protect the environment and biodiversity, with a special emphasis on creating a healthy environment and establishing an Environmental Sanitation Fund.

Moreover, the passage highlights the absence of specific references to biodiversity and its preservation in the Constitutional Declaration of 2011. This lack of particular mention is notable in the context of the increasing importance placed on biodiversity and the conservation of ecosystems globally. The draft constitution of 2017 and the draft constitutional rule of 2023 both include references to preserving natural and biological diversity and compensation for damages caused, which suggest increased attention on biodiversity conservation. Furthermore, there is also reference to laws and regulations that specifically pertain to protecting and improving the environment, preventing oil pollution in seawater and managing water resources, ionizing radiation and protecting against its dangers and protecting of pastures and forests. All these

laws may be taken as efforts to preserve and protect the environment and biodiversity of Libya.

Additionally, it is worth noting that the passage also mentions international agreements to which Libya is a party, such as the 1993 International Convention and the Mediterranean agreement, that provide a broader context for environmental protection and biodiversity conservation efforts in the country. These international agreements establish a framework for cooperation and coordination with other countries in the region and can help to ensure that Libya’s efforts to protect the environment and biodiversity align with regional and global trends and best practices. However, the passage does not provide any details about the specific provisions of these agreements and how they are applied in the Libyan context.

Overall, the passage provides a general overview of the legislative framework for environmental regulation and natural resource management in Libya, including constitutional rules, specific laws and regulations, and international agreements. While the focus of this framework is primarily on natural resource management, it also includes some elements related to biodiversity conservation and environmental protection. However, more in-depth analysis and research would be needed to fully understand how these laws and regulations are implemented and enforced in practice.

It’s worth noting that for these laws and regulations to be effective, there should be a robust monitoring and enforcement system. Additionally, adequate funding and resources should be allocated to support these efforts. Without proper monitoring, enforcement and funding, laws and regulations alone may not be sufficient to protect the environment and biodiversity in Libya.

Also, it is essential to consider the practical realities of the country and the political and economic context. While the laws and regulations outlined in the passage may be well-intentioned, they may not be fully implemented or enforced due to a lack of resources or political will. Conflicts and instability in the country in recent years may have further hampered the ability of authorities to protect the environment and biodiversity effectively.

Finally, it is worth mentioning that involving the local communities and stakeholders through the local government law no. 56 for the year 2012, providing education and awareness-raising activities and involving them in conservation projects can be vital in achieving sustainable conservation outcomes, which in turn can provide added support for the effective implementation and enforcement of the laws and regulations.

In Libya, a number of laws have been put in place over the years to regulate and safeguard the country’s Biodiversity and resources. These laws cover a wide range of topics, including the prevention of pollution, regulation of water resources, protection of animals and trees, and organization of grazing and marine wealth exploitation.

2.1 Laws

  1. Law No. 15 of 2003 on the Protection and Improvement of the Environment aims to safeguard the environment by addressing various issues such as pollution, natural resources management and the conservation of wildlife.
  2. Law No. 8 of 1973 regarding the prevention of oil pollution in seawater is implemented to prevent and control the environmental pollution caused by oil spills and other hazardous chemical releases into the sea.
  3. Law No. 2 of 1982, regulating the use of ionizing radiation and protecting against its dangers, is put in place to ensure the safe and responsible use of ionizing radiation in the country and protect people from its harmful effects.
  4. Law No. 3 of 1982, regulating the exploitation of water resources, aims to manage and control the use and distribution of water resources in a sustainable and equitable manner.
  5. Law No. 5 of 1982, regarding the protection of pastures and forests, is put in place to preserve and protect the country’s pastureland and forests.
  6. Law No. 7 of 1982 regarding environmental protection is aimed at safeguarding the environment and regulating activities that may cause harm to the environment.
  7. Law No. 13 of 1984, regarding provisions relating to public hygiene, is implemented to promote public health and sanitation.
  8. Law No. 17 of 1985, regarding the organization of grazing, aims to manage the use of pastures and grazing land in an efficient and sustainable manner.
  9. Law No. 14 of 1989, regarding the exploitation of marine wealth, regulates the exploitation and management of marine resources in a sustainable and responsible manner.
  10. Law No. 15 of 1989, regarding the protection of animals and trees, aims to protect and conserve the country’s wildlife and vegetation.
  11. Law No. 15 of 1992, regarding the protection of agricultural lands, is put in place to safeguard the country’s agricultural land and ensure sustainable farming practices.
  12. Law No. 9 of the year regarding the production, propagation, and circulation of improved seeds is implemented.

The Laws listed above are a set of legislation established in Libya that aim to regulate the environment and biodiversity and protect it from various forms of pollution, harm, damage, exploitation and degradation. The laws cover a wide range of topics, including the protection and improvement of the environment, prevention of oil pollution in seawater, regulation of the use of ionizing radiation, exploitation of water resources, protection of pastures and forests, environmental protection, public hygiene, organization of grazing, exploitation of marine wealth, protection of animals and trees, protection of agricultural lands, disposal of state-owned agricultural and reclaimed lands, prevention of infectious and epidemic animal diseases, Agricultural Inspection Authority, hunting weapons and ammunition, organization of the Ministry of Dams and Water Resources, Planning and organization of cities and villages, public roads, real estate ownership and the Council for Nutrition and Marine Resources Affairs. These laws provide guidance and regulations to maintain the environmental balance of Libya. They protect future generations’ rights and the Libyan people’s welfare.

The laws, regulations listed above are aimed at protecting and preserving the environment and biodiversity in Libya, including Law No. 15 of 2003 regarding the protection and improvement of the environment, Law No. 8 of 1973 regarding the prevention of oil pollution in seawater, Law No. 2 of 1982 regulating the use of ionizing radiation and protecting against its dangers and Law No. 3 of 1982 regulating the exploitation of water resources are aimed at preserving the natural resources and protecting the environment from different sources of pollution and negative impacts.

1.2  Decrees

These laws, regulations, and decisions play a vital role in preserving the environment and biodiversity of Libya but also ensure the sustainable development of the country by promoting environmentally friendly practices and protecting the rights of future generations.

  • Decree No. 757 of 1990: Establishes the Public Authority for Water, which aims to manage and develop the country’s water resources and ensures the availability of water supply for domestic.
  • Cabinet Decision No. 161 of 1992: Reorganizes the Marine Biology Research Centre, which conducts research on marine biology and ecosystems and provides advice and information to the government and other organizations.
  • Council of Ministers Decree No. 6 of 1997, prohibits hunting in all regions of the State of Libya, which helps protect and conserve the country’s wildlife and biodiversity.
  • Decree No. 183 of 2006, establishes the National Parks Project, which aims to create new national parks and upgrade and improve existing ones.
  • Decree No. 159 of 2007: Establishes the Public Authority for Marine.
  • Decree No. 51 of 2004 regarding the determination of some provisions regarding fishing for bluefin tuna.
  • Decree No. 116 of 2005 of the Assistant Secretary of the Council of Ministers Forms the Permanent Committee for Marine Fishing in Libyan Waters and its tasks.
  • Decision No. 37 of 2005 of the General People’s Committee, declares a Libyan fishing protection zone in the Mediterranean and aims to protect and sustainably manage the country’s marine fish stocks.
  • Decree No. 303 of 2010, decides on some provisions related to national parks, such as their boundaries, regulations, and management.
  • Decree No. 98 of 2012 establishes the National Centre for Prevention and Agricultural Quarantine, which aims to prevent the spread of plant and animal diseases and pests that could threaten agricultural production.
  • Decree No. 129 of 2012 organizes the Public Authority for Water Resources, which is responsible for managing and developing the country’s water resources, including surface and groundwater.
  • Decree No. 100 of 2012 establishes the National Centre for Animal Health, which is responsible for monitoring and controlling animal diseases and ensuring the safety and quality of animal products.
  • Decree No. 637 of 2013 establishes the Palm and Olive Development Authority, an organization responsible for promoting and developing the palm and olive industries in Libya.
  • Decree No. 48 of 2013 establishes the National Parks Management and Development Authority, which is responsible for managing, developing, and protecting the country’s national parks.
  • Decree No. 290 of 2021 establishes the National Centre for Extension, Cooperation and Agricultural Information, which aims to provide extension services, technical cooperation, and agricultural information to farmers and other stakeholders.

1.2  Related Laws and Decrees

The following is a list of environmental legislation in Libya, including laws, resolutions, and decisions that regulate various aspects of the environment and natural resources, such as health, energy, mining, agriculture, and urban development.

2.3.1 laws:

  1. Law No. 25 of 1955 on Petroleum and its amendments.
  2. Law No. 5 of 1969 on Planning and Organizing Cities and Villages.
  3. Law No. 133 of 1970 on the Organization of the Agricultural Bank.
  4. Law No. 142 of 1970 on Tribal Lands and Wells.
  5. Law No. 2 of 1971 on Mines and Quarries, and its executive regulation.
  6. Law No. 106 of 1973 on the Issuance of the Health Law.
  7. Law No. 2 of 1974 on Cooperative Farms.
  8. Law No. 46 of 1975 on the dwarf lands matter.
  9. Law No. 8 of 1977 AD regarding the amendment of some provisions of Law No. 155 of 1970 AD regarding the passage to farms and agricultural lands.
  10. Law No. 07 of 1981 on the Possession of Weapons, Ammunition and Explosives.
  11. Law No. 3 of 1982 on the matter of regulating the exploitation of water resources.
  12. Law No. 11 of 1983 establishing the Executive and Management Authority for the Man-made River Project.
  13. Law No. 3 of 2001 on Urban Planning and its executive regulations. 14.
  14. Law No. 59 of 2012 on the Local Administration System and its executive regulations.
  15. Law No. 29 of 1994 on Hunting Weapons and Ammunition and its Amendment by Law No. 2 of 2014.

2.3.2 Decrees (Ministerial Council)

  1. Decree of the General Secretariat of the General People’s Congress No. 10 of 1979 reorganizing the National Oil Corporation.
  2. Decree No. 161 of 1986 to establish the Atomic Energy Corporation.
  3. Minister of Justice Resolution No. 306 of 201 Decision No. 225 of 2018 regarding the Building Permits Regulation.
  4. Decree No. 22 of 2010 issuing the executive regulations for Law No. 6 of 2005 on Civil Aviation.
  5. Decree No. 307 of 2012 to establish a scientific research centre for palm trees.
  6. Decree No. 1352 of 2018 on the Establishment of Integrated Health Zones.
  7. Decree No. 516 of 2020, on the Formation of an Advisory Committee to Review and Revise Sub-regional and Urban Plans.
  8. Decree No. 567 of 2021 to reconfigure the Advisory Committee to review and revise the plans.
  9. Decree No. 790 of 2022 to reorganize the Supreme Council for Energy Affairs.
  10. Decree No. 493 of 2022 on the Establishment of the Libyan Bureau for Grains.
  11. Decree No. 307, 2012 to establish a scientific research centre for the olive tree.

Meanwhile, one important piece of environmental legislation is Law No. 106 of 1973, which pertains to the issuance of health law. This law aims to protect and promote public health by regulating activities that may have an impact on health, such as industrial and agricultural operations, waste management, and water and air pollution. Another key piece of legislation is Ministerial Council Decree No. 1352 of 2018, which established integrated health zones. These zones aim to improve access to healthcare services, particularly for marginalized communities in remote and rural areas.

The local administration system is regulated by Law No. 59 of 2012, which outlines the responsibilities of local councils and municipalities with regard to the management and protection of the environment. The law also provides for the establishment of an Environmental Directorate within the local council to oversee and regulate environmental activities in their respective areas.

Energy is also a crucial aspect of environmental legislation in Libya. Ministerial Council decree No. 161 of 1986 established the Atomic Energy Corporation, which aims to promote the peaceful use of nuclear energy and to conduct research in the field of nuclear science and technology. Additionally, Cabinet Decision No. 790 of 2022 has been issued to reorganize the Supreme Council for Energy Affairs and streamline their activities to handle the matter efficiently.

The oil and gas sector in Libya is regulated by Law No. 25 of 1955, which pertains to petroleum and its amendments. This law sets out the framework for the exploration, production, and management of oil and gas resources, as well as the rights and obligations of the state, oil companies, and other stakeholders.

Mining and quarrying activities are regulated by Law No. 2 of 1971, which provides for mineral resource exploration, development, and management. The law also established the General Directorate for Mines and Quarries to oversee and regulate the industry.

Agriculture is also an important area of environmental legislation in Libya. Law No. 142 of 1970 pertains to tribal lands and wells and regulates the use and management of these resources. Law No. 46 of 1975 governs the use of dwarf lands, while Law No. 2 of 1974 provides for the formation of cooperative farms.

Urban planning is governed by Law No. 3 of 2001, which set out the framework for developing and managing cities and towns in Libya. These laws cover various aspects, such as land use, zoning, building codes, and environmental impact assessment.

Real estate property legislation in Libya is governed by several laws, including Law No. 11 of 1992, which determines some provisions relating to real estate ownership, and Law No. 15 of 1992, which pertains to the protection of agricultural lands.

In addition to these laws, a number of regulations and decisions have been issued to implement and supplement the laws. These include Cabinet Decision No. 637 of 2013, which established the Palm and Olive Development Authority, and Cabinet Decision No. 100 of 2012, which established the National Centre for Animal Health.

Libya is a signatory of the Convention on Biological Diversity, which is an international treaty that aims to promote the conservation and sustainable use of the world’s biodiversity. The Convention was adopted in 1992 and ratified by more than 190 countries, including Libya. The Convention has three main goals: the conservation of biodiversity, the sustainable use of biodiversity, and the fair and equitable sharing of benefits from using genetic resources. It also provides a framework for national and international actions to achieve these goals. Libya also ratified other international agreements regarding the conservation and sustainable use of natural resources, such as CITES, Ramsar Convention, and CBD, in addition to regional agreements such as The African Convention on the Conservation of Nature and Natural Resources and The Convention for the Protection of the Mediterranean Sea Against Pollution.

Like many other countries, Libya is home to a wide variety of plant and animal species, many of which are unique to the region. The country also has a number of protected areas and national parks, such as the Tadrart Acacus National Park and the Al-Jifara Protected Area, that aim to protect and preserve the country’s biodiversity. Additionally, Libya has ratified several international biodiversity-related agreements, including the Convention on Biological Diversity and the African-Eurasian Waterbird Agreement. However, the situation in Libya is complicated, and there have been changes in the government and social instability over the past decade, making it difficult to access any information about the recent status of the environment and biodiversity in the country.

These international conversations establish a framework for cooperation and coordination with other countries in the region and can help to ensure that Libya’s efforts to protect the environment and biodiversity align with regional and global trends and best practices. However, as mentioned above, this section will not delve into the details of these agreements and how they are applied in the Libyan context. In this context, the Libyan Supreme Court concluded its constitutional appeal No. 57/01 issued on December 23. 2013 indicated that “it is decided that the international agreements to which the Libyan state is bound shall be directly enforceable as soon as it is approved by the legislative authority in the state, and shall take precedence over the internal laws and legislations so that if it occurs If there is a conflict between its provisions and the provisions of the internal legislation, the provisions of the conversation are the first to be applied.”3

3. Entities and Institutions

The related organizations that are authorized to protect or develop the environment condition, including the biodiversity in Libya can be divvied into government organizations/authorities and non- government entities, are as follow:

Government institutions

  • The Ministry of Environment instead of the Public Authority for the Environment.
  • Ministry of Agriculture, Livestock, Marine and Water Resources.
  • Environmental monitoring in the regions.
  • Environmental police.
  • Environmental Protection Fund.
  • Land and Marine Environment Research Center.
  • The National Center for Desert Locust Control.
  • Technical Center for Environmental Protection.
  • The operation, maintenance, and environmental protection devices in municipalities.
  • Agricultural police.
  • Agriculture and Utilities Prosecution.
  • Public cleaning companies in municipalities.
  • National Parks Management and Development Authority.
  • Permanent and temporary committees.
  • Agricultural Inspection Authority.

Municipal Guard.

4. Challenges

Despite the legal framework in place, a number of challenges have hindered the effective implementation and enforcement of biodiversity conservation measures in Libya. The ongoing security situation in the country has made it difficult to access and monitor protected areas and enforce laws and regulations. In addition, limited funding and capacity have limited the ability of the government and NGOs to take effective action to protect and conserve biodiversity.

Another key challenge is the degradation of coastal and marine habitats caused by pollution and the overuse of resources. Sewage and other forms of pollution have led to the degradation of the Mediterranean Sea, which is home to a rich diversity of marine life.

Another challenge is that Libya has not yet approved the national strategy or national biodiversity program. It is still under state committees’ discussion that was formed in 2010.4

5. Reported Violations

In recent years, there have been numerous reports of violations of environmental laws and regulations in Libya. One primary concern is the illegal hunting and poaching of wildlife, which has led to the decline of many species, including the critically endangered scimitar-horned oryx, addax and dama gazelle.

Another issue is the illegal trade in protected species, including birds and reptiles, which is driven by the demand for wild animals as pets for traditional medicine. The current security situation in the country has made it difficult for authorities to enforce laws and regulations against illegal hunting and trade effectively.

There have also been reports of illegal logging in protected areas and of overgrazing of pastureland, which has led to the degradation of ecosystems and the loss of biodiversity. The illegal cultivation of crops in protected areas has also been reported, contributing to the destruction of ecosystems and the loss of biodiversity.5

Marine pollution is also a significant concern in Libya, caused by the discharge of pollutants into the Mediterranean Sea, including sewage, agricultural and industrial waste, and oil spills. Such discharges have resulted in the degradation of coastal habitats and biodiversity loss.

In addition to these issues, the ongoing conflict and insecurity in the country make it difficult for conservation efforts to take place and also hinder the ability of the government to effectively enforce environmental laws and regulations. Furthermore, inadequate funds, limited resources, and the weak capacity of the relevant authorities make it difficult to address these issues and protect the environment and biodiversity.

All these violations have a negative impact on the biodiversity, ecosystems, and natural resources of Libya. It is important that the relevant authorities and stakeholders work together to address these issues and take the necessary measures to protect and conserve the environment and biodiversity in Libya.

Another area where environmental violations have been reported in Libya is in the oil and gas sector. The country is rich in oil and gas resources, but the extraction and production of these resources have led to pollution of the air, land, and water, as well as damage to biodiversity.

For example, oil spills have been reported, resulting in the pollution of coastal habitats, which seriously impacts marine life and the livelihoods of local communities. Additionally, the flaring of natural gas associated with oil production results in the release of large amounts of greenhouse gases and other pollutants into the atmosphere, which contributes to climate change and air pollution.

In addition, the illegal extraction of natural resources, including sand, gravel, and rock, has become a major problem in Libya, as it leads to the destruction of ecosystems and wildlife habitats. This also puts the country’s heritage at risk, as these activities often occur in archaeological sites and landmarks.

Another problem is the illegal dumping of waste, which has become a serious environmental and public health problem in many parts of the country. Improper disposal of waste can lead to the contamination of soil and water resources, as well as air pollution, which poses a threat to human health and the environment.

Overall, the environmental violations in Libya are quite severe and have a negative impact on the country’s biodiversity, ecosystems, and natural resources. It is essential that the relevant authorities take steps to address these issues and that they work with NGOs, the private sector, and local communities to find sustainable solutions.

6. International support to Libya

There have been various efforts by international organizations and governments to support environmental conservation and sustainable development in Libya6. Here are a few examples:

  • The United Nations Environment Programme (UNEP) has been working with the Libyan government to support environmental protection and sustainable development in the country. This includes initiatives to promote sustainable management of natural resources, reduce pollution and waste, and to promote environmental awareness.
  • The World Wildlife Fund (WWF) has been working on conservation and sustainable development programs in partnership with the Libyan government for many years. These efforts include promoting sustainable management of marine and terrestrial protected areas, as well as efforts to combat wildlife poaching and illegal trade.
  • The World Bank has provided Libya with financial and technical assistance to support environmental conservation and sustainable development. This includes support for implementing national environmental policies and strategies, as well as the protection of biodiversity and the promotion of sustainable use of natural resources.
  • The European Union (EU) has provided financial and technical assistance to Libya in the environment and biodiversity conservation field. This has included support for the protection of wetlands and coastal areas, as well as for the conservation and sustainable management of marine and terrestrial protected areas.7
  • The United States Agency for International Development (USAID) has provided financial and technical assistance to Libya to support environmental conservation and sustainable development. This includes efforts to promote sustainable land and water management, as well as to reduce pollution and waste.8

These are just a few examples of international support for environmental conservation and sustainable development in Libya. However, it’s worth mentioning that the country’s current political and security situation has made it difficult for international organizations and governments to provide comprehensive and sustained support.

7. Recommendations  

  1. Increase funding and capacity building for conservation efforts: Increased funding and capacity building for government agencies and NGOs working on biodiversity conservation is crucial to effectively protect and conserve biodiversity in Libya.
  2. Improve law enforcement: The government should improve the enforcement of laws and regulations related to biodiversity, including by increasing patrols in protected areas and increasing penalties for violations.
  3. Address pollution and overuse of resources: Measures should be taken to reduce pollution, including regulating and controlling the discharge of sewage and other pollutants and by promoting sustainable use of natural resources.
  4. Engage local communities: Local communities should be engaged and involved in conservation efforts, as they can play an important role in protecting and conserving biodiversity in their area.
  5. Enhance international cooperation: Libya should engage in international cooperation with other Mediterranean countries to jointly address shared issues such as pollution and overuse of resources, which could help to protect the Mediterranean Sea and its biodiversity.
  6. Finalise and implement the national biodiversity strategy: The government should take steps to implement the national biodiversity strategy, which includes identifying and prioritizing conservation areas, protecting and restoring ecosystems, and promoting sustainable use of natural resources. Promote environmental education and awareness: Environmental education and awareness campaigns should be carried out to educate the public about the importance of biodiversity, the negative effects of pollution and overuse of resources, and their role in protecting and conserving biodiversity.
  7. Encourage sustainable tourism: The government should promote sustainable tourism as a way to generate income and jobs for local communities while at the same time protecting and conserving biodiversity. This can include ecotourism, wildlife tourism, and cultural tourism.
  8. Improve data collection and monitoring: Improved data collection and monitoring systems should be put in place to track the status of biodiversity and the effectiveness of conservation efforts. This will help to identify areas of concern, target conservation efforts, and measure progress over time.
  9. Create a monitoring and enforcement mechanism: A monitoring and enforcement mechanism should be implemented to ensure compliance with laws and regulations related to biodiversity conservation. This mechanism should include regular inspections and audits of protected areas, penalties for violations, and a system for reporting and addressing complaints.
  10. Encourage private sector participation: The government should encourage and support the private sector to get involved in biodiversity conservation and sustainable development through, for example, tax incentives, grants and subsidies, and other forms of support.

The implementation of these recommendations will require a coordinated effort between the government, NGOs, the private sector, and local communities. By working together, it is possible to effectively protect and conserve biodiversity in Libya and ensure that the country’s natural resources are used sustainably for the benefit of present and future generations.

In addition to the recommendations outlined above, it is also essential to consider the provisions of the Convention on Biological Diversity (CBD) which Libya ratified in 1993. The CBD is an international treaty that aims to promote biodiversity conservation, the sustainable use of its components, and the fair and equitable sharing of the benefits arising from the use of genetic resources. It sets out a number of specific goals and targets, including:

  • The conservation of biological diversity
  • The sustainable use of the components of biological diversity
  • The fair and equitable sharing of the benefits arising out of the utilization of genetic resources

Under the CBD, Parties are required to develop and implement national biodiversity strategies and action plans, and to monitor and report on their implementation. They are also required to take measures to prevent the introduction of, control or eradicate alien species that threaten ecosystems, habitats or species and to encourage the conservation of endangered species.

Libya, as a party of the CBD, is required to develop and implement policies and measures to protect biodiversity, including designating protected areas, promoting sustainable use of resources, controlling pollution and waste, and encouraging the participation of local communities. The Parties also have to share the knowledge and

technologies necessary for the conservation and sustainable use of biodiversity, as well as traditional knowledge and technologies.

In summary, the implementation of the Environmental Legislation of Libya on Biodiversity, in addition to the provisions of the CBD, is essential to preserving and

Conserving the country’s rich biodiversity and ensuring that future generations can enjoy it.

In addition to the Environmental Protection and Biodiversity Conservation Law and the Convention on Biological Diversity, it is also important to consider the provisions of the Law No. 15 of 2003 on the Protection and Improvement of the Environment in Libya Such a law is considered to be amended as there is already a committee formed by the Ministry of Environment of Libya in order to upgrade such a law.9

This law contains provisions related to the protection and preservation of the environment, including measures to control and prevent pollution, conserve natural resources, and promote sustainable development. The law establishes the Environmental Protection Authority as the main body responsible for enforcing environmental laws and regulations in Libya.

Under Law No. 15 of 2003, the government is responsible for developing and implementing a national environmental strategy and for establishing and managing protected areas, as well as for regulating activities that may have a negative impact on the environment. The law also requires the government to take measures to ensure that environmental impact assessments are conducted for proposed projects and activities.

Law No. 15 of 2003 also includes provisions for public participation in environmental decision-making by providing citizens with the right to receive information and participate in the decision-making process concerning protecting and improving the environment.

Furthermore, it allows citizens and organizations to file a complaint to the Environmental Protection Authority in case of violation of environmental laws. Also, it allows them to seek compensation in case of damage to the environment as a result of the activities of individuals or companies.

It is important to note that Law No. 15 of 2003 and the Environmental Protection and Biodiversity Conservation Law complement each other, and they both should be applied to provide comprehensive protection to the environment and biodiversity in Libya.

 8. Conclusion  

Biodiversity is an important natural resource in Libya, which plays a crucial role in ecological and socio-economic sustainability. Despite the legal framework in place, the ongoing security situation and lack of funding and capacity have created challenges for the protection and conservation of biodiversity. This paper highlights the importance of increasing funding and capacity building for conservation efforts, improving law enforcement, addressing pollution and overuse of resources, engaging local communities, and enhancing international cooperation to effectively protect and conserve biodiversity in Libya.

  1. Barcelona Convention and Protocols. ↩︎
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  4. Environment Public Authority, The Fourth National Report on the Implementation of the Convention on Biological Diversity (Tripoli, 2010). ↩︎
  5. Hindia Al-Eshaibi, ‘The Green Mountain Forests of Libya are Crying out for Preservation’ (DW 20/07/2021)
    <https://p.dw.com/p/3wQMK> accessed 13 January 2023. ↩︎
  6. ‘Libya and Saudi Arabia for the First Time within the UNESCO World Network of Biosphere Reserves’ (France 24 16/09/2021) https://www.france24.com/ar/-شبكة-ضمن-األولى-للمرة-والسعودية-ليبيا-20210916/األخبارالمستمرة
    2023. January 11 accessed اليونسكو-العالمية-لمحميات-المحيط-الحيوي ↩︎
  7. ‘COMMISSION IMPLEMENTING DECISION of 15.12.2021 on the Financing of the Special Measure in Favour of Libya for 2021’ (C(2021) 9268 final) European Commission (Brussels, 15/12/2021) Annexes 1_2. ↩︎
  8. ‘Highlighting U.S. Efforts to Combat the Biodiversity Crisis’ (Fact Sheet) U.S Department of State (15/12/2022) https://www.state.gov/highlighting-u-s-efforts-to-combat-the-biodiversity-crisis/ accessed 09/01/2023. ↩︎
  9. ‘Meeting of the Committee for the Modernization of Law No. 15’ (The Ministry of Environment 9 October 2022) <https://environment.gov.ly/15-رقم-القانون-تحديث-لجنة-اجتماع/> accessed 9 January 2023. ↩︎

Legal Review on the ruling of the Zawiya Court of Appeal in Libya vs TotalEnergies and Conoco Phillips/Hess

Legal Review on the ruling of the Zawiya Court of Appeal in Libya vs TotalEnergies and Conoco Phillips/Hess

Introduction

On May 4, 2023, the judgment of the Zawiya Court of Appeal in the First Administrative Division, registered under No. 216 – 2022, was issued against the Council of Ministers Resolution No. 918 of 2022, which pertains to the approval procedures for the sale of a share owned by a foreign company in Waha Oil Company, which was the text of the decision as follows:

‘’ Article (1)

 The approval procedures for the sale of Hess Libya’s share in Al-Waha Company to Conoco Phillips and Total Energy shall be approved, as presented at the fourteenth ordinary cabinet meeting of 2022 referred to.

 Article (2)

 This decree shall enter into force from the date of its issuance, and any provision contrary to it shall be repealed, and the competent authorities shall implement it.’’

Legal Facts

On April 30, 2021, the French company TotalEnergies submitted an offer to purchase shares from the American company Hess in their joint oil exploration and production contract (EPSA) with the Libyan Oasis Company. The contract provides the Libyan state with the right of pre-emption, and the sale was approved by Cabinet Resolution No. 552 of 2020, attached to Resolution No. 118 of 2022.

Legal Issues

The legal concerns that are going to be examined and analysed hereby can be divided into three legal questions in this regard, as follows:

  1. What is the right of pre-emption in Libyan law and oil contracts in Libya?
  2. Do Libyan courts have any jurisdiction to look at oil and gas contracts?
  3. Is a non-interested person entitled to file a lawsuit in Libya?

Although the merits of the judgment touched on the suspension of the implementation of the decision and the consequent sale contract in the urgent apartment, and soon considered its substantive part, there arises a constitutional problem. This stems from the defect of the Government of National Unity’s lack of jurisdiction and its behavior outside its competence as a caretaker government under the legislation in force. This is based on the House of Representatives Resolution No. 10 of 2020 regarding the withdrawal of confidence from the government. The ruling on this matter may involve examining the extent of the legitimacy or lack thereof of the Government of National Unity, which falls within the sole competence of the Constitutional Chamber of the Libyan Supreme Court. This reference, however, does not distract us from discussing and commenting on the three legal inquiries and their legislative rooting.

First: What is the right of pre-emption in Libyan law and oil contracts in Libya? The Libyan Civil Code of 1953 (referred to as ‘The Law’) allows the right of pre-emption according to the requirements and provisions contained in Articles (939-952).

However, Articles 944 and 952 of the Code deal with the procedures related to pre-emption, including deadlines. The person who has the right of pre-emption is required to exercise this right before the seller and buyer by declaring their interest within fifteen days from the date of the official warning given by the seller or buyer. If they fail to do so within this timeframe, they will forfeit their right. The right of pre-emption also lapses if one year has passed from the day of registering the sale contract, regardless of whether the pre-emptor is present or absent.

In the case of oil contracts in Libya (EPSA), the right of pre-emption extends to one hundred and twenty (120) days from the date of notification or extension. After the expiry of this period, the foreign party can start executing the sale thirty (30) days after notifying the Libyan State.

It is worth noting that the provision discussed in this comment does not address the right of pre-emption and its provisions or the parties’ obligations regarding deadlines and requirements. Its focus appears limited to the legitimacy of the administrative decision issued by the Council of Ministers and its effects, as well as the administrative dimension within the competence of the Ministry of Oil or the Council of Ministers. The provision does not address the role and overlapping competencies with the two bodies mentioned regarding the Supreme Council for Energy and Gas Affairs, which was discussed in a previous article available in this link: Legal Analysis Cabinet Resolution No. 790 of 2022 On Reorganization of the Supreme Council for Energy Affairs Preamble – Itkan Law

Second: Is it permissible for the Libyan judiciary to intervene in oil contracts that are subject to international arbitration? The Petroleum Law No. 25 of 1955, with the text of Article 20, subjects oil contracts to Libyan law and international arbitration, and this is what oil contracts with the Libyan state adhere to. Although the judgment is subject to suspension targeting the administrative decision of the Council of Ministers, it clashes with the provisions of the Libyan Petroleum Law and oil contracts, which are exceptions to the legal rule on which the judges based their judgment that is the subject of this suspension. Therefore, it remains for the Supreme Court to decide on the matter.

Third: To what extent is an ordinary person entitled to file a lawsuit in Libyan law? The principle in the Libyan Code of Civil and Commercial Procedure of 1953 is that the interest condition is one of the main requirements for accepting a lawsuit, as it depends on the existence of a direct interest, distinguishing it from the concept of “hisba and grievances” in Islamic law, which constitutes the second source of legislation in Libya according to Article 1 of the Libyan Civil Code.

What draws attention in this judgment is the broad interpretation of the text found in Article (6) of Law No. 88 of 1971 concerning the administrative judiciary, particularly concerning the concept of “direct personal interest.” The judgment said that only “civil servants” have the right to appeal, not workers who are interested in challenging the administrative decision mentioned in the judgment. This exclusion is due to the differing conditions required compared to a civil lawsuit, which does require the condition of interest.

In conclusion, we expect from Libyan jurisprudence and the Libyan Supreme Court to develop a legal view on this case.

Overview of the Libyan Commercial Arbitration Law No. 10 of 2023

Overview of the Libyan Commercial Arbitration Law No. 10 of 2023. Notwithstanding that there are different provisions in several laws that govern Arbitration in Libya – such as Law No. 25 of 1955 on the Petroleum Law, Law No. 9 of 2010 on Investment Promotion, and Law No. 12 of 2010 on Labor Relations – the main rules regulating arbitration in Libya are provided in section IV, Articles (739 -771) of the Civil and Commercial Procedure Code of 1954.

Since then, rules on arbitration have not been developed until the promulgation of a bill on arbitration law on April 17, 2023. The law has yet to be published. It contains 100 articles regulating commercial arbitration in Libya.

The Bill dates to 2008-2009, when the Libyan Ministry of Economy initiated a proposal on an arbitration law that no progress was ever made on. Bearing in mind that Libya still needs to join the New York Convention on the Recognition and Enforcement of Foreign ArbitralAwards 1958 and the Washington Convention on International Commercial Arbitration 1965.

A review of the Bill signifies the following salient points:

– An arbitration clause or an arbitration agreement must be written, whether presented formally, customarily, or electronically.

– In terms of validity, an arbitration agreement is independent of the original contract within which arbitration is stipulated.  

– Arbitration conducted virtually is binding and governed by the same rules as conventional arbitration.

– Arbitration is not a part of the public order, and the parties should submit it to the judge to comply with it.

– The judge of provisional matters may issue conservative measures or temporary measures at the request of a party before or during the commencement of arbitration measures.

-The arbitral award issued in Libya has the authenticity of the final and conclusive judgment, and the competent court shall append the arbitral award in the executive form at the request of one of its parties. It is automatically enforceable by the parties or made compulsory by the President of the Court of Appeal, of which the Arbitration Seat is located.

The presiding arbitrator or the arbitrator shall send a copy of the award to the parties within 15 days from the date of the award’s issuance. The original award shall be deposited together with the arbitration agreement to the clerk of the competent court. The clerk shall make a record of the deposit. The court shall deliver a copy of the executive formula within two days of depositing the award. 

– The law regulates cases of objection and appeal against arbitral awards issued in Libya in Article (54) and cases of complaint and appeal against the international arbitral award in accordance with Article (59) of the law.

– Article (60) of the Law, entitled “Recognition of the Arbitral Award”, provides that the arbitral award is a final and conclusive judgment, and the special rules on expedited execution are applied to it once the award is appended in the executive form by a decision of the President of the competent court.

– Article (62) of Section VII of the Law, entitled “Recognition of Foreign Arbitral Awards”, approves the enforcement of foreign arbitral awards in Libya in accordance with the principle of reciprocity. This is done by a written application submitted to the President of the Court of Appeal. The latter shall order the enforcement of the arbitral award and append it in the executive form within two days from the application date.  

– Finally, the law considers arbitration centres as legal entity derive their legitimacy from a decision by the Minister of Justice. The decision shall be published in the official gazette. The law also obligates all existing arbitration centres to re-register with the Ministry of Justice within six months of passing this law. Otherwise, their licenses are deemed revoked.

Legal Analysis Cabinet Resolution No. 790 of 2022 On Reorganization of the Supreme Council for Energy Affairs Preamble

Legal Analysis Cabinet Resolution No. 790 of 2022 On Reorganization of the Supreme Council for Energy Affairs Preamble. Established pursuant to a law that the Cabinet of the State of Libya meets with competence in establishing public institutions, agencies, interests and companies under the legislation in force. The Cabinet also has the competence to reorganize them, even if established by law, pursuant to the delegation of competences conferred upon it by Law No. 16 of 1991 on the attribution of certain competences to the General People’s Committee (Ministerial Council), namely the Cabinet. The Supreme Judicial Court of Libya has affirmed this approach in several judicial judgements.

The National Oil Corporation’s dependence on the Cabinet was also being worked on in the absence of the Ministry of Oil. General People’s Congress Secretariat Resolution No. 10 of 1979 on the reorganization of the National Oil Corporation – regardless of the jurisprudential controversy of the legality of this resolution, which abrogated Law No. 24 of 1970 on the establishment of the National Oil Corporation – is explicit: “The National Oil Corporation shall enjoy legal personality and shall have full legally competent to achieve its purposes. The Minister of Oil shall have the authority to supervise and control its business.”

However, the competences conferred upon any authority, including the Cabinet, must not exceed the statutory framework and mechanisms, i.e. the legal and administrative channels established by the legislation in force, unless the legislation itself is abrogated or amended by the same authority that promulgated the legislation or by a higher authority.

Non-compliance with this legislative gradation of the legal rule brings the situation closer to the application of the principle of usurpation of power, which opens the door for the judiciary to annul these legislations or certain provisions contrary to it.

Legal Challenges

In an analytical reading in Cabinet Resolution No. 790 of 2022 on the reorganization of the Supreme Council for Energy Affairs “Resolution” – expanding its membership to include all authorities associated with Libya’s energy field of oil, gas, electricity, renewable energies and State Supervision authorities headed by the Prime Minister – within its legal framework represented in the relevant legislation hereinafter referred to in the preamble of the resolution, and the most important of which is Resolution No. 10 of 1979 hereinafter referred to, the Petroleum Law No. 25 of 1955 and the Resolution to establish and organize the Supreme Council for Energy Affairs Resolution No. 406 of 2009 and to amend it, it is clear that the legislator has expressly left the competence exclusively in the hands of the National Oil Corporation and its Affiliate (Cabinet or Ministry of Oil). Therefore, the Cabinet, legally, shall not initiate on its own the granting of such competencies to a third authority such as the Supreme Council for Energy Affairs. Perhaps the most important of these issues, which its competence is entrusted by the Legislative Authority’s Resolution only by the Cabinet or by the Ministry of Oil, may be found in paragraphs 14, 15, 22 and 26 of article V of the resolution, which are the subject of this comment, respectively:

– Establishing rules and negotiating mechanisms on the extraction and investment of various energy sources and approving partnership agreements and contracts from foreign companies, development and operation agreements and other investment contracts concluded by oil and other energy enterprises.

Adjudication of applications for renewal, abandonment and waiver of concession contracts.

– Review and approval of investment budgets for energy development, manufacturing and infrastructure projects.

– Study and address the issues referred to it by the Cabinet or its President.

It is worth mentioning that the development of the State’s strategy in the various fields of energy and policies on energy demand management and programs to enhance the capacity of the State in the fields of energy are essential competence of the Cabinet and are undeniable from the legal point of view as long as they comply with the purpose of establishing the Cabinet as the State’s supreme regulatory authority and its counsel in this area, as long as the Cabinet does not interfere with the competencies of the executive authorities regulated by legislation or resolutions of public associations such as the General Electricity Company. This development is due to the granting of executive competencies to the Cabinet instead of its previously advisory competence in view of the Government’s trend to provide financial support for the development of the oil sector, which restricts the National Oil Corporation and the Ministry of Oil from obtaining financial nutrition for the development of the sector because of the Secretary General letter of the General People’s Committee (Previously) Indicative No. 0957 of 3 April 1995, which established a financial mechanism to finance the oil sector through the budget of the State despite the attempt of the Libyan House of Representatives in its letter indicative No. 059 of 20-12-2021 to abolish this mechanism and allow the National Oil Corporation to deduct its budgets through its revenues. The Government is also represented by the Cabinet to abolish this letter by resolution No. 496 of 2021, which was partially withdrawn by Resolution No. 694 of 2021. This confusion reflects the inability of the State, including the Libyan Government, to address this issue legislatively except by reorganizing this Supreme Council and granting it executive competencies, which may, in the future, lead to the breaking up of the General Electricity Company’s legal monopoly in its production and distribution, as well as by promoting the further expansion of the State’s electricity production through renewable and clean energies such as solar energy. Cabinet Resolution No. 830 of 2022 on the mechanism for the payment of energy generated from renewable sources may address some of the legal problems in establishing a mechanism for supporting what is generated from such renewable energies for the consumer and how to introduce it in the public power grid network of the General Electricity Company, whether for the purpose of local marketing or external export as an investment project under the Libyan Investment Law. This comes with the signing of an agreement with the Italian company Eni worth eight billion dollars to develop the infrastructure of the oil sector in Libya’s western region, which is promised significant reserves, as well as the contract to build an oil refinery with an American company in the southern Libyan region.

Conclusion

Finally, despite the legal disagreement between the Libyan Minister of Oil and the Cabinet on the legality of the resolution of reorganizing the Supreme Energy Council on the subject of this paper, the resolution remains in force until what is abrogated by the Libyan judiciary or partially abrogated what is contrary to the legislation in force. Even the Law Department of the Supreme Council of the Judiciary seems not to have been presented with the issue to express its legal opinion in this regard.

Decree No. 944 of 2022 of the Minister of Economy on the Foreigners’ Participation and Foreign Companies’ Branches and Representative Offices in Libya, Legal Update

On 13 October 2022, the Libyan Minister of Economy issued Decree No. 944 of 2022 (“Decree No. 944”), which has repealed the prior regulatory regime applicable to the so-called “Commercial Law Regime” for doing business in Libya and provides some significant advantages for non-Libyan entities. For example, it raises the permissible level of foreign ownership in joint companies to 75-89% (from 49% previously) and gives foreigners the right to establish limited liability companies in Libya.

Article 375 of Law No. 23 of 2010 on Commercial Activity (the Commercial Law) authorises the Minister of Economy to issue regulatory decrees to determine the permissible levels of foreign ownership and the permissible areas of activity for non-Libyan legal and natural persons in the Libyan economy. To date, these matters were regulated by Minister of Economy Decree No.  207 of 2012 (as amended by Minister of Economy Decree No. 22 of 2013), both of which have been repealed and replaced as of 13 October 2022 by Decree No. 944.

Decree No. 944 regulates the participation of non-Libyan entities in activities under the Commercial Law only (i.e., the commercial licence regime). Therefore, it does not affect the rights and obligations of foreign or Libyan investors established under Investment Promotion Law No. 9 of 2010 (i.e., the investment licence regime). Further, the provisions of Decree No. 944 do not apply to entities that were established before its date of issuance.

Decree No. 944: summary of significant provisions  

Set out below is a summary of the most significant provisions of Decree No. 944:

  • It creates new forms of entities authorized to operate under the Commercial Law, including temporary branches, international cooperation companies, and limited liability joint companies.
  • It increases the permissible maximum level of non-Libyan ownership in joint companies to 75%, and potentially as high as 89% if specifically approved by the Minister of Economy (up from 49% previously).
  • It establishes a “Black List” of foreign companies that have violated Libyan law and, consequently, are barred from conducting further business in Libya.
  • It prohibits non-Libyans from conducting non-profit activities in Libya.
  • It obligates branches and joint companies to submit annual reports to the Libyan Company Register.
  • It clarifies that non-Libyan persons enjoy the same rights as Libyan persons except for the right to own real estate.
  • It states that branches may conduct business in, at maximum, two areas of the permitted activities that are enumerated in the Decree.
  • It states that the maximum duration of a temporary branch is 18 months, and that such a branch may not be a party to more than three contracts or memorandums of understanding.
  • It permits the conversion of branches to joint companies.
  • It increases the level of minimum capital required to open a branch to 2,000,000 LYD from LYD 250,000.
  • It adds new areas of activities that are open to branches of foreign companies, including air transport and international cooperation.
  • It establishes a committee charged with assessing penalties and fines for violations of Decree No. 944.
  • It states that the operation of Decree No. 944 will be reviewed in December of each year.

Comment

Compared to the prior Decree No. 207 regime (now repealed), Decree No. 944 provides some significant advantages for non-Libyan entities. For example, it raises the permissible level of foreign ownership in joint companies to 75-89% (from 49% previously) and gives foreigners the right to establish limited liability companies in Libya. In addition, Decree No. 944 establishes new types of legal entities, such as “temporary branches” and “international cooperation company,” which may be of interest to non-Libyan entities.

As a cautionary note, Itkan Law believes that certain aspects of Decree No. 944 may have exceeded the authority delegated to the Minister of Economy by Article 375 of the Commercial Law – which only authorizes the Minister to regulate levels of permissible foreign ownership and to determine the commercial activities open to non-Libyan entities acting through the entities established in the Commercial Law. Accordingly, clients should be aware that the provisions of Decree No. 944 establishing a new type of legal entity (i.e., international cooperation companies) and may be subject to challenge before the Libyan administrative courts and to the issuance of an adverse legal opinion by the Law Department of the Ministry of Justice.

The Provisions of Law No. 9 of 2010 on Promoting Investment

The provisions of Law No. 9 of 2010 on Promoting Investment

Analysis of the Foreigners’ Right to Invest in Libya

This article sheds light on several legal questions raised concerning the right of foreigners to invest in Libya, aiming to provide answers for them and analyse how Law No.9 of 2010 on Promoting Investment is regulated. The questions are as follows:

  • What are the legislations governing investment in Libya?
  • Who is a foreigner?
  • Who is an investor?
  • What are the legal regulations through which a foreigner can practice his/her commercial activity in Libya?

What are the legislations governing investment in Libya?

The investment sector in Libya was initially regulated by Law No. 37 of 1986 on the Investment of Foreign Capital. This law was later revoked by Law No. 5 of 1997 on Encouragement of Foreign Capital. Subsequently, Law No. 5 of 1997 was amended by Law No. 6 of 2003 on Encouraging National Capital Investment. The aforementioned laws were later on entirely revoked, and Law No. 9 of 2010 on Promoting Investment was implemented and is still the governing law to date.  Furthermore, the Council of Ministers issued Executive Regulation No. 499 of 2010.

Who is a foreigner?

According to Law No. 24 of 2010 on Nationality, Law No. 6 of 1987 on Regulating the Entry and Residency and Exist of Foreigners in and out Libya, and Law No. 10 of 1989 on the Rights and Obligations of Arabs in Libya, a foreigner, whether a natural person or a legal person, is every person who does not hold a Libyan nationality including Arabs while taking into consideration the Libyan- Maltese Agreement of 1985 (https://ls.org.ly/yj91), and the bilateral agreements on the Rights of movement, Residence, and Ownership- on procedural terms- with Tunisia and Egypt.

Who is an investor?

According to the definition provided under Law No. 9 of 2010 on Promoting  Investment, an investor is “any natural or legal person, national or foreign who invests in accordance with the provisions of this law ”, implying that a foreigner, an individual or a company, may invest in Libya.

Does a foreigner have the right to invest and conduct commercial activities under the Libyan investment law?

In general, there are two pathways to entering the Libyan market:

What fields and commercial activities are a foreigner permitted to establish in Libya?

Under Commercial Law: the fields of commercial activities in which foreigners can invest were determined by the Minister of Economy Decree No. 207 of 2010 and its amendment in 2013, and the Decree of the Council of Ministers No. 248 of 2012 on Prohibiting the Entry of Foreign Security Companies to Libya to Carry out Their Activities. The aforementioned decrees set the areas in which joint companies in which foreigners are prohibited from investing, as well as the commercial activities in which branches of foreign companies are allowed to enter (https://ls.org.ly/a/y4iz).

Under Investment Law: a foreigner is permitted to invest in the majority of production and service activities in Libya by Article 8 of the Investment Law, except the investment in Oil and Gas projects, pursuant to the exception stipulated by Article 27 of the Law. The Executive Regulation (Decree No. 499 of 2010) in Article 4 delegated the Council of Ministers the power to determine the areas that are permissible for Libyans only or in partnership with foreigners and the percentage of share for each contributor in the investment project based on a proposal from the competent minister. Article 4 of the same Executive Regulation further confirms the exclusion of foreigners from investing in Oil and Gas productions, specifically in areas of:

  • Oil and Gas exploration.
  • Oil and Gas extraction.
  • Marketing of Oil and Gas.

This insinuates that investing in oil services and the fields of petrochemicals, fertilisers, and refineries is permissible, as it is closer to the industrial classification than to oil production. We had a precedent in 2007 when a license was granted to (Libyan-Qatari) oil services companies.

Fortunately, restricting investment in oil fields is limited to the three exceptions mentioned in Article 4 of the Executive Regulation. Even in the oil sector, the Council of Ministers has abated the number of restrictions imposed on foreigners investing in Libya by providing them with the right to invest in oil services and its affiliates. Additionally, there seems to be a movement in the Libyan State calling for the abolition of restrictions in the oil sector. This is a result of the need to develop the infrastructure in the oil sector for money, while it is becoming challenging for the Libyan state to provide the necessary investments, in addition to the low production rates in the oil field, thus requiring investments from the private sector.

Are there any limitations on the percentage of foreigners’ contribution to commercial activities in Libya?

Contrary to the commercial licence under the Commercial Law, which prevents a foreigner from owning more than 49% of the shares in joint companies, a foreigner under investment law and by virtue of investment licence may own up to 100% of the investment project without the need of having a joint Libyan investor. The Council of Ministers has the competence solely to determine the restrictions of the percentage of foreigner share contribution, at the suggestion of the Minister of Economy. The legislator did well by not restricting the percentage of shares a foreigner can own and entitled them with the right to own the entire investment project or to jointly own shares with a Libyan national in any percentage agreed upon by the parties. As a result, a foreigner was given the privilege of having the flexibility that encourages him to enter into investment in Libya, which is consistent with the purpose for which Law No. 9 on Promoting Investment was enacted.

What is the value of the investment capital required for a foreigner to invest in Libya?

According to Article 5 of the Executive Regulation of the Investment Law, the minimum amount of the investment capital for the investment project – project value – for foreigners is five million Libyan Dinars. As for the Libyan investor, the required capital was set at a minimum of two million Libyan Dinars.

In circumstances where a foreigner is entering into a joint investment with a Libyan investor, the legislator seems to have adopted an approach by which they encourage the foreigner to invest with a Libyan by reducing the investment capital fund to a minimum of two million Libyan Dinars. This is evident from the practical application of this philosophy, although Article 5 of the Executive Regulation did not reflect this trend in its text. In addition, the minimum required capital does not encourage owners of small and medium enterprises to take advantage of the recompences of this law to invest under its provisions.

What forms of companies can a foreigner establish in Libya and practice his activity through?

In consonance with Article 8 of the Executive Regulation of Investment Law, a foreigner can register an investment project through any legal forms stipulated under the Commercial Law. The registration should be under the investment registry with the Investment Board. The registration is carried out in accordance with the procedures and rules outlined in Article 9 of Executive Regulation. Additionally, the Executive Regulation defines the legal form of investment as the legal body that owns the investment project or supervises its management.

Since the Investment Law No. 9 of 2010 is a special law that overrides the general provisions of the law, namely, the commercial and civil laws, according to the established general rule, “the private restricts the general”. This implies that the interpretation of a particular text should not be stretched beyond what it bears. In practice, Article 28 of Law No. 9 states that the provisions regulating economic activity shall apply to those subject to the Investment Law’s provisions in matters not provided for in a special provision.

Accordingly, where a provision is mentioned under Investment Law, it shall be applied without any dispute. Moreover, when the law refers to its Executive Regulation in determining the shares between foreigners and nationals and areas of investment, and the Executive Regulation decides that the jurisdiction in this area is entrusted with a decision of the council of ministers, it is not permissible to invoke the validity of the percentages or areas specified in the Commercial Activity Law as this is considered a violation of the established general rules and Law No. 9 and its Executive Regulation.

The commercial entities available in accordance with the Foreigners Commercial Law are branches of foreign companies, joint stock companies, and limited liability companies, given that Article 8 of the Executive Regulation of Investment Law expressly excludes “individual activity and partnerships – partnership companies- and joint venture companies” from the commercial entities available for foreigners.

What are the procedures for establishing and conducting commercial activities?

According to Article 17 of the Executive Regulation, the regulatory body will establish an investor services centre that provides a one-stop service centre through which procedures and investment applications are completed, including services provided by the relevant authorities such as the Tax Authority, the Customs Authority, the Pension Fund, Commercial Banks, the Passports Authority, Nationality, and Foreign Affairs, the Ministry of Labour, and others. The regulation also permits the addition of any entities that the authority proposes to add.

Article 10 of the Executive Regulation guides the documents required for an investment application as follows:

  1.  A Memorandum of Understanding between the founders regarding the investment project notarized by a notary public or the embassy according to the procedures and legislation in force.
  2. The approval of the foreign company’s board of directors in the event that no other partner is investing in the project.
  3. A proposal that includes three options for the name of the investment project.
  4. A memorandum on the investment project that includes the following:
  5. The value and nature of the capital to be invested, denominated in Libyan Dinars or one of the convertible currencies at the time of application.
  6. The products/materials used in the project, whether imported or locally sourced.
  7. Technical specifications for the investment project.
  8. The schedule set for the implementation of the investment project.
  9. National and foreign workforce estimations for the operation of the investment project and the replacement schedule of foreign workers by national workers during the first five years of employment.
  10. A certificate indicating the investor’s nationality issued by the foreign investor’s competent authority in his country.
  11.  A recent official extract from the registration sheet of the Commercial Register in the foreign legal person’s country of origin.

The documents submitted regarding the project mentioned in points 4 and 5 must be original and certified by the embassy.

What are the incentives provided for investment in Libya?

 The IssueCommercial LawInvestment Law
1Taxes (Income, Stamp Duty and Consumption)Subject to Income, Stamp Duty, Jihad, and Consumption taxes apart from Exportation taxesInvestors are exempted from all taxes for a period of 5 years and could be extended to 8 years with the approval of the Council of Ministers
2EmploymentLibyan employment should be a total of no less than 75%  Libyan employment should be a total of no less than 30%
3Real Estate OwnershipIt is not permissibleUtilization rights for a period that does not exceed 70 years
4Custom DutiesIs subject to Custom DutiesIs exempted from Custom Duties for 5 years
5Contribution PercentageNo more than 49% in a joint ventureUp to 100% for foreigners
6Areas of Contribution14 fields prohibited for foreigners Only 3 areas are prohibited in oil and gas projects
7VisasThe normal passport system process; is usually 6 months to a yearA 5 year Work Permit
8Foreign Currency Accounts and LoansPermissiblePermissible
9ArbitrationAccording to the agreement, and for state contracts, it is permissible only with the approval of the Council of MinistersPermissible
10Legal ProtectionIt is not legally protected and is subject to seizure and confiscationIt is not permissible
11Net Profit TransfersAccording to the publications of the Central BankThe investor has the right in transfers
12Choosing an AppraiserBy order of the court from the schedule of experts registered with the courtsBy agreement

Legal Shortcomings of the Investment Promotion Law:

The Investment Promotion Law succeeded Law No. 5 of 1997 on the Promotion of Foreign Capital Investment. Whereas the new law is expected to overcome the weaknesses of the previous law. It was anticipated that Law No. 9 of 2010 would come up with articles that would create a more investment-friendly environment. However, the following legal shortcomings have been noted in Law No. 9:

  1. Unlike Law No. 5, Law No. 9 unified the Commercial Registry with the Investment Registry, causing confusion in practice. While Law No. 5 expressly stipulates in Article 13 the separation of the Commercial Register from the Investment Register specially prepared for the purpose of registering investment projects, the said article stipulates that:

“the investment project shall not be bound by the forms provided for in the legislation in force and shall not be subject to the procedures for registration in the Commercial Registry, the Industrial Register and the Registers of Importers and Exporters. The Executive Regulation shall determine the legal forms of investment projects that may be established in accordance with the provisions of this Law, the controls of incorporation, and the procedures for registration in the Investment Register prepared for this purpose.”

This article undoubtedly distinguishes between the Commercial Registry and the Investment Registry.

On the other hand, the Investment Law No. 9 stipulates in Article 4 that:

“[w]ithout prejudice to the provisions governing the Commercial Registry, a special registry shall be established in the administrative body called the Investment Registry in which all investment projects shall be registered, indicating the legal form of these projects, the size of investments, the type of activity, the names of their owners and shareholders, their nationalities, and the percentage of the presence of foreigners in them. The Executive Regulation shall determine the controls and procedures for registration in the Investment Register.”

The beginning of this article raises doubts about an incomplete separation between the Commercial Registry and the Investment Registry, contrary to Article 13 of Law No. 5.

  • According to Law No. 9, the procedures through which applications for investment registration are considered require that the project be submitted to the Ministry of Economy to obtain final approval, despite the prior approval from the Investment Board, which is surprising as the Investment Board is supposed to be the only body to decide on the Investment project registration. The requirement to obtain the approval of the Ministry prolongs the duration of the proceedings, which is contrary to the spirit of the law and raises difficulties in implementation, especially when the Board approves a registration on the one hand, and the Ministry opposes it on the other.
  • In the past, the law required the Board to respond to investment requests within fifteen days. Accordingly, a lack of response would be considered approval of the investment request by law. This obligation no longer exists in Law No. 9, which opens the door to the abuse of the right and the delay in responding to investment applications. Currently, Law No. 9 in Article 21 provides for the acceptance of grievances against any decision issued against the investor within thirty days of its issuance. Despite the limitation of the duration of the grievance, the law is still considered to be deficient in specifying periods in which decisions related to the investment application must be issued, as it does not oblige the Ministry to issue an approval decision within a certain period, which in practice may last for several months.

Investment Promotion Law, between the objective and the implementation:

Analytical reading of the Investment Promotion Law No. 9 of 2010 that considers the timing of the enactment of this law shows that the legislator of this law aims to encourage investment, especially foreign ones, in Libya. This is confirmed by the designation chosen for this law. Unfortunately, the aforementioned legal shortcomings, as well as the tools used to apply the law and its inaccurate interpretation when implemented, have, in practice, led to a shift from the goals intended to be achieved by its enactment.

For example, on 18th August 2021, the Ministry of Economy issued Decree No. 273 of 2021, according to which the fees that companies – wishing to register under the investment law – must pay to ensure an investment licence were increased. The most prominent of these fees is a fee on the total investment costs of the project at a value of 0.01%.

In practice, such fees have led some companies to retreat from entering Libya and registering investment projects. Not to mention that the decision to increase the fees provided for its effectiveness immediately upon its issuance. Thus, it became applicable to projects approved on the same day as the issuance of Decree No. 273.

In addition to the retreatment of investors, such decisions make it difficult to predict the next movement, discouraging investments as they require a stable environment.  

Another example of a shift from the goals intended to be achieved by Law No. 9, the Legal Department of the Ministry of Economy issued a memorandum addressing the Minister of Economy. This memorandum questioned the validity of a registration application by a foreigner wishing to invest in Libya in the form of a partnership between two foreign companies (an investment project owned 100% by a foreign investor). As a result of this memorandum, the Minister of Economy refrained from approving the application, despite the previous approval of the Investment Board.

The Legal Department’s interpretation is entirely contrary to the Investment Law and its Executive Regulation, in which several articles insinuated the validity of the registration of a foreign investment company wholly owned by two foreign partners. For example, Article 5 of the Executive Regulation stipulates that the minimum value for foreign capital is five million Libyan dinars, which means that the capital may be owned entirely by a foreigner, and the article does not specify specific proportions for the parties’ shares in the investment project, whether the participation is between two foreign parties or a foreign party and a Libyan party. The general rule is that things are legitimate unless otherwise prohibited.   

The Executive Regulation also stipulates that the specifications of fields that are limited to Libyans only or in partnership with foreigners and the share of each side shall be determined by a Council of Ministers’ decision. There was no such decision when the Ministry’s Legal Department issued the above-mentioned legal memorandum. Article 10 of the Executive Regulation, in its first and second paragraphs, also requires the existence of a decision from the Investor’s Board of Directors certified by a notary public or by the Libyan consulate in the investor’s country of origin if he/she is not Libyan, or if he/she is abroad. Moreover, the investors’ agreement to invest will replace the requirement of the Board of Directors’ decision if there is more than one investor, even if they are all foreigners.

The uproar raised by this memorandum and the give-and-take between the Investment Board and the Ministry of Economy led to the referral of the matter to the Law Department of the Ministry of Justice to seek its legal opinion. Unfortunately, this referral was only made seven months after the application was forwarded to the Ministry of Economy. This provoked the foreign investor’s restlessness and certainly reflected negatively on the appearance of the Ministry’s performance.

In conclusion, the question here is, once the Law Department interprets the Investment Law and clarifies how to apply it correctly, will this opinion be the beginning of a practical opening towards investment promotion, or will the situation continue as it is?

An Overview of Law No.1 of 2013 Regarding the Prohibition of Interest-Based Transactions In Libya

An Overview of Law No.1 of 2013 Regarding the Prohibition of Interest-Based Transactions In Libya

There is no dispute on the inviolability of riba “usury” and no opposition to the enactment of a Law prohibiting usury, if on professional and practical terms. The ongoing discussions regarding the application of the Law have become a real concern for companies and banks, given the workforce potential and practical capabilities currently available in Libya. The time required for its implementation should have been taken into consideration when enacting the law in a way that does not prejudice existing interests and stable legal statuses, especially with the Law having approved the immediate and retroactive applications of its provisions, i.e., from the start of 2013 for natural persons and the beginning of 2015 between legal persons.

The questions that arise and should be addressed to the Libyan Legislator are; Were the circumstances/status of the Banks and Companies operating in Libya even taken into thought? And if the capability and impact of the Libyan Economic System in general and the Banking System in particular in carrying out such a reform within the period granted were considered? , Which will and have suffered unsecured financial losses.

A Law that will expose the Libyan State’s money to a fundamental legal problem as any revenues acquired from interests is, in the eyes of the Law, illegal amounts and money attained from the crime of dealing with usury; these amounts will also include the funds not yet due, due to the retroactivity of the Law itself on the past. This is, of course, a loophole on which foreign countries or institutions may base their claims to deprive Libya of the benefits of its funds deposited abroad, especially those of the Central Bank, the Libyan Investment Authority, and the Libyan Foreign Bank, as well as the rights of the National Oil Corporation.

Let’s look at Islamic Countries such as Malaysia and Bahrain, even though they are ahead in building a base for dealing with Islamic Financial Instruments by two or more decades. They still adopt both traditional and Islamic Banking Systems, which is why Libya should adopt the same approach, mainly as it lacks the cadres and financial tools for such modernization or legislative reform.

The process of passing this Law by show of hands in 2013 and on-air explains the dimensions and background of the existence of this Law, which did not take into account the negative effects of the application, particularly the economic effects on State Institutions.

In other words, the funds of; the Central Bank of Libya, estimated at 100 Billion USD, the Libyan Investment Authority, estimated at 15 Billion USD, deposited at the Central Bank of Libya, 3 Billion in deposits called Fixed income, and 5 Billion USD between so-called derivatives, swaps, and options, all rely on an international interest rate system that generates revenues, especially the finds of the Central Bank of Libya, and the Libyan Foreign Bank.

The question that arises is. What is the legal adjustment of these interests in riba-based transactions-i.e., profits- for deposits and investments dependent on the investment and financial categories referred to in Law No.1 of 2012? Are they Illegal? Do they consist of a crime? If so, the legal offense would be borne by these institutions, represented by their chairman and boards of directors, with criminal convictions, and the Public Prosecution headed by the Office of Attorney General shall need to file a criminal case against them. This issue will become more complicated if the view of the “Mufti” in the State of Libya is taken, who may not be aware that Libya’s money returning from oil is invested mainly through the Central Bank, the Foreign Bank, and the Libyan Investment Authority with an interest-rate system.

The foreign party, whether a Bank or an Investment Fund, may claim against the payment of such profits to the Libyan Institutions building on the fact that these institutions are based in Libya and were established according to the Libyan Laws-even with an agreement on the validity of another Law on the contracts – considering it to be a breach of Law, since the payment of interests is considered a crime; the Law was enacted retroactively. The limitation periods in criminal cases do not apply in Libya.

The problem is compounded by the inconsistency between the validity of Law No.7 of 2015 issued by the House of Representatives on postponing the entry into force of Law No.1 of 2013 for five years until 2020 and the Supreme Court Ruling of 2014 on revoking the 11th paragraph of the 7th amendment to the constitutional declaration of 2011, with no enough clarification from the Supreme Court ruling No. 6-467 dated 16-06-2019, on the enforceability and application of these Laws. However, in this ruling, the Libyan Supreme Court seems to be accepting only law no.1 of 2013 to be in enforce as well as permits to carry on with a ‘delay fine’ under article 229 of the Libyan civil code without being forbidden by law no.1 of 2013, as an interest. All in the light of the Constitutional Vacuum, the ongoing political divide, and the non-completion of the terms of the Political Agreement.

Where do we stand before the Law and Sharia concerning Libya’s Foreign Funds?

Regulations Governing the Recruitment of Foreigners in Libya

Regulations Governing the Recruitment of Foreigners in Libya.

Article (9) of Law No. (12) of 2010 on Labour Relations “the Labour Law” expressly states that: “Non-nationals may not practice any work before obtaining a permit therefore from the competent authority – i.e. the Ministry of Labour – and employers may not recruit non-nationals from abroad, contract with them, or enable them to work without obtaining prior approval from the competent authority, which shall issue a decision to specify the conditions for employing foreigners and the jobs in which foreigners may be accepted.”

Before addressing the recent decision of the Minister of Labour No (392) on the Issuance of Restrictions on the Importation and Employment of Non-nationals of 22/12/2021 “the Resolution”, it should be noted that the definition of foreigners can be deducted from Law No (24) of 2010 on the Provision of Libyan Nationality. Article (1) of this law defines the Libyan nationality as “the nationality of the citizens of the State of Libya according to the conditions outlined in Article Two of this law.” The same law provides that foreigners married to Libyans and their sons and daughters will enjoy the same benefits as the Libyan citizens do in the provisions and systems of work, social security, and tax legislation (Articles 10 and 11). This is also confirmed by the Resolution in Article (17).

Legally, any company or branch of a foreign company operating in Libya and registered under the Libyan Commercial Registry cannot employ more than 25% of foreign workers (Article 51 of the Labour Law). However, this percentage increases to become 70%, according to Article (7.7) of Law No. 9 on Promoting Investment, which permits companies and branches registered under the Investment Law to employ foreigners when there are no national alternatives.

In practice, the Ministry of Labour used to issue an annual bulletin that determines the professions that are prohibited to non-Libyans. However, this yearly practice stopped in 2014 due to the circumstances in Libya in the last decade. Resolution (392), the subject matter of this comment, comes after a long period to regulate the rules and conditions of the employment of foreigners. It also provides a list of the jobs allowed to be the subject of employment (Article 2).

This Resolution includes 25 articles. It stipulates new rules on the percentages and fields of work allowed for foreigners, whether recruited by national or foreign companies, agents of accredited foreign companies, medical and health companies, hotel services companies, and investment companies.

It should be noted that there is a circular issued by the Department of Employment (Ref No. D-188), dated 26/10/2021, which prohibits contracting with foreign workers holders of visas other than a work visa. This is a restriction to the general rule, which allows the recruitment of holders of such visas in Libya. Being merely a circular, it should be easy to revoke or amend it by the legislator.

We conclude this comment with another circular recently issued by the Social Security Fund in Libya, which determines a salary ceiling of LYD 16,000, from which the social insurance deductions are allowed, and a minimum salary of LYD 900, according to the Council of Ministries Decision No. (448) of 2021 on Minimum Wages.

New Requirements for Registration at the Ministry of Economy


As part of the Libyan government’s plan to move forward towards establishing e-government, the Ministry of Economy (MoE) has begun to digitise its databases. As a result, the MoE issued several resolutions in the last quarter of 2021. Most of the said resolutions set the scene for converting the data in traditional files to an electronic database. They are also concerned with regulating when and how it will be conducted

In this regard, Decree No. (935) of 2021 on the availability of corporate names electronically provides that the issuance of electronic certificates on the availability of corporate names shall start from 1st January 2022. This service will be provided through the unified electronic service platform. Negative Name Letter

Similarly, the Minister of Economy issued another Decree No. (221) of 2021 on adopting an electronic ID number for companies in the Commercial Registry. The Commercial Registry offices are the authority that would provide different companies working in Libya with the electronic ID. This shall be done through the unified electronic service platform. Moreover, the electronic ID number is the way through which companies will be identified and distinguished, and it is prohibited to perform any financial or administrative paperwork of any company without the said ID number. Furthermore, all registered companies must comply with this Decree and rectify their registration accordingly. Significantly, Article (5) obliges all government departments to disregard the commercial registers issued in violation of this decree from 11 February 2022.

In correspondence, the Libyan Central Bank (LCB) sent a letter of instruction to all banks in Libya (letter ref no. 246/2021), in which LCB instructs all banks to meet Decree (221) requirements. One of the state-owned banks has already produced an electronic database and was on trial last December.

In another recent development, the Minister of Economy issued Decree No. (531) of 2021 on permitting the incorporation of companies outside the banking sector. It obliges insurance companies, financial investment companies, and companies operating in the non-banking financial system to obtain permission from the Stock Exchange Board before incorporation and registration in the commercial registry.

Furthermore, for those who provide professional medical services and importation of medicine, Decree No. (412) of 2021 provides that it is strictly prohibited to establish, renew or amend records of clinics and companies that import medicines through commercial registry offices, commercial licensing offices and the importation registry without the approval of the Ministry of Health.

Additionally, Decree No. (139) of 2021 on adopting a template for guiding articles of association for holding companies stipulates that all holdings, whether newly established or already existing, must adopt the guidance on articles of association.

Finally, Decree No. (273) of 16/8/2021 added extra fees on companies that want to register their projects under Investment Law.

It remains to be seen to what extent the Libyan government will pursue the full implementation of these decrees.

List of 7 best business types you can do in Libya

List of 7 business types you can do in Libya. The requirements on foreign companies present a number of obstructions to their freedom of operation. Thus, this advisory opinion highlights the legal framework pertinent to Libyan market accessibility, and the appropriate legal form and business organisation, by foreign investors under Libyan laws and jurisdiction.

Three key pieces of legislation are the 1954 Civil Code, the 1953 Code of Civil and Commercial Procedure, and the 2010 Commercial Code. In addition, there are numerous decrees from the Ghaddafi era regulating various aspects of the economy. In the past, these conflicting and opaque decrees have made it challenging for both foreign investors and local Libyan businessmen to navigate the Libyan legal system. Attempting to put Ghaddafi’s era behind, Libya is trying to focus on providing a more stable environment that will encourage foreign inward investment. The principal way in which it is doing this is by improving its legislation; a process that has begun, but one that will likely take some considerable time to complete.

In 2012, the structure of foreign businesses was reviewed, due to the 2011 revolution that ended Ghaddafi’s regime, by the new Libyan Ministry of Economy, and Decree No. (207) of 2012 ‘Regarding the Foreign Participation in Companies, Branches and Representative Office for Foreign Companies in Libya’ was passed. Currently, there are attempts towards encouraging investments in Libya. Therefore, some of the current regulations are under consideration by the Ministry of Economy and the Council of Ministries.

ESTABLISHING A PRESENCE IN LIBYA  

For a new foreign entrant to establish themselves in the Libyan market, they are required to either obtain an Investment License, where such an establishment will be registered in the Company House or to obtain a Commercial License where such an establishment will be overseen by the Ministry of Economy. Foreign companies operating in Libya tend to obtain a Commercial License in order to operate through one of the following options:

(1) Joint-Stock Company; (2) Branch for the Foreign Company; (3) Representative Office;  (4) Commercial Agent,  (5) Investment Funds;  (6) Free Zones Trade;  (7)  Foreign Capital Investment, as detailed below.

Business types you can do in Libya

1- JOINT-STOCK COMPANY

The Ministry of Economy stated under Decree No. (207) of 2012, that the joint-stock company shall not be a holding company. The joint-stock company is permitted to conduct the majority of activities in energy, infrastructure, telecoms, agriculture and industry, etc., except for certain activities which are permitted for the Libyans’ solely (can be explained in detail upon request).

The capital required to establish a joint-stock company is a minimum of one million (1,000,000 LYD) Libyan Dinars paid on establishment of the joint-stock company or 30% of this capital to be paid on registration and the remaining shall be paid within five years. This capital can be withdrawn at any time.

The joint-stock company used to be able to have a form of a limited liability company in certain areas (i.e., food, garment, furniture industry, etc.), provided that the minimum capital is Fifty Thousand (50,000 LYD) Libyan Dinars paid on the establishment of the limited liability joint-stock company.  However, this has been repealed by the Ministry of Economy’s decision in 2013.

The shares of the Libyan investor and the foreign investor, in a joint-stock company shall be 51% and 49 % respectively.

While the maximum shareholding of the foreign investor in a joint-stock company is 49%, under particular circumstances, and subject to the Minister of Economy’s approval, this percentage could increase for particular activities to 60%.

There are a number of legal documents required from foreign investors, either natural or legal personalities, to establish a Joint-Stock Company.

Firstly: Legal Person

  1. Memorandum & Article of Association of the foreign and local company.
  2. Resolution of the Board of Directors of the foreign and local company for contribution in the joint-stock company and the value of its contribution.
  3. An up-to-date commercial extract from the competent body (Commercial Register or a Chamber of Commerce) of the foreign and local company.
  4. Certificate from a Bank operating in Libya indicating a transfer of the foreign investor’s share to Libya
  5. A document proving that the share in kind has been presented, whether this share in kind was presented by the Libyan partner or the foreign partner.

All documents submitted with respect to items under 1, 2 and 3 must be ratified by an Official Government Departments in the country of the company’s headquarters, and by the Libyan Embassy or a competent body; provided that the Arabic translation of such documents shall be conducted in Libya.

Secondly: Natural Person

  1. Investor’s valid passport.
  2. Proof of legal age to be able to exercise commercial activities in Libya in accordance with the Libyan Law.
  3. Clear criminal record; must not be bankrupt.
  4. Certificate from a Bank operating in Libya indicating a transfer of the foreign investor’s share to Libya.
  5. The share in kind has to be presented in accordance with Article (104) of law No. (23) of 2010.

The Joint-stock company shall comply with the following restrictions in exercising its activities in Libya:

  • Transfer of knowledge and technology.
  • Hiring Libyan personnel.
  • Providing annual training programs for the Libyan personnel.
  • Preparing annual programs for the replacing the foreign personnel with the Libyan personnel.

The Chairman of the Board of Directors of the Joint-stock company must be Libyan.

Moreover, Joint-stock companies are not allowed to practice the following activities:

  1. Retail and wholesale trade.
  2. Importation activities.
  3. Catering services.
  4. All types and fields of commercial agencies’ activities.
  5. Land transport services.
  6. Inspection activity on all the imported and exported commodities and goods unless by virtue of a prior permission of the Minister.
  7. Activity of handling, shipment and discharge in the airports.
  8. Legal and financial audit works.
  9. Packing and packaging activity.
  10. Stone crushing (breakers).
  11. Contracting and civil works including the activity of construction and building with regards to the contract whose value is less than (30,000,000) thirty million Dinars.
  12. Any other field whose exercise is limited to the Libyans by virtue of special laws. For example, the Council of Ministers’ Decree No. (248) of 2012 on Prohibiting the Entry of Foreign Security Companies into Libya.

The fees required for the establishment of a joint-stock company is the ratio of 1 to 5 of the capital value.  For example: if the capital value is one million (1,000,000 LYD) Libyan Dinars the registration fees will be as follows:

  • Tax fees: 5025 LYD
  • License fees: 5025 LYD
  • Commercial Registration fees: 175 LYD
  • Chamber of Commerce fees: 700 LYD
  • Notary fees: 10,000 LYD to 15,000 LYD
  • Legal consultant fees: depends of the firms fees.

The Ministry of Economy along with the Ministry of Manpower are responsible for overseeing the process of establishing a joint-stock company in Libya. The Ministry of Manpower’s interference is with respect to the Libyan employees as 25% of the joint-stock company employees must be Libyan.

2- FOREIGN COMPANY BRANCH

To be eligible to carry out work in Libya, it is essential for the company to be registered in Libya. Opening a branch for a foreign company in Libya is governed by the Commercial Code as to its substantial issues. The foreign companies may open branches in Libya after seeking the approval of the Ministry of Economy, as stated under Article (7) of Decree No. (207) of 2012.  The branch shall operate for five years, renewable more than once; renewable fees will be paid at each time, whereas the joint-stock company has the privilege to operate for an unlimited period without paying any fees other than the registration fees.  Also, foreign company branches are under more supervision by the Tax Department as opposed to joint-stock companies.

The foreign company branch shall not be established unless the following documents are submitted along with the application form:

  1. Memorandum & Article of Association of the mother company.
  2. Resolution of the Board of Directors of the foreign company to establish a branch in Libya including the following:

a) a description of the activity that shall be practised in Libya. Such activity should be among the activities allowed for branches of foreign companies to perform in Libya;

b) appointment of the foreign company’s Branch Manager and his deputy; one of them MUST be Libyan;

c) allocation of an amount of establishing and administrating the branch, which shall consist of a minimum of 250,000 LYD (Two Hundred                    and Fifty Thousand Libyan Dinars);

  1. Certificate(s) of experience of the company’s work.
  2. An up-to-date commercial extract from the competent body (Commercial Register or a Chamber of Commerce) where the company is registered.
  3. An undertaking by the foreign company that it shall prepare a balance sheet and profit and loss account of the branch in Libya, which balance sheet shall be approved by a Libyan accountant audit.
  4. Certificate from a bank operating in Libya indicating a transfer of the amount allocated for opening the Company’s Branch.

All documents submitted with respect to items under 1, 2, 3 and 4 must be ratified by an Official Government Departments in the country of the company’s headquarters, and by the Libyan Embassy or a competent body; provided that the Arabic translation of such documents shall be conducted in Libya.

Other registrations with other administrative departments will have to follow, such as the Chamber of Commerce, Tax Department, Social Security Fund, Manpower Departments and Immigration Department.

Activities permitted for performance by foreign company branches in Libya are:

  • Construction & Civil Work more than LD 50 Million; this financial limitation was stated in general; hence the Ministry of Economy’s interpretation will be for this limitation shall be for the public sectors and private sectors.
  • Oil Services.
  • Communication supply.
  • Industry.
  • Survey & Planning.
  • Environmental protection.
  • Information Technology.
  • Health services.
  • Aviation services.

The resolution issued by the Ministry of Economy shall only approve one of the above activities.  Each activity shall have a separate resolution.

Furthermore, the registration fees for a foreign branch company are as follows:

  • Ministry of Economy: 100,000 LYD
  • Various fees (Tax, Chamber of Commerce, etc,.): 25,000 LYD

3- REPRESENTATIVE OFFICE

Having a Representation office by a foreign company is permitted by virtue of Law No. (23) of 2010 and by virtue of Decree No. (207) of 2012. The purpose of the representative office of the foreign company is to study the market, collect as much information as possible and facilitate the procedures to exercise its activity in Libya without having the authority to enter into contracts. The Representative Office shall operate for two years renewable for the same period, but for one time only.

There are a number of legal documents which have to be submitted to the Ministry of Economy along with the application form, which are:

  1. Memorandum & Article of Association of the mother company.
  2. Resolution of the Board of Directors of the foreign company to establish a Representative Office in Libya.
  3. An up-to-date commercial extract from the competent body (Commercial Register or a Chamber of Commerce) where the company is registered.
  4. Appointment of the Representative Office Manager (whether it is stated in the Resolution of the Board of Directors or in a seperate resolution).
  5. Opening a bank account in a bank operating in Libya; provided that the minimum balance in this account shall be 150,000 LYD (One Hundred & Fifty Thousand Libyan Dinars).

All documents submitted with respect to items under 1, 2, 3 and 4 must be ratified by an Official Government Departments in the country of the company’s headquarters, and by the Libyan Embassy or a competent body, provided that the Arabic translation of such documents shall be conducted in Libya.

The registration fees for a representation office is Twenty Thousand Libyan Dinars (20,000 LYD) for a 2 years licence paid to the Ministry of Economy plus Ten Thousand Libyan Dinars (10,000 LYD) for various fees (Tax, Chamber of Commerce, etc,).

4- COMMERCIAL AGENT

Commercial agencies were initially permitted under Law No. 6 of the year 2004, this law was replaced by law No. (23) of 2010. The Executive Regulation that was referred to under chapter 14 of this law has not been approved yet. Therefore, until the Executive Regulation is approved, the commercial agencies in Libya are governed by a Decree that was passed in 2007. A Libyan agent should be appointed by entering into an Agency Agreement that shall be approved by the Ministry of Economy. The parties entering into a commercial agreement can agree on their own terms and conditions, but some restrictions have been risen by the Ministry of Economy, which are:

  • the commercial agency agreement shall not include a clause of exclusivity.
  • the principal must be from the mother company and not from a regional

Under article (375) of this law, a foreign investor who is a natural person is not allowed to market his goods/merchandise and services in Libya unless via a local agent.  In the case of a legal personality, it should be wholly owned by Libyan shareholders.

Moreover, a new decision on commercial agencies is in the process of being drafted and is yet to be approved.

5- INVESTMENT FUND

The investment fund was initially introduced under Article (379) of law No. (23) of 2010 and was established under Article (2) of law No. 11 of 2010 on the Stock Market. The investment fund may not be established until attaining prior permission from the Public Monetary and Supervisory Board for Non-Banking Financial instalments.  The founder may establish more than one fund.

The investment fund established under this form of the fund has the leverage of up to 10 times the paid capital. An investment fund could be established by all entities including Banks, Insurance Co. and Financial Institutions.

The foreign investor may invest in commercial notes as stated in Article (16) of Law No. (11) of 2010. On the other hand, the foreign investor is restricted from investing commercial notes in banking activities such as providing loan or guarantees.  The foreign investor is not allowed to set up a new company or purchasing shares outside the Libyan Stock Market as well.

This type of fund is tax-free as stated in Article (24) of Law No. (11) of 2010, but this privilege is subject to certain conditions.

However, both laws No. (11) of 2010 and Article (395) of Law No.23 of 2010 refer to an executive regulation, which shall govern the establishment of the investment fund, this executive regulation has not been issued yet.  Despite that, Law No. (46) of 2012 amending Law No. (1) of 2005 on Banks, gave the Central Bank of Libya the authority to regulate investment funds.  This, consequently, has caused an overlap with the authority given to the Ministry of Economy, which needs to be untangled by amending the current regulations.

In practice, two funds licences have been granted by the Libyan Stock Market, but they have not been launched.

6- FREE ZONE

The concept of establishing free zones in Libya was initially introduced under law No. (9) of 2000.  This law sets out the legal framework of the establishment of free zones in Libya, but it did not create any free zone areas itself; it delegated such authority to the Prime Minister based on the request of the Minister of Economy. In the same year, Prime Minister Decree No. (495) was issued which declared the foundation of Misurata as a free zone in Libya (this law was amended by Decree No. (32) of 2006).  In 2006, Zwara-Abu-Kemmash has also declared a free zone under Decree No. (215) that was converted into law No. (9) of 2010.

However, the Misurata and Zwara-Abu-Kammash free zones are established free zones and therefore any foreign company can establish a branch or a company in both zones – the registration fees for such establishment shall be one hundred (100.000 USD) Dollars – whereas the Benghazi free zone is still under establishment.

7- FOREIGN CAPITAL INVESTMENT

Law No. (9) of 2010 “Investment Promotion” is a continuous attempt by the Government, which begun in 1997 under Law No. (5), to encourage foreign capitals investment. Law No. (9) of 2010 aims to attract national and foreign capitals to establish and set up investments within Libya’s framework of the general policy and the objectives of economic and social development, particularly to:

  • assist the transfer of modern technology.
  • build up Libyan technical cadres.
  • accelerate the diversification of income sources.
  • encourage the development of national products to infuse these into the internal markets; and
  • achieve regional development.

This law governs investments of foreign and national capitals involved in the formation project capital by one of the following forms:

  • Local currency and foreign convertible currencies.
  • Machinery, equipment, plants, installations, spare parts and raw materials necessary for the project.
  • Moral rights such as patents, licenses, trademarks, trade names.
  • The part reinvested from the project profits and revenues, whether in the same project or any other project.

The capital value of the investment project shall be Five million Libyan Dinars (5,000.000 LYD) for foreign investors and Two million Libyan Dinars (2,000.000 LYD) for national investors. As stated in this law, the licence to start the project shall be issued by the Investment Promotion Board and the Minister of Economy.  The investment project shall be registered in the Commercial register and the Investment register.

Sectors targeted under this law include – but are not limited to – Industry, Health, Tourism, Services, Agriculture, or any other field specified by a decision of the Ministry of Economy.

The provisions of this law attempt to lower the tax and customs fee on qualifying companies. Under the law, imported machinery, tools, and other capital equipment are exempt from all customs duties and taxes; any equipment, spare parts, or primary materials needed for the project operation are exempt for a period of five years; the affected project is exempt from income tax on its activities for a period of five years from the date of the commencement of work; this period may be extended for an additional period of three years. Losses incurred during the exemption years can be carried forward to the subsequent years.  Goods directed for export are exempt from excise tax and from the fees and taxes imposed on exports; stamp duty tax on commercial documents are exempt; and finally, profits from a project will enjoy the same exemption if reinvested.  On the other hand, this law presents challenges with respect to real estate; foreign investors are not allowed to own land but alternatively, this law allows for the foreign rental of land for setting up or operate the project.

The Ministry of Economy shall issue a decision where to specify the fees due and payable by the investor against the services rendered.

In the case where a dispute may arise in an investment capital project, Libyan courts and Libyan law were to be applied unless there was a bilateral or multilateral agreement that indicates otherwise.

FOREIGN NAME

Under law No. (24) of 2001, It is prohibited to use a non-Arabic language in all transactions, such as names of private business, shops, institutions, etc., tourism, trading names and trading marks were exempted from this law as set out under Article 2 of the Decree No. (3) of 2007.  On the contrary, the foreign investor could submit an application form to the Arabic Language Centre requesting to use a foreign name, such request could be approved or disapproved by this centre.

APPLYING / TIMEFRAME

The foreign investor that wishes to invest in Libya, whether as a joint-stock company or a branch or a representative office shall submit its application form to the Companies   Department & Commercial Registration Office of the Ministry of Economy.

The application form shall include the authorized representative for the process, profession and contact address.  In addition to the documents required under Article (491) of Law No. (23) of 2010, the foreign investor shall submit a (ii) resolution to establish a joint-stock company or opening a branch or having a representative office in Libya (ii) certificate from a Bank operating in Libya indicating that the foreign partner or the foreign company has transferred the required amounts for establish a joint-stock company or opening a branch or having a representative office.

It might take a period of two months at most if all the legal documents and procedures for the establishment of a Joint-Stock Company or registering a branch or having a representative office are set.

VISAS

The manager of the branch must obtain a work visa to be able to enter Libya.  With respect to employees from the mother company, they must apply for a visit business visa to perform work in Libya. However, the branch may utilize experts from abroad (non- Libyans) to carry out work in Libya via the Immigration Authority.

LABOUR

Foreign investors are not allowed to bring in foreign employees to practice any work in Libya only after obtaining a work permit from the Ministry of Manpower, as stated under law No. (12) of 2010. Subsequently, a work permit is required from the date of commencement of the work of the foreign employee in Libya. The Ministry of Manpower issues an annual list called the ‘Negative List’, which experts are allowed to get hold of in order to obtain a work permit.

Also, a joint-stock company or a branch to a foreign company, etc., which has more than ten (10) employees working in Libya must have a work permit number. The latter is obtained from the Ministry of Manpower.

TAXATION

Under Law No. (7) of 2010, the principal taxes in Libya are Corporate Income Tax, Salaries and Wages Tax and Jihad Tax.

Corporate Income Tax: This type of tax shall be imposed on the income arising in Libya and abroad for companies and foreign company affiliates (governed by the provisions of the Libyan Commercial Code), whatever the type their activity or purpose may be; the income is generated from Libya.  Any company securing work in Libya should pay tax in Libya on its income generated from Libya, whether the company is registered or not. Corporate Tax is levied on corporate profits at a flat rate of 20%.  No tax is payable if the company’s profit and loss account show a loss.  Furthermore, projects are undertaken within the scope of Law No. 9 of the year 2010 shall be exempted from income tax for a period of five years from the date of commencement. This period may be extended for an additional period of three years. Losses incurred during the exemption years can be carried forward to the subsequent years.

Therefore, a foreign employee working in Libya under an official contract shall be subject to this type of tax from the date of commencement in Libya. On the other hand, foreign employees who are working in Libya under a secondment contract and for less than six months shall not be subject to the income tax.

However, any foreign employee whose period of residence in Libya exceeds six (6) months shall be subject to Income Tax.

Stamp Duty: The stamp tax/duty is fixed or relative, and shall be imposed on the papers, documents, publications, advertisements, registers and other writs, as well as acts, transactions, and the rates/prices indicated in the annexed table.  If one paper includes more than one writ, act or transaction, the tax shall be due on each of them. If, however, the writs, acts or transactions are connected with each other in an indivisible manner, they shall be considered as one writ, act or transaction, and the tax shall be due on thereon as the highest value rate. In the cases where the writ tax is imposed on the paper, the paper shall be considered as two pages. Nevertheless, the tax shall not be due on the photocopies of the commercial papers or copies thereof.

Moreover, projects undertaken within the scope of Law No. (9) of 2010 shall be exempted from stamp duty specified on commercial writs and documents.

Jihad Tax:  Jihad Tax is payable under Law No. (44) of 1970 and is levied on personal incomes at 3% and corporation profits at 4%.

A joint-stock company or a branch to a foreign company etc. must have a tax registration number, which shall be obtained from the Tax Authority.  Moreover, a company in receipt of an invoice from a contractor should ensure that the invoice has been registered with the Tax Department. The company could become liable to the registration tax if this is not paid. The company should further ensure the contractor is registered with the Tax Department and should sign the tax certificate periodically.
The export of goods to Libya is not subject to tax if the supplier’s commitments end before Customs clearance and the supplier is not registered in Libya.

Furthermore, in an effort to encourage foreign investors to conduct business in Libya, foreign investors have no limits to investment loans. In the past, a foreign investor was granted up to 50% in loans from local banks. Also, local and foreign currencies are accepted.

INTERESTS

Law No. (1) of 2013 on Usurious Dealings prohibits interests in all civil and commercial transactions whether between natural or legal persons. This law stipulates that any usurious interests resulting from any transaction are null and void. This applies to all interests even the ones resulting from civil or commercial transactions due before the date on which this law came into effect, and which has not been paid yet.  However, the Libyan Supreme Court’s judgment (Civil Appeal No.476/ 64 dated on 16/6/2019) allowed Delay Penalties of 5% on commercial transactions, and 4% on civil transactions. This judgement means that Payment Penalties are considered an exception to the rules of Law No. (1). This rule remains effective unless the parties’ agreement prevents such penalties or is otherwise provided by the law.

CONCLUSION

It shall not be permissible to practice any commercial activity within Libya, until obtaining a Commercial or an Investment licence.  Furthermore, under Article (1355) of Law No. (23) of 2010, the foreign investor may need to be granted particular permission prior to issuing the licence, if the activities require so; the foreign investor is still obliged to register at the Ministry of Economy even after obtaining this permission.  The benefits of obtaining this permission are: (i) facilitate and speed up the registration process; (ii) guarantees the approval of the Ministry of Economy for the proposed registration. However, this exemption was not referred to under Decree No. (207) of 2012.  As a result, this remains a confusing point that needs further clarification by the Ministry of Economy.

The Ministry of Economy is currently working on amending regulations, in order to redevelop a friendly investment environment.  Perhaps in the foreseeable future, we will see development in investment regulations. Moreover, while many embassies left Libya in recent years because of the civil war, there are many signs after the appointment of the National Unity Government, which demonstrate a serious inclination to reopen embassies in Libya soon, especially if the recent stability continues to flourish.

Prepared and reviewed by Albudery Shariha & Huda Tulti.

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