Protection for foreign investors in Rwanda

Dr Elvis Mbembe Last week, I looked at the incentives investors in Rwanda enjoy. Today, I will examine the provisions on investor protection in Rwanda, especially as regards to intellectual property, among others. In terms of investment protection, the most visible input of the new law is Article 7 that provides for the protection of intellectual property rights in relation to investment. “The investor’s intellectual property rights and legitimate rights related to technology transfer shall be guaranteed in accordance with relevant laws,” it reads in part. This provision is timely considering high probability of disputes between investors that could arise based on property rights violations, especially due to deep implementation of the freedom of establishment in the East African Community (EAC), as was recently the case between two Tanzania-based companies established in Rwanda, Mikoani Traders Ltd and Bakhresa Grain Milling (Rwanda) Ltd. For disputes between the investor and the government of Rwanda, or its decentralised entities such as districts, Article 6 of the new law affirms the inviolability of investors’ private property, whether owned individually or collectively. The same article protects investors against seizure or confiscation of any “investment, interest in or right over any property forming part of such investment”, except when that seizure or confiscation is done in compliance with laws. The investor is also protected against expropriation in public interest, which can be done only after the former has been given fair compensation in accordance with relevant laws. In addition, foreign investors are allowed to repatriate the capital, profits derived from business activities, debt and interest on foreign loans, proceeds from the liquidation of investment, or any other assets, provided that they fulfill their tax obligations beforehand. Subjecting the repatriation of investors’ asset to prior payment of taxes is another feature of the new law. In comparison with article 30 of the old law which provided that “… such amount is freely repatriated to a country of the investor’s choice without being subject to any form of tax whatsoever”, the new provision may be analysed as hardening the situation of investors who would like to repatriate their assets. According to article 9 of the new law, any dispute between investors and public organs in Rwanda in connection with an investment is supposed to be primarily settled amicably. In case amicable settlement cannot be reached, arbitration can be sought if parties so agreed in writing. Otherwise, the matter should be taken to competent court. This means that unlike Article 34 of the old law that erected Rwandan courts as default forum for investment related disputes that parties could fail to solve through arbitration, the new law gives latitude to investors to confer competence to any other court in their investment certificate of registration. It is also important to note that the new law does not make reference to disputes settlement mechanisms that could be provided in bilateral or multilateral investment treaties signed between Rwanda and the investor’s country of origin nor does it refer to other existing international mechanisms, such as the International Centre for the Settlement of Investment-related Disputes (ICSID), as possible ways of investment dispute settlement. However, this omission should not be construed as depriving investors of their right to suggest or to have recourse to such mechanisms, if need be. All in all, this quick analysis of the new investment law of Rwanda gives a mixed observation. On the one hand, a number of provisions have been put in place to improve the overall situation of investors, especially in relation with investments admission and protection. On the other hand, some steps have been taken backwards mostly regarding the treatment of foreign investments. This is, for instance, the case of the threshold provided in order to enjoy fiscal and non-fiscal incentives.

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Protection for foreign investors in Rwanda