“Nicaragua: the miracle of a growing economy”, is how the prestigious international Journal, Forbes from Mexico, defined the sustainable and accelerated economic growth experienced in our country in recent years. That article highlights the main reasons for the citizen safety/security in comparison to other countries in Central America and how attractive our country is for foreign investment, given the various laws and legal regulations that underpin and promote the business climate.
On the latter we will focus our attention and partly develop the legal framework that has encouraged foreign investors to consider Nicaragua as a favorable country for investment.
The minimum guarantees for investment, are contemplated in the Political Constitution of Nicaragua (CN). Article 5 “Principles of Nation”, states the different ways of property, among them public, private, associative, community… etc. Additionally, article 27, stipulates that all persons are equal before the law and have the right to equal protection, and specifically establishes that foreigners have the same duties and rights, with the exception of the political rights assigned to Nicaraguans.
In addition to the foregoing, article 100 CN, establishes that the Nicaraguan State must guarantee national and foreign investments, short and long term; promoting a legal framework to develop public-private projects; in order to improve the way of life of the Nicaraguan people.
Within this context, on April 27, 2000, the National Assembly approved Law Nº 344 “Law for the Promotion of Foreign Investments”, published in the Official Gazette No. 97 of May 24, 2000 and then, at the same year, Decree 74-2000 was published in the Official Gazette No. 163 of May August 29, 2000.
It is interesting to learn about the definition of foreign investment and foreign investor as per our Law. The Law Nº344 defines foreign investment, as the investment that is realized through foreign capital transfer to Nicaragua, regardless of the nationality or residence location of the investor. And foreign investor, is defined as all natural or legal person that carry out foreign investments, with the above mentioned characteristics.
Article 5 of Law Nº 344, recognizes fundamental guarantees for the foreign investor, such as: equal treatment, meaning all foreign investors shall recieve the same treatment as national investors; free convertibility of currencies; removed restrictions for foreign investors, free access to our country; Free expatriation of capital; no minimum or maximum investment amount; access to financing from local banks, according to their terms and conditions of approval; It recognizes the right of foreigners to own and use property without limitation, and in the case of a declaration of expropriation, to receive fair compensation.
Also, Article 7 of the same law stipulates that double taxation is subject to international conventions whereby Nicaragua is a signatory. Similarly, Article 8 of this law and Article 24 of such Regulation recognizes the right to submit any dispute, controversy or claim arising in connection with foreign investment to international arbitration, without prejudice to the application of national legislation, which in this case is Law No. 540, “Law on Mediation and Arbitration” or any Convention which approved and ratified by the Republic of Nicaragua on this issue.
Similarly, Article 25 of the regulation, establishes the unity of the process in the field of alternative conflict resolution, indicating that once a process of this nature has been initiated, it may not be subject to another jurisdiction.
This law provides that the competent authority is the Ministry of Development, Industry and Trade (MIFIC) in coordination with other institutions, such as Ministry of Finance and Public Credit, Central Bank of Nicaragua, among others.
A foreign investor who wishes to obtain the benefits provided by this law, shall register and update the nature and amount of their investment in the Statistical Registry of Foreign Investment Office of MIFIC. For registration of the investment, the investor must fill out specific forms. If the information is incomplete, the investor may complete it within a period not exceeding thirty days.
The regulation provides for the transfer of rights made by one investor to another, it shall be by public instrument, which must be filed with the Registry no later than thirty days later for proper registration.
It must be highlighted that, Law No. 344 is not the only one that is part of the legal framework for investment, also by way of illustration we mention Law Nº822 “Tax Concertation Law” and its amendments, Law No. 306, “Law of Incentives for the Tourism Industry “, Law No. 532,” Law for the Promotion of electricity generation from renewable sources and its amendments, Law No. 915 “Law Establishing the Agency for Investment Promotion and Export (ProNicaragua) and the Presidential Delegation for the Promotion of investments, Exports and Foreign Trade Facilitation “and Law No. 917” Law on Free zones “, among others. The latter except for the Nº Law 915, establishing tax incentives favoring investment in general.
In conclusion, it is clear that the State of Nicaragua has been setting the legal framework in such a way that ensures legal certainty and the minimum conditions for foreign investors, aimed to promote the economic growth of our country.