Transparency of the Regulatory System
Government procurement practices are governed by the Public Procurement Act and the Financial Administration and Audit Act of 1973. The Government has implemented procurement procedures in the management of funds from international lending agencies and maintains an online list of tender notices for projects, as required as a condition of funding.
Some U.S. companies, however, have alleged a lack of transparency and undue political influence with government bidding and procurement processes, noting that not all potential government contracts, particularly those not financed through international financing institutions, are put out for tender. Companies also complain that it is difficult to obtain information on the status of bids. In several highly publicized requests for proposals (RFP) in recent years, the Government did not meet stated deadlines or changed the nature of the RFP, and some contract renewals have been pending for 12 months or more.
The Bahamian government has publicly committed to modernizing and reforming government procurement with assistance from the Inter-American Development Bank. The Bahamas is not a party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO), but efforts to implement the Economic Partnership Act with the European Union may also address similar concerns.
New administrations sometimes review contracts executed by previous administrations and may request changes in terms, although government officials assert that the majority of contracts are not reviewed or altered in any way. Companies also cite concerns with the discretionary issuance or denials of approvals and licenses from various government authorities, complaining that in some instances these approval processes can be opaque with no possibility for review or appeal of a decision.
Legislation and regulations are available on line at http://laws.bahamas.gov.bs . Draft legislation, in general, is subject to a public consultation process.
According to Transparency International’s 2016 Corruption Perceptions Index , The Bahamas ranked 24 out of 176 countries with a score of 66 out of 100.
International Regulatory Considerations
The Bahamas is an observer, but not a member, of the World Trade Organization (WTO). The Bahamas’ effort to accede to the WTO is nearing twenty years, but the Government has expressed its commitment to ongoing efforts towards membership.
The Bahamas is not a party to the agreement on Trade Related Investment Measures (TRIMS). Government officials, however, have informed the Embassy that its efforts to implement the terms of the EPA with the EU will include measures that it anticipates will exceed the WTO/TRIMS obligations.
The Government established the Bahamas Bureau of Standards and Quality in 2015 to adopt and implement standards in The Bahamas and certify products and services that conform to international standards. For example, the Bureau has successfully implemented a standard for water and is currently developing standards for poultry products, table eggs, and tobacco.
Legal System and Judicial Independence
The Bahamian legal system is based on English common law with the highest court being the Privy Council in London. Foreign nationals are afforded full rights in Bahamian legal proceedings. Contracts are legally enforceable through the courts.
The judiciary is independent and allegations of government interference with the system are rare. The judiciary is appointed by the Governor-General, and the Attorney General is the government’s chief legal advisor and has responsibility for public prosecutions. The Bahamas is a member of the British Commonwealth and uses the Privy Council in London as the final court of appeal. The country also contributes financially to the operations of the Caribbean Court of Justice, and has announced its intention to develop itself as a center for international arbitration.
Judgments by British Courts and selected Commonwealth countries can be registered and enforced in The Bahamas under the Reciprocal Enforcement of Judgments Act. Court judgments from other countries, including those of the United States, must be litigated in the local courts and are subject to all Bahamian legal requirements.
The Industrial Tribunal comprises three members appointed by the Governor-General acting on the advice of the Judicial and Legal Service Commission. The Tribunal has the power to hear and determine trade disputes, register industrial agreements, hear and determine matters relating to the registration of such agreements, make orders or awards, and award compensation on complaints brought and proved before the Tribunal.
Property disputes can be challenging, sometimes lasting several years in the Bahamian court system. Investors complain that these matters are difficult to resolve, and that, even after a court decision has been rendered in their favor, they face difficulty in collecting or enforcing the court judgments.
The Embassy is aware of several complaints about local attorneys, primarily involving real estate transactions, which have resulted in significant losses to American investors. Embassy referrals to the Bahamas Bar Association for appropriate disciplinary action in these matters often go unanswered.
Additional information on the Bahamian Court System is available at https://bs.usembassy.gov/u-s-citizen-services/attorneys/.
Laws and Regulations on Foreign Direct Investment
The BIA’s Project Proposal Guidelines list the type of information and documentation that investors should provide when submitting proposals, consistent with the National Investment Policy. The government generally views more favorably proposals that prove adequate financing, demonstrate investment experience, create local employment and support overall economic development.
In addition, industry-specific legislation often provides exemptions for Customs duties or other incentives to investment. Examples of such incentives include the Hotels Encouragement Act, the Export Manufacturing Industries Encouragement Act, and the Industries Encouragement Act.
Foreign firms are not restricted from participating in government subsidized research and development programs.
In 2015, the Government enacted new and amended laws to provide enhanced protection of intellectual property rights; however, these laws are not yet in full force pending adoption of implementing regulations.
Registration of securities is regulated by the Securities Commission of The Bahamas (www.scb.gov.bs ) and the Bahamas maintains an international securities exchange (BISX) (www.bisxbahamas.com ).
American investors should be aware that they may not be able to rely on the provisions of U.S. Chapter 11 bankruptcy law to protect assets located in The Bahamas. For example, in September 2015, a U.S. Bankruptcy Court judge dismissed a bankruptcy case in the United States involving the owner and developer of the stalled USD $3.5 billion Baha Mar resort complex in Nassau, citing a finding by a Bahamian Supreme Court judge that the project’s stakeholders would expect that insolvency proceedings would take place in The Bahamas where the property and assets are located.
Competition and Anti-Trust Laws
With the exception of the Utilities Regulation and Competition Authority (URCA), which regulates the telecommunications sector and energy sector, there are no regulations governing competition or antitrust policy. In some sectors of the economy, exclusive rights to provide services for fixed periods have been granted by contract in some sectors.
Expropriation and Compensation
Property rights are protected under Article 27 of The Bahamian Constitution, which prohibits the deprivation of property without prompt and adequate compensation. There have been compulsory acquisitions of property for public use, but in all instances reported there was satisfactory compensation at fair market value. There is no evidence that the GCOB has ever expropriated a business, and it remains unlikely that this will be an instrument of government policy.
ICSID Convention and New York Convention
The Bahamas is a member of both the International Centre on the Settlement of Investment Disputes (ICSID) Convention (adopted 1965) and the New York Convention (adopted 1958). The Arbitration Act of 2009 enacted the New York Convention and provides a legal framework.
Investor-State Dispute Settlement
Investment disputes in The Bahamas that directly involve the Bahamian government are rare. The Bahamas is not a signatory to a bilateral international trade agreement with a developed dispute settlement mechanism and, therefore, disputes must be settled within the judicial system or subject to international arbitration.
International Commercial Arbitration and Foreign Courts
The Bahamas has been a member of the International Center for the Settlement of Investment Disputes since 1995 and is also a member of the Multilateral Investment Guarantee Agency. This agency insures investors against current transfer restrictions, expropriation, war and civil disturbances, and breach of contract by member countries.
Order 66 of the Rules of the Bahamian Supreme Court provides rules for arbitration proceedings. The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards entered into force for The Bahamas on March 20, 2007. This convention also provides for the enforcement of agreements for commercial disputes. Under the convention, courts of a contracting state can enforce such an agreement by referring the parties to arbitration. There are no restrictions on foreign investors negotiating arbitration provisions in private agreements.
The government has announced its intention to establish The Bahamas as a center for international arbitration cases, but a body has yet to be formally established.
Courts in The Bahamas face a persistent backlog of cases, and the judicial process in both civil and criminal cases remains lengthy. Corporate plaintiffs should engage a local attorney to represent their interests in court. The 2017 World Bank Report on Ease of Doing Business (www.doingbusiness.org ) ranked The Bahamas at 75 (out of 190 economies) on the ease of enforcing contracts.
Companies are regularly liquidated (voluntarily or involuntarily) according to the Companies Act. Liquidations are routinely published in accordance with the legislation. Creditors of bankrupt debtors and liquidated companies participate in the distribution of the bankrupt debtor’s or liquidated company’s assets according to statute. As noted above, U.S. investors should be aware that they may not be able to rely on U.S. Chapter 11 bankruptcy law provisions to protect assets located in The Bahamas. In the World Bank’s Doing Business Report for 2017, The Bahamas ranked 59 out of 190 economies for ease of resolving insolvency.