The legal system in Algeria is a mixture of French Civil Law and Islamic Law. The judicial system, in common with other aspects of Algeria's culture, shares features of its French and Arab traditions.


Throughout the French colonial period, secular courts prevailed as the final judicial authority, although Islamic sharia courts had jurisdiction over lower level cases, including civil cases, criminal offenses, family law, and other personal matters. Family law, and certain criminal penalties were divisive issues and many were simply omitted from the new judicial codes. In the 1980s, Benjedid proposed a family code, which drew extensive public criticism but was ultimately passed in 1984. The 1976 constitution asserted a judicial responsibility to uphold the principles of the revolution; this commitment has lessened in importance, however, as Algeria has moved away from its socialist regime.

Country overviewAlgeria Flag

Population

41,765,366 

President

Abdelaziz Bouteflika

Capital city

Algiers (2, 988,145 people)

Other major cities
  • Setif (1,489 979 people)
  • Oran (1, 454,078 People)
  • Tizi Ouzou (1,127,607 people)
Major industries

Petrochemicals, natural gas and light industries

Minerals: Algeria is abundant in natural resources. It has rich deposits of iron, copper, zinc, lead, mercury, oil and natural gas. In 2006, Algeria's helium production accounted for 13 percent of the world's total output. It has the eight largest natural gas reserve in the world.

Agriculture: 8 % to the country’s Gross Domestic Product.

Fishing: The fishing industry in Algeria thrives along the Mediterranean Sea. France is the largest importer of Algerian fish, followed by Spain and Italy.

Currency

Algerian dinar

Languages

Arabic, Berber and French

Major religions

Islam (94%), Christianity, and Judaism

Capital Markets

Algerian authorities, mindful and conscious that a more dynamic stock exchange is needed to boost economic growth and unlock new sources of capital for the private sector, are pushing through with a capital markets reform program aimed at boosting activity on the Algiers Stock Exchange.

The bureaucracy, the size of the state and the variety of different decision-makers consulted for major policy initiatives ensure that any reform program is likely to be delayed. The signal that a compromise has been reached is usually given through the accelerated pace of official statements, in addition to press coverage.

A dynamic stock exchange would in turn encourage such investments (private equity, venture capital and international organization funding) by providing a clearly-defined way out for investors.

Algeria remains, to a large extent, a cash economy with very few outlets for retail investment, beyond real-estate. This factor, along with the well capitalized domestic banking sector, means that demand for new stocks is likely to be significant.

Competition Regulation

The National Competition Council (Conseil National de la Concurrence, CNC) was officially set up in January 2013 and is an administrative authority intended — in accordance with Ordinance No. 03-03 dated July 19, 2003 — to observe, rule and sanction trade practices and the functioning of the Algerian market.

The CNC has elaborated further on its own general doctrine with regards to competition and market matters in the business realm. It seems that the CNC currently cooperates with European countries, namely — the French, Italian and German competition authorities in continuation of a cooperation programme financed and supported by the European Commission, known as the Support Programme for the Association Agreement between Algeria and the EU.

Through its power of prevention, and in application of provisions of Order no. 03-03 dated 19 July 2003 on competition (hereinafter "Order 03-03"), the CNC shall deliver certificates (known as "negative certificates") to companies wishing to obtain a written and final position on potential abuse of dominant position or competition-restricting agreements. The CNC may also issue concentration authorisations to companies that have given prior notice thereof, as in the case of merger operations.

Corruption / transparency
Corruption Perception Index rank worldwide for 2017

112

Corruption Perception Index score for 2017

33

Corruption information

In 2013, the GoA created the Central Office for the Suppression of Corruption (OCRC) to investigate and prosecute any form of bribery in Algeria. The current number of cases currently being investigated by OCRC is not available. In 2010, the GoA created the National Organization for the Prevention and Fight Against Corruption as stipulated in the 2006 anti-corruption law. The Chairman and members of this commission were appointed by a presidential decree. The commission studies financial holdings of public officials and carries out studies. Also in 2013, the Financial Intelligence Unit was strengthened by a new regulation that gave the unit more authority to address illegal monetary transactions and terrorism funding. In 2015 and 2012, the government updated the 2005 anti-money laundering and counter-terrorist finance legislation to bolster the authority of the financial intelligence unit to monitor suspicious financial transactions and refer violations of the law to prosecutorial magistrates.

The GoA does not have a policy that requires private companies to establish internal codes of conduct that prohibit bribery of public officials. The use of internal controls against bribery of government officials varies by company, with some upholding those standards and others rumored to offer bribes. The GoA is not a participant in regional anti-corruption initiatives. While Algeria does not provide protections to Non Governmental Organizations involved in investigating corruption, there are whistleblower protections for Algerian citizens who report corruption.

Disputes

The bureaucratic nature of Algeria's economic and legal system, as well as its slow decision making process, means that disputes can drag on for years before a resolution is reached. Litigation in the court system is slow and may be subject to political considerations.

Investment disputes are fairly common, especially on major projects. These disputes can be settled informally through negotiations between the parties or via the domestic court system. The Algerian Chamber of Commerce and Industry (CACI), the nationwide, state-supported chamber of commerce, has the authority to arbitrate investment disputes. The resolution process can be very slow - it can take several years to resolve a case. One U.S. company that encountered bureaucratic blocks on the expatriation of dividends from an investment made in 2005 has been pursuing a resolution since 2012; despite the intervention of several GoA institutions and ministers, a solution is still pending.

Enforcement of arbitral awards

Algeria adhered to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards through Law n° 88-18 of July 12th 1988. Algeria will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State, and only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under Algerian law. One of the objectives behind the Code des Procédures Civiles i.e. Code of Procedural Law 1993 modification was to adapt Algerian regulation to its international obligations deriving from the convention. Articles 458 bis and following of the CPC are therefore largely inspired by the Convention and sometimes even go further in the recognition of arbitral awards than the CPC itself.

Algeria's international arbitration practice is extensive. The country ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. National courts have therefore been exposed to international arbitration procedures and awards, and generally grant exequatur insofar as the arbitration agreement is valid. The tribunal generally requires an original copy of the award, and a signed arbitration agreement. It also verifies whether the audi alteram partem principle has been respected.

Algeria has less experience in other Alternative Dispute Resolution methods such as mediation. However, the general approach of national courts to the enforcement of ADR agreements is positive as article 17 of the CPC allows the judge to seek conciliation in all domains. ADR agreements other than arbitration are generally considered to be transactions, defined by article 459 of the Algerian Civil Code as agreement intended to end or prevent a dispute by means of reciprocal concessions.

Foreign investments

Algeria attracted a decent Foreign Direct Investment flows in past years. Most recently, there has been a sharp decline in European investment and greater interest from Gulf investors. A reorientation of FDI towards the domestic market is also noticeable with the proliferation of development projects in transportation and infrastructure. According to available data, FDI flows increased slightly to reach USD 1.55 billion in 2016.

To attract and encourage foreign investment, the Government has set up various attractive measures, including the reduction of corporate taxes for investment in specific locations, a reduction in social security contributions for new recruitments of young employees, the concession of land by mutual agreement for up to 33 years (which provide similar rights to ownership) and tax exemptions throughout the life of the project for exporting projects. The full list of measures, can be consulted on the ANDI (National Agency for Investment Development) website.

Taxation

IBS, the tax on company profits, is levied on all Algerian-sourced profits, including income of resident companies and income of non-resident companies which realize a complete cycle of commercial activities via a Standard tax regime:

  • Resident companies: Corporate Income Tax (IBS), Tax on business activity (TAP), VAT at the rate of 19% or 9%, Branch tax set at the rate of 15% calculated on net profits after IBS.
  • Non-resident companies: in the absence of a double tax treaty (DTT), the basic principle that governs taxation of non-resident entities is that such entities are taxable in Algeria on their Algerian-source income whatever the way and wherever the location the work is carried out, provided only that the same are rendered or used in Algeria.
  • In the presence of a DTT, a foreign company will be taxed in Algeria if it has a PE only.
Withholding tax (WHT) regime

Non-resident entities performing service contracts in Algeria are subject to the WHT regime. The 24% WHT, which encompasses the IBS, the TAP, and the VAT, is required to be levied on services only. The calculation base is the gross amount of the services invoiced.

The Finance Law for 2017 subjects contracts that had been taxed under the 24% WHT to the Algerian VAT when its basis of calculation benefited from a reduction in the rate or rebates as provided for by the local tax legislation or the DTTs.

Regulation

Press - The Algerian Minister of Communication, announced in January that the installation of the regulatory authority of the press will be established before the end of 2018.

Pharmaceutical - Regulation of medical devices in Algeria is conducted by the National Laboratory for the Control of Pharmaceutical Products (LNCPP), under the supervision of the Ministry of Health and Population. 

Commerce - Executive Decree No. 18-02 of 19 Rabie Ethani 1439 corresponding to 7 January 2018 appointing goods subject to import restrictions.

Investment - New Investment Code

Following the adoption in June 2016 by the People’s National Assembly and in July 2016 by the Council of the Nation (Conseil de la Nation) of the bill relating to investment promotion, Law No. 16-09 on the promotion of investment was published in the Official Gazette on August 3, 2016.