The law of Libya has historically been influenced by Ottoman, French, Italian, and Egyptian sources. However, Libya has moved towards a legal system based on Shari'a, but with various deviations from it.

Country overviewLibya flag

Libya is located in North Africa, bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west. With an area of almost 1.8 million square kilometres, Libya is the 4th largest country in Africa and 17th largest country in the world.




Fayez al-Surraj

Capital city

Tripoli (1.7m people)

Other major cities
  • Benghazi (0.65m people)
  • Misratah (0.39m people)
  • Tarhuna (0.21m people)


Major industries

Hydrocarbons and mining



Major religions

Islam (97%)

Capital Markets

The free market concept is still relatively new in Libya. Under the old regime the private sector was tightly controlled. However, since the revolution, the successive governments have been taking steps to encourage investment by foreign companies and has become more open to private sector involvement in the economy.

Nevertheless, it will take time for these measures to have any noticeable effect; the vast majority of Libyans still work with the public sector (around 1.6 m of the population).

Libya is one of the more developed countries in Africa, with the second highest Human Development Index score in Africa after the Seychelles, and the sixth highest GDP per capita. According to Annual Statistical Bulletin 2013, Libya has the 8th largest proven oil reserves in the world and the 15th highest crude oil production.

The Libyan economy is highly dependent on the hydrocarbon industry a fact that becomes clear when one notices the effects a slowdown in oil production had on GDP Growth. Libya has the potential to operate large and successful tourism, communication and solar energy sectors alongside its oil and gas industry, which would serve to grow and diversify the economy hence strengthening its resistance to fluctuations in the commodity market.

Competition Regulation

Competition is governed by law no. 23 of 2010 regarding commercial activities.

The law applies to all commercial activities, whether practiced by natural persons or entities. Also, it extends to cover any economic activity to be executed outside Libya but has its effect inside.

As per the law, all explicit and implicit at and agreements aiming at prejudicing the competition principles and market rules shall be prohibited.

Acts that are considered illegal competition:

  • Agreements or works which aim at or lead to fixation of goods and services prices.
  • Prevention or hindrance of practicing the commercial activity within the market to put an end to the entry or exit of other practitioners.
  • Sharing the markets or sources of goods and services or clients on geographical, or quantitative or seasonal basis.
  • Rejection of sale and purchase or restricting thereof by additional restrictions or suspending thereof on conditions not related to goods and services object of dealing.
  • Connivance in submission of offers, tenders, bids and public auctions or in drawing up conditions of unjustified acceptance.
  • Excluvity in concession contracts and commercial agency except in exceptional cases which shall be authorized by the Competent Minister following the opinion of the competition council.
  • Dumping by selling the imported goods (similar to goods produced locally or having the same specifications), at a price less than their sale price on national market of the exporting country or at a price less than the actual cost in such a manner that causing damage or threatening therewith or remarkably hindering production of such goods on local market.

If the merchant or commercial entity (commercial project) exceeds 30% of the market share, the commercial project shall be considered in a controlling or domination position.
The following tools are used to measure controlling or domination:

  • Market share;
  • Annual turnover;
  • Assets size;
  • Number of personnel; and
  • Ability of the commercial project to raise the prices over or under the competitive level.

All the practitioners of the commercial activities are prohibited from practicing the following:

  • Fixing the prices of sale and purchase of the goods and services in a manner contrary to the market rules and leading to violation of the competition principles.
  • Abstention from selling or purchasing or concealing or monopolizing the goods or services or abstention from trading therein inasmuch as creating untrue abundance or shortage therein in view of manipulation and influence on prices.
  • Rejection of dealing with one of the commercial activity practitioners or imposition of discriminative conditions of unequal performance.
  • Utilization of the economic subordination position for imposing dealing conditions which are in their nature to suspend the competition principles.
  • Interference in any form whatsoever to suspend the process of production, manufacturing, development and distribution of goods and service or to suspend their entry to the market.

The law refers to the Economic Blocs and prohibits any constitution of Blocs that exceeds 30% of market shares, which shall lead to influencing and controlling the market activity.

However, the following activities are exempted:

  1. Acts contributing to creation of technical or economic progress and leading to reduction of costs or improvement of production and distribution conditions in a manner which shall result in realization of the public interest and bring about a fair interest to consumers.
  2. Acts which are in their nature to allow for improvement of the competitive position to some small units with engage in an economic activity.

The law no. 23 of 2010 allows the establishment of the "Competition Council", which will be concerned with the following:

  1. Consideration of complaints and acts violating the competition, issue of resolutions necessary therefor including resolutions on termination of the practices violating the competition rules or temporary closing of the convicted projects for a period not exceeding (3) three months.
  2. Performance of inquiries and investigations based on complaints to be brought to it or by its own initiative if it has evidences inspiring with existence of practices which in their nature to prejudice or limit the competition rules.
  3. Provision of the opinion and advise on what is to be referred to it by the competent Minister as to issues related to competition and constitution of Commercial blocs.
  4. Taking of actions and arrangements necessary for preventing or suspending any acts or limiting any damages facing the local production due to dumping of the local market which in their nature to prejudice the competition principles.
  5. Giving opinion and drawing up proposals, assisting in preparation of bills and organizational resolutions related to competition.
  6. Submission of proposals to the competent Secretary for taking the resolutions necessary for treating the condition of the block or control over the market, including amendment and cancellation of agreements or contracts under which the concentration or the control has been realized. It shall have the right also to issue an order for taking actions necessary for division at the companies to prevent the market control cases.
  7. The Council shall refer the subject matter of the complaint to the Public Prosecution if it is found that it constitutes one of the crimes provided for in this Law.
  8. Submission of an annual report to the Prime Minister and the competent Minister containing the Council activity and to be supported by opinions and recommendations.

The law also governs the illegal completion in the field of intellectual property, like:

  1. Falsification and imitation of the registered trademarks;
  2. Infringement upon the trade name and motto registered in the Commercial Register;
  3. Utilization of others achievements and procuring the undisclosed information by illegal ways such as espionage, theft and fraud;
  4. Non-respecting the rules organizing the registered drawings and industrial samples; and
  5. Infringement on author's rights, adjacent rights, sound compilations and broadcasting programs as well as infringement upon information systems (electronic) and piracy, attempt to breakthrough their coding system and attempt to inflict damage to the information programs (electronic).
Corruption / transparency

Ranked 171 out of total 180 countries in 2017 by Transparency International on the list of the most corrupt countries, and with a score of 17. Libya clearly faces a tough challenge from corruption.

Libya defines the Corruption as: “abuse of power / responsibilities given in public or private sector for personal gains”. This general definition covers the corruption in public sector, but also in political parties, private business sector, associations, non-governmental organizations and the society in general. This definition also reflects the overall understanding that corruption is not conducted only for personal advantages of a person, but also for any kind of advantage or private benefits including the benefit for family, relatives, friends or other persons or organizations with which business or political relationship is established. The given definition includes political corruption (of high level) and administrative corruption (of the lower level).

On the other hand, oil is a main cause root for corruption in Libya. Libya’s oil revenue constitutes 95% of the nation’s exports and thus considers the lifeblood of Libya’s government and economy. The unfair distribution of oil revenues among the main provinces and lack of transparency and accountability opens the gate to corruption.

At the same time, Libya is a party to the UN Convention against Corruption signed in 2003 and ratified in 2005 and since 2009 started to adopt an Anti-Corruption Strategy in cooperation with the UN. The project is now pending due to the current situation. However, Libya has a number of national regulations that combating corruption, i.e: Penal Code, law no. 2 of 1979 regarding economic crimes, law no. 10 of 1423 regarding التطهير, law no. 6 of 1985 regarding criminalizing of Mediation and Nepotism, law no. 22 of 1985 regarding the Abuse of Public Authority.

Corruption in Libya is being fought by three main bodies; Audit Bureau, Administration Observation Agency and Auti-Corruption Authority which has been established in 2013.

Court Structure

The Supreme Court is based in Tripoli and has appellate jurisdiction over all lower courts. It is also responsible for cases involving constitutional interpretation, challenges to the constitutionality of legislation and conflicts of jurisdiction. It sits as a five-judge panel with a majority required for a ruling. The Court of Appeal is the second highest court with appellate jurisdiction over the courts of first instance and original jurisdiction for felonies and serious crimes. It sits as a three judge panel requiring a majority for a ruling. The Courts of First Instance are found in each district in Libya. They have appellate jurisdiction over the summary courts and primary jurisdiction for civil disputes in excess of 1,000 Libyan Dinar, criminal and commercial cases, and personal and religious matters, where Sharia is applied. It sits as a three judge panel for its appellate jurisdiction and one judge sits for cases of first instance. Summary Courts, comprised of one judge, are found across Libya and their jurisdiction is limited to small civil, commercial and administrative disputes.

The Supreme Court (al-Mahkama al-Ulya)

The Supreme Court (SC) is based in Tripoli and is Libya’s highest court. The SC has appellate jurisdiction over all lower courts. Cases are heard by a five-judge panel. A ruling can only be made by a majority in decision. The main task of the court is to ensure that laws are applied and interpreted in a uniform manner throughout the country.

The Supreme Court is the court of first instance for the following:

  • Claims of the unconstitutionality of any legislation brought before the court by anyone who has a direct, personal interest.
  • Any legally essential matter concerning the Constitution or its interpretation, which arises in any case being heard by any court.
  • Conflicts of jurisdiction between courts and any exceptional judicial authority.
  • Any dispute concerning the execution of two conflicting final judgements issued by a court and an exceptional judicial authority.
  • Changing of one of the Supreme Court’s principles.
  • Any challenge against rulings of lower courts concerning civil, commercial, personal status, administrative, and criminal matters.

Courts of Appeal (Mahakim al-Isti’naf)

Courts of Appeal are Libya’s second highest court level. A majority in decision of a three-judge panel is required for a ruling. They have appellate jurisdiction over Primary Courts, and are courts of first instance for matters concerning high crime and felony. Rulings of the Courts of Appeal are final. Decisions can be challenged through the Supreme Court.

Primary Courts/Courts of First Instance (Mahakim Ibtidaiyya)

Primary Courts have appellate jurisdiction over Summary Courts and are the courts of first instance for civil and commercial disputes which are valued at 1,000 Libyan dinars or higher. They also deal with personal and religious cases, where they apply sharia law. In the capacity as a court of first instance, Primary Courts do not hear criminal cases and comprise of a single judge. As an appeals court, Primary Courts comprise of a three-judge panel. A majority in decision is required for a ruling. Primary Courts can be found in each city or district in Libya.

Summary Courts/District Courts (Mahakim Juz’iyya)

The jurisdiction of Summary Courts is limited to small, civil, commercial, administrative disputes which are valued up to and including 1,000 Libyan dinars. In criminal cases the court is responsible for misdemeanors and contraventions (“minor” crimes). Courts have a one-judge chamber and rulings of 20 dinars or less are final, without the possibility to appeal. Other rulings are subject to appeal before the Primary Courts.

The Libyan Judiciary

The structure of the Libyan Judiciary is somewhat unusual as it encompasses a range of bodies with different functions, including the Prosecutor’s Office and public defence lawyers. Law No. 6 of 2006 on the Justice System, as amended by Law No. 4 of 2011 and Law No. 14 of 2013, among others, provides for the organization of the judiciary in Libya. This law defines the Judicial Body as “the Judicial Body Inspection Department, the Courts, the Public Prosecution, the Litigation Department, the Public Legal Defence Department, and the Law Department.” The Judicial Body Inspection Department is the agency responsible for the inspection, assessment and initiation of disciplinary proceedings and is examined in detail in Chapter III on judicial accountability and vetting. The Courts encompass all judges working at all levels in the Ordinary Courts, (the court structure is outlined above). Judges working in the Court of Appeal or above are referred to as Counsellors and all judges below that level are referred to as judges. The Public Prosecution is considered part of the judiciary in Libya and is examined in detail in Chapter V on the independence of the Prosecutor’s Office. The Litigation Department is tasked with representing governmental institutions and bodies in judicial proceedings. The law creating this department makes clear that members are answerable to their superiors and ultimately to the Minister of Justice. The Public Legal Defence Department has a somewhat controversial history. It was created by statute in 1981 with the express aim of providing free legal advice to all those taking cases in the courts. The regime initially aimed to squeeze all private lawyers out of practice by providing that lawyers within this department were the only lawyers authorized to practice before the Libyan Courts. This served to sideline lawyers who were willing to act independently. However, private lawyers were authorized to practice again in the early 1990s. Despite the initial controversy over its creation, and its reputation for lacking the independence of private lawyers, the Legal Defence Department is now, in fact, championed by many in the justice sector as playing a positive role in the delivery of justice by providing free legal advice to all those who want to avail of it. Those who have particularly benefited from the provision of free legal advice have been women. In addition, there is evidence that many lawyers working within the public defence department are women, who, in a society still significantly influenced by stereotypical gender roles, have apparently benefitted from the structured conditions, including regular hours and regular salaries. The Law Department was created by Decree in 1993 by the Minister of Justice, charged with, among other functions, analysing draft laws, providing legal opinions to government and public authorities and reviewing international agreements. The law provides that its members must be existing members of another judicial body. However, they are appointed by the Minister of Justice and its members are ultimately subordinate to the Ministry of Justice. Some commentators have observed however that this body was mainly ignored under the Gadhafi regime, a result perhaps of the fact that its decisions were advisory only. Judicial training is organized by the Judicial Institute. The Judicial Institute has its own legal personality and is an independent financial entity but it is subsidiary to the Ministry of Justice. The Director of the Institute is appointed by the Government, on recommendation by the Minister of Justice, and must hold the grade of at least President of a First Instance Court or hold high qualifications in Islamic jurisprudence and law.

Enforcement of arbitral awards

The provisions of law that govern the enforcement of foreign awards are Articles 405, 406, 407 & 408 of the Libyan Civil Procedure Code of 1954. The provision of law that governs the enforcement of domestic awards is Article 763 of the said Code.

Under the existing Code, both domestic and international arbitration awards must be ratified before they can be enforced through the court process. The parties may agree on the enforcement of the arbitral award without reference to the Court. However, if one of the parties would like to enforce the arbitration award judicially through the Court, the arbitration award must be ratified by the Court before it is capable of enforcement. This is done by way of a normal application to the court in which one of the parties requests the court to ratify the award and make it good for enforcement. The Court will not review the merits of the arbitral awards and will only look at formal and procedural matters for enforcement. The other parties to the arbitral award will be notified and invited to submit their response to the Court. It is at this stage that the challenges to the legality or the procedural issues of the arbitration award may be raised. Following the exchange of pleadings, the Court will issue a judgement to ratify the arbitral award. Any judgment is subject to appeal not on merits, but on the ratification process to the Court of Appeal. Enforcement will not be possible until the final decision of the appellate court is made.

The process is usually done by a normal application to the Court summarizing the facts and requesting the Court to ratify the arbitration award. With the arbitration award, usually a copy of the original award is filed along with the terms of reference; and the rules if any; the arbitration agreement; and any minutes or correspondence relevant to the proceeding.

As per Article 408 of the Libyan Civil Procedure Code, the foreign arbitral award can be enforced if it is final and enforceable in its country, and the following conditions should be fulfilled:

  1. The judgment or order has been issued by a court having jurisdiction under the law of the country in which it was issued.
  2. The opposing parties in the case in which the foreign judgment has been rendered have been summoned to appear, and have duly appeared.
  3. The award does not conflict with a judgment or order previously issued by the Libyan Courts.
  4. The decision does not contain anything in breach of public morals in Libya.
Foreign investments

There are multiple business opportunities in Libya in every sector of the economy particularly as Libya needs to re-organise and re-build its infrastructural set-up and economy. Although oil is a predominantly important sector, there are many other various opportunities for foreign direct investment in diverse sectors including health, transportation, education, tourism and public utilities.

Investment enterprise

Under Investment Law No. 9 of 2010, investors may establish investment enterprises
for activities in all major industry sectors, other than upstream oil and gas. The
investment project may be wholly owned by the foreign investor, provided that the
foreign investment exceeds LYD 5 million. If a Libyan partner holds at least 50% in
the investment, the minimum investment is reduced to LYD 2 million.

Tax and customs duty exemptions are available.

Dividends are freely transferable and the investor may own real estate in Libya.
An investment enterprise is particularly suitable for capital intensive projects. The
licensing requirements must be required in each individual case.

Libya has entered into bilateral investment treaties (BITs) with a number of countries,
including Italy (2000), Austria (2002), Switzerland (2003), Portugal (2003), Germany
(2004), France (2004), Belgium (2004), Ethiopia (2004), Qatar (2004), Luxembourg (2004), Malta (1973 and 2003), Cyprus (2004), Serbia (2004) and Spain (2007).
Other BITs which have been signed but which are not yet in force are those with South Korea (2006), India (2007), Russia (2008), Turkey (2009), and China (2010).

There are no BITs with the US or the United Kingdom.

Libya has not ratified the ICSID Convention. This means that the forum for disputes
between investors and the Libyan government will depend on what has been agreed in the respective BITs, and it may be recommendable that international parties consent to submit disputes to the ICSID under the so-called Additional Facility Rules.

Free zone enterprise

There is a special regime governing free zone enterprises (Law 9 of 2000). A free
zone enterprise can be established to manufacture or process goods or to provide
services. A free zone enterprise must have a paid up capital of at least USD 100,000.
Free Zone FZEs qualify for exemptions and benefits similar to those available to
investment enterprises.

At present, there is only one free zone, located at Misurata, 200 km east of Tripoli.
The Misurata Free Zone has had a certain success among foreign investors but so
far it cannot be compared to the free zones in Egypt or the Gulf States.

Structuring business activities in Libya requires careful legal planning. The restrictions on foreign ownership frequently entails complex corporate governance arrangements.

At present, it remains unclear what changes the Libyan government will adopt in the
medium term. In particular, it is difficult to predict whether the restrictions on the activities of joint ventures will be liberalized or maintained.


Commercial related regulations

  • Law no. 23 of 2010 regarding Commercial Activities
  • Minister of Economic Decree no. 207 of 2012 regarding the Foreign share in Companies, Branches and Representative Offices of foreign companies in Libya
  • Customs law no. 10 of 2010
  • Stock Exchange Law no. 11 of 2010

Banking and Insurance related regulations

  • Law no. 1 of 2005 regarding Banks
  • Law no. 2 of 2005 regarding Anti-Money Laundry
  • Law no. 4 of 2006 regarding Observing and Monitoring Insurance Activity

Investment and Free Zones related regulations

  • Investment Law no. 9 of 2010
  • Law no. 9 of 2000 regarding Transit and Free Zones

Natural Recourses related regulations

  • Petroleum Law no. 25 of 1955
  • Mining Law

Maritime relating regulations

  • Maritime Law
  • Law no. 53 of 1970 regarding Ports royals

Taxes are divided into direct and indirect tax; direct tax includes income tax (tax on individual and companies' income) and wealth tax. Whereas indirect tax includes the tax on consumption, stamp duty tax, customs tax, production tax and entertainment tax.

Any entity registered in Libya is considered to be tax resident in Libya, hence any income generated in Libya from assets held, or work performed in Libya is subject to income tax in Libya.

The tax shall be collected all at once if it does not exceed LYD 100.

The tax shall be assessed based on a declaration filed by the taxpayer on his income and tax shall be paid on the basis of the data in such declaration (if exceeds LYD 100) and collected on 4 instalments which shall be due periodically as from the 10th until 25th of each month of March, June, September and December. The tax or the first instalment shall be paid on the first of the aforesaid dates.

Libyan companies are taxed based on their submitted tax declarations, supported by audited financial statements.

Profits are taxed at the corporate tax rate of 20% in the fiscal year when they are earned.

However, there is no tax on dividends, irrespective of whether the shareholder is resident or non-resident.

All local source income is subject to income tax. The following corporate entities are
subject to income tax in Libya:

  • any companies incorporated under the provisions of the Libyan Commercial Law
  • (including the joint venture “mushtarika” and state-owned corporations)
  • branches of foreign companies
  • other legal persons, whether state-owned or private, whose main activities are in the fields of commerce, industry or investment in real property

In case of partnerships each partner is taxed on his share of profits.

Taxes are assessed on the net income generated in any given fiscal year. Net income is
determined on the basis of all sources of revenue after deducting all costs incurred in order to generate the revenue. There are specific rules regulating deductions such as
depreciation, bad debts, social security contributions and payments to not-for-profit

Libya applies a deemed profit approach. Depending on the taxpayer’s activity, the taxable deemed profit ranges from 10 to 40 per cent of turnover, as follows:

Double Tax Relief and Tax Treaties

Under Libya's double tax treaties, resident individuals who derive income abroad may claim a tax credit for foreign tax paid, up to the amount of the tax due on such income in Libya.

Libya has entered into double tax treaties with the following countries:

Arab Maghreb Union countries, India, Sudan, Malta, Syria, Bulgaria, Pakistan, Turkey, Egypt, Serbia, Ukraine, France, Singapore, United Kingdom, Greece and the Slovak Republic.

Libya has signed double tax treaties awaiting ratification with the following countries: 

Austria, Azerbaijan, Belarus, Belgium, Bosnia, China, Croatia, Germany, Italy, Korea, Netherlands, Qatar, Russia, Slovenia, Spain and Switzerland.