Invest in the Maldives

Dispute Resolution

Foreign investments in the Maldives are mainly governed by the Foreign Investment Act (Law Number 25/79) and the Business Registration Act (Law Number 18/2014). Foreign investors enter into a Foreign Investment Agreement with the Government of Maldives, which details the scope of the investment, rights and obligations of the investor.

The areas of businesses that are open for foreign investments and the guidelines on foreign investment approvals are detailed in the Foriegn Direct Investment Policy published by the Ministry of Economic Development.

 
Legal System
 
Sources of Law
The main sources of law in the Maldives are:

• The Constitution of the Maldives;
• Laws enacted by the Parliament;
• Regulations made pursuant to the enacted laws.

Apart from these, government policy directives and circulars play an important role in governing foreign investments.

 
Courts and Tribunals

The first instance courts are the Superior Courts and the Magistrate courts. The appellate courts are the High Court and the Supreme Court as the apex court. Apart from these judicial courts, several other institutions review disputes between private parties and disputes between government bodies and private parties. Among them, the Employment Tribunal and Tax Appeal Tribunal take prominence.

Further, the Maldives International Arbitration Center – an independent government institution offering alternative dispute resolution services, has recently commenced its functions.

 
The Common Law System

The courts and tribunals follow a common law system and frequently use foreign case laws to resolve disputes and to interpret law. Where there is no codified law regarding an issue, Islamic Law is used as a source of law.

 
Dispute Resolution & Arbitration

 
The First Instance Courts
The Superior Courts and Magistrate Courts are generally the first instance courts in relation to matters other than tax disputes and employment matters. The first instance courts are:

• The Civil Court of the Maldives;
• The Criminal Court of the Maldives;
• The Family Court of the Maldives;
• Magistrate courts in outer atolls.

The Appeal Courts
The appeal courts are:

• The High Court of the Maldives;
• The Supreme Court of the Maldives.

 
Tribunals
Tax Appeal Tribunal
All tax disputes and matters are heard by the Tax Appeal Tribunal, consisting of five members. Taxpayers contending to tax assessments are required to pay at least 30% of the principal amount that is being contested. The decisions of the Tax Appeal Tribunal can be appealed directly to the High Court of the Maldives.

Employment Tribunal
Employment disputes between employers and employees are generally heard by the Employment Tribunal. The decisions of this tribunal can be enforced through the Civil Court of the Maldives and appeals must be filed to the High Court of the Maldives.

 
Arbitration
The Maldives International Arbitration Center (MIAC) established under the Maldives Arbitration Act has recently commenced its operations. The MIAC has experienced and renowned arbitrators from various countries and diverse backgrounds. The MIAC is in the process of developing its own modern arbitration rules in line with international standards and has made available interim rules to enable parties to seek MIAC’s services even now.

The parties to an arbitration agreement can agree to any law of their choice as governing law and the seat of arbitration. Where parties opt to have the Maldives as a seat of arbitration, the arbitration proceedings will be governed by the Arbitration Act (Law Number 10/2013) of the Maldives (Ch 7) and Maldives International Arbitration Centre Rules for Arbitration.

 
Recognition and Enforcement of Foreign Arbitral Awards
The Maldives acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the ‘New York Convention’) on 17 September 2019, and so recognition and enforcement of foreign arbitral awards can be sought in the Maldives.

The Arbitration Act (Law Number 10/2013), provides that arbitral awards rendered by a foreign arbitral tribunal can be recognised and enforced by a competent national court so long as the arbitral awards fall within the ambit of procedures prescribed under the Arbitration Act. Generally, an arbitral award is final and binding on parties. Hence, courts only have limited grounds to set-aside foreign arbitral awards.

Along with the application for enforcement, a party wishing to enforce a foreign arbitral award has to submit an original award/attested copy of the original award and a translation of the award to Dhivehi.

The recent decision of the Maldives High Court in Hilton International v Sun Travel and Tours sets an important precedent on the enforcement of foreign arbitral awards in the Maldives. Read our summary of the case here.