Less than a year removed from the bloody revolution that toppled Gaddafi, Libya is facing an economic boom. Many people may recall the surge of business activities that began to occur in the mid 2000's as the country started to open up to outsiders. Then a short period of stagnation followed by the Arab Spring and a revolution that freed the country from decades of heavy-handed rule by Colonel Gaddafi. Now, Libya's natural resources are acting as a catalyst to revive the country from decades of neglect. While many predicted chaos, Libya is mostly peaceful, united and ready to do business. What else is there besides oil to attract businesses? How about over 1,000 miles of Mediterranean coastline, some of the best preserved Roman ruins outside of Rome and the appeal of the vast Sahara desert with many well-preserved Berber villages and oasis towns. Libya is also a young country with around 30% of its population under the age of 15 years. Tourism had started to take off in the last few years of Gaddafi's regime but many of the large development projects were suspended. It is unclear at the moment whether any of these planned developments can continue, but many investors are hopeful that the government will enable future development with a friendly business environment and public investment dollars.
Working in the legal system. Libya's legal system is reasonably well-developed and includes detailed laws, which are largely derived from the French and Egyptian Civil Codes. Shari'a law is very rarely invoked in commercial matters but does apply to prohibit gambling and alcohol. The prohibition on alcohol may be removed by an elected government but, in any case, need not be a major issue for investors. Consider the success of resort and hotel developments in Saudi Arabia.
Owning Real Estate. Previously, the ownership of real estate by Libyan nationals was restricted and, under Gaddafi's rule, non-nationals were prohibited from owning any real estate. Prior to Gaddafi, land ownership in Libya was open to all nationalities without restriction on size or location. Therefore, it is widely expected that the coming years will see considerable evolution in the real estate market, an asset class strongly regarded in the Arab world in particular. Buyers of other Arab nationalities are already acquiring prime land in Libya and real estate prices are increasing.
Application of Shari'a law. It remains to be seen whether Shari'a law will become more applicable to the commercial laws of Libya. For example, interest is now acceptable where the payment is between two companies. This is in contrast to Saudi Arabian laws, where interest is wholly forbidden. Therefore, at present any provisions in development agreements relating to interest should be considered valid and, if this changes in the future, there are ways that such agreements could be drafted to get around any enforcement issues. The exclusion of liability may also be an area of law, which could change if Shari'a principles were applied strictly. Shari'a principles prohibit the exclusion of liability on the basis that a person is responsible for their actions. Previously in Libya, exclusion of liability arising from 'ordinary' defaults could be excluded but liability for fraud or 'gross' negligence could not be excluded. In a commercial context, if either of the above issues proves to be a material roadblock for a particular deal, the governing law of the contract that the parties opt for may be something other than the laws of Libya.
Overall, the legal system of Libya is sufficient for investors to enter the market with a relative level of comfort; and the boom of the Libyan real estate market should reward those who move quickly to secure deals with the right partners.