Libyan Construction Law: Contractor’s Liabilities

By Dr. Mohamed Karbal,  Managing Partner at Karbal & Co.

Libyan Construction Law: Contractor’s Liabilities

Prior to the upheaval of the February 2011 revolution, Libya was already contending with various economic problems. Forty years of the Gaddafi regime's irrational strategic planning and an apathetic mindset left Libya among the least developed countries. Hospitals taking 30 years for completion was common practice. Presently, the Libyan deteriorated infrastructure is in total disarray: housing shortages, dilapidated road networks, and airports stuck in a 40-year time warp, left without modernization since completion. Other neglected sectors included small, unequipped seaports, substandard or nonexistent hospitals and schools. In other words, most of the infrastructure built in the '60’s and '70’s was left without any renovation. As a result most if not all, public service facilities needed to be demolished and rebuilt.

The New Libya, in its road to modernization, will need massive reconstruction in all aspects of its economy. Fortunately for Libya it has zero debt and a lucrative oil industry to fund the reconstruction. The international financial community believes that with wise, comprehensive planning, Libya will be able to climb out of the economic hole the regime dug for it. An International Monetary Fund (IMF) report stated that in 2012 the Libyan GDP was expected to increase by a record-breaking 122%. It is expected to continue growing at 17% in 2013, and at an average of 7% per year from 2014 to 2017.

The Libyan Minister of Economy issued decree no. 207 for year 2012 amending decree no. 103 of 2012 which organizes the legal framework of foreign investment in Libya. Foreign investment is allowed in all economic sectors except certain areas which are strictly limited to Libyan citizens such as the legal profession, accountancy firms, and commercial agencies. For foreign companies, the decree details the form of the legal entities; i.e. limited liability, joint venture, branch of a foreign company and representative offices.