MALDIVES Law and Practice Contributed by: Hassan Maaz Shareef, Aminath Amathulla, Aishath Shifala, Mohamed Azmee, Nazahath Ahmed, Maaisha Mohamed Musthafa, Aifa Shareef and Noorul Hudha Ahmed, Premier Chambers LLP
1. Legal System 1.1 Legal System and Judicial Order
2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments Approval of Foreign Investments Foreign investments in the Maldives are currently gov - erned by the Foreign Investment Act (Law 11/2024) (the “FI Act”), which became effective on 3 December 2024. It repealed and replaced the previous Law on Foreign Investments (Law 25/1979), which was enact - ed in 1979. The FI Act establishes a new legal frame - work for regulating foreign direct investment in the Maldives, including provisions on eligible investment areas, approval procedures, investor rights and pro - tections and conditions for the revocation of licences. The FI Act requires that all foreign investments be approved, regardless of their nature or type. A licence has to be obtained before any foreign investment can be established in the country. Criteria for Review All foreign investments are subject to the review cri - teria and considerations set out in the FI Act. There is no specific review process mandated under the FI Act for specific investments. The approval of foreign investments under the FI Act is subject to an assessment of several factors, including, but not limited to: • the financial capacity of the investor; • the investor’s eligibility for residence and entry into the Maldives; • compliance with any conditions applicable to restricted sectors or investments subject to addi - tional requirements; • the extent to which the proposed investment may pose a risk to national security; • the potential effect of the proposed investment on existing businesses within the relevant sector; • the extent to which the investment is expected to generate employment opportunities and contrib - ute to the development of human resources in the Maldives; • the potential to increase the export of local prod - ucts, goods or services as a result of the invest - ment;
The legal system of the Maldives is a combination of civil and common law traditions aligned with the principles of Islamic law. Under Section 10 of the Con - stitution of the Maldives, Islam is the state religion and all laws are based on it. This means that no law inconsistent with the principles of Islam may be enact - ed. This hybrid system has enabled the Maldives to preserve its Islamic ethos while modernising its legal framework. While much of the legal framework is now covered by statutes, where there is a gap, it may be supplemented by Islamic law or common law, with precedence given to Islamic law. The judicial system of the Maldives is organised into three tiers. The Supreme Court of the Maldives is the highest court in the country and has:
• original jurisdiction; • inherent jurisdiction; • appellate jurisdiction; and • advisory jurisdiction.
The Supreme Court’s decisions are final and binding on all other courts. Under the Supreme Court Regula - tion 2020, a Supreme Court decision may be reviewed in limited circumstances. These circumstances are those in which an applicant can show a blatant dis - regard for the law or there has been a gross injustice. The High Court of the Maldives is subordinate to the Supreme Court and has both original and appellate jurisdiction. The High Court hears appeals from supe - rior and lower courts and tribunals. The third tier of the judicial system consists of first instance, superior and lower courts, along with tribu - nals. These include the Civil Court, the Criminal Court, the Family Court, the Juvenile Court, the Drug Court, the magistrates’ courts, the Employment Tribunal and the Tax Appeal Tribunal. All courts, apart from the magistrates’ courts, have specific jurisdictions. The magistrate courts have jurisdiction to hear civil, family and criminal matters.
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