Nicaragua: Fostering foreign investments with a new legal framework.

With its wide range of resources, projects, and businesses, Nicaragua is an attractive target for foreign investments seeking a region with the potential to foster new businesses. Based on this, on February 24, 2025, the National Assembly published Law 1240, the "Foreign Investment Law," in the official newspaper. This law repealed Law 344 (the previous law that promoted investments) and its regulation. It also repealed Executive Decree Number 55-2006, "Creation of the Single Window for Investments (VUI)," in order to transform the legal framework regarding investments in Nicaragua.

This new regulation establishes innovative precedents, including the definition of "strategic investment." This term refers to investment projects that align with national development objectives, such as increasing production, exports, or job creation, and are considered positive means for economic progress. Another important concept is the "Foreign Investment Contract," which is defined as an agreement between the Nicaraguan State and a foreign investor that establishes the parties' obligations, conditions, guarantees, and rights for executing the investment.

Among the organizational changes, the National Foreign Investment Commission (CNIE) has been established as the competent authority to enforce the provisions of this law which was previously under the jurisdiction of the Ministry of Development, Industry and Commerce. The CNIE is composed of the Presidential Advisor for Investments, Commerce and International Cooperation, the President of the Central Bank, the Minister of the Ministry of Development, Industry and Commerce, and the Executive Director of the National Commission of Free Zones. Similarly, the Secretariat for the Promotion of Investments and Exports (SPIEX) will serve as the Technical Secretariat of the Commission.

As a result of the registration process before the Directorate of Investments, the Sole Foreign Investment Registration Certificate (RUIE) will be granted as a physical means to materialize the investment before governing entities or other authorities, since as an accrediting document it grants the incentives established for each investment depending on the corresponding sectorial authority.

Following registration with the Directorate of Investments, the Sole Foreign Investment Registration Certificate (RUIE) will be granted and will serve as proof of investment to governing entities and other authorities. As an accrediting document, it grants incentives based on the corresponding sectorial authority.

Similarly, with the support of other state institutions, such as the Public Registry of Real Estate and Commercial Property, the General Directorate of Revenue, the Nicaraguan Social Security Institute, Municipalities, and others, MIFIC will establish a management model to facilitate business formalization and the registration of investments. 

Foreign investors shall enjoy the following indispensable rights:

1. The right to use and control the property in relation to the foreign investment.

2. Access to purchasing and selling foreign currency, as well as its free convertibility, in accordance with national laws on foreign exchange.

3. Transfer the invested capital of the foreign investment abroad and remit any profit, dividend, or gain obtained by the project.

4. Payments and remittances originating from debts contracted abroad, including interest and royalties.

5. Payments for expropriation compensation.

6. Fiscal or sectorial incentives based on the national legal framework.

In return, foreign investors have the following obligations:

1. Manage their investments in compliance with the Nicaraguan legal system.

2. Protect the environment and natural resources, and restitute any damage caused by their economic activity, whether directly or indirectly.

3. Provide quarterly reports demonstrating compliance with the investment plan to the relevant governing bodies.

4. Submit any information to the Central Bank of Nicaragua for statistical purposes to follow up on foreign investment.

Finally, if conflicts arise between the state and the foreign investor during the course of the foreign investment project, the parties may settle disputes through the following mechanisms:

1. Resolving the dispute through a request for friendly negotiation before the MIFIC. If the case warrants it, the CNIE will participate in the case's consideration.

2. If a solution is not reached within 30 working days, the claim may be submitted to the provisions of the national laws in force or to an international arbitration court. However, once the dispute resolution process has begun, the foreign investor may not bring the case before another jurisdiction.

In conclusion, foreign investments have received legal provisions in accordance with Nicaragua's national reality in the context of globalization, providing mechanisms that safeguard, expedite, and regulate in a comprehensive manner compared to the repealed regulations.

Thanks to inter-institutional progress and cooperation between the state and foreign investors, these procedures and norms will be observed, facilitating the development of foreign capital and attracting new investors from around the world.