Enforcing Contracts In Angola: A Guide

Angola's economy is largely driven by the oil and gas industry, which presents a complex web of regulations and administrative duties for businesses to navigate. The country's public institutions are generally adept at handling all issues, with labour authorities playing an active role in enforcing the administrative and reporting functions outlined by national labour laws.

The country's laws cover all aspects of the employment relationship, with the most notable being the Angolanisation principle, which mandates that 70% of a company's workforce must be Angolan citizens if the company employs more than five people.

When it comes to contracts, Angola is a civil law country, meaning obligations on parties may not stem exclusively from the contract itself. While written contracts are not required for works contracts, certain types of contracts, such as fixed-term and training contracts, must be in writing.

Dispute resolution in Angola typically involves negotiation between parties, with the option of judicial courts as an alternative. Arbitration clauses are becoming more common in private contracts, particularly in the energy sector, and are governed by the Voluntary Arbitration Law.

Dispute resolution

Angola's judicial system is divided into three categories: the Supreme Court, the highest body in the hierarchy of Angolan courts; the Courts of Appeal; and the District Courts.

Disputes arising from construction contracts are typically resolved through negotiation between the parties and, alternatively, by the judicial courts. Arbitration clauses are less common in public contracts but are often included in private construction contracts.

Arbitration

Arbitration is governed by the Voluntary Arbitration Law (Law no. 16/03 of 25 July 2003). Arbitration awards must be issued within six months of the date of acceptance of the last appointed arbitrator, although the parties may agree to extend this deadline.

In private contracts involving international parties or financed by international banks or multilaterals, arbitration clauses typically follow International Chamber of Commerce or UNCITRAL models and procedures.

Judicial Courts

The Angolan court system is organised into a first level of jurisdiction, distributed by local courts with jurisdiction up to a certain amount; intermediate and appeal courts; and a final appeal court – the Supreme Court of Justice.

Proceedings start with a pleading phase, followed by an adversarial phase, where the pleadings are discussed. Parties may be invited to present further evidence at a preliminary hearing, which is typically used to seek a settlement. If the parties aim to proceed, the judge organises trial sessions where evidence and substance are discussed.

Decisions by civil courts of first instance are usually subject to appeal to the courts of appeal, while a subsequent right of appeal to the Supreme Court of Justice may exist in certain restricted cases.

In practice, proceedings at the first level of jurisdiction take between three and six years. Appeal decisions may take between three and five years.

Adjudication

Adjudication processes are not common in Angola. However, as standard contracts become more popular, it is expected that the development of these proceedings and the acceptance of dispute boards will assist during the execution of the contracts.

Employment Disputes

Under the General Labour Law, employment disputes may be resolved through:

• Conciliation before the Public Attorney's Office with the competent provincial labour court
• Mediation before the General Inspectorate of Labour
• Voluntary arbitration

The average timescale for a first-instance proceeding is two years. An appeal may be filed with the Court of Appeals by either the employer or the employee in relation to an unfair dismissal claim. A further appeal to the Supreme Court is possible but is subject to complex requirements.

Arbitration

Parties often refer to arbitration in construction contracts, which are governed by the Voluntary Arbitration Law. Arbitration clauses typically define the number of arbitrators, the seat of arbitration, the governing law, and enforceability. The law provides that arbitration awards must be issued within six months of the date of acceptance of the last appointed arbitrator, but this deadline can be extended by agreement.

In private contracts involving international parties or financed by international banks or multilaterals, arbitration clauses typically follow International Chamber of Commerce or UNCITRAL models and procedures.

Angola is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which came into force in the country in 2017. This convention enhances the possibility of enforcing internationally rendered arbitral awards. Awards can be rejected on limited grounds, including disputes that are not arbitrable, awards rendered by a tribunal with no jurisdiction, or awards that lack a statement of grounds.

There are several arbitral institutions in Angola, including the Centre for Extrajudicial Dispute Resolution, the Angolan Centre for Arbitration of Disputes, and the Centre for Mediation and Arbitration of Angola. However, many of these centres seem to have limited arbitral activity.

The use of arbitration in Angola is encouraged by the government due to the lack of resources and celerity in the judicial system. The country's Private Investment Law states that disputes regarding disposable rights may be resolved through alternative means such as arbitration, and the recent entry into force of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States is a sign of Angola's commitment to enhancing the use of alternative dispute resolution mechanisms.

Employment contracts

The Angolan labour law divides employees into two categories: national and foreign residents, and foreign non-residents or expatriates. Foreign non-residents face stricter immigration, recruitment, and hiring procedures, and they can only be hired on a fixed-term basis ranging from 3 to 36 months.

One of the most important regulations in Angola's employment law is the Angolanisation Principle, also known as the 70/30 rule. This principle states that any company with more than five employees must employ at least 70% Angolan citizens and 30% foreign non-residents. This regulation aims to promote local employment and skill development, enhance national industrial participation, and provide benefits to Angolan workers.

When drafting employment contracts, it is advisable to explicitly stipulate all the terms and conditions of employment, such as contract type, salary or wages, work schedule, nature of work, qualifications, and certifications. Advertising and recruitment procedures must also be non-discriminatory.

In the case of fixed-term employment contracts, the parties can set a probation period, with a maximum duration of 15 days for non-qualified employees and 30 days for qualified employees. Qualified employees typically hold positions that involve technical complexity, a high degree of responsibility, or special qualifications.

Employers with more than 50 employees are required to draft and approve employee handbooks, guidelines, instructions, service orders, and work rules that define various aspects of the organisation and performance of work, labour discipline, employee job descriptions, safety, hygiene, health protection, performance indicators, remuneration systems, working hours, control of entrances and exits, and surveillance. Employers with 50 or fewer employees are not mandated to implement these handbooks but may choose to do so.

Whenever employee handbooks or regulations establish rules on performance, discipline, remuneration systems, work performance, or safety and health protection, the employer must forward these regulations to the General Labour Inspectorate for information and registration purposes.

Contract termination

In Angola, the termination of a contract can occur through unilateral termination by the employer, mutual agreement, termination by the employee, or expiration. Here is a detailed overview of contract termination laws and procedures in the country:

Unilateral Termination by Employer:

• Dismissal based on objective grounds, such as redundancy or disciplinary dismissal with just cause, is allowed.
• Termination without cause is permitted only for employees hired under an employment contract of service commission regime, which is a rare type of contract offering flexibility in termination.
• In cases of economic, technological, or structural changes, employers can terminate contracts if job positions need to be eliminated or significantly altered. Collective dismissal rules apply when at least 20 employees are involved.
• For individual dismissals based on objective grounds, employers must provide prior notice of at least 30 days to the affected employees.
• Notice periods for term contracts are specified, with 15 business days required if the contract duration is three months or longer.
• Payment in lieu of notice is permitted and often required if the notice period is not honoured. Garden leave is also allowed during the notice period.
• Severance payments vary based on company size and years of service. Higher severance payments are common to avoid litigation.

Termination by Mutual Agreement:

Mutual agreement between both parties can be a basis for contract termination.

Termination by Employee:

Employees can initiate termination with notice or through constructive dismissal with just cause.

Expiration:

Contract expiration, including fixed-term and open-term contracts or retirement, is a valid reason for termination.

Restricted and Prohibited Terminations:

Special protection against dismissal is granted to specific categories of employees, such as union representatives, women covered by maternity protection, war veterans, employees under the legal age, and employees with reduced work capacity or a disability degree of 20% or higher.

Notification and Documentation:

As a general rule, a copy of the notice served on the employee must be forwarded to the General Labor Inspectorate. Information about collective dismissals should also be provided to the Inspectorate, but their approval is not required.

Termination Procedures:

For individual dismissals based on objective grounds, employers must provide prior notice to employees at least 30 days in advance. For collective dismissals, the prior notice period is 60 days.

Dispute Resolution:

Construction contract disputes in Angola are typically resolved through negotiation, judicial courts, or arbitration, especially in private contracts. There are no specialised construction courts in the country. Arbitration clauses are common in construction contracts and are governed by the Voluntary Arbitration Law.

Contract types

Angola's economy is largely driven by the oil and gas industry, which has resulted in a complex regulatory environment for businesses. The country's laws and regulations cover all aspects of the employment relationship, including contract types.

The Angolan Civil Code and the Public Contracts Law govern construction contracts. While the Civil Code does not require written agreements, the Public Contracts Law may mandate a written contract and court approval for public works contracts above a certain amount. Standard contract forms are often used in projects led by international companies or financed by international banks.

The General Labour Law (7/15) is the primary legislation governing employment contracts. It defines an employment contract as an agreement between an employee and an employer, where the employee offers their professional services in exchange for remuneration. The law differentiates between national and foreign resident employees and foreign non-resident or expatriate employees. Foreign non-residents face strict immigration, recruitment, and hiring procedures, with fixed-term contracts ranging from 3 to 36 months.

The law also introduces the concept of micro, small, medium, and large companies, with varying rules for each category. For instance, micro, small, and medium firms enjoy more flexible regulations and cost-effective work standards. Additionally, micro, small, and medium-sized companies can offer fixed-term contracts of up to 10 years, while large companies are limited to 5 years.

The law sets out mandatory allowances and specific social security benefits, such as the family allowance, that employers must provide instead of the social security system. It also outlines strict rules for termination, allowing dismissal only in cases of serious employee infringement or objective economic reasons beyond the employer's control.

Other types of contracts in Angola include:

• Civilian-military contracts: These are agreements between civilians and military organizations, and they are governed by the relevant military and civilian laws.
• Service agreements: These are used for hiring complementary services from self-employed individuals. Taxes are applicable regardless of the type of agreement, and social security contributions must be considered for employees.

Frequently asked questions