FAQ’s on the “Somaliland Development Corporation (SDC).”
Various questions have been raised about the SDC during the course of meetings. These notes seek to answer such questions
How can a contract with the SDC be enforced when the Somaliland Government is not recognised?
This is the fundamental point of the SDC. The Government can contract with whomever it wants; but its legal commitments do not extend beyond the territory of Somaliland. However good local Courts may be in administering justice within Somaliland, they have little experience of dealing with foreign parties. Consequently, an investor or donor has no counterparty with which it may confidently enter into an agreement, because the agreement has no validity outside Somaliland.
Since the Foreign Corporations Act 1991[1], English law will recognise and enforce contracts made with corporations of unrecognised States, although, in fact, the SDC will be incorporated in and governed by a recognised neutral jurisdiction (UK, Jersey or Dubai). Courts in England will enforce its contracts or arbitration awards made under such agreements. This enforceability provides a basis of mutual confidence and predictability, in dealings between an investor or donor and Somaliland, which is particularly important for medium- to long-term projects, involving significant investment prior to income generation.
The enforceability of contracts does not of itself provide substance to the commitment; but this is the dilemma facing any investor when deciding whether to risk significant funds to any government. In this regard, however, Somaliland has a far better track record of political stability and peaceful democratic change than many recognised States. Somaliland will contract through a transparently incorporated entity in an accessible jurisdiction, which - in time - will build real capital substance.
How do we know that the Government really backs the SDC?
The SDC in its two forms (donor and investor) will be open and transparent. Its management, boards of directors and trustees will be identified and accessible. The management of both the investor and donor companies will comprise competent professionals with relevant experience. The two Boards will include ex-officio Ministers and other Somaliland notables to ensure that the projects and other work undertaken by the SDC reflect the Government’s priorities. The Trustees, who will ultimately control the SDC on behalf of the people of Somaliland, will comprise individuals of the highest integrity and authority within Somaliland. The existence of the SDC will not preclude direct access to the Government. On the contrary, the SDC is created in order to facilitate the realisation of the Government’s priorities in the long-term interests of the country.
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[1] "An Act to make provision about the status in the United Kingdom of bodies incorporated or formerly incorporated under the laws of certain territories outside the United Kingdom.“ This was enacted to overcome the problems of dealing with companies incorporated in unrecognized States, e.g. Taiwan.
