Corporate Disputes and Business Mediation: The Key Role of the Corporate Lawyer

We invite you to read the article by our partner Gina Hernández Vólquez in the digital magazine of the Spanish Chamber of Commerce in the Dominican Republic

We are pleased to invite you to read the latest article by our partner Gina Hernández Vólquez, Partner of the Corporate and Investment Practice at Alburquerque Abogados Consultores, published in the March edition of the digital magazine of the Official Spanish Chamber of Commerce in the Dominican Republic.

Entitled “Corporate Disputes and Business Mediation: The Key Role of the Corporate Lawyer”, Gina offers a clear and insightful analysis of the strategic role corporate lawyers play in preventing and resolving internal business conflicts, as well as the value of mediation as an effective tool for preserving commercial relationships and ensuring business sustainability.

This article is a must-read for business owners, executives, and legal professionals interested in strengthening corporate governance and promoting stable and collaborative business environments.

📖 You can read the full article in the March edition of the Chamber’s digital magazine:

https://www.camacoes.org.do/portfolios/revista-marzo/

Through this ruling, the Third Chamber of the Supreme Court of Justice (SCJ) sets a fundamental precedent regarding the application of Law No. 158-01, the Law for the Promotion of Tourism Development in low-development areas and new poles in provinces and localities with great potential. The decision is based on Article 3 of said law, which states that companies engaged in tourism activities in designated tourist poles may qualify for exemptions from income tax, municipal and national incorporation taxes, import duties, among others, which have a decisive impact on the operations and profitability of these companies.

This is significant because the ruling establishes that not all activities linked to tourism automatically qualify for the tax benefits of the law, which by nature is restrictive and must align with what the State promotes and considers cost-effective for the country.

Upon reviewing Article 3, it is clear that airport infrastructure, air transportation, and airport services are excluded from the incentives, as the purpose of the legislation is to promote activities that generate investment, employment, and foreign currency inflows into the Dominican Republic. This is further confirmed by Law No. 195-13, which amends Law 158-01 and also does not include such companies as eligible for the exemptions. In this regard, the ruling states that: “The definitive classification authorization was issued illegally by exceeding the sectors that may be covered by the tourism incentive regime, which does not include airport infrastructure, air transport, or airport services.”

It is also important to highlight that the ruling emphasizes the requirement to meet all conditions for classification as a tourism project in order to receive such benefits, notably including the valid environmental authorization issued by the Ministry of Environment and Natural Resources. The ruling clearly states that “no incentive shall be granted if the investor does not hold the proper environmental license issued by the Ministry of Environment and Natural Resources.”

Furthermore, it was noted that there was no evidence that the project had been properly disclosed to all stakeholders through any form of mass communication, despite its far-reaching implications. This is tied to the regulation of the same law, which mandates at least one public consultation in the area of influence of the project.

This ruling marks an important precedent for the tourism sector, as it reinforces the provisions of the law and clarifies which companies within the sector are eligible for the incentives.

By:

Lyath Jimenez

The Dominican Republic has become a prime destination for foreign investment, particularly under the Free Trade Zone regime, which offers businesses significant tax incentives and strategic advantages.

As our Partner of Corporate Business & Investment, Gina Hernández, highlights in her latest article for LIR República Dominicana (Legal Industry Review):

📢 “The country has established itself as a major logistics hub in the Caribbean and Central America. Along with the modernization of local infrastructure, workforce professionalization, and incentive policies, this has fostered its development.”

In her article, “Benefits of Investments Under the Free Trade Zone Regime in the Dominican Republic,” featured on pages 34 and 35 of LIR, Gina analyzes how these factors have driven sector growth and the opportunities they present for investors.

📖 Read the full article here: https://thelegalindustry.com/dominican-republic/

I. What Was This Case About?

On October 4, 2023, the nonprofit organization Entrepreneurs United for Development and Freedom (EMUDELI), Inc. filed a direct action of unconstitutionality before the Constitutional Court of the Dominican Republic against Articles 7 and 25 of Law No. 32-23 on Electronic Billing, enacted on May 16, 2023.

Article 25 of the law states the following:

“Art 25 – Financial and securities intermediation entities in the Dominican Republic, when issuing financial products other than savings, must request from the General Directorate of Internal Taxes (DGII) a risk certification of the recipient of said product, which must state the total amount and volume of invoiced transactions over a given period.”

This article seeks to ensure that banks request a “risk certification” from the DGII before granting any financial products to their customers other than those meant for savings. Through this certification, the DGII would disclose, as a minimum, how much an individual or company has billed over a specific period. In other words, banks would not be able to approve certain loans or financial products without first receiving the fiscal information about the potential client, thus directly linking access to financing with the applicant’s billing history at the DGII.

EMUDELI argued that these provisions violated constitutional principles such as reasonability, the right to equality, the right to a defense, human dignity, privacy, personal honor, and freedom of enterprise.

As a result of the action filed by EMUDELI, the Constitutional Court issued Judgment TC/1197/24 on December 30, 2024. Below, we briefly explore the analysis conducted by the Court regarding the contested article, as well as the final ruling.

II. Constitutional Court’s Reasoning

The Constitutional Court examined the constitutionality of Article 25 of the Electronic Billing Law and determined the following:

1. Lack of Specificity and Violation of Privacy: The Court found that Article 25 lacked specificity regarding the information to be included in the tax risk certification, thereby granting the DGII the power to provide banks with unrestricted information about taxpayers, infringing on their right to privacy.
2. Reasonability Principle: According to the Court, the provision in Article 25 did not comply with the reasonability principle established in Article 40.15 of the Constitution, which states that laws may only mandate what is just, useful, and beneficial to the community. The Court concluded that Article 25 did not contribute to improving the Dominican tax system, electronic billing, or the general public. Instead, the provision only benefited financial intermediation entities, as it gave them unrestricted access to taxpayers’ economic activity data to refine their risk indicators.
3. Lack of Connection with the Law’s Intended Purpose: The Court determined that the tax risk certification had no relation whatsoever to the objectives of the Electronic Billing Law, as none of its other provisions referred to strengthening the Dominican banking system. Consequently, this provision distorted and disconnected the law from its intended purpose.

III. The Court’s Decision

Given the violation of the right to privacy and the reasonability principle, the Court upheld the unconstitutionality action and declared Article 25 of Law No. 32-23 null and void.

The Constitutional Court’s decision seeks to reaffirm the protection of taxpayers’ privacy and the reasonability principle as fundamental pillars of the Dominican legal system. By invalidating Article 25, the Court aims to prevent financial entities from unrestrictedly accessing citizens’ tax information and ensure that any future legislation mandating the disclosure of such information meets the specificity and reasonability requirements that should characterize all laws in the country.

 

Miguel Eduardo Gil Molina

Andrea Jacobo Ricart

The Superintendence of Health and Occupational Risks (SISALRIL) has officially launched the Digital Transfer System, an innovative tool that allows affiliates to quickly, securely, and entirely digitally switch to the Health Risk Administrator (ARS) of their choice.

This system, which uses biometric data to guarantee the authenticity of affiliates, introduces a robust and transparent control mechanism. It also offers the possibility of transferring family units together, so that all members of a household can be under the same ARS.

Resolution and Implementation Process:

To ensure the proper functioning of the new system, SISALRIL issued a resolution establishing that all transfers must be conducted exclusively through this digital platform. The ARS were duly informed, and a trial period was conducted to ensure its effectiveness.

This advancement promotes the free choice of affiliates, improves transparency, and increases control levels in the transfer process.

How to Complete a Digital Transfer?

To request a transfer, the affiliate must approach the ARS they wish to switch to and submit a personal request. The ARS will input the personal details and validate the applicant’s identity using their biometric data. Additionally, an audiovisual authorization from the affiliate will be recorded to formalize the transfer.

Requirements:

1. Been enrolled in the original ARS for 12 months.
2. Be up-to-date with the payment of contributions.
3. Not have scheduled elective surgeries or high-cost health conditions.

With this new tool, SISALRIL aims to simplify access to health services, guarantee greater legal certainty, and offer affiliates more active participation in the transfer process, thereby safeguarding their health rights.

Take advantage of the ease and transparency the Digital Transfer offers!

If you would like more information or need legal advice on this matter, don’t hesitate to connect with a member of our Labor Law Department to address your concerns. We are here to help you navigate these changes and protect your labor rights. Thank you for reading, and until next time!

 

Leslie Florian

Labor and Social Security Associate

Brief Historical Overview:

Legislation regarding real estate rentals is old and scattered, containing obsolete aspects that are no longer applicable. The first document establishing the right to dignified housing is our Constitution. The first legislation regulating this matter was Decree No. 2213, dated April 17, 1884, which adopted the French Civil Code translated into Spanish, including certain provisions of the Dominican Republic’s Civil Procedure Code. After this modification, no updates were proposed on rental matters until the Trujillo government, introduced the most significant changes through Law No. 4314, dated October 22, 1955. This law was the first to establish the leasing and eviction process for real estate. It was later amended by Law No. 17-88, dated February 5, 1988, which sought to regulate the provision and return of tenants’ deposits given to landlords.

Review of the Current Draft Bill on the General Law of Rentals

Since there have been no significant legislative changes in this area, our Chamber of Deputies has approved, in the first reading, a new proposal for a law aimed at regulating legal relationships originating from the rental of real estate to standardize practices in this matter. The new law will apply to:

• Residential use.
• Non-residential uses (commercial, industrial, artisanal, professional, technical, welfare, cultural, educational, recreational, or public activities and services, among others).

This draft law seeks to cover written and verbal contracts for real estate rentals, regardless of the property’s location. However, it excludes the following:

• Urban and suburban undeveloped land.
• Rural estates.
• Registered guesthouses and lodging establishments.
• Temporary occupancy of spaces or stalls in markets, fairs, or during festivities.
• State-owned properties rented or leased.

The draft introduces several innovations modernizing agreements in this area, such as:

1. Consent from all property co-owners will be required to rent indivisible properties, although a representative may be appointed for agreement signing and payment collection.
2. Fixed parameters for a valid contract will be established, including party details, property address, inventory of rented furnishings (if applicable), notarized signatures, and a specific mention of the intended use.
3. Rent will be freely agreed upon by the parties.
4. Implicit acceptance of rent payment in foreign currency and mandatory issuance of payment receipts.
5. Advance rent payments of more than one month will not be allowed.
6. Rent adjustments will be subject to mutual agreement.
7. Grounds for contract termination include:
   a) Expiration of the term.
   b) Property destruction.
   c) Default by the landlord or tenant.
   d) Use of the property for illegal activities.
8. For the first time, early unilateral termination of the contract by either party will be allowed.
9. Even if a tenant vacates the rented property, they remain contractually obligated until the contract’s expiration.
10. The Agricultural Bank will be replaced by the Reserve Bank for deposit management.
11. Landlords are prohibited from:
    • Requiring conditions such as “no children,” foreign nationality, or other forms of discrimination.
    • Using discriminatory language in rental advertisements.
12. If the property is sold during the rental period, the new owner must respect the existing contract terms until its expiration.
13. Subletting or changing the property’s intended use without explicit written authorization will lead to contract termination.
14. Justice of the Peace courts will maintain jurisdiction over eviction cases. Appeals requiring double the penalty amount deposited with the Reserve Bank may delay the execution of eviction rulings.

Final Considerations:

The proposed law primarily updates standard rental practices without introducing significant new measures beyond prohibitions. However, several critical issues remain unaddressed, including:

a) The impact and regulation of short-term rentals via platforms (e.g., Booking, Airbnb) and their negative effects on the tourism and real estate markets.
b) The rise in rental prices and dollarization, makes housing unaffordable for the average citizen.
c) The lack of regulation on property purchases and excessive rentals by non-resident foreigners.
d) Outdated laws regarding private property invasion.
e) The need to define and regulate properties suitable for housing versus economic activities.
f) Failure to enforce Law No. 38-62 (1966), which empowers the General Directorate of National Cadastre to set minimum rental prices based on property size, maintain a registry of state-approved residential properties, and clarify ownership rights.

We support the law’s modernization through this innovative project but acknowledge that critical issues were left unaddressed. We recommend involving stakeholders, such as the construction sector and citizen representatives, during the review process to evaluate and address potential improvements.

Lyath Beatriz Jiménez Cabral