IFLR 1000
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The legal market in Tunisia since the revolution is a complicated environment. There are "a lot of difficulties", says one lawyer, "some firms had strong ties with the former business community which was tightly linked with the political arena… but now the business arena is not the same as it was," adds the lawyer....

The legal market in Tunisia since the revolution is a complicated environment. There are "a lot of difficulties", says one lawyer, "some firms had strong ties with the former business community which was tightly linked with the political arena… but now the business arena is not the same as it was," adds the lawyer.

Such matters lend an air of uncertainty to the market which is discernible in clients as well.

There have been a number of changes over the past couple of years and new players have emerged and are competing for transactions. At the same time, some partners note that the market is down: "We are all working at 50% of the level of 2010, so it is not a good time for law firms," says one.

In general, clients find the market "good at execution rather than formulating a solutions" in the words of one. "If I have one criticism it is that they need to find a different way of thinking instead of the client," adds the client of a global company. However, commentators note that firms are quickly adapting to services entities not only from Tunisia and France but also from the rest of Europe, Asia, the US and the Middle East.

Rule changes in the legal market have also seen the exit of Gide Loyrette Nouel, which now operates officially as a foreign firm partnered up with independent local lawyers, while Bird & Bird and French firm DS Avocats both have associations with local firms.

CONTEXT AND TRENDS The picture from Tunisia is patchy, with some partner concluding that the market activity has been considerably down compared to previous years and others reporting a busy year. A few trends are certain, however....

The picture from Tunisia is patchy, with some partner concluding that the market activity has been considerably down compared to previous years and others reporting a busy year.

A few trends are certain, however. "Private equity is very active, more so than the banks," says one lawyer. "In Tunisia we do not have the same difficulties as in Europe but it is still difficult to lend and private equity funds have been much more dynamic and it is easier for them to focus," adds the source.

According to another there has been a marked shift from the private sector to the public sector. "The public sector is becoming more and more important, the government has issued a series of bonds on the international market guaranteed by foreign public entities and there are lots of foreign governments granting loans to the government like USAID, KfW, the European Investment Bank (EIB) and now the World Bank and International Finance Corporation (IFC), where before it was more private banks."

The country has also seen various legislative developments. In August 2012 decrees were adopted that permit the issuance of instruments such as sukuk bonds and provide a framework for Islamic financings. Laws effecting public companies, which will have an impact on investment and sovereign funds have also been approved. According to one lawyer the prior approval for funds to establish and operate by the authorities has been removed and replaced by posterior regulation.

Additionally, certain ambiguities have been clarified which have opened the way for sovereign funds and a number of other public funds, which are targeting the small-to-medium enterprise (SME) sector, to launch. "There are more and more sovereign funds that want to invest here and funds that want to help SME companies and companies in deconsolidated industries," says a lawyer.

In other developments, a new law has also carved out the Caisse de Depots et de Conciliation from the Ministry of Finance and created it as a public but independent body, run as a company responsible for all public companies; a concessions law and public-private partnership (PPP) and private finance initiative (PFI) law are under discussion; and there is an ongoing review on the capital market framework in order to tackle some of the current limitations of the stock exchange. For instance "securities lending has no clear framework and hedging instruments are difficult to take due to the lack of a close out setting provision", and the regimes for taking pledges on securities is also "not a modern one".

MAJOR LEGISLATION CHANGES

Islamic Finance law
In effect as of August 2012

Investment Funds / Public offering companies
In effect as of August 2012

Caisse de Depots et de Conciliation
In effect as of January 2012