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Monaco: Country and Foreign Investment


In 1911 Monaco adopted its first constitution, which was amended in 1962. In 1963 Prince Rainier (Grimaldi) signed a major treaty with France which incorporated the provisions and terms of a number of previous treaties and which guaranteed Monaco "independence" subject to French control and subject to assimilation with France in a number of legal & economic areas, including a monetary and customs union. In 1993 Monaco became a fully fledged member of the United Nations. Defense and security matters are handled by France.

The Principality has a constitutional, hereditary monarchy in which the sovereign wields overall executive power. Prince Albert II, who succeeded his father Prince Rainier in 2005, represents Monaco in its relations with foreign powers and he alone can sign and ratify treaties.

The 24-seat National Council, whose sole function is to accept or reject legislation proposed by the sovereign and to vote on budget proposals, is elected by universal suffrage, with a 5-year residence qualification. Elections are held every five years. 16 members are elected by a list majority system, and eight by proportional representation. The National Council meets twice a year. The sovereign makes all judicial and diplomatic appointments as well as selecting an executive Council of Government which consists of a Minister of State and a Minister of the Interior (chosen from a list proposed by the French Government) and three Monegasque councillors responsible for finance, social services and building. There are no political parties in Monaco.

Monaco is not a member of the European Union but because of the large number of French laws which apply there and because of its full customs and monetary union with France a number of European directives which apply in France indirectly apply in Monaco.

Monaco is a civil law jurisdiction with its legal system based on the French Napoleonic code. A number of French laws in areas as diverse as insurance, postal services, telecommunications, banking confidentiality, tax payable by French nationals, and permanent establishment requirements apply in the Principality.

The legal system consists of 4 tiers of courts irrespective of whether the matter involves criminal or civil issues. A single judge deals with relatively minor offences. Above the single judge is the Court of First Instance which consists of a panel of several judges presided over by a president and which both hears appeals from the single judge and deal with cases involving more serious legal issues. Appeals from judgments of the Court of First Instance are lodged with the Court of Appeal. The final Court of Appeal is the Cour de Revision which is made up of French judges.

Additionally there is a constitutional court where an aggrieved party claiming an infringement of his constitutional rights can bring an action.

The judiciary is appointed by the sovereign but consists entirely of French judges seconded to the courts of Monaco. Procedure is modeled on and virtually identical to French civil and criminal procedure. Proceedings are inquisitorial and although the judges are not bound by precedent its persuasive value is very strong. Notaries are appointed by the sovereign.

In December, 2006, Prince Albert II and then French President Jacques Chirac signed new agreements regulating the Franco-Monegasque relationship, including:

  • A Convention which is designed to adapt and to strengthen administrative co-operation between the Principality of Monaco and the French Republic. It replaces the previous 1930 convention and has already undergone a preliminary application phase by means of Government expansion, with the nomination of a Government Counsellor for Social Affairs and Health and an External Relations Delegate.
  • The Convention of judicial assistance between the Monegasque and French Governments with regard to criminal matters;
  • Exchange of letters relating to investor securities, with the aim of completing the pre-existing exchange of letters concerning banking affairs in Monaco, as well as enabling banking establishments within the Principality to accede to the French investor security system.

The revision normalises Monaco's relationship with its larger neighbour, putting the two States on equal footing, updating the 1930 convention, and giving the Principality the autonomy promised in the build up to its entry into the Council of Europe. The agreement removes the restriction whereby French civil servants are appointed to many important positions in Monaco.

In May 2008, Franco-Monegasque agreements and conventions concerning administrative cooperation, judicial assistance and investor security were ratified.



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