Monaco: Country and Foreign Investment
This page was last updated on 20 April 2021.
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 treaties and which guaranteed Monaco "independence" subject to assimilation with France on a number of legal and economic areas, including monetary and customs union. In 1993 Monaco became a fully fledged member of the United Nations. Defence and security matters are handled by France.
The Principality is 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, which exists to accept or reject legislation proposed by the sovereign and vote on budget proposals, is elected by universal suffrage. The Council meets twice a year and there is 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 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 Monégasque councillors responsible for finance, social services and building. There are no political parties in Monaco.
Monaco is not a member of the European Union. However, in diverse areas such as insurance, postal services, telecommunications, banking confidentiality, tax payable by French nationals, and permanent establishment requirements, many French laws apply in the Principality. Furthermore, Monaco is in full customs and monetary union with France. This means that several EU directives that apply in France indirectly apply in Monaco.
Monaco is a civil law jurisdiction with its legal system based on the Napoleonic code. The legal system consists of four tiers of courts for both criminal or civil issues. A single judge deals with relatively minor offences. Above this is the Court of First Instance, which hears appeals from the single judge and deals with more serious cases. 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 Révision which is made up of French judges. Additionally there is a constitutional court to which an aggrieved party claiming an infringement of their constitutional rights can bring an action.
The judiciary, though appointed by the sovereign, consists entirely of French judges seconded to the courts of Monaco. Procedure is virtually identical to that found in French civil and criminal law. Proceedings are inquisitorial, and though the judges are not bound by precedent, its persuasive value is very strong. Notaries are also appointed by the sovereign.
In May 2008, Franco-Monégasque agreements and conventions concerning administrative cooperation, judicial assistance and investor security were ratified.