The Legal Industry Reviews (LIR) – Dominican Republic published an article in its third edition authored by José Maldonado Stark and César Ariel Sánchez Mieses, managing partner and senior associate at the firm, titled «Access of Foreign Companies to Hydrocarbon Exploration in Dominican Territory.» Below, we share the full article:
Access of Foreign Companies to Hydrocarbon Exploration in Dominican Territory
Oil remains the most in-demand fossil fuel on the market due to the wide range of applications of its derivatives across various sectors of the economy. Hence, the importance that states place on the utilization of this natural resource through its exploration and exploitation, which is considered a mining activity of high public interest under Article 17 of the Constitution of the Dominican Republic.
In this context, the Senate of the Republic recently approved a bill to amend Article 4 of Law 4532 on the exploration and exploitation of oil and hydrocarbon deposits. This amendment opens the possibility for foreign capital companies to explore, exploit, and benefit from the aforementioned deposits, provided they meet certain specific conditions.
Both past and current Dominican mining laws exclude oil and its derivatives from their scope. Therefore, in September 1956, Law 4532 was enacted to specifically regulate oil and hydrocarbon exploitation, creating a special regime for this sector—now unequivocally extendable to foreign companies under the aforementioned bill.
According to the new wording of Article 4 of Law 4532, “the same rights [of exploration, exploitation, and benefit from the deposits] may be granted to foreigners through national or foreign legal entities, whether private, public, or mixed in nature. In all cases, the contract or concession involved shall be governed by the legislation of the Dominican Republic regarding the rights granted.”
It is noteworthy that the amendment includes foreign companies of a private, public, or mixed nature, whereas the previous wording explicitly prohibited “foreign governments” from benefiting from the provisions of this law, whether acting directly or as partners, co-partners, or shareholders. As a result, allowing a foreign public or mixed company to have the same rights as a local one opens the door to a broader range of investment opportunities in the sector.
In the case of private foreign companies seeking to benefit from the law, the new paragraph in Article 4 stipulates that such entities must have Dominican shareholders holding at least 15% of the share capital.
While this ensures a degree of national participation in the market, it is worth evaluating whether this mandatory minimum shareholding could constitute an economic restriction or discrimination that may counteract the intended incentive for foreign investment—especially in a market that requires significant initial investment and high technical standards. This is particularly relevant considering that Article 221 of the Dominican Constitution promotes equal conditions for both national and foreign investment.
Like the Senate, the Chamber of Deputies also approved this legislative initiative. It must now be submitted to the Executive Branch, and it remains to be seen whether it will be officially enacted and what the effects of its eventual implementation will be.
*** Russin, Vecchi & Heredia Bonetti provides this publication for general informational purposes only and it should not be considered legal advice for specific cases.
Written by:
José Maldonado Stark
Managing Partner
Cesar Ariel Sánchez
Senior Associate
LIR Dominican Republic: https://www.flipsnack.com/cejchile/the-legal-industry-reviews-dom-republic-edition-3-july-2025/full-view.html?p=44
