With the new  Transitional National Council officially declaring Libya a “liberated” state, Libya now appears to be the new business hot spot.  A number of articles have come out in recent days discussing the new business prospects in Libya. Indeed, as the dust is settling, there is much activity – the UN has announced that the no-fly zone designation over the country will soon be removed and oil production is set to get back on track.

U.S. business has been a relatively recent phenomenon in Libya, with the country being off limits to American business for years due to U.S. sanctions.  The middle of the last decade saw a reentry by U.S. companies.  While U.S. companies has reason for the excitement presented by a liberated country with vast potential, businesses must be exceptionally careful of pitfalls that are all too common for foreign entities in the region.  Some of the below tips may seem obvious, but many amazingly seem to overlook these.

1. Know the market and the business culture.  Showing up with your laptop, Blackberry, and brochures is not enough. Doing business in the region is a delicate dance and an exercise rooted in deep relationships – things take a somewhat slower pace than they do here in the U.S.  Not only do you need to know the market and the culture, you need to know your counterparties. There are ways to use third party vendors and counsel to perform due diligence.  It is in times like these that many snake oil salesmen will come forward insisting that they are plugged in with the new government or that they have the backing of strong and cash-rich entities.  Don’t be caught without having done your homework.  Talk to an trustworthy expert who can help you.

2. Do you know what the law is? This is particularly important for areas like sales in goods, as well as services like construction. You need to know the local laws. The present ambiguity can clearly be problematic. As such it is important to work with a solid team who can handle your U.S. and Libyan legal needs – coordinating with local counsel while making sure everything on the U.S. end is compliant.  Speaking of which, if you are dealing with high technologies, you are going to be best served making sure everything you export to Libya is within the U.S. Department of Commerce Export Administration Regulations (EAR), a very complicated set of laws that controls goods that can have so-called “dual use” (i.e., civilian and military application).

3. Paper everything and make sure that the agreements are enforceable.  The new government has not been in power long enough to substantively revise any laws.  Given the strong backing of NATO and having the world’s attention, it is unlikely that the TNC would force any legal U-turns, changing laws overnight.  That said, it is imperative that you seek contractual guarantees if closing a deal with any Libyan counterparty.  Irrespective of what the law calls for, you can seek third country-based assurances to protect yourself. These can take the form of Standby Letters of Credit and Guarantees, or favorable contract terms. Do you really want to wind up in a Libyan court whose judges may be unsure as to what the law now is? Didn’t think so.

4. Make sure your contacts protect you.  Believe it or not, contracts are important. Further  to the above point, a contract be a game changer in the region.  This is not just a matter of signing a piece of paper – what the piece of paper says is critical.  Before you get involved too deeply, make sure what you want to do is not only legal, but will work.  Also, acting strategically is naturally important.

5. Sort out your financing.  Banking with Libya is likely to remain challenging for the time being, being subject to fluctuating sanctions regimes, such as those promulgated by the U.S. Treasury Department.  That said, you may want to try using US and third country financing methods for the time being until the Libyan banking system is back on its feet.

Any businessperson with a palate for international expansion will find Libya a great opportunity.  An experienced advisor with a global perspective and professional consultant can help you navigate this promising yet potentially cumbersome maze of laws and other intricacies.