The legal system of Nepal
A system built on the Muluki Ain, the country code first promulgated in 1854 and comprehensively replaced by the Civil Code and Criminal Code of 2017, which came into force in August 2018 and modernised private and criminal law together. Common-law method predominates in adjudication: the Supreme Court's decisions bind lower courts and are a recognised source of law. The 2015 Constitution converted a unitary Hindu kingdom into a secular federal republic with three tiers of government, and its implementation is still the dominant question in Nepali public law.
Legal tradition
Nepal belongs to the mixed common law and hindu customary tradition tradition. A system built on the Muluki Ain, the country code first promulgated in 1854 and comprehensively replaced by the Civil Code and Criminal Code of 2017, which came into force in August 2018 and modernised private and criminal law together. Common-law method predominates in adjudication: the Supreme Court's decisions bind lower courts and are a recognised source of law. The 2015 Constitution converted a unitary Hindu kingdom into a secular federal republic with three tiers of government, and its implementation is still the dominant question in Nepali public law.
How power is divided
Federal with three tiers: one federal government, seven provinces and 753 local units, each with its own elected assembly and schedule of exclusive powers. This is a genuine constitutional division rather than delegation — local units have taxing and legislative competence — and much post-2015 litigation concerns the boundaries between tiers and the slow transfer of staff and revenue.
Where law comes from
- The Constitution of 2015
- Supreme; inconsistent law is void under Article 133.
- Federal, provincial and local legislation
- Three legislative tiers with allocated competences.
- The Civil Code and Criminal Code 2017
- Replaced the Muluki Ain; in force since August 2018.
- Supreme Court precedent
- Binding on subordinate courts and a formal source of law.
- Custom
- Recognised where consistent with the Constitution and codified law.
The legal profession
Advocates are licensed by the Nepal Bar Council after a law degree and the Council's examination, with tiers of pleader, advocate and senior advocate. A single licence permits appearance at all levels, and the Nepal Bar Association is the professional body. Legal aid is provided under the Legal Aid Act 1997 through district committees, and the Constitution guarantees free legal aid to indigent parties.
Law by topic in Nepal
- Employment & Labour2017 Labour Act introduced social security contributionsThe Labour Act 2074 (2017) applies to all enterprises regardless of size, sets an eight-hour day and requires written contracts. The Social Security Act created a contributory fund covering medical, accident and pension benefits.
- Property & LandForeign individuals cannot own land; approved companies canForeign natural persons may not own land in Nepal. A company registered in Nepal with approved foreign investment may hold land needed for its industry, and long leases are otherwise used.
- Family Law2017 Civil Code unified family law and abolished separate personal codesThe Muluki Civil Code 2074 (2017) governs marriage, divorce, adoption and succession for all Nepalis. Registration of marriage is required, and daughters have equal inheritance rights.
- Criminal Law2017 Penal Code replaced the Muluki AinThe National Penal (Code) Act 2074 (2017) and the Criminal Procedure Code replaced Nepal's century-old general code. They introduced statutory limitation periods for prosecuting most offences.
- Constitutional Law2015 Constitution made Nepal a secular federal republicThe 2015 Constitution replaced a unitary Hindu monarchy with a secular federal republic of seven provinces. It contains an unusually long list of enforceable fundamental rights and a Constitutional Bench within the Supreme Court.
- Business & CorporateCompanies Act 2063 with a negative list for foreign investmentCompanies form under the Companies Act 2063 (2006). Foreign investment needs approval under FITTA 2075 (2019) and is barred in a negative list that includes retail, personal services and some agriculture.
- Immigration & NationalityVisa on arrival for most tourists, employer-sponsored work visasMost nationalities obtain a tourist visa on arrival. Working requires a work permit from the Department of Labour and a non-tourist visa, and Indian nationals have a distinct position under the 1950 treaty.
- Tax LawIncome Tax Act 2058 with rates set annually by the Finance ActThe Income Tax Act 2058 (2002) governs direct tax; the standard corporate rate is 25 percent with higher rates for banks, insurers and tobacco. VAT is 13 percent under the VAT Act 2052.
- Civil Procedure2017 Civil Procedure Code, with mandatory mediation in many casesThe National Civil Procedure Code 2074 (2017) governs civil litigation from District Court through High Court to the Supreme Court. Court-referred mediation is compulsory for several categories of dispute.
Found something out of date on Nepal?
Corrections are reviewed against the primary source before anything changes.