The legal system of Palau
The most American in form of the Pacific systems: a directly elected President, a bicameral Congress, and a Supreme Court exercising judicial review on the US model, with statutes and procedure drafted in a recognisably American idiom. Custom retains real force, however — clan and lineage structures govern most land, and the Constitution requires that traditional leaders be consulted. Palau's constitution is also the origin of the world's first nuclear-free constitutional clause, which required a 75% referendum majority to override and delayed the Compact of Free Association until 1994. The Palau National Marine Sanctuary closes 80% of the exclusive economic zone to commercial fishing.
Legal tradition
Palau belongs to the mixed common law with customary law tradition. The most American in form of the Pacific systems: a directly elected President, a bicameral Congress, and a Supreme Court exercising judicial review on the US model, with statutes and procedure drafted in a recognisably American idiom. Custom retains real force, however — clan and lineage structures govern most land, and the Constitution requires that traditional leaders be consulted. Palau's constitution is also the origin of the world's first nuclear-free constitutional clause, which required a 75% referendum majority to override and delayed the Compact of Free Association until 1994. The Palau National Marine Sanctuary closes 80% of the exclusive economic zone to commercial fishing.
How power is divided
A republic of sixteen states, each with its own constitution, governor and legislature, over a small population — Palau has more layers of government per head than almost anywhere. The national Council of Chiefs, made up of the paramount chief of each state, advises the President on custom and traditional law, and the two highest-ranking chiefly titles of Koror and Melekeok carry particular weight.
Where law comes from
- The Constitution
- Supreme law; Article IV rights, the nuclear-free clause, and citizen-only land ownership.
- Acts of the Olbiil Era Kelulau
- Bicameral national Congress: Senate and House of Delegates.
- State constitutions and ordinances
- Sixteen states legislate locally, particularly on land use.
- Customary law
- Clan and lineage rules govern most land and title; recognised by the Constitution and applied by the courts.
- Compact of Free Association
- In force since 1994; defence, assistance and visa-free migration to the United States.
The legal profession
Admission is to the Supreme Court under rules that recognise United States bar qualifications, and a substantial part of the bar and bench trained in the US. Palau also licenses trial assistants to appear in the Court of Common Pleas and the Land Court, which is how much routine representation is provided. Land Court practice is a specialism in itself, given the layers of Spanish, German, Japanese and Trust Territory administration that Palauan title claims have to be traced through.
Law by topic in Palau
- Family LawStatutory family law with customary marriage and clan adoption recognisedMarriage, divorce and custody are governed by the Palau National Code and heard in the Court of Common Pleas or Supreme Court, with customary marriage and adoption recognised.
- Immigration & NationalityCompact residence in the US, and tight inbound labour permitsPalauan citizens may live and work in the United States under the Compact. Inbound, foreign workers need permits and quotas apply, with citizenship restricted to those of Palauan descent.
- Property & LandCitizens only may own land, with matrilineal clan title and a Land CourtThe Constitution restricts land ownership to Palauan citizens. Much land is clan-held through matrilineal descent, and title claims are determined by the Land Court.
- Tax Law10% Palau Goods and Services Tax from 2023 replacing gross revenue taxPalau introduced a 10% goods and services tax in January 2023, replacing the gross revenue tax for most businesses, alongside net income tax on businesses and a wages tax.
- Constitutional Law1981 Constitution with a nuclear-free clause needing a 75% referendumA republic under the 1981 Constitution with a directly elected President, a bicameral Olbiil Era Kelulau, a Council of Chiefs, and an entrenched nuclear-free provision.
- Business & CorporateForeign Investment Board approval and sectors reserved to citizensCompanies register under the Palau National Code, and foreign investors need a Foreign Investment Approval Certificate. Several activities are reserved wholly to Palauan citizens.
- Civil ProcedureSupreme Court with Appellate and Trial Divisions, plus Common Pleas and Land CourtCivil claims are heard in the Supreme Court trial division, the Court of Common Pleas or the Land Court, with appeal to the Supreme Court appellate division as final court.
- Criminal LawRecodified Penal Code in PNC title 17 on a US modelOffences and sentencing are set out in title 17 of the Palau National Code, substantially recodified in 2014 on a United States model, and prosecuted by the Attorney General.
- Employment & LabourMinimum Wage Act with a large permit-tied foreign workforceA statutory minimum wage applies, with public service rules for government employees and permit conditions governing much of the private workforce, which is largely non-citizen.
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