Contracting in Paradise: Key Legal Considerations for Foreign Investment in Barbados’ Real Estate and Hospitality Sectors

Introduction: Barbados’ real estate and hospitality surge

Barbados is not only a serene island destination for blissful beach holidays and glittering lifestyle experiences. It is also one of the Caribbean’s most dynamic real estate and hospitality markets. Across the west and south coasts, ultra-luxury villas, branded residences, mixed-use resorts, and boutique hotels are proliferating. Prestigious international brands, including Pendry, Hyatt, IHG, and Wyndham Hotels & Resorts, are entering the market, signalling growing global confidence in Barbados’ long-term tourism potential.

Several key forces are driving this development. International investors are seeking stable jurisdictions offering adherence to the rule of law and predictable regulation. Post-COVID migration waves have increased demand for second homes and remote-work living. Barbados’ “Welcome Stamp” visa programme, introduced in 2020, has reinforced this trend by attracting remote professionals and digital nomads. Further, the government has pursued targeted policy reforms and incentive regimes to attract foreign capital and streamline development approvals.

This article explores key legal and risk management factors that investors and developers should consider when planning new projects in Barbados’ vibrant real estate and hospitality sectors, with a focus on effective drafting and deployment of relevant contracts.

Structuring and entity-level risk

One of the earliest strategic decisions for investors is the selection of appropriate ownership and operating vehicles. Barbados offers several types of corporate entity. Each option has distinct advantages and disadvantages depending on the investor’s objectives, liability exposure, tax drivers and operational needs. The three most commonly used structures are:

• the Regular Barbados Company (RBC), the standard domestic corporation under the Companies Act Cap. 308;
• the Society with Restricted Liability (SRL), a hybrid vehicle offering limited liability and flexible governance that is functionally comparable to a limited liability company but with certain features derived from partnership law; and
• the External Company, a company or other entity established in another jurisdiction and registered in Barbados under the Companies Act (residents and non-residents enjoy the same rights with respect to property ownership in Barbados, and there are no restrictions on foreign purchasers, but foreign entities are required to register as External Companies prior to owning property in Barbados).

Property is typically acquired either by way of a direct conveyance of the real estate itself, or through the transfer of shares in an External Company (commonly, a BVI or St. Lucia company registered as an External Company in Barbados), that holds title to the Barbados property. Using an offshore company as the holding vehicle can eliminate the property transfer tax and stamp duty that would otherwise apply to domestic conveyances. The type of structure selected is therefore an important consideration for the acquisition of real estate, the development and operation of the project, and its future sale by the developer. In certain contexts, careful drafting of constitutive documents of entities in the relevant structure is critical. Vehicles used to facilitate collective investment in projects often require the crafting of provisions catering to different classes of shares, and the rights, entitlements and restrictions attaching to each. In the hospitality sector, development holding entities and operating entities may require very specific private equity-styled provisions to facilitate investment and exit strategies.

Contractual and regulatory risk in development and construction

Once the scope of the project has been defined, developers will usually issue requests for proposals (RFPs) as part of the procurement process to identify and select prospective suppliers, consultants and contractors. At this stage, proposals often incorporate the submitting party’s standard terms of service.

In accepting such proposals, care must be taken to ensure that only the developer’s provisional acceptance is indicated on the basis that the engagement is subject to contract, in the form of a written agreement between the parties. Typically, this contract would be initiated by the developer’s legal team and will supersede any prior agreements and negotiations. It is vital that the developer’s RFP documents include express language making this position clear, and that the formal contract eventually executed between the parties includes an “entire agreement” clause recording the parties’ agreement to be bound only by the terms of the developer’s written agreement, and not by any other extraneous terms. This is critical to avoiding a “battle of the forms” argument over which party’s terms actually apply to the engagement, and to preventing the developer’s carefully drafted protections and risk management contract provisions from being displaced.

For construction projects, selecting and adapting an appropriate form for the suite of project contracts is central to effective risk management. Internationally recognised construction contract forms – such as those of the American Institute of Architects, Joint Contracts Tribunal or the Fédération Internationale des Ingénieurs Conseils – may be used, but these must be tailored to Barbados’ legal and regulatory framework.

For example, local law requires that architects and engineers must be registered in Barbados in order to practise their profession on the island. Developers seeking to employ prestigious design firms from other countries may therefore still need to engage locally registered professionals to work in tandem with their foreign counterparts and to provide certification for permits, code compliance and final construction documents. Whether engaged as sub-consultants or under direct contract with the developer, each contract should carefully delineate the respective party’s scope of work to ensure both regulatory compliance and seamless integration of services. Vigilance is required to make sure that there are no gaps in responsibility/accountability to the developer; where locally registered professional and foreign counterparts have shared responsibility and/or taken on complementary roles.

Copyright in design materials

Contract terms must be modified to accord with local law in the context of the licensing of intellectual property rights. Many copyright materials will be produced in the course of a construction project and will be used throughout its life – from construction, marketing, repair and maintenance, to demolition. For example, an architect’s drawings might be used in every one of these stages. The wide range of purposes for which copyright material is required means that many different parties need to use it, such as a developer, a contractor, other design consultants, or a party providing finance in relation to a project. The use of copyright material without the permission of the copyright owner constitutes an infringement giving rise to legal liability. It is therefore critical that development agreements, building contracts and professional appointments include copyright licences that are sufficiently broad in scope to cover all foreseeable uses of the material in order to avoid such infringement. Further, express language should be included to state that the copyright licence granted is irrevocable and non-terminable, to ensure that the licence cannot be withdrawn after it has been granted, and that it will continue even if the underlying agreement is terminated.

Given the differences between Barbados and jurisdictions such as the United Kingdom and the United States in the laws governing intellectual property rights, it is essential that copyright licences be drafted or reviewed by a suitably qualified Barbadian attorney. An example of one important difference is that under the laws of the United Kingdom, the author of a work, such as a design drawing, is the first owner of any copyright in it. However, in Barbados, Section 22 of Chapter 300 of the Copyright Act provides that: “Where a protected work is made under a contract for services, the person who commissioned the work is the first owner of any copyright in the work.” Consider a scenario in which a Barbados developer engages a UK architect. If the architect’s professional appointment is governed under UK law, then ownership of the architect’s design drawings prepared for the project will vest in the architect as author. The developer would therefore require a contractual licence or an assignment of copyright in the drawings in order to legally make use of them. However, if the terms of the architect’s appointment are governed by Barbados law, the developer who commissioned the architect to prepare the design drawings for the project will be the owner, and it will be the developer who has the right to license the copyright in the drawings to other parties. Although local law establishes the position, it may be unfamiliar to foreign investors. Relevant licensing documents should therefore memorialise the local law position to avoid confusion and any “nasty surprises” that could result if a foreign author of the relevant material was not aware that ownership of it rests with the developer.

Jurisdiction

Project developers and their counterparties should also consider the choice of the jurisdiction where contractual disputes are to be resolved. Notwithstanding that the project is in Barbados; a jurisdiction clause may specify an alternative country or even a particular national court or courts as the parties’ dispute venue(s) of choice. The choice of venue is often based on:

• convenience (ie, a party typically prefers to sue or be sued in the country in which it is based);
• whether the jurisdiction offers efficient procedures and a robust range of interim and final remedies; and
• how easily a judgment obtained in that jurisdiction can be enforced in any other jurisdiction (taking into account the location of the defendant’s assets).

Notably, while arbitral awards are broadly enforceable internationally under the New York Convention, there is no widely adopted equivalent instrument governing the enforcement of court judgments. In Barbados, for example, the enforcement of foreign judgments is governed by Chapter 201 of the Foreign and Commonwealth Judgments (Reciprocal Enforcement) Act. Pursuant to this Act, only final and conclusive foreign judgments/orders awarding a fixed sum of money, from courts in the UK and certain other reciprocal countries are capable of being enforced. Contracting parties should therefore always check the enforcement position when settling on a particular dispute venue to be specified in their agreements.

If there is no effective jurisdiction clause the correct forum for the determination of a dispute will be decided by reference to rules of private international law. This can cause uncertainty and inconvenience and can lead to additional costs and delay if litigation becomes unavoidable.

Jurisdiction clauses should always be expressly written into the contract. While the parties’ choice of venue is not binding, the courts in Barbados, like the English courts, generally seek to give effect to the parties’ intention as set forth in the written terms of the agreement. A party expressly submitting to the courts of a particular jurisdiction will find it difficult to argue that those courts are not the appropriate forum for the trial of disputes.

When contracting with multiple professional consultants, contractors, and other parties involved in complex projects, the jurisdiction clauses should, insofar as possible, be replicated in all contracts. From the developer’s perspective it is critical that dispute venue provisions in these agreements are aligned. In the event of a dispute involving multiple parties (engineers, architects, contractors, plant and equipment suppliers) that results in litigation, there must be the ability for all parties to be joined in one single action, to avoid multiplicity of proceedings in different jurisdictions. Having to commence or defend actions in parallel proceedings in different venues will be far more costly, and doing so is likely to result in further litigation to determine which court should ultimately decide the matter.

Force majeure

Beyond legal and regulatory considerations, developers in Barbados should also ensure that their contractual arrangements adequately address the risk of force majeure events – particularly natural phenomena such as hurricanes, tropical storms, volcanic activity and earthquakes, which are experienced throughout the Caribbean region. A well-drafted force majeure clause is essential to allocate responsibility and mitigate exposure where such events prevent or delay performance of construction obligations. It should clearly define what constitutes a force majeure event, the procedural steps for invoking it (such as notice requirements and obligations to mitigate), and the consequences for time and cost. Given the increasing frequency and intensity of extreme nature events, lenders and insurers also scrutinise these provisions closely, as they affect both project timelines and risk allocation. Developers should therefore treat force majeure protection, not as boilerplate, but as a critical risk-management tool tailored to the realities of building and operating in a hurricane-prone region.

Insurance

Insurance coverage is another critical component of effective risk management in construction projects. Professional consultants with design responsibility should maintain comprehensive professional indemnity insurance that covers negligent acts, errors and omissions arising from the performance of their services, with policy limits adequate to the scale and complexity of the development.

Consultants such as architects, engineers and interior designers who are likely to have representatives on site during the planning and construction phases should also carry third-party liability and employers’ liability insurance under policies compliant with Barbados law. Where the developer is based overseas, or the consultancy agreement includes a jurisdiction clause permitting proceedings in another country, it is prudent to ensure that the consultants’ policies provide worldwide territorial coverage so that they can respond to claims brought in any relevant jurisdiction. Contracts by which such consultants are engaged should clearly outline the requirements for coverage.

A contractors’ all risks (CAR) policy is equally vital in mitigating construction-related risks. This form of insurance typically provides comprehensive cover for physical loss or damage to the works, materials and equipment during the construction period, as well as third-party liability arising from construction activities. The policy should ideally name the developer, the main contractor and other key participants, such as architects, engineers, and project and construction managers as additional insureds, ensuring that all parties have direct protection under a single policy and reducing disputes over responsibility for claims. In many cases, it is advantageous for the developer to procure and maintain the CAR policy, rather than leaving this responsibility to the contractor. This approach allows the developer to retain control over policy terms, coverage scope and claims management, and to ensure continuity of cover in the event of contractor default or replacement. From a cost and efficiency perspective, developers may also consider project-specific insurance programmes that extend coverage to multiple consultants and contractors engaged on the same development, thus avoiding duplication of premiums, closing coverage gaps, and aligning the interests of all insureds under a unified policy framework.

Foreign exchange controls

Barbados is one of the few remaining English-speaking countries (along with South Africa, The Bahamas, Jamaica, Trinidad and Tobago, and certain Eastern Caribbean territories) that maintains a comprehensive exchange control regime.

Financing structures, cash flow arrangements and procurement strategies for real estate projects in Barbados must cater to the effective navigation of the island’s foreign exchange control framework, administered by the Central Bank of Barbados. Under Chapter 71 of the Exchange Control Act, in conjunction with applicable Regulations and Circulars issued by the Central Bank, foreign currency brought into Barbados for the purchase or development of property must be registered. This registration process evidences the foreign origin of the investment and is essential for enabling the investor to repatriate both the original capital and any capital gains in foreign currency upon the eventual sale or divestment of the property. In practice, this means that developers and purchasers should ensure that all inflows of foreign funds (not just the initial acquisition investment, but all injections of capital towards project-related expenses arising throughout the course of development) are properly documented, routed through an authorised dealer in Barbados (typically a local bank), and formally registered with the Central Bank to preserve future convertibility and exit flexibility. Failure to do so may result in significant delays or restrictions when seeking to expatriate proceeds from a future sale.

A significant development in Barbados’ foreign exchange landscape has been the introduction of the Foreign Currency Permit (FCP) in 2019, and the recent repeal and replacement of the original governing legislation by the Foreign Currency Permits Act, 2025-5 (the “FCP Act 2025”). The FCP, issued by the Barbados government’s International Business Unit, is available to qualifying entities that earn 100% of their income in foreign currency. FCP applications must be made on behalf of the entity by a local service provider registered under the Corporate and Trust Service Providers Act, 2017 of Barbados.

An FCP confers valuable benefits: it exempts the holder from exchange control restrictions, allowing it to freely hold, settle and repatriate funds in foreign currency, and to maintain foreign currency accounts both locally and abroad. FCP holders also qualify for reduced stamp duty rates under the Chapter 91 of the Stamp Duty Act and are exempt from certain property transfer taxes under Chapter 84A of the Property Transfer Tax Act.

The FCP Act 2025 expands the definition of qualified persons who may apply for an FCP to include external companies and trustees, in addition to companies, firms or societies. Critically for investors in real estate development and hospitality services, the Act also introduces import duty relief for FCP holders exclusively engaged in the trade of services (such as villa rentals, resort management and property sales to overseas buyers). Such entities can now import equipment, materials, furnishings, and an extensive range of other goods that are integral to the delivery of its foreign-currency-earning services, free of customs duty, value-added tax and ad valorem stamp duty.

For developers and investors capitalising projects via debt or equity, in foreign currency, the FCP provides an elegant mechanism to simplify capital flows, reduce administrative friction and ensure certainty of exit. Structuring the project company and contractual arrangements to ensure only foreign currency revenue is earned, in order to qualify for and maintain an FCP, can therefore be a key element of an efficient investment strategy, aligning the project’s financing with Barbados’ modernised international business framework.

Tax concessions

The input of local tax and financial advisers is also crucial to achieve tax efficiency and secure hugely beneficial fiscal incentives that may be available under Barbados law. A range of concessions and allowances is potentially accessible to projects in the tourism, hospitality, and related sectors that attract or rely on foreign direct investment.

Depending on the nature and scale of the development, these may include exemptions or reductions in import duties, value added tax and property transfer tax, as well as allowances on withholding taxes payable under Chapter 73 of the Income Tax Act. Incentives may be granted under enabling legislation such as the Tourism Development Act, 2022, Chapter 237A of the Special Development Areas Act, or bespoke arrangements approved by the Ministry of Finance pursuant to application made under the Duties, Taxes, and Other Payments (Exemption) Act, 2023. Properly structured, these concessions can materially improve a project’s profitability. However, their availability often depends on compliance with qualifying criteria and on proactive engagement with the relevant government agencies early in the project cycle. Applicants will usually also be required to present a powerful business case explaining how Barbados stands to benefit from the project. Although this is not contractual drafting “per se”; thorough, persuasive drafting, is required for a successful concessions application.

Integration of legal, technical and financial advisers

Successful projects in Barbados typically reflect early and sustained collaboration among legal, technical and financial advisers. The legal team must manage land acquisition, joint venture documentation, consultant and contractor agreements, structuring, governance, regulatory approvals, and consistent and comprehensive risk management. Construction professionals, such as architects, engineers and project managers, must advise on technical matters relating to the design and construction of the project, as well as co-ordinate drawings, specifications, and submittals. Local tax and financial advisers play a critical role in structuring for tax efficiency and in advising alongside legal counsel on concessions available to qualifying projects. Lastly, the deployment of an integrated document management system such as Procore, together with a skilled document and procurement manager capable of co-ordinating and harmonising the inputs of multiple service providers, is an under-appreciated but essential driver of project success.

Conclusion and outlook

Barbados presents a compelling environment for foreign investment in real estate and hospitality. The combination of political stability, investor-friendly reforms, and enviable international connectivity offers a strong foundation for long-term growth. Success, however, depends on detailed attention to structuring, contractual discipline, governance, regulatory compliance, and concessions strategy with meticulous, highly commercial legal advisers.

Selecting the appropriate entity form, tailoring contracts for reasonable and precise risk allocation with consideration for local conditions, addressing exchange control implications, and embedding strong governance and compliance frameworks are all vital. With prudent structuring and competent local support, overseas investors can participate confidently in Barbados’ rich development opportunities and contribute to a sustainable expansion of the island’s tourism and real estate sectors.