Legal Briefing – June 2015

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: The new Consumer Protection Bill, which is expected to come down harshly on price manipulators, has been passed by the People’s Assembly and is awaiting presidential assent. A source within the government has hinted that the Draft Public-Private Partnerships Law dating back from 2010 should be enacted soon while the new Employment Bill is expected to be presented to the People’s Assembly in March 2016. Other laws that have attracted the attention of the government include the Property Investment Law, the Arbitration Law and the Council of State Administrative Law. As banks are obliged to reschedule loan repayments, taxes and fees remain newsworthy items with the government trying to shore up its revenues while businesses seek exemptions and incentives. As for Syrian car owners who shipped their vehicles abroad, they may soon find out that they will not be allowed to sell them outside Syria.

• The People’s Assembly has passed the Consumer Protection Bill, which now awaits presidential assent before it can come into force. This Bill takes into consideration a number of items from the outgoing Law 2/2008. Among the Bill’s core provisions are important controls on merchants to protect consumers against price increases and monopolistic practices. These measures include deploying inspectors into the markets to monitor vendors. Strict penalties have also been adopted to deter the sale of products, which may be of poor quality or contaminated. Sanctions against violators are expected to include heavy fines and imprisonment.

• There has apparently been a decline in the number of cases alleging anti-competitive and monopolistic practices even though these acts have been predominant during the past four years. The main pieces of legislation that are applicable in these cases- the Competition Law, the Consumer Protection Law (which will shortly be replaced with tougher provisions) and the Economic Criminal Code– lay down strict penalties for any party found to have abused its market position.

• A source within the government has hinted that the Draft Public-Private Partnerships (PPP) Law will be enacted soon after consultations were held to discuss potential drawbacks that have hitherto hindered its adoption. The Draft PPP Law is regarded as an essential piece of legislation that will facilitate the rehabilitation of infrastructure through private investment. The participation of the private sector along with its financial capabilities and expertise in delivering certain public services is recognized as a crucial component of the reconstruction process.

• One piece of legislation that already embraces PPPs to a certain extent is the Electricity Law 32/2010. With this in mind, the General Electricity Generation Company has opened the bidding process to both domestic and foreign investors to establish wind farms on a build-own-operate basis in the provinces of Rural Damascus and Homs.

• The General Commission for Real Estate Development and Investment has announced that amendments to the Property Investment Law 15/2008 will soon be ready. These changes will take into account the reconstruction and rehabilitation demands of the country with a focus on setting up real estate development zones in appropriate areas.

• The Minister of Administrative Development has announced that the committee charged with amending the Employment Law 17/2010 plans to submit its respective bill to the People’s Assembly in March 2016.

• A special committee is currently studying amendments to the Arbitration Law 4/2008 seven years after its enactment. Certain shortcomings have been discovered in the application of this Law. One issue that has been debated is the role of arbitral panels alongside the courts as opposed to supplanting the latter in the dispute resolution process. The committee is seeking to develop this relationship so that both these bodies complement each other. Additionally, attention is being directed towards the arbitration centers in Syria, which have not been able to accumulate much experience since foreign investment was driven outside the country during the past four years.

• The Central Bank and the Syrian Commission on Financial Markets and Securities (SCFMS) are looking to set up a joint committee to study the possibility of including foreign exchange companies on the Damascus Securities Exchange (DSE). Previously, the SCFMS had admitted that the current rule, which requires these types of companies to seek the approval of the Central Bank whenever their shares are traded, is hindering their listing on the DSE.

• The SCFMS has also created a special committee whose objective is to establish a bond market. Furthermore, serious discussions are being held with a view to issuing Islamic bonds on the DSE.

• The SCFMS has passed a regulation that lays down certain procedures, which financial services and brokerage companies must abide by when recruiting employees and instructing them to carry out their duties.

• The Central Bank has published a list of names of individuals who have violated foreign exchange regulations in the course of their business. As a consequence, banks are prohibited from dealing with these designated persons.

• The Central Bank has sent copies of a draft regulation to the public banks that will impose a new schedule for the repayments of loans.

• The recently enacted Law 5/2014 extends Article 4(a) of Law 11/2014, which exempts borrowers of the state-owned Agricultural Cooperative Bank from paying interest payments and fines as long as they pay back their debts by December 31^st of this year. According to the Ministry of Agriculture, this Law seeks to support farmers who have been affected by the drought that hit the agricultural sector from 2013 to 2014.

• The Ministry of Finance requested clarifications from the Ministry of Justice on whether there may be banking provisions in Law 19/2014 that contradict the Civil Procedure Code, which were affecting public banks. These provisions relate to the valuations and sales of movable and immovable properties. In response, the Ministry of Justice has held that the relevant points in the Civil Procedure Code apply to matters that are not included in Law 19/2014.

• The Syrian Insurance Supervisory Commission has written to the Ministry of Finance to emphasize the need to activate the compulsory insurance provisions contained in Regulation 49/2009, which apply to a variety of sectors including industry, construction, health and education.

• With the exception of territories outside its control, such as Deir Ez-Zor, Raqqa, Idleb and others, the Ministry of Finance has announced that it managed to secure the payment of SYP 12.4 billion in taxes in 2014.

• The Deputy Minister of Finance has stressed that the introduction of the billing system cannot take place in isolation from tax reform. Furthermore, he has admitted that there are gaps in the new customs regime that came into effect at the beginning of this year that are plaguing the Ministry of Finance.

• A source at the Directorate of Customs has announced that the authorities have dealt with 600 cases, which have yielded fines of up to SYP 1 billion during the past two months.

• Up to 137 violations of the new Consumption Tax Law have already been recorded in the provinces of Damascus, Rural Damascus and Lattakia.

• The Prime Minister has called for an amendment to real estate taxes, which would take into consideration the real value of properties and not the undervalued figures that were appraised in the past.

• Legislative Decree 30/2015 exempts the import of cattle from customs duties, taxes and other fees as long as they are used for the purposes of raising and breeding. As a result, the price of one imported cow is predicted to reach SYP 50,000. This law was enacted in response to serious pressures on the agricultural sector during the last few years, which affected the livestock industry.

• Right after the conflict in Hama in 1982, Legislative Decree 18/1982 was promulgated. It provided that certain financial obligations could be discarded for the time being as they could not be met by the city’s population as a result of the warlike conditions at the time. Calls have recently been made to formulate a similar law for the inhabitants of Aleppo, who are affected by the current conflict. In this regard, the appeals include the postponement of tax liabilities alongside requests by borrowers to relieve them of interest payments and fines on loans they are unable to repay at the present time.

• Law 6/2015 exempts industrial businesses, craftsmen and artisans based in the industrial cities from paying the renewal fees for their building permits. This Law applies to those parties whose permits expired but want to renew them and to those who are unable to complete the construction of their facilities due to the current unstable conditions.

• Given its status as the safest province in Syria during this period, there have been some noticeable calls on the government from the business community to declare Tartous a free zone to facilitate commerce.

• The Federation of the Syrian Chambers of Commerce has published a report summarizing Syria’s economic decline in a range of sectors. As it concludes, it discloses that a full review of policies, measures and laws is anticipated in the coming period with the aim of encouraging higher economic growth rates. However, it is unlikely that any legal reviews will yield substantial results until the war comes to an end.

• The President of the Council of State has asserted that the draft law that will govern this judicial body intends to make it fit for purpose. In doing so, it will simplify procedures in order to shorten the litigation process. Moreover, it will aim to achieve a balance between the parties to a dispute, which should in theory work to the benefit of any person or entity bringing a case against a public body.

• The Council of State has ruled in favour of the Competition Council in its case against the Ministry of Agriculture. The ruling comes after the Competition Council held a regulation by the Ministry of Agriculture dating back to 2012, which imposed certain restrictions on the import and trading of agricultural pesticides, to be anti-competitive as it would harm local traders and manufacturers.

• Pressure is being piled on the criminal courts in the province of Rural Damascus, which have to process approximately 300 cases a month. This comes as a result of lawsuits being transferred from courts in conflict zones to more safe areas.

• The present legal regime that seeks to combat money laundering and the financing of terrorism is set to undergo a comprehensive review. The relevant law that regulates this area is provided for in Legislative Decree 33/2005.

• Law 4/2015 amends Articles 96 and 180 of the Road Traffic Law 31/2004. Accordingly, owners and drivers will not be held liable if their vehicles are involved in accidents resulting in bodily harm while they are not in motion. This change brings to an end a controversial policy whereby an owner or driver of a parked vehicle for instance was held responsible even if a cyclist or pedestrian struck their automobile and was injured as a result.

• The government is studying proposals that would prohibit individuals from transporting their motor vehicles outside of Syria for the purposes of selling them. As it stands, the current law provided for in Legislative Decree 14/2014 permits owners of registered motor vehicles to transport them outside Syrian territory with the intention of selling them after they fulfill their financial obligations.

• A decision has been taken to remove the ‘Profession’ category from Syrian passports as the Directorate of Immigration and Passports in the Ministry of Interior no longer requires it. Previously, Syrian passport holders had to specify their occupation.

• In its 2013 annual report, the National Media Council (NMC) criticized the government for failing to apply the Media Law to its full extent by not adequately bringing the drama industry under the umbrella of the NMC.

• The Minister of Justice has formed a committee to study amendments to Articles 106 and 110 of the Agricultural Relations Law 56/2004, which touch on contractual issues between parties involved in agricultural businesses.

• The Ministry of Justice has published a draft law concerning the management and investment of funds belonging to orphanages on its website in an effort to gather feedback from interested parties on this subject.

• The Minister of Justice has sent out a memo to judges and lawyers to take the necessary measures that would discourage begging.

• The Council of Ministers has discussed a draft law that would curb attempts by individuals to illegally transmit electricity and encroach on power grids.

• A draft law pertaining to city planning and construction was reviewed by the Council of Ministers as well.

• The Council of Ministers has approved plans to continue exempting imports by the public sector from Iran from fees for an additional six months starting on July 2^nd. A new credit line granted by Iran to Syria is also expected soon.

• The Council of Ministers has also reviewed a bill ratifying the cooperation agreement signed between Syria and Belarus.

• Syria and South Africa are seeking to improve cooperation in the fields of taxation and customs. Both countries have agreed on the need to implement the double taxation treaty they signed back in 2007.