Syrian Law Journal

Legal Briefing – November 2015

by · 04/12/2015

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: The new Landlord and Tenant Law has been enacted and it seeks to alleviate the pressures that have befallen the property leasing sector during the span of the current conflict. A new law has been passed that exempts property owners from paying building permit fees if they are intending to carry out repairs on their properties to fix damages sustained as a result of the conflict in the country. The national budget for 2016 estimated at SYP 1.98 trillion has been approved. The Public Procurement Law is back in the headlines as amendments to this piece of legislation are anticipated to take into consideration the prospects for reconstruction. Finally, the Syrian Commission on Financial Markets and Securities, the capital markets authority, has announced that it intends to hold companies listed on the Damascus Securities Exchange to account where majority shareholders take decisions at the expense of small shareholders.

Property

  • The new Landlord and Tenant Law 20/2015 has been enacted and it seeks to alleviate the pressures that have befallen the property leasing sector during the span of the current conflict. The new Law replaces the previous Law 6/2001. The Law seeks to put an end to manipulations of rents and other problems that have arisen between landlords and tenants. Accordingly, leases subject to the previous laws- Legislative Decree 111/1952 and Law 6/2001- remain governed by them. The favourable provisions towards landlords that were contained in the preceding Law 6/2001 are more or less retained in the new Law. The Law also maintains the principle that the terms of leases shall remain subject to the will of the contracting parties. The parties are still permitted to conclude fixed-term leases and set rental prices as they see fit.
  • While landlords and tenants remain free to determine the conditions for rescission of leases, further restrictions have been inserted into the new Landlord and Tenant Law that seek to protect tenants from undue pressures to vacate leased properties. In this respect, the Law expands on the conditions that give rise to rescission of leases. It is also explicitly provided that one tenant’s breach of the lease contract does not extend to other co-tenants unless the latter were aware of the breach. In addition, provisions have been preserved that offer a certain degree of protection to public sector employees and military personnel against the possibility of eviction.
  • It is worth pointing out that the reference in Law 6/2001 concerned with the eviction of tenants under contracts governed by Legislative Decree 111/1952 by paying them 40% of the value of the leased property has been omitted from the new Landlord and Tenant Law.
  • One notable portion of the new Landlord and Tenant Law deals with the specific rule that political parties and public entities can be evicted from private properties starting on January 1, 2018. In order to do so, landlords must pay these tenants 40% of the value of the leased premises. The previous Law 6/2001 was amended by Law 32/2011, which at the time contained this exact provision. While Law 32/2011 initially envisioned January 1, 2015 as the starting date for implementation, it was subsequently delayed for three years.
  • New procedures relating to the registration and assignment of leases have also been detailed in the new Landlord and Tenant Law. The registration of leases at the relevant municipal or administrative bodies can now be carried out by owners holding at least 75% of the shares in the leased property. Another area that is regulated is the assignment of leases of commercial but not residential properties. In the event of unauthorized assignments, the tenant must pay the landlord an amount equaling 10% of the property value in order for the tenant to transfer the lease to a third party and avoid having the contract rescinded.
  • Despite the changes introduced in the new Landlord and Tenant Law, critics have described it as unhelpful and falling short of expectations.
  • Law 21/2015 exempts property owners from paying building permit fees if they are intending to carry out repairs on their properties to fix damages sustained as a result of the conflict in the country.
  • The Prime Minister has granted public access to private property in the province of Tartous for the purpose of installing public utilities such as electricity. The property in question must not be subject to planning.
  • A real estate expert has warned that the Property Investment Law is being amended with a view to benefit certain real estate companies during the reconstruction period.
  • The People’s Assembly has initiated discussions on the Draft Urban Planning Law, which takes into consideration the reconstruction period among other factors.

Finance

  • Law 22/2015 enacts the state’s national budget for 2016 estimated at SYP 1.98 trillion.
  • The government has approved a measure that grants Aleppo City Council SYP 500 million to cover its expenses.
  • The government has called on the public sector to deal only in Syrian Pounds when conducting its transactions. To this effect, it cited the provisions of the Currency Transaction Law, which criminalizes the sale of goods and services priced in any currency other than the Syrian Pound in order to increase demand for the local currency.
  • The Minister of Finance has rejected proposals by some MPs in the People’s Assembly to pay a part of public sector salaries in US Dollars because it would be contrary to the principle of national sovereignty as well as the law.
  • Frustration mounts as the issuance of a new law to further ensure that domestic transactions are carried out in Syrian Pounds faces several delays. The current law on this subject is the Currency Transaction Law.
  • The Central Bank has announced that it will not discriminate when approving import finance applications. Generally, the Central Bank has been perceived as resistant to grant its consent to these requests as it seeks to lessen pressure on the Syrian Pound during foreign exchange transactions.
  • The Monetary and Credit Council, the body entrusted with governing the Central Bank, has permitted public banks to resume providing loans to the private sector.
  • Public banks are working alongside the Central Bank and the Ministry of Justice to put in place a legal mechanism to address the issue of non-performing loans.
  • The Minister of Finance has called on public bodies to settle the advance payments they received by the end of this year in order to avoid the consequences laid down in the Public Funds Collection Law.
  • The authorities have uncovered a number of entities illegally transferring monetary funds into Syria in violation of the respective laws and regulations.

Taxation

  • An official in the Ministry of Finance has questioned the feasibility of passing both the Draft Billing Law and the property transfer fee amendments when measured against the current laws already in place. Nevertheless, the Ministry of Finance has already stated that the Draft Billing Law will complement the provisions of the new Consumer Protection Law. If enacted, the Draft Billing Law will introduce the billing system into Syria, which is anticipated to have a positive effect on the economy and the operation of the tax system. It is also envisioned that the billing system will help curb any fraudulent activity and increase transparency especially when it concerns customs documents. As for the property transfer fees provided for in Law 429/1948, the latest news is that the final touches are being applied to the relevant amendments after talks were held between the General Commission for Taxes and Fees and the Ministry of Local Administration.
  • The Ministry of Finance has reiterated its intention to pursue touristic businesses that evade their tax liabilities by imposing penalties on them.
  • The Minister of Finance has accused restaurant owners of evading their tax liabilities for the past 10 years.
  • The number of customs cases settled in accordance with the Customs Offenders Exemption Law is limited to 339 since the Law was enacted in July of this year.

Public Procurement

  • The Public Procurement Law is back in the headlines. Amendments to this piece of legislation have been in the works for years but nothing has been passed yet. However, the changes that are anticipated will take into consideration the prospects for reconstruction. One of the concerns with the current Law is that it may not be strong enough to deter corruption between the public and private sectors. The issue of annexes to public procurement contracts is regarded as one of the main drawbacks to the Law and is in need of reform. Price fluctuations are also expected to be addressed in the ongoing review since this has been considered a major problem for the last few years during the conflict. The subject of price breaks has also been brought up as a shortcoming since it is not explicitly addressed in the Law.

Commerce

  • The Minister of Justice has reiterated that in line with the decisions taken a few months back, the following transactions require the prior approval of the security services: powers of attorney concluded in Syria or abroad for the transfer of property ownership; powers of attorney concluded in Syria or abroad for the incorporation of companies and for becoming or ceasing to be a shareholder; powers of attorney for the establishment of branches of foreign companies in Syria; and commercial agencies that require attestation. All these obligations are in addition to the requirement to obtain security clearances for all powers of attorney concluded abroad for the purposes of transactions in Syria.
  • The Damascus branch of the Consumer Protection Association has admitted that the new Consumer Protection Law did not positively affect the markets or the prices of goods.
  • The Damascus Chamber of Commerce (DCC) has put forward proposals and is trying to take measures that would prevent the private sector from importing or purchasing goods of Turkish origin. At the same time, the DCC has clarified that it does not have the authority to disallow imports from Turkey but rather only has the power to influence businesses through its recommendations.
  • The Federation of Syrian Chambers of Industry is calling for the establishment of a Turkey Boycott Office, which would be similar in nature to the Israel Boycott Office to prevent trading in Turkish goods.
  • The Ministry of Economy and Foreign Trade has been working alongside the Central Bank in order to develop new policies concerning the approval of import and export licenses.
  • New policies could include classifying imports into three categories with different deposit requirements based on the priority of the goods in question.
  • The Competition Protection and Anti-Monopoly Commission (CPAMC) is encouraging the adoption of free market economic policies but it accepts the need for price controls on certain necessity goods in an effort to control the significant inflation that has plagued Syria since the start of the conflict.
  • The CPAMC has also called for a new industrial policy consistent with the Competition Law that would promote new technology and products.
  • Following a number of unlicensed transactions, the sale and purchase of a certain type of gold material is now subject to a special license.

Companies

  • The Syrian Commission on Financial Markets and Securities, the capital markets authority, has announced that it intends to hold companies listed on the Damascus Securities Exchange (DSE) to account where majority shareholders take decisions at the expense of small shareholders.
  • The DSE has announced that it is ready to list any company on the stock market that meets the conditions required of public joint stock companies.

Tourism

  • The Ministry of Tourism has issued Regulation 1660/2015 setting prices for restaurants under its jurisdiction.

Transport

  • Law 18/2015 increases the age of retirement of pilots employed by Syrian Arab Airlines from 60 years to 65 years. The Law amends Article 200 of Legislative Decree 35/1979, which provides for the age of retirement.

Education

  • The Ministry of Education has denied that any investments in the education sector have been made pursuant to the Investment Law. Rather, they have been carried out in accordance with the Private Education Law.

Employment

  • The Minister of Labour has reported that the relevant amendments to the Public Employment Law are almost complete and should be reviewed and decided upon by the government by early December. The Minister of Labour added that the amendments will solve a number of problems dating back to 2004.
  • The amendments to the Social Security Law will include a provision that permits the General Establishment for Social Security to invest freely in various sectors.

Judiciary

  • The Ministry of Justice is continuing with efforts to introduce automation into the administrative workings of the judiciary.
  • The Third Judicial Conference kicked off in Damascus at the end of November. During the Conference, the Prime Minister spoke about judicial reform as an urgent matter and pointed towards the recent automation of the administrative workings of the judiciary as part of that effort. The Minister of Justice stated that one of its main objectives is to shorten the duration of the litigation process and build trust in the judiciary. On the subject of legislative reform, the Prime Minister announced that the government is in the process of updating current laws. In fact, a number of laws were discussed during the Conference including the Civil Procedure Code, the Evidence Law and the new Landlord and Tenant Law. The Prime Minister also clarified that the government is keen on restoring damaged judicial facilities throughout the country. Moreover, he reported that new palaces of justice were to be expected in Damascus and Lattakia while the one in Tartous would undergo an expansion.

Lawyers

  • After a proposal to dissolve it, the Prime Minister has decided to retain the body entrusted with managing the state’s legal cases. There are currently 350,000 public sector cases that are managed by the state’s competent legal department. Dissolving it would mean referring cases to private sector lawyers who charge higher fees than the state’s lawyers, which would be a drain on the Public Treasury. Despite the drawbacks inherent in this legal department, the law governing it is under review with the aim of safeguarding the state’s funds.

Family Law

  • There are calls to amend Article 40 of the Personal Status Law, which requires certain documents to be presented to the competent authorities before a marriage can be declared as valid. Among the documents currently requested are couples’ military and health certificates.

Criminal Law

  • In light of current circumstances, criminal law provisions are to be scrutinized to bring them more in line with modern times.
  • The Ministry of Justice has stated that more data will be used to determine suspects in criminal cases so as to avoid detaining persons on the basis of similar names. Throughout the ongoing conflict, innocent persons have been detained because their names are similar to those being pursued by the authorities. Based on what the Ministry of Justice explained, it should be expected that other additional information will have to be assessed before a decision to detain an individual is made.