Legal Briefing – February 2018

Property

• Prime Minister Imad Khamis visited the Syria Towers project by Souria Holding and the Mövenpick Hotel project in downtown Damascus. The Syria Towers project located in the Baramkeh district of Damascus has been altered from two towers to five towers. Each tower will consist of 40 floors, with a total area of approximately 260,000 square meters and a floor area of 140,000 square meters. The project includes a commercial center, a hotel, furnished hotel apartments, offices and so forth. The Mövenpick Hotel project is located in the Kafer Sousseh district of the capital and is built on an area of 10,250 square meters. The contract was signed according to a build-operate-transfer model between the Governorate of Damascus and a private investor in 2007. In 2008, the main structure of the hotel was completed. The government is trying to get the private investors to restart operations. The Prime Minister said that the government is prioritizing its objective in taking immediate steps to remove obstacles and restart halted and stalled projects in all the provinces throughout Syria. He was informed by the investors that the projects are to be restarted in the foreseeable future.
• The Council of Ministers tasked a number of ministries with following up on the government’s plan to re-launch all stalled and halted private sector investment projects in all the provinces, and to provide facilities to encourage investors to activate these projects.
• Damascus Cham Holding signed a joint venture with a new investor to develop three plots in Marota City worth approximately $17.7 million (US). Damascus Cham Holding will own 49% of the company while the private investor will hold the remaining 51%.
• Syrian subsidiary Sendos Investment and Development is expected to re-launch its real estate development project ‘The Address’ in the upscale Yaafour district of Rural Damascus opposite the planned development by Majid Al-Futtaim this April. Completion of the project is foreseen for April 2020.
• 13 out of 46 real estate development companies have had their licenses revoked by the General Commission for Real Estate Development and Investment, the sector regulator, for failure to honour agreed specifications and non-compliance with the provisions of the Real Estate Investment Law.
• Potential amendments to the Real Estate Investment Law will focus on addressing the issue of informal housing across Syria.
• The eastern suburbs of Damascus around Jaramana will be subjected to new zoning and planning ordinances.
• Real estate buyers in Syria, especially in the countryside, are being urged to conduct thorough legal due diligence on the properties to avoid situations where forged powers of attorney are being used to illegally sell properties by fraudsters pretending to have such authority.
• President Bashar Al-Assad ratified Law 3/2018, which provides for the removal of rubble and debris from buildings that were damaged, destroyed or subject to demolition. The Law is undoubtedly a response to the destruction of buildings caused by the ongoing conflict.

Tourism

• The Ministry of Tourism is preparing an investment strategy for the coastal regions of Syria through plans that could potentially involve private sector participation, holding companies and the like.

Energy

• The Syrian Investment Authority licensed a solar power project being undertaken by a leading investor.
• Syrian-Russian talks focused on bolstering commercial cooperation in projects in the fields of oil, gas and mineral resources, including geology, exploration, extraction, refining, rehabilitation, the development of phosphate mines and so forth. Syria and Russia signed an agreement in Moscow to cooperate in the energy sector to implement projects related to oil and gas fields, phosphate mines and others. The two countries are also working to undertake electricity projects together.

Reconstruction

• The Syrian-Russian Businessmen Forum opened in Moscow with the participation of 281 Russian businessmen and 120 Syrian businessmen alongside representatives of several Syrian governmental entities concerned with economic matters.
• A newspaper report stated that the Regional Director of the Arab Union for Iron and Steel announced a four-way Russian-Chinese-Saudi-Egyptian alliance for the reconstruction of Syria in light of the political rapprochements taking place between the countries.
• Russian company Stroy Export incorporated ‘Stroy Export Middle East’ in Damascus along with Lebanese and Syrian partners to operate in the construction sector. The Russian company Stroy Export signed a memorandum of understanding with the Syrian Ministry of Public Works and Housing last month to cooperate on the implementation of construction and residential projects in Syria.
• A group of Egyptian companies were reported to be heading to Syria in February to assess the prospects of various economic sectors as they prepare for the reconstruction phase. They planned to look for export markets in Syria and evaluate demand for construction activities. However, they postponed their trip due to the security situation in Damascus, which recently became tense.
• The Public Procurement Law is undergoing a review that could witness new amendments passed to address the reconstruction phase. At the same time, the proposed changes seek to curb the various instances of corrupt activity when awarding public contracts such as by resorting to automating the system.

Finance

• Damascus Cham Holding and Al-Baraka Bank are teaming up with other banks in Syria to establish a real estate financing company. The new company is expected to finance the construction of real estate developments in newly zones areas such as Marota City in Damascus.
• The Governor of the Central Bank of Lebanon refused a request by the United States to shut down the Syrian Lebanese Commercial Bank, stating that it did not violate any Lebanese laws. The bank is a subsidiary of the Syrian state-owned Commercial Bank of Syria and was sanctioned by the United States in 2011.
• An electronic program for exchanging foreign currencies and transferring remittances is set to take effect.
• President Bashar Al-Assad appointed a new director to head up the Central Financial Supervisory Agency.
• Attachment orders will soon be executed by electronic means. The initiative is being undertaken by both the Ministry of Justice and the Ministry of Finance.
• Within the past two years, the Ministry of Finance has imposed attachment orders against assets owned by businessmen worth SYP 13 billion to the benefit of 86 governmental entities due to allegations of abuses of the law and corrupt activity.

Taxation

• As the government pushes through a new real estate sales tax law, the Ministry of Finance tasked special committees with valuing real estate prices throughout the Syrian provinces. The government wants to take control of this matter to prevent reliance on property speculators. While the government is seeking to bring valuations up to actual market rates, it does not want traders and real estate speculators to determine the prices on their own. Committees throughout the provinces have determined the relevant price per square meter in various regions.
• The Ministry of Justice has instructed the courts and judicial departments to forward all lease and investment contracts to the relevant Directorates of Finance in the provinces before legalizing the agreements in order to collect the required tax as per the Income Tax Law.
• Syria and Lebanon are to push forward and activate tax and customs agreements in an effort to prevent double taxation among taxpayers.

Corporate

• Cham Holding announced that the shareholdings of three of its shareholders amounting to 3,090,000 shares would be sold by public auction due to their failure to pay up the fourth installment of their capital requirements. The auction was marked for February 28th at the offices of Amrit Tourism Investment Company under the supervision of the Civil Enforcement Department in Rural Damascus. The Amrit project in Tartous is being undertaken by Cham Holding. There are around 70 shareholders who own Cham Holding and a number of them have been outside Syria for years. Cham Holding launched a list of 16 projects in various sectors worth $1.3 billion (US) after it was founded in December 2006 with a capital of SYP 18.025 billion.
• A leading Syrian businessman in the pharmaceutical sector has joined up with Lebanese investors and incorporated a private joint stock company with a capital of SYP 100 million to invest in various sectors of the Syrian economy.

Lawyers

• The Bar Association disbarred 11 lawyers for allegedly carrying fake licenses to practise law.

Judiciary

• The new Director of the Judicial Inspectorate, the body which is tasked with investigating complaints against judges, reminded citizens that such complaints do not lead to an overruling of a lawsuit. The General Assembly of the Court of Cassation, the highest court in the land, hears complaints against judges and can remit a lawsuit back to the court system to rule again on the case.
• The Council of Ministers deliberated on a bill that would establish a judiciary specialized in adjudicating cybercrime cases.
• It was alleged in a newspaper that under the instructions of President Bashar Al-Assad, any citizen who is believed to have taken stances against the state will no longer be subjected to interrogations by the security services but rather to a hearing before the civil courts. It was further stated that President Al-Assad had apparently also appointed a committee of nine reputable judges known for their transparency to revamp the court system and name 2,700 judges throughout the state-controlled regions of Syria, without the intervention of the security forces, to hear cases. The experience of the nine judges was said to date back to the years of President Hafez Al-Assad’s tenure. They were expected to hold corrupt judges to account. The latest initiative was slated to take effect on February 15th. It remains to be seen whether it will mark a true shift away from the situation where there is alleged interference in the judiciary by the security services. Such a rationale would presumably be to make the judiciary independent of the actions of the security services.

Administration

• President Bashar Al-Assad ratified Law 2/2018, which sets the new consular fees for services outside Syria.
• The Council of Ministers discussed a bill on defining the duties and functions of the Ministry of Internal Trade and Consumer Protection.

Environment

• The People’s Assembly passed the new Forestry Bill with strict penalties for anyone found to have deliberately started wildfires.

Families

• The Council of Ministers along with the Ministry of Justice and the Ministry of Religious Endowments are studying the issue of customary marriages performed by sheikhs and the detrimental effects they have on women’s and children’s rights because they are not registered with the Sharia Courts.

Criminal Law

• The Ministry of Justice prepared an amendment to Article 15(d) of the Economic Criminal Code provided for in Law 3/2013 that aims to revoke the option for corrupt officials to avoid prosecution if they confess to their crimes before the case is referred to the courts. The People’s Assembly subsequently approved the amendment. The current provision as it stands presents corrupt officials with an opportunity to take their chances and abuse the system while hanging on to the possibility of immunity if they are caught as long as it is before they appear in court. Following the passage of the Economic Criminal Code, economic criminal courts were established in a move to strengthen a judicial specialization in this area of the law.