Syrian Law Journal

Legal Briefing – May 2016

by · 04/06/2016

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: As Syria prepares to swear in its new Parliament and government, the plans for constitutional reform look likely to be delayed. In a surprise turnaround, the Central Bank is now permitting exporters to retain their foreign currency earnings until the 1st of September in order to encourage exports and increase liquidity in the foreign exchange markets. A senior official in the Ministry of Internal Trade and Consumer Protection has held the Ministry of Economy and Foreign Trade and particularly the Import Deposit Rules it issued as being responsible for the inflation witnessed in Syria. A new law has suspended the registration of properties in land registries that were closed due to unstable security conditions. Controversy stirs in the health sector as to whether drug prices should be increased by the Ministry of Health to reflect the rising costs of raw materials and the Pharmacists Syndicate has been complaining about its exclusion from the pricing committee. While Syria’s lawyers press their demands during their annual Syrian Bar Conference, the President of the Council of State shares his perspectives on the country’s administrative court.

Parliament/ Government

  • Following parliamentary elections held in April, the Supreme Constitutional Court received 26 appeals against the results but not much evidence was presented to support the claims.
  • President Bashar Al-Assad has issued Decree 127/2016, which confirms the names of the incoming MPs recently elected to the People’s Assembly. He also invited the newly-elected MPs to take the oath of office during the 15 days following the end of the 2012-2016 parliamentary term. In line with Decree 146/2016, President Al-Assad set the 6th of June as the date for the new Parliament to hold its first session. Following the swearing-in of the new MPs, the government of Prime Minister Wael Halqi will function in a caretaker capacity. As is constitutionally required at that point, President Al-Assad must either reappoint Wael Halqi or appoint a new candidate for the Prime Ministership and select a new government.
  • There are signs that the next government will witness widespread change, particularly with regards to the new economic team that will be installed.
  • News has emerged that a Syrian MP (in office before the recent parliamentary elections) physically assaulted a judge and an expert accompanying the judge in Damascus. In response, the judiciary called on Parliament to lift the MP’s parliamentary immunity.

Constitutional Reform

  • The International Syria Support Group has stated that the 1st of August date to agree on a framework for a political process is a goal and not a deadline. The United States and Russia had examined the possibility of setting August as a target for the Syrian government and opposition elements to establish the framework for a political transition in Syria and the preparation of a draft constitution. President Bashar Al-Assad said in March that aiming for August allows a sufficient amount of time to draft a new constitution.
  • President’s Bashar Al-Assad’s office has denied media reports that a foreign-drafted constitution was proposed to Syria while affirming Syrian ownership over the constitutional reform process.

Finance

  • In a surprise turnaround, the Central Bank is now permitting exporters to retain their foreign currency earnings in order to encourage exports and increase liquidity in the foreign exchange markets. Exporters will now be allowed to keep their foreign exchange earnings for transactions carried out until the 1st of September after the deadline was extended by three months from the original date of the 1st of June. Regulation 1397/2014, which was issued by the Prime Minister’s Office around two years ago, allows the Central Bank to require exporters to sell 50% of their foreign currency earnings to any of the authorized banks in Syria. The Central Bank had since resolved to increase this amount to 100% in April 2015, which was in response to the financial strain the economy found itself under at the time. However, the lack of foreign currency liquidity in the markets this year was having a severely detrimental effect on merchants and therefore, the Central Bank suspended its decision on foreign currency earnings. The new measure allows exporters to sell their foreign currency earnings in the market or use them to finance their imports of raw materials needed for manufacturing. Consequently, the decision seeks to increase the supplies of foreign exchange in the market thereby strengthening the value of the Syrian Pound. It also encourages exports and lowers demand for black market transactions.
  • The Central Bank has adopted three main measures to strengthen the purchasing power of the Syrian Pound. They include combating smuggling and the closure of retail outlets that sell smuggled goods, holding merchants responsible for rising prices in the markets to account, and activating the role of relevant public sector entities concerned with market interventions for the purposes of consumer protection.
  • According to the President of the Federation of Syrian Chambers of Commerce, the Ministry of Finance’s decision that prohibits the return of smuggled goods to their owners could lead to extortion by officials in the Customs Directorate.
  • According to the Governor of the Central Bank, the sudden improvement in the value of the Syrian Pound should be reflected positively on the prices of goods in the markets.
  • The Central Bank has adopted new regulations for the sale of foreign currencies to foreign exchange offices and companies.
  • Foreign exchange offices and companies were obliged to purchase US Dollars from the Central Bank in a bid to counter the depreciation of the Syrian Pound. Offices were committed to buy $100,000 and companies were bound to purchase $1,000,000 or else they would face the penalty of being shut down. Following the purchases, both the offices and companies were mandated to sell the foreign currencies immediately to citizens without commissions under penalty of closure.
  • Around five new cases of illegal foreign exchange transactions and money transfers are being investigated on a daily basis in Damascus.
  • The spotlight is on dealers who illegally sell gold according to the US Dollar exchange rate on the black market.
  • The Central Bank is allowing banks to open accounts and accept deposits of foreign currencies for the purposes of personal transfers. Recipients can therefore withdraw money in Syrian Pounds at the price set for transfers by the Central Bank on the date of withdrawal. The measure came at the request of banks and is envisioned to encourage the use of foreign currencies for personal and savings purposes.
  • It has been revealed that a number of debtors are exploiting legal loopholes brought about by the current crisis in Syria to avoid repaying debts. Meanwhile, the public banks are complaining to the Ministry of Justice that the courts are not enforcing loan repayments due to the confusion caused by the new Civil Procedure Code.
  • Around 6,500 industrialists have been banned from leaving Syria by the banking courts for failing to pay back debts.
  • The state-owned Real Estate Bank has revealed that more than SYP 300 million worth of defaulting debts were settled during the first quarter of this year.
  • The Real Estate Bank has denied repossessing houses in Aleppo belonging to defaulting debtors for sale at public auctions. It has stated that it is giving debtors a chance to reschedule their loan repayments in accordance with the law, specifically the Public Banks Loan Repayments Law.
  • The Monetary and Credit Council, the body that governs the Central Bank, passed Regulation 1245 to permit banks to hold a minimum of four board meetings in 2015 instead of the usual six. That Regulation is no longer applicable after 2015 and the Central Bank is evaluating its results to decide whether to maintain the minimum four board meetings rule. Regulation 489/2009 contains the Governance Code for banks and sets a minimum of six board meetings per year. Regulation 1245 is an exception to this rule. By default, banks must hold a minimum of six board meetings this year unless another exception is made.

Taxation

  • The Council of Ministers is looking to continue exempting all Iranian imports supplied to the public sector from customs duties and other fees for another six months.
  • Customs revenues in the first quarter of this year are estimated at SYP 31 billion while the total number of smuggling cases reached 723.
  • The Anti-Smuggling Unit in the Customs Directorate has dealt with 34 cases totaling more than SYP 391 million in the current year so far.
  • In the past year, the Damascus Directorate of Finance, which is linked to the Ministry of Finance, has witnessed tax evasions worth SYP 5.5 billion and revenues of SYP 5 billion derived from consumption taxes.

Commerce

  • A senior official in the Ministry of Internal Trade and Consumer Protection has held the Ministry of Economy and Foreign Trade responsible for the inflation being witnessed in Syria. The official has criticized the Ministry’s decisions, especially the Import Deposit Rules. The official also pointed to the Central Bank’s lack of full commitment to finance the importation of basic goods, which is regarded as a leading factor contributing to inflationary pressures. The Central Bank’s alleged failure to finance imports drove merchants to the black market and consequently distorted prices to make up for the additional costs. Merchants affected by the Import Deposit Rules, particularly the 50% requirement for importing ‘Category A’ basic goods and food items, passed on their losses and additional costs to consumers. The drastic depreciation of the Syrian Pound subsequently created chaos in consumer markets. Furthermore, a proposal has been put forward to the Economic Committee, which is linked to the Council of Ministers, requesting the Central Bank to fix the foreign exchange rate for importing basic goods for a period of six months.
  • The Central Bank has sent directions to the Ministry of Internal Trade and Consumer Protection for the purposes of calculating the prices of imported goods. The Central Bank has asked the Ministry to adhere to the foreign exchange rate set on the date of the customs declaration for financing imports as opposed to the date the import license was granted.
  • New rules from the Ministry of Internal Trade and Consumer Protection that reduce profit margins are stirring opposition from Syria’s merchants.
  • The pricing mechanism put in place by the Ministry of Internal Trade and Consumer Protection is apparently causing problems for merchants and therefore, traders affiliated with the chambers of commerce were seeking to develop a new formula with the Ministry to address shortcomings. It has recently been reported that the Ministry has reached a common understanding with the merchants regarding the pricing mechanisms for goods.
  • Syria is concluding agreements with Algeria, Iran, Iraq and Russia to further open trade routes in an attempt to boost Syrian exports.

Industry

  • In August 2015, the Ministry of Justice tasked a special committee comprised of representatives from its own Ministry, the Ministry of Industry, the Aleppo Chamber of Industry and the Aleppo Chamber of Commerce with looking into cases of looted factories in Aleppo and Idlib provinces to prepare for possible prosecutions. It expanded its scope last October to include the eastern provinces of Deir Ez-Zor, Hassakeh and Raqqa. Furthermore, the Ministry of Justice called on owners of industrial businesses in these provinces to document and inform the committee of the destruction and theft they sustained during the present conflict. Recently, the committee announced its findings and held Turkey responsible for the damages estimated so far at $5.3 billion (US) that were sustained by the businesses and called on it to compensate their owners. The committee further reported that the industrial facilities were illegally transferred to Turkey. It is planning to conduct further investigations of other looted businesses.

Investment

  • The new Investment Bill is expected to be presented to the Council of Ministers soon for deliberations. The bill will seek to unify legislation since the current Law does not include the tourism and real estate development sectors.

Property

  • Legislative Decree 11/2016 has suspended the registration of properties in land registries that were closed due to unstable security conditions.
  • There are increasing instances of the same property being sold to more than one person. There are 150 real estate-related lawsuits in the provinces of Damascus and Rural Damascus per month, half of which relate to fraudulent sales. Numerous lawsuits are arising due to the collapse of law and order in conflict areas around Syria.
  • In light of the new Urban Planning Law, the Council of Ministers has amended its expropriation provisions accordingly.
  • Alternative housing has not yet been secured as required by law for residents in southern Damascus who lived on a property that was expropriated for a new development. The Al-Razi development project was sanctioned by Legislative Decree 66/2012. The law aims to carry out an urban redevelopment project in informal parts of southern Damascus that were the scenes of intense fighting during the current unrest.
  • The state-owned General Housing Establishment is looking to offer real estate units on terms constituting financial leases or leases ending with ownership by the tenant.
  • Legislative Decree 12/2016 grants legal status to the digital version of the Real Estate Gazette.

Public Procurement

  • The Ministry of Industry is setting out a plan to rehabilitate its companies and factories that were affected during the current crisis through public-private partnerships (PPP). The Ministry has offered 21 out of its 100 companies for PPPs though the process appears to be on hold. The original list of 27 potential companies under consideration for PPP investments came out this past March.
  • Reports suggest that the PPP Council, the body entrusted with overseeing the PPP process in Syria in accordance with the PPP Law, will be formed soon. Until then, proposed PPP projects involving the Ministry of Industry will be put on hold.
  • Due to its importance and high costs, the Ministry of Electricity is prepared to partner up with the private sector in renewable energy projects. The Electricity Law invites local and foreign investors to participate in the electricity sector either on their own or in partnership with the public sector. According to the Law, private investors are allowed to generate and distribute electricity to consumers. Moreover, the Law promotes investments in renewable resources.
  • The Ministry of Public Works has announced that a special committee is setting the technical, financial and legal conditions for the recycling of war debris. It is envisioned that contractors will collect and recycle all the debris from the demolished buildings, which the state may subsequently purchase from them.

Health

  • Pharmaceutical companies have called for increases in drug prices to reflect the costs of raw materials, increase competitiveness and promote more supplies in the market. Apart from increases to compensate for the cost of raw materials, pharmacists do not support raising the prices of medicines. Furthermore, there were reports that the government is studying a request submitted by pharmaceutical companies to raise drug prices in line with the appreciation of the US Dollar. However, there is now confusion and rumors surrounding this story. For its part, the Ministry of Health has denied that it is looking into a study to raise drug prices.
  • The Pharmacists Syndicate has been complaining about its exclusion by the Ministry of Health from the committee charged with overseeing the pricing of medicines. The Syndicate has been arguing that its exclusion contravenes Law 9/1990, which requires its participation in such a committee.
  • The Ministry of Health has threatened to close down pharmaceutical distributors who deliberately refuse to supply the markets with medicines.
  • The smuggling of medicines and illicit activities in the pharmaceutical industry are supposedly now on the government’s radar after they were discussed at a meeting of the Council of Ministers.
  • The Ministries of Health of both Syria and Belarus have signed a health cooperation agreement during the 69th session of the World Health Assembly in Geneva.
  • The Council of Ministers has approved an amendment to current legislation to encourage medical students to keep pace with global education standards.
  • The Council of Ministers has approved a bill amending certain legal provisions that govern the veterinary profession.

Tourism

  • The Governor of Tartous has called for a law that puts an end to the phenomenon of stalled touristic projects found in prime locations in the province.
  • There have been reports of 275 violations committed by touristic facilities in the first four months of this year while 15 establishments were shut down.

Transport

  • The Ministry of Transport has suspended the private airline company Cham Wings for 30 days for violating circulars passed by the Civil Aviation Authority. Cham Wings was found to have exceeded its payload capacity.

Employment

  • The Ministry of Justice has clarified that the Martyrs’ Families Employment Law applies to families after the Law came into force, not before. The Law allocates 50% of job vacancies in the public sector to the families of martyrs. The Ministry of Labour has proposed to the Council of Ministers to include the brothers and sisters of martyrs for the purposes of implementing this Law.
  • The Ministry of Labour is preparing a plan to curb child labour.

Legal Profession

  • During the annual Syrian Bar Conference that took place in May, it was reported that the most pressing demands by Syria’s lawyers included the passage of the new law governing the legal profession and better safeguards for their retirement. Their demands touched on increasing monthly pension payments to lawyers by SYP 5,000 so that they become SYP 30,000 per month starting from next year, better income tax collection standards for lawyers and strict oversight over the transfer of real estate ownership to prevent fraudulent acts. They also sought to give lawyers who did not leave Syria an opportunity to submit their bar license renewal applications.
  • Following the annual Syrian Bar Conference, the President of the Syrian Bar Association announced that the minimum monthly pension demand by the lawyers will be implemented early next year. It is noteworthy that the pension for a lawyer can reach SYP 45,000 per month in certain cases depending on his or her level of experience. The President admitted that the Ministry of Finance must develop standards and a clear mechanism for collecting income tax from lawyers. The President also noted that 8,000 lawyers out of 28,000 were struck off the roll for violating laws and regulations, such as for leaving Syria without obtaining permission while others engaged in activities deemed harmful to the state.
  • The Ministry of Justice has prepared a bill establishing the Civil Prosecutor’s Office with wide powers to replace the Legal Affairs Department, the body entrusted with managing the state’s legal cases. The Legal Affairs Department was responsible for more than 300,000 lawsuits in all of Syria last year.

Judiciary

  • The Ministry of Justice has established another first-instance commercial court in Damascus along with three first-instance civil courts.
  • Up to 4,000 juvenile offenders currently have cases against them pending before the courts in Syria.
  • The Council of Ministers has approved a bill setting out fees for the automation of certain powers of attorney as part of the e-government initiative in Syria.

Administrative Law

  • The President of the Council of State has discussed in an interview the new Council of State Administrative Bill to replace the current 1959 Law. According to him, a special committee is holding intensive meetings to complete the bill as soon as possible. After it is prepared, it will be submitted to the Council of Ministers for consultations and then to the People’s Assembly.
  • According to the President, the aim of the bill is to facilitate the litigation process between the parties to a dispute so that the Council of State can resolve many lawsuits in shorter periods of time. During the interview, it was revealed that the number of counselors, or judges in the Council of State, does not exceed 58 whereas more than 300 are needed to fill the shortfall. Therefore, the current number of counselors is very small compared to the number of claims pending before the Council of State. Meanwhile, the present circumstances in the country produced a large number of disputes for the Council of State to adjudicate. In spite of the situation, there were thousands of lawsuits that were resolved during the past few years. Furthermore, hundreds of advisory opinions were also issued to the various public authorities upon their request. It is worth recalling that the Council of State is comprised of the Judicial Division and the Advisory Division.
  • The President reminded public sector employees that they are allowed to file lawsuits before the Council of State for mistreatment in the workplace, such as in the event they lose their jobs due to justified absences. After all, a number of employees were prevented from going to work due to clashes throughout the country. He further reiterated that the Council of State is open to all citizens who feel that they have been treated unfairly by the public administration.
  • The President also noted that the Council of State has heard many cases between contractors and public authorities and on many occasions, it has ruled in favour of the former. The lawsuits in those instances arose from disputes surrounding the execution of the contracts, price rises, termination of contracts and so forth. In addition, there are also many lawsuits brought by the public authorities against contractors. In any event, the President declared that the Council of State stands equidistant from all the parties without compromising the interests of citizens.
  • According to the President, the appointment of counselors is done by conducting competitions. Counselors appointed through competitions will usually gain experience for a period of time before rendering judgments. While there is no Supreme Judicial Institute to train counselors like there is one for ordinary judges in the Ministry of Justice, the idea of creating such a body to train judges specialized in administrative law has not been ruled out.
  • Should a counselor be accused of wrongdoing, the President explained that he would be referred to the Disciplinary Committee, which is presided over by the President of the Council of State and also consists of the four longest-serving counselors. Counselors enjoy the same immunity conferred on judges falling under the authority of the Ministry of Justice.
  • The President also clarified that there is no procedural law governing the Council of State but rather, it applies the Civil Procedure Code. The Code is applied in accordance with the nature of the administrative proceedings. In the future, the idea of developing a procedural law to regulate the work of the Council of State might be put forward. Any such law would have to be commensurate with the work and nature of the administrative courts.
  • The President also pointed out that the Council of State is an independent administrative judicial body attached to the Council of Ministers only in an administrative capacity. As an administrative court, it does not intervene in the work of the ordinary courts or the judgments they render.

Family Law

  • The Sharia Court has discovered cases of false death claims made by persons seeking to inherit assets from their relatives who are presumed to be deceased but subsequently turn up alive.
  • Due to the complications brought about by the war, including migration, the Sharia Court has acknowledged that half of marital contracts in Damascus are concluded via a proxy.

Culture

  • By virtue of Legislative Decree 10/2016, Syria has acceded to the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects. The UNIDROIT Convention complements the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property and further aims to strengthen the fight against the illegal trafficking of cultural property. Throughout the current conflict, Syria has been a victim of the illegal trafficking of cultural property, such as in Palmyra and many other places.

Water

  • According to the Minister of Water Resources, the Ministry has completed a draft law that calls on farmers to form water users associations. The Water Bill seeks to activate collective irrigation mechanisms and optimize water resources to reduce wastage and achieve sustainability.

Environment

  • The new Forestry Bill is expected to harshly punish offenders who cause harm to forests throughout Syria as the government is placing more emphasis on preserving them.

International Sanctions

  • The European Union has extended its sanctions against Syria for an additional year.