Legal Briefing- September 4, 2015

Welcome to our latest legal briefing covering the news of the past month- here is a taste of what is in store: A new controversial regulation has been passed requiring property owners to seek clearance from the security services before proceeding to sell any of their real estate assets. Employers who fail to register their employees with the General Establishment for Social Security will be fined SYP 20,000 for every unregistered employee. The government has finally agreed to terminate contracts signed with private sector contractors following requests by the latter who sustained financial losses as a result of significant inflation. Businessmen on the other hand have been voicing their concerns to the government over the tough restrictions and harsh penalties stipulated in the new Consumer Protection Law. Meanwhile, an inquiry into the administrative dealings of the city of Tartous has recommended that the relevant local officials including the Mayor be referred to the judiciary on the grounds of misuse of public office.

Property

  • A new controversial regulation has been passed requiring property owners to seek clearance from the security services before proceeding to sell any of their real estate assets.
  • The provisions in Law 429/1948 regulating property transfer fees are currently the subject of an ongoing review.
  • The Minister of Finance in his capacity as Chairman of the Mortgage Finance Supervisory Commission (MFSC) has issued a regulation laying down procedures for registering and licensing real estate appraisers in accordance with the Property Appraisal Law. This Law introduces conditions for any person or company intending to undertake work in the property appraisal business, which falls under the jurisdiction of the MFSC. Foreign participation in Syrian companies involved in these activities is permitted but only up to a 49% cap.
  • A new real estate company ‘Emessa’ has been incorporated with a capital of SYP 50 million pursuant to the provisions of the Property Investment Law.
  • Legislative Decree 66/2012 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. To meet this objective, the government has recently allocated SYP 20 billion to cover infrastructure costs and compensation payments to residents.
  • The Attorney-General of Aleppo has confirmed that hundreds of property title deed forgery cases have been adjudicated in the last three months.

Employment

  • Employers who fail to register their employees with the General Establishment for Social Security in accordance with the Social Security Law will be fined SYP 20,000 for every unregistered employee.
  • The Ministry of Labour has announced that the amendments to the Employment Law are expected to be completed before the end of this year.
  • According to the Ministry of Labour, the legal revisions covering public sector employees (see the Public Employment Law) are intended to further guarantee their rights and increase their salaries.

Public Procurement

  • The government has finally agreed to terminate contracts signed with private sector contractors. The move comes in response to requests by the latter who sustained financial losses as a result of significant inflation since the current crisis erupted. During the annual general meeting of the Damascus branch of the Construction Contractors Syndicate earlier this year, participants called for the termination of contracts they concluded with public bodies for projects they are unable to complete due to the unrest affecting the country.
  • On other matters, the Council of Ministers has extended the duration of contracts signed with ministries and public bodies for a further six months.
  • The government has decided that the relevant public sector entities can now contract the services of foreign engineering consultancies.
  • The Competition Protection and Anti-Monopoly Commission (CPAMC) has lamented the lack of cooperation by some governmental bodies when it concerns cases relating to bids and tenders.
  • The Competition Council, the executive organ of the CPAMC, has dismissed speculation that the CPAMC might be subordinated under the jurisdiction of the Ministry of Economy and Foreign Trade (MEFT). The CPAMC is currently linked to the Prime Minister’s Office and falls under its authority. If it were to be transferred to the MEFT, the Competition Council believes that such a move could compromise its independence. Given its recent complaints that some governmental bodies are not cooperating with it in cases relating to bids and tenders, the Competition Council has asserted that it needs to remain equidistant from public entities, including the MEFT, in order to make impartial decisions in matters that come before it.
  • The Council of Ministers is preparing to push through the Draft Public-Private Partnerships (PPP) Law dating back from 2010 by giving it its approval.
  • The Ministry of Electricity has met with energy companies from China, Ukraine, Norway and Austria in order to entice them to invest in power plants. The current Electricity Law encourages public-private partnerships in this sector to increase energy supplies in the country. Before the crisis, Syria’s energy needs amounted to 9,000 megawatts while only between 1,500 and 2,500 megawatts of electricity are produced today according to the Ministry of Electricity.

Commerce

  • The Executive Regulations implementing the new Consumer Protection Law await the signature of the new Minister of Internal Trade and Consumer Protection before taking effect.
  • The Ministry of Industry has observed that some concerns held by industrialists with regards to the Consumer Protection Law relate to its penalties provisions. Meanwhile, the Damascus Chamber of Commerce (DCC) has been engaged in in-depth discussions over the new Law with the Ministry of Internal Trade and Consumer Protection, particularly the effects of its penalties provisions. Among the other issues of concern that came up, merchants have touched on the provisions relating to pricing, quality control, guarantees, invoicing and imports.
  • News headlines reporting infringements of the Consumer Protection Law have recorded up to 1,500 violations already since its enactment.
  • The Ministry of Justice has formed a committee to discuss means of preventing illegal market abuses perpetrated by merchants when selling goods to consumers.
  • The DCC has issued new clarifications pertaining to customs clearance for the benefit of traders. In this respect, the Customs Directorate has reached an agreement with the DCC to facilitate the clearance of imported goods.
  • The Customs Directorate has issued a regulation refusing to accept any customs declarations from merchants unless they are accompanied by commercial registration certificates, including those confirming membership in the Chambers of Commerce or Industry. Moreover, the Customs Directorate is requiring traders to verify the documents necessary for the importation of goods.
  • Transit companies are complaining following the Customs Directorate’s decision to raise their financial guarantees to SYP 15 million with an additional SYP 3 million for each of their branches.
  • The Ministry of Economy and Foreign Trade is calling for a list to be prepared periodically, which contains the types of goods for which import licenses will be granted.
  • The General Establishment for Free Zones has announced that it is working to expedite the enactment of the Draft Free Zones Law to replace the current law dating back to 1971.
  • 15 limited liability companies were incorporated in July of this year in accordance with the Companies Law. The total capital of all these companies exceeds SYP 71.2 million.
  • The head of the Syrian-Armenian Business Council Leon Zaki has called on Syria to join the Shanghai Cooperation Organisation (SCO). The SCO had initially welcomed Syria’s request to join it back in June. The SCO is an intergovernmental international organization promoting closer ties between China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan with other candidate countries applying to join.

Finance

  • The Syrian Commission on Financial Markets and Securities (SCFMS), the capital markets authority in the country, has produced new corporate governance rules with a specific focus on enhancing corporate social responsibility.
  • The Ministry of Justice is seeking the participation of the SCFMS in lawsuits that involve parties it is responsible for regulating.
  • Using incentives, the Central Bank is encouraging exporters to sell their foreign currency earnings to banks. The Central Bank currently requires exporters to sell all of their earnings to the banks, which is testament to the financial strain the economy finds itself under at the present time.
  • The Central Bank and the General Commission for Taxes and Fees are cooperating together to crack down on purchasers of foreign exchange who dishonestly obtain preferential rates to import goods but subsequently fail to do so.
  • Reports indicate that laws rescheduling the repayment of debts by borrowers to public banks have not produced the desired results in a significant number of cases.
  • Public banks are calling on the government to contract the services of specialized lawyers in order to assist the banks in settling the debts owed to them.
  • The current perception on banking courts, which have been in operation for nearly a year, is that they focus mainly on imposing travel bans in disputes that come before them and have a tendency to overlook other alternative measures provided to them in the Banking Courts Law.
  • After reviewing more than 86,000 cases, the Central Agency for Financial Supervision has reported 25 types of violations that have been committed by public bodies when applying laws and regulations.

Insurance

  • The Ministry of Finance has initiated deliberations on a new law for the insurance sector that would consolidate all legislation in this field into one comprehensive document.

Taxation

  • The Stamp Duty Law is currently under review with the objective of increasing revenues to the Public Treasury.
  • The Ministry of Finance and the Ministry of Economy and Foreign Trade are to join forces to consider new taxes in order to increase revenues to the Public Treasury.
  • At the beginning of this year, the Income Tax Law was amended by Legislative Decree 10/2015. This piece of legislation introduces changes in the classification of taxpayers such as small businesses who are entitled to pay a fixed lump-sum amount as opposed to complying with the relevant tax brackets. More recently, the Ministry of Finance has begun debating a controversial proposal to tax these types of small businesses on the basis of the size of their commercial premises and not the income they generate. Such a measure would have the effect of imposing a lower tax liability on businesses in small premises that yield high incomes while those that do not perform well but occupy larger premises would have to pay more in income taxes.
  • The Damascus Chamber of Commerce has called for cooperation between public bodies and businesses to implement the Taxpayers Exemption Law. This Law exempts taxpayers from fines resulting from the late payment of income, consumption and property taxes as long as they pay them by the end of this year.
  • A public investigation finds that for years, certain traders were importing goods in their employees’ names in an effort to avoid paying taxes.

Tourism

  • The Supreme Tourism Council plans to amend Regulation 386, which concerns the seizure of properties by the state so that they may be used for touristic investment purposes under the supervision of the Ministry of Finance.

Health

  • Despite denials, the prices of locally-produced medicinal drugs are expected to rise by 50% following a decision to this effect by the Prime Minister and the Ministry of Health. In fact, the Ministry of Health has held that the price increases, which resulted from a shortage of drugs, obliges pharmaceutical companies to supply the products in demand to the markets within a specific timeframe.
  • The Pharmacists Syndicate is working with the Ministry of Health to draft legislation that would monitor the quality of food and drug products and regulate their supply in the markets in the event of shortages.

Civil Society

  • The Constitutional Committee in the People’s Assembly has approved the Draft Civil Society Law, which is expected to replace the current Law 93/1958 dating back from the era of the United Arab Republic. If passed, the new law is expected to regulate the increasing number of non-governmental organizations that have sprung up around the country in recent years in response to the ongoing conflict.

Parliament

  • Decree 214/2015 sets Saturday, September 19th as the date for holding parliamentary by-elections to fill the vacant seats of the 10 MPs expelled from the People’s Assembly in late July.
  • A Syrian MP has revealed that while the People’s Assembly has tried to hold ministers to account, the government’s performance cannot be accurately judged under wartime conditions.

Judiciary

  • The Ministry of Justice is planning to form a committee to review the Draft Evidence Law, which will replace the current Law 359/1947 and have a significant effect on the activities of the judiciary. When the new law is passed, it will seek to facilitate the litigation process to bring it more in line with modern times. With this objective in mind, it is also expected to take into consideration the use of electronic means such as fax, telex and e-mail messaging for the purposes of evaluating written evidence.
  • The Attorney-General of Damascus has admitted that there has been an increased burden on judges in the capital resulting from a surge in litigation. It comes as no surprise given that the population in Damascus has risen dramatically during the current conflict due to its safe haven status.
  • The Attorney-General of Aleppo has insisted that the judiciary’s work in Aleppo province has improved with the presence of up to 270 judges in addition to activating the operations of the courts in rural Aleppo.
  • The Attorney-General of Rural Damascus has claimed that most new judges do not possess the required legal culture to practise their profession. In this regard, he has also decried the disputes among judges and lawyers that surface between both parties when they each think they know better than the other and called on them to overcome these petty differences. On the other hand, the Ministry of Justice has proposed to the Bar Association that it is important to establish the concept of a legal culture among judges and lawyers to improve the workings of the judiciary.

Lawyers

  • In provinces throughout Syria affected by the war, the Ministry of Justice is now making it mandatory to obtain the signature of the relevant provincial attorney-general before accepting a power of attorney as a valid document. The policy reasons behind this move relate to a number of forgery cases.
  • The Prime Minister has issued a regulation adjusting the legal fees of lawyers and the conditions for public entities to solicit their services.
  • The Prime Minister has requested from all ministries and public entities to submit all official documents to the State’s Attorney in cases where the State is one of the parties to the dispute.
  • The Bar Association has complained to the Arab Lawyers Union about the poor treatment of Syrian refugees by lawyers in host countries.

Women’s Rights

  • A Sharia judge in Damascus has stated that the Personal Status Law in its current form is unfair to men, not women. Nevertheless, criticism continues over the treatment of women in this Law.
  • While on this subject, a leading feminist has asserted that a fundamental contradiction exists between the Constitution and the Personal Status Law with regards to the rights of women in that the former grants women more freedoms than the latter.

Criminal Law

  • An inquiry into the administrative dealings of the city of Tartous has recommended that the relevant local officials including the Mayor be referred to the judiciary on the grounds of misuse of public office.
  • Recent reports indicate that a number of high-ranking and wealthy officials are appearing before the courts on charges of embezzlement of public funds.
  • Legislative Decree 35/2015 sanctions tougher penalties on individuals who illegally obtain electrical power. Previous laws that address electricity theft have been enacted in the past as this issue is becoming more prominent as a result of electrical shortages in the country.
  • The Ministry of Justice has tasked a special committee with looking into cases of looted factories in Aleppo and Idlib provinces to prepare for possible prosecutions. Furthermore, the Ministry of Justice has 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.
  • Reports in early August confirmed that the Anti-Terrorism Court was expected to release a new group of detainees.

Miscellaneous

  • A cabinet reshuffle in accordance with Decree 217/2015 has resulted in the appointment of Rima Al-Qadiri as the new Minister of Social Affairs, replacing Kinda Shammat, a former law professor. In addition, Hassan Safiyeh has been replaced by Jamal Chahine as Minister of Internal Trade and Consumer Protection.
  • The price of a liter of diesel has been raised by SYP 5 to SYP 130.
  • In light of the challenging energy situation in the country, the Ministry of Electricity has increased electricity prices.
  • The Ministry of Interior is demanding strict compliance with the Road Traffic Law particularly following a number of reported violations committed by public transport drivers.
  • Syria has acceded to the International Federation of Organic Agricultural Movements (IFOAM) by virtue of Legislative Decree 34/2015.
  • Decree 203/2015 grants an additional examination term for BA and MA students.
  • The Council of Ministers has been discussing a number of bills including those pertaining to the granting of prizes to students who perform well on final examinations, the retirement of pilots, and an amendment to the national budget.

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