The Application of Contract Law in Syria
As a civil law jurisdiction, the law of contract in Syria originates from several distinct legislative sources, including but not limited to the Civil Code provided for in Legislative Decree 84/1949, the Commercial Code provided for in Law 33/2007, the Electronic Commerce Law 3/2014 and the Consumer Protection Law 14/2015. The legal provisions governing the basic framework of contracts are grounded in the Civil Code. The Commercial Code concerns itself more with legal relationships where at least one of the parties to a contract is deemed to be a trader or is undertaking a commercial transaction. Book Two of the Commercial Code regulates commercial contracts in this respect. Whereas the Civil Code, the Commercial Code and the Electronic Commerce Law cover sales of goods and services in detail, the Consumer Protection Law offers additional safeguards for those individuals further along the supply chains. With respect to public contracts entered into with governmental entities, they are administered according to the Public Procurement Law 51/2004. Finally, marital contracts are mainly regulated by the applicable provisions of the Personal Status Code provided for in Legislative Decree 59/1953.
Elements of a Contract
Contract law is divided into sections including the elements of a contract, performance, force majeure and imprevisión, nullity and so forth. In order to conclude a valid contract, two or more parties must declare their intent to enter into a legal agreement expressly or implicitly whether verbally, in writing or by custom. The contract must also include the objects of the agreement, which should be clearly stated. The mechanics of a contract include various types of understandings and terms, including representations, warranties, conditions, covenants, indemnities and so forth, all of which are outlined and discussed below. The obligations of each party must be specifically clarified or the contract risks being rendered void for vagueness. The parties may also insert a mechanism in their contract to amend the terms or objects of their agreement by mutual consent.
It is also worth noting that contracting parties must observe the overarching principle of good faith in their dealings and must therefore avoid any improper intentions. Hence, if one party to a potential transaction enters into pre-contractual negotiations with another party in bad faith without any likely intention to conclude a contract and the other party suffers harm as a result, the latter could potentially sue the former in tort law for breaching their duty to negotiate in good faith. Tort law offers legal protection to parties in the absence of a formal contractual relationship. As long as there is no bad faith on the part of any of the parties, they are free to negotiate as they wish without any legal commitment to agree a contract.
The principle of freedom of contract within the bounds of good faith was a hallmark of the Syrian business community preceding and following independence from France in 1946. It continued to exist to a certain degree albeit with limitations during the socialist restructuring of the economy in the late 1950s and early 1960s, which maintained the status quo until the turn of the millennium. It resurged once again in the 2000s alongside the economic liberalization program.
Freedom of contract was considerably expanded in the sphere of lease contracts entered into between landlords and tenants starting in 2001 after half a century of statutory controls. Similarly, the area of the law governing relationships between employers and employees was also granted more freedoms for the parties to contract with one another beginning in 2010. The ability of foreign investors to enter into property sale contracts was bolstered in 2008 following on from a period of significant economic reform. Statutory and regulatory controls with respect to consumer contracts were liberalized in 2004 pursuant to Resolution 2908/2004 and onwards in favor of market forces, but since the economic crisis spurred on by the war erupted in 2011, the government has intervened to limit the principle of freedom of contract by instituting price controls.
For the purposes of a contract, if the offeror sets a deadline for acceptance, they are bound to honor it and may not withdraw the offer before the said deadline. If an offer is made to the offeree in their immediate presence without specifying a deadline, it must be accepted immediately or otherwise it lapses. If it is in the nature of the relationship that the offeror is not expected to wait for a declaration of acceptance by the offeree, the contract shall be considered agreed unless the offer is rejected. Silence shall suffice as acceptance if there is a prior understanding between the parties to conclude a contract along these lines. If an offer is accepted with modifications or restrictions, it shall be considered a counteroffer.
Agreements that take effect in the future must specify all core provisions, including the time that the contract will be entered into by the parties, in order to be legally binding. A non-refundable deposit may be provided by a contracting party to enable them to exercise their rights at a later time and to settle the remaining balance on a future date while providing some assurance to the payee. In other words, they would be paying earnest money to confirm the contract. Once it is paid, the deposit is considered to be part of the purchase price. In effect, the deposit grants the payer the option to repudiate the contract prior to performance but they would nevertheless forfeit their deposit if they do so.
For commercial transactions as per Book Two of the Commercial Code, a price for an exchange of goods or services may be freely negotiated in a contract. A judge may not revise the amount on the premise that it may be overvalued or that consideration is not adequate. If the prices are not specified in the contract, they shall be determined by reference to custom, or the usual rates of the transaction concerned, or if need be, they may be evaluated by a judge. Similar conditions also apply to interest rates that are not stipulated. Sufficient attention should therefore be given to the drafting of commercial and financial terms in a contract.
Non-Binding Contractual Obligations
It should be borne in mind that not all agreements between parties are drafted with the intention to be legally binding. For example, memorandums of understanding, letters of intent and term sheets may be agreed between parties but without the objective to have their terms enforced by law. Rather, they are usually intended to take the form of documented pre-contractual expressions of interest that later form the basis of an officially binding agreement.
The parties may however decide to render certain terms of such documents as legally binding if they intend for them to be enforced. Under such circumstances, it should be explicitly confirmed whether a clause in a memorandum of understanding, letter of intent or term sheet shall be deemed to be legally binding. An exclusivity clause for instance that prevents a party from negotiating with a third party for a prescribed period of time is likely to be a legally binding obligation. Otherwise, depending on the form of the document, there may be a presumption that its terms are not enforceable.
The common law concept of ‘without prejudice’ is alien to the civil legal system, including Syrian law. Consequently, inserting the statement or label ‘without prejudice’ at the top of a correspondence or document detailing positions during negotiations will not prevent its submission into evidence in the Syrian courts, where a judge may analyze it to determine the intentions of the parties. While a non-disclosure agreement or a confidentiality agreement, both of which are discussed below, may prevent certain documents exchanged between the parties from being relied upon in the event a dispute arises at a later period, a court order to the contrary could simply overturn such a confidentiality undertaking. On this basis, a judge may imply legal obligations on a party based on such documents depending on the content of what was communicated between the parties.
Contractual Breaches and Damages
The key principle in contract law is that if an agreement has been breached or if there is only partial performance of an agreement, the objective is to place the non-breaching party into the position they would have been in if the contract was performed in full. Doing so usually requires the payment of sufficient monetary damages by the breaching party to the non-breaching party to compensate them accordingly. Notwithstanding, the parties can mutually agree in advance that if a contract is prematurely terminated by one of them after only undertaking partial performance of the agreement, the said party is obliged to reimburse the counterparty solely for any costs borne by the latter as opposed to paying any damages. On this basis, the parties have a degree of freedom in determining how the terms of their contract are to be applied. In any case, attention should be given to the de minimis principle so that any breach must not be too trivial as to be deemed negligible to the transaction.
The parties may have exchanged numerous representations between each other during their negotiation phase which they intend to form the basis of their terms. Such representations may even be expressly reiterated in their contract as a term. If one party induces another party to enter into a contract based on certain representations, which later transpire to have been dishonest or deceitful, that may potentially lay the grounds for the tortious claim of fraudulent misrepresentation. Under such circumstances, the non-breaching party has the option to either repudiate or affirm the contract in question due to one or more such misrepresentations. In effect, the contract is voidable if the innocent party chooses to act accordingly.
If the contract is repudiated accordingly, it shall be treated as if it never existed by law. As such, damages for breach of contract would not be the appropriate remedy since the underlying agreement has no legal basis. Therefore, no contract has technically been breached. Rather, a claim under tort for inducing a party to enter into a contract based on one or more misrepresentations could be sustained. The inducing party would have to compensate the induced party to restore them to the position that they were in prior to entering into the nullified agreement. Such a position should be contrasted with the principle in contract law where the non-breaching party is compensated by the breaching party to the extent that performance should have been completed. Moreover, if the misrepresentation in question is found to be fraudulent, the breaching party may not only face tortious civil liability but also potentially criminal liability as well if the matter is referred to the Public Prosecutor.
The non-breaching party retains the option to nevertheless affirm the contract in order to confirm its validity and instead claim contractual damages. If so, any such compensation stems from the principles of contract law, which is distinct from the practice of repudiation under tort law. Affirmation of such a contract may be done explicitly or implicitly by the conduct of the non-breaching party. In any case, the innocent party should be careful not to wait too long before asserting a claim for damages as doing so may suggest that they are waiving their right to do so.
During the drafting process, the parties must determine of their own accord whether the contractual terms inserted shall comprise either warranties or conditions. A warranty shall be considered collateral to the main purpose of the contract whereas a condition shall be deemed to be an essential term that must be performed. Any violation of a warranty may only give rise to indemnities included in the contract, such as damages, but not termination of the said agreement. However, any breach of a condition may be regarded as material enough to justify rescission of the contract by the affected party, who may subsequently claim damages. In this case, termination would be actionable pursuant to the terms of the contract, unlike the case with repudiation for fraudulent misrepresentation where the underlying claim is not based on the contract but rather on tort law.
The parties may also include one or more condition precedents in their agreement. A condition precedent is a clause inserted into the contract that when complied with by a party triggers certain obligations to be performed by the counterparty. If a condition precedent has not been satisfied by the said party, the counterparty cannot be made to fulfill their obligations as specified in the contract. Furthermore, if the counterparty is accused of breaching their responsibilities by failing to discharge their commitments under the contract, they can raise the defence that their obligations were never triggered in the first place due to the failure of the other party to adhere to the condition precedent in question.
If one of the parties fails to perform their obligations once a contract is concluded, their counterparty may demand that they fulfill their commitments or else claim compensation, or rescission of the contract accordingly depending on the type of breach. Nevertheless, the judge may grant leniency in certain circumstances in line with the concept of imprevisión detailed below. For the purposes of the Commercial Code, if a contracting party fails to comply with part of their ongoing obligations under a contract, the counterparty has the right to void the underlying terms associated with the unperformed obligations and claim suitable damages.
The general principle is that if there is only partial performance of a contract, the party in default should pay monetary damages to the non-breaching party to compensate them for any losses suffered as a result of a lack of complete performance on their part. If the innocent party has to seek alternative contractual arrangements with a third party to fulfill the responsibilities of the breaching party, the damages are likely to include the reasonable costs for doing so in addition to other factors such as delay costs and so forth.
Monetary damages are the remedy available to the innocent party in the event of a contractual breach. In addition to direct damages stemming from the breach itself, the affected party may also claim damages for indirect or consequential losses that are capable of being substantiated before the courts if necessary. The party claiming damages for indirect or consequential losses is likely to have to make available supporting documents that allow for a definitive calculation of such losses, including for example loss of profits and opportunity costs. If the dispute advances to litigation or arbitration, an expert appointed by the judges or arbitrators may need to assess such losses. The innocent party may also be entitled to interest payments. It is important for a claimant to expressly state in their pleadings what damages they are seeking because the courts or arbitral tribunals need to be guided by the arguments put forth accordingly.
Attempts to exclude or limit the liability of a breaching party are regulated by law, and in general are governed by the principle of fairness according to the nature of the transaction. While a limitation of liability clause may take the form of a predetermined sum constituting liquidated damages, the courts are likely to interfere and alter the amount if they deem it necessary to do so, especially if they are not a genuine pre-estimate of possible losses. Under certain circumstances, especially in the context of consumer contracts, any attempts by the vendor to limit their liability to an unfair amount would likely be challenged accordingly.
If the parties decide beforehand in their agreement to limit compensation to liquidated damages constituting an ascertained amount in the event of a contractual breach in the future, the courts retain a degree of authority to disallow such damages as mentioned above. A liquidated damages clause by its nature should be a genuine pre-estimate of possible future losses. The courts may take action in the absence of any harm suffered or they may reduce the said amount if they find it to be grossly exaggerated when compared to the loss actually sustained. The objective for the courts in doing so is to avoid the application of what would otherwise be an unfair penalty imposed on the breaching party that is disproportionate to the breach itself. A penalty clause would normally contain a figure that a reasonable onlooker would not regard as a genuine pre-estimate of possible future losses unlike a fair liquidated damages clause.
Furthermore, the courts are expected to frown upon and strike down any attempts to exclude or limit liability for gross negligence by a party or for any fraudulent misrepresentation by one party that induced the other to enter into a contract. A fraudulent misrepresentation as mentioned above may give rise to both tortious civil liability and criminal liability, and cannot be excluded for instance by an ‘entire agreement’ clause. Any desire to limit or exclude matters of strict liability, such as decennial liability imposed on architects, engineers and contractors by the Civil Code for any structural defects that may arise, are likely to be resisted.
It should be borne in mind that as far as the Syrian courts are concerned, the most adequate type of remedy in the event of a breach of contract is generally monetary damages, which is the norm in civil law jurisdictions such as Syria. Interim judicial measures such as injunctions and orders for specific performance, which are equitable remedies derived from the English common law system, do not form part of the legal tradition in Syria. Injunctions instruct a party to refrain from a particular act while an order for specific performance obliges a party to undertake an act. Syrian courts are more predisposed to making orders for monetary damages at the conclusion of a trial but there are instances where substantive interim relief before hearings commence would be considered more appropriate and useful to the circumstances at hand.
The most common interim remedy available under Syrian law is a provisional attachment order, which is commonly applied where the movable or immovable assets of a defendant are frozen pending a resolution to the dispute. It is used in order to protect against any risk that a defendant may not settle their dues or may take action that could lead to the dissipation of their assets, thereby reducing the chances of recovery for the claimant. It must soon thereafter be followed by a formal lawsuit registered with the courts to initiate the underlying claim.
It is prudent from a contractual standpoint to include text in an agreement that any termination of the contract for cause or for the purposes of convenience shall be exercised within the context of mutual consent. As such, if a material breach occurs, the performance obligations may be voided by invoking the termination provisions to exercise rescission of the contract accordingly. In other words, the underlying contract itself still exists in spite of the fact that performance has ceased. Therefore, termination is actionable as a contractual right in the agreement and is not considered a separate matter altogether distinct from the provisions of the contract. Such a situation should be contrasted with the context of fraudulent misrepresentation where the legitimacy of the contract as a whole is repudiated and treated as though it never existed in the eyes of the law.
Wording should thus be included in the contract that in the event one of the parties breaches a certain obligation, the breaching party consents to the non-breaching party possessing the option to serve notice on the former that they intend to rescind the contract without reference to any action before a court or arbitral tribunal. The same concept can apply for the purposes of termination for convenience in the absence of a breach. The rationale behind this argument is to attempt to avoid potential protracted litigation or arbitration proceedings at some point in the future over alleged unlawful termination. Alternatively, a contract may terminate by operation of law, or due to a specified term in its provisions that allows for an expiry date, or simply as a result of a listed event that has come to pass which gives rise to termination, such as a bankruptcy provision. Nevertheless, the parties may include text to the effect that certain rights that accrued prior to termination of the contract shall continue to be legally enforceable in the future.
The objects of an agreement must be possible to fulfill in order to take effect. Otherwise, a contract may be declared null and void if its stipulations are deemed impossible to execute. Such situations are termed force majeure events and are provided for in the Civil Code. Force majeure is a legal principle that may be invoked by the service of notice of one party to another where a contract subsequently becomes impossible to perform whether temporarily or permanently due to an unforeseeable and unavoidable event.
The effects of a force majeure event are either to suspend performance of a frustrated contract until the force majeure ceases or officially terminate the agreement if resumption of the legal relationship is no longer viable. However, the parties are obliged to mitigate the impacts of the disruption as much as possible. Consequently, if an obligation lapses in a binding contract because it becomes impossible to perform, the agreement shall be voided. In the event of nullity, the parties revert to the position they were in before the contract was concluded. If that is not feasible, compensation may be payable to the party who bears any losses. Furthermore, payments due to a party prior to the force majeure event are not excused. Force majeure clauses were cited regularly by contracting parties in Syria since 2011 due to the turmoil caused by the conflict in the country.
According to the Employment Law 17/2010, if an employee is precluded from working by reasons beyond the control of the employer such as due to a force majeure event that is capable of mitigation, the employee shall be entitled to half their salary. It is for the employer to decide whether to maintain normal shifts, if possible, under such exceptional circumstances. Such situations arose during the coronavirus pandemic in 2020. Employment contracts shall however terminate due to an event of force majeure which cannot be mitigated.
The Civil Code also lays down articles governing imprevisión, which is known as the doctrine of hardship and may be considered to be a higher threshold to satisfy than the principle of force majeure. It is an exception to the general rule that a valid contract is final and applies when unforeseen circumstances in general change to render a contract less economically viable but not necessarily impossible to perform. Economic conditions may have shifted so that at least one of the contracting parties would be placed in an onerous or unreasonable position if they were to perform or continue with their obligations. The unforeseen event must be general in nature and not specific to a party.
Under such circumstances, a judge has discretionary authority to modify the terms of the contract accordingly to rebalance the positions of the parties in order to save the agreement if an application to the courts is made. Such action amounts to a renegotiation of the contract to an extent. However, the judiciary may be reluctant to interfere with the terms of a contract unless the elements of imprevisión have been met in full.
The depreciation of the Syrian Pound (SYP) from SYP 47 to the US Dollar starting in 2011, and continuing throughout the conflict before acutely contracting in value from 2019 onwards to an unofficial rate exceeding SYP 4,000 to the US Dollar by early 2021, had a profound effect on all segments of the Syrian business community. Countless contracts were affected by the severe economic and financial crises gripping the country. The general nature of these circumstances applied to Syrians across the commercial spectrum and were not specific to any limited persons since shifts in supply and demand across industries meant that contractual values had to be recalculated and renegotiated.
Since March 2011 until October 2019 the Syrian Pound dropped from SYP 47 to approximately SYP 650 to the US Dollar, so its gradual decline was foreseeable to an extent for a period of almost nine years, rendering a claim for imprevisión questionable. However, its sudden devaluation since the onset of the Lebanese financial crisis in October 2019 means that economic burdens experienced by contracting parties could potentially have been unforeseeable and subject to judicial review.
There are a diverse range of reasons why a contract may be set aside other than for vagueness or due to a force majeure event. The parties must firstly possess mental capacity and not be minors to enjoy legal authority to enter into a binding contract. A contract may also be nullified on the grounds that it contains a fundamental mistake, or is unlawful or illegal to execute. Illegality becomes an issue if the contract in question deals with unlawful activities that give rise to criminal liability. Furthermore, if there is any evidence of duress being exerted on a party or fraud by a party, the contract may be deemed unenforceable. For instance, if one party’s fraudulent misrepresentation induced another party to enter into a contract, that could give rise to a repudiation of the contract by the injured party as detailed above. Finally, if the terms of an agreement contravene the public order and morality of the state, the contract is likely to be struck down on public policy grounds with no binding authority. A matter considered essential to the public policy is also likely to override contradictory contractual provisions.
If a party has suffered harm due to the nullification of a contract, they may consider claiming compensation from the other party on the basis of tortious liability incurred by the latter. Since the party that suffered harm cannot make any claim under the contract, which has been declared null and void, tort law may offer an alternative path for relief and the possibility to claim damages.
A contract may be voided for a fundamental mistake if the counterparty made the same error, or if they knew of its existence, or should have reasonably known of it. A mistake is considered fundamental if it would be considered significant enough to deter the other contracting party from entering into the contract if they were aware of it. A mistake is also considered fundamental if it affects the essence of the contract.
A contract is voidable for mistake of law if the conditions for mistake of fact have been satisfied. A minor error does not render the contract invalid but it must be corrected. For parties that entered into a contract on the basis of a mistake, they are not entitled to take advantage of such a situation in an improper way that would contradict with the principle of good faith. Furthermore, they remain bound to implement the terms of the contract if the counterparty has shown a willingness to perform their obligations.
The inclusion of any restrictive covenants in an agreement should be deemed reasonable in nature to justify their enforceability and the resulting legal consequences in the event of their breach. Restrictive covenants usually take the form of non-compete and non-solicit clauses. A non-compete clause would normally need to be reasonable in scope and specific to be enforceable by the courts. For example, a non-compete clause would need to at least restrict competition by a party for a reasonable time period in a specific profession and a limited geographic territory. The aim of non-solicit clauses would be to prevent any interactions with employees, suppliers, clients and customers by the party to whom the restrictive covenants apply.
Covenants are also regularly included in contracts to restrict the ability of parties to disclose the confidential information of each other. It is advisable that they are entered into in the form of a non-disclosure agreement, where one party is barred from disclosing such information belonging to their counterparty, or through a formal confidentiality agreement mutually obliging both parties accordingly prior to entering into any substantial contractual negotiations. Doing so precludes the parties from disclosing any confidential information belonging to each other even if they fail to reach agreement on a formal transactional contract.
Privity of Contract
The general rule in contract law is that only the parties who lawfully entered into the agreement can validly enforce its terms. On this basis, a third party who is not a signatory to the contract should not in theory possess a right to make any claim originating from the terms of the agreement. However, the Civil Code provides alternative means to give effect to such third party rights if the parties to the contract desire such an outcome.
A contract may therefore create a right or confer a benefit in respect of a third party enforceable by the said third party. On this basis, the law permits the inclusion of assignment clauses to transfer any rights or entitlements to a third party by a party to the contract. There are nevertheless restrictions on the ability of contracting parties to impose obligations on third parties unless certain conditions are satisfied, including an explicit admission by a third party to be bound by such obligations. Moreover, a novation agreement can be concluded subsequent to a contract whereby a third party assumes the liabilities and obligations of one of the contracting parties to the original contract.
A contract entered into between two parties may also be dependent on the actions of a third party. On this basis, one of the parties may be expecting an undertaking from a third party, which forms part of the obligations of the counterparty to the contract. While the party expecting such an undertaking cannot oblige the third party in question to provide it since they are not an official signatory to the contract, they have to rely on their counterparty to provide some assurance. Therefore, the counterparty may be called upon to warrant the actions of the third party in question and if the latter fails to do so, only the counterparty can be sued. The counterparty may have an agreement in place with the third party and may seek indemnification thereafter from them. Such a scenario may arise in the content of non-disclosure agreements and confidentiality agreements where an employee or a contractor of one of the parties is required to provide an undertaking that they will not compromise the confidential information of the disclosing party.
Any contract entered into between parties should also avoid causing any detriment to a third party whether according to the laws of contract or tort. If a third party sustains harm due to the performance of a contract to which it is not a party, that third party may have a claim against one of the contracting parties in question. Under such circumstances, a contracting party may require an indemnity from their counterparty included in the contract to hold the former harmless in the event that they are sued by a third party due to an act arising from their performance of the contract. In return, the indemnitor may insist on incorporating terms into the agreement to the effect that they shall assume control over any defence in the event a lawsuit is filed against the indemnitee by the third party.
A party’s obligations under a contract may be guaranteed by a third party in the form of a guarantor contract. In other words, while the third party may not be an official signatory to the original agreement between the two other parties, the third party may commit to guaranteeing the obligations of a party who defaults upon performance of the original contract. While a separate guarantor contract can be utilized in this case, the guarantor third party may also be invited to sign the original agreement, thereby being treated not as a third party per se but as an official contracting party like the others. In the event that the guaranteed party fails to honor their commitments under the original contract, the innocent party would have a legal claim actionable against not only the breaching counterparty but potentially also the guarantor if need be. Such guarantor contracts are common in financial facility agreements where banks are called upon to guarantee the obligations of a borrower.
A third party may acquire the contractual rights of a party due to the fact that the latter may have died or is declared bankrupt. Under such circumstances, the third party shall be considered a successor as opposed to an assignee since its rights have been generated by operation of law and not a formal contractual assignment. A deceased party’s successors will inherit the former’s estate but if there are any liabilities pending on it, they will be settled accordingly by the executor when the matter undergoes probate in the religious or civil courts. Any benefits that remain thereafter, including any outstanding contractual rights, may be inherited by the successors. Similar considerations may apply to creditors who obtain entitlements over a debtor’s contractual beneficial rights whether as a result of an enforcement order or a liquidation process executed by a trustee-in-bankruptcy or a liquidator respectively in accordance with the applicable provisions of the Commercial Code. It is however questionable whether a successor can be obliged to comply with the terms of a contract that they were not originally a party to unless they expressly affirm their intention to do so.
A contract is not only limited to the terms within it but also includes other factors such as legal compliance in general, customary practice and fairness according to the nature of the transaction. Moreover, if the terms of the contract are clear and unambiguous, it is not permissible to interpret them in any manner whatsoever that risks deviating from the clear intentions of the parties. Such a method is known as the principle of textual interpretation. However, if interpretation is necessary, the common intentions of the parties are important and not necessarily the literal meanings of the contractual terms used. It is known as the principle of original intention interpretation.
Applicable Law and Forum
A contract shall be subject to the law of the country where the contracting parties are resident but if they reside in different countries, then the law of the country where the contract was agreed shall be applied. Nevertheless, these rules may be deviated from if the parties consent to have their contract governed by the substantive law of another jurisdiction, or if it is clear from the circumstances that a foreign law should be applied.
The parties are also free to subject any disputes that may arise between them to the Syrian courts or to an arbitral tribunal. Such contentious causes of action may take the form of contractual or non-contractual claims, with the latter being concerned with related tortious liability. Where they are designated as the appropriate forum, the Syrian courts will generally adjudicate contracts that have elected to be governed by a foreign law according to the wishes of the parties. Furthermore, testimony from experts with knowledge of the chosen foreign law will be requested in the form of regular evidence to advise as to its application. The submission of any such evidence and its treatment by the Syrian courts is considered in accordance with the Evidence Law 359/1947.
The Syrian courts will construe the terms of a contract in line with the designated foreign law unless they contradict mandatory provisions of Syrian law or public policy. Such compulsory provisions may be expressly provided for by law or derived from case law as established by court judgments over the years. Where such a conflict exists between the position of Syrian law and the foreign law in question, Syrian law will prevail.
Bearing this potential situation in mind, parties to a contract should consider including an ‘unenforceability’ clause that sets out a process as to how unenforceable terms in the agreement, if any, would be deleted, modified or substituted to the extent permissible by Syrian law. Additionally, it may be advisable to break down terms in clauses as much as possible and not to bundle them together so that if a clause contains text that is deemed unenforceable, all the wording in that clause is not at risk of being struck down, but only the problematic portion.
Contracts governed by Syrian law may be adjudicated by foreign courts according to their jurisdiction clause. Foreign court judgments originating in other Arab countries may be enforced in Syria by virtue of its accession to the Riyadh Convention of 1983. However, Syrian courts may nevertheless seize jurisdiction and declare themselves competent to act irrespective of the parties’ wishes where there is a nexus between the case in question and Syria itself, such as where one of the parties or the properties in dispute are located in Syria. The authority of the courts to do so is granted by the Civil Procedure Code provided for in Law 1/2016.
Contracts governed by Syrian law may also provide for disputes to be resolved by means of either domestic or international arbitration, a private and confidential dispute resolution process away from court litigation. However, the Syrian courts may override an arbitration clause where the subject matter of the dispute is not deemed to be arbitrable according to the Arbitration Law 4/2008. Parties, such as companies, who intend to subject any disputes that may arise between them to arbitration must ensure that their contract is signed by their authorized and recognized signatory. Given that arbitration is an exceptional form of dispute resolution that entails parties waiving their inherent right to court litigation, only the authorized signatory can validate an arbitration clause or agreement, or otherwise it will be rendered null and void, thereby reverting to court litigation if a dispute arises. Furthermore, it should be noted that foreign arbitral awards may be enforced in Syria by virtue of its accession to the New York Convention of 1958 and the Riyadh Convention of 1983.
Most contracts are adjudicated on the merits and generally do not require any special formalities to make them legally binding and enforceable by the courts. They can even be concluded electronically, including by the parties imprinting their digital signatures. However, there are some notable procedural exceptions that should be noted where registration with the relevant authority and the payment of stamp duty is applicable. The legal treatment of marital contracts is also examined below.
Lease contracts concluded between a landlord and a tenant must be registered with the applicable local authority in order to be recognized pursuant to the Landlords and Tenants Law 20/2015. Such registration is conditional on the payment of a duty amounting to one percent of the monthly rental amount. Once a lease contract is registered accordingly, the courts will seize jurisdiction and enforce its terms in the event a dispute arises between the landlord and the tenant. Failure to register a lease contract could lead to legal complications that hinder the enforcement of what would otherwise be a party’s rights.
Employers are required to draft written contracts for their employees in Arabic and each party shall retain a copy of the contract while the employer shall also deposit a copy with the competent Directorate of Social Security in their respective province within three months, which falls under the authority of the Ministry of Social Affairs and Labour. In the absence of a written agreement, an employee may establish the existence of an employment relationship and their entitlements pursuant to the work they have carried out using all methods of proof while the employer has the right to similarly prove the contrary. Any employment contracts that give employees fewer rights than those provided for in the Employment Law 17/2010 are deemed null and void. Similar conditions apply to public sector employees and workers in the agricultural sector.
With respect to the insurance industry, an insurance policy must be completed in Arabic in line with the requirements outlined in the Insurance Law provided for in Legislative Decree 43/2005. It may however be drafted in a foreign language as long as an Arabic translation is attached to it. In any case, the Arabic text takes precedence in the event of any conflict between the terms of the policy in Arabic and the version drafted in a foreign language.
In order for an exclusive principal-agency commercial agreement to be recognized as such pursuant to the Commercial Agency Law 34/2008 and the Commercial Code as applied in conjunction, the contract must be registered with the Commercial Agency Department at the Ministry of Economy and Foreign Trade. If the said contract is not registered accordingly, then the agent is deemed to be a normal distributor subject to the jurisdiction of the Civil Code and the Commercial Code without any right to claim exclusivity over the Syrian market.
Stamp duty is usually payable on instruments involving corporate contracts, financial facility agreements and other similar documents in accordance with Legislative Decree 44/2005. The rates range from 0.4% to 0.7%. Stamp duty is applied on all counterparts of an agreement. A contract may be executed in any number of counterparts, all of which are deemed to be originals. Therefore, stamp duty is payable on each counterpart since it is regarded as an original version. On this basis, executing the agreement by having the parties sign only one document and producing one or more copies, whether certified or not, of the said document can save the parties money on stamp duties. Bearing this fact in mind, the parties may choose to include text in their contract providing for only one version of the contract with several copies.
While contracts may be concluded in languages other than Arabic, any agreement that requires registration with a respective authority and is subject to stamp duty should be in Arabic. Contracts drafted in other languages will need to be translated by an officially certified translator recognized by the Ministry of Justice, such as is the case with documents to be submitted to the courts.
The validity of contracts may also be attested by a notary public certified by the Ministry of Justice. The parties to a contract may therefore sign their agreement before the notary public. The notary public may however carry out their own review of the document to ensure that it conforms to applicable law. While signing a contract before a notary public is not necessarily mandatory, it may be preferable to avoid any scenario in the future where one of the parties alleges that their signature is false. The attestation of the notary public avoids the drawn out process of undertaking a forensic examination of the signature in dispute.
Contracts may also be concluded by proxies through powers of attorney granted to a third party. An individual or legal entity inside or outside the country may authorize another person through a power of attorney to sign a contract on their behalf. Syrians or other nationals overseas can grant powers of attorney at their nearest Syrian consulate, which then has to be certified by the Ministry of Foreign and Expatriate Affairs in Damascus. After the power of attorney has been certified by the Ministry, a contract can be entered into by the proxy on behalf of a party.
Statute of Limitations
For causes of action raised under the Civil Code, the statute of limitations for civil cases is generally 15 years. Similarly, judgments rendered in civil cases must be enforced within a period of 15 years or else they risk lapsing. In commercial matters that fall under the authority of the Commercial Code, the statute of limitations is valid for a period of 10 years unless a shorter duration has been designated. If a judgment has been passed in a given case, the judgment creditor in whose favor it was rendered shall have 10 years to enforce it. Despite the statute of limitations set by the Civil Code and the Commercial Code, there are different considerations with respect to statutory warranties for defective goods as mentioned below.
Sales of Goods and Services
Sales of goods and services are covered extensively by applicable domestic and international legislation. It should be noted that Syria is a signatory to the United Nations Convention on Contracts for the International Sale of Goods, though its provisions may be excluded by the contracting parties. As part of the legislative framework, the legal tender payable for an exchange of goods and services is also strictly monitored. To this effect, the Currency Transaction Law provided for in Legislative Decree 54/2013 and amended by Legislative Decree 3/2020 provides that the sale of goods and services must be priced in Syrian Pounds unless legal exemptions apply. Otherwise, criminal penalties may be imposed against violators of this Law.
Sales of goods can take the form of both tangible and intangible goods, such as intellectual property and digital goods with respect to the latter. On a sale of goods, ownership is transferred by the seller to the buyer in exchange for consideration as per the agreement reached between the parties. Nevertheless, the contracting parties may decide to delay the legal transfer of ownership until the purchase price is paid in full, even if delivery has been performed. However, attempts by the seller to repossess title thereafter are not possible. Furthermore, when paying by installments, the parties may concur that the seller is entitled to retain a sum of money from the buyer as a deposit to ensure full compliance on the part of the latter. Moreover, vendors are obligated to present customers with invoices specifying the price and the quantity of the goods sold or services provided pursuant to the Consumer Protection Law.
The Civil Code, the Commercial Code and the Consumer Protection Law impose liability where goods sold are not of satisfactory quality. Statutory warranties for defects are included but are subject to a statute of limitation running for a period of one year from the date when the goods are delivered. However, this restriction does not apply if the vendor intentionally sought to conceal potential defects affecting the goods in question. Merchants should therefore be aware that they are obliged to adhere to certain statutory warranties, including but not limited to warranties of title, merchantability and fitness for a particular purpose.
All producers, importers and vendors are required to provide guarantees to buyers regarding the quality of their goods pursuant to the Consumer Protection Law, so the principle of ‘caveat emptor’ whereby the buyer purchases at their own risk is limited from a legal standpoint. In this respect, any contractual clauses between a seller and a buyer that seek to disclaim representations or warranties through an ‘entire agreement’ clause and sell goods or services on an ‘as is’ or ‘as available’ basis may be challengeable, including any such provision pertaining to exclude maintenance services. In the event a product or service has deficiencies, customers shall be compensated with either a replacement or a refund, whichever they choose. Such contracts of adhesion, which are based on non-negotiable standard terms and conditions that favor sellers at the expense of consumers, would usually be construed to the benefit of the latter by the courts where there is the bandwidth to do so.
Any attempts to override the provisions of the Consumer Protection Law in contractual agreements are held to be ineffective. It should also be noted that the provisions of the Consumer Protection Law may not in practice extend to sales by overseas suppliers who ship their products to Syria, but rather only to local suppliers. However, such a situation does not exclude the possibility of the purchaser seeking legal redress in the jurisdiction where the overseas seller is based, though it may be impractical and costly to do so depending on the circumstances.
The sale of goods via the internet is regulated by the Electronic Commerce Law 3/2014, which was enacted to encourage and facilitate commercial transactions using electronic means while securing the rights of consumers. As a result, agreements between parties may be concluded electronically through online payment platforms, which simplify and shorten the contractual process. The Law is expected to build on other legislation such as Law 4/2009 pertaining to digital signatures, which seeks to counter certain crimes including forgery. The infrastructure and regulation of digital signatures is now in place. In order to safeguard against the possibility of online fraud and other related criminal acts, Legislative Decree 17/2012 has been issued to resist possible cybercrime offences. Specialized cybercrime courts have also been set up to try such cases in accordance with Law 9/2018.
It should be borne in mind that in times of economic distress, the government may impose certain control measures that interfere with the principle of freedom of contract. They include administrative pricing orders with respect to certain basic goods as mandated by the Consumer Protection Law to curb inflationary pressures, which have become common since 2011. In essence, the Ministry of Internal Trade and Consumer Protection has been coordinating with local authorities throughout the country to impose maximum price caps on consumer items that are considered essential to the wellbeing of the general population. While strict penalties are in place to deter sales in excess of the price caps, illegal trading in this respect continues unabated. It is also worth mentioning that in ordinary as well as exceptional times, the Ministry of Health is responsible for regulating the prices of pharmaceutical products and medical services.
Market interference through governmental directives on the grounds of protecting both consumers and traders are sanctioned not only by the Consumer Protection Law but also in line with the Competition Law 7/2008 and the Anti-Dumping Law 42/2006. Regulatory oversight of this nature is intended to restrict monopolistic practices and dissuade attempts at market manipulation by traders at the expense of consumers and competitors. Such detrimental activities are further caught by the ambit of the Economic Criminal Code provided for in Law 3/2013, which imposes criminal liability and punishment against wrongdoers if found guilty.
Any form of consumer contracts whether verbal or in writing may be subject to sales taxes depending on the goods or services sold, especially those deemed luxurious. In general, sales taxes range from one percent and 20% but have reached up to 60% as well. For imported goods and not those produced locally in Syria, the current rates of these taxes merely stretch from one percent to five percent and are set by the Sales Tax Law provided for in Legislative Decree 11/2015. The tax brackets in question correspond to the rates for customs duties. Special considerations apply to gold and jewelry products. Furthermore, there is a reconstruction tax mandated by Law 46/2017, which is applied on consumer contracts at a rate of 10%.
The Public Procurement Law 51/2004 lays out the conditions and tendering procedures that public sector bodies are required to comply with when concluding contracts for the procurement of goods and services. Once public contracts are agreed with a governmental entity, they follow the model template containing the applicable terms and conditions authorized by Resolution 450/2004, which was issued by the Ministry of Finance. Both the Public Procurement Law and Resolution 450/2004 touch on matters pertaining to force majeure, suspension, termination, inflation, delays, extensions, material breaches, and dispute resolution whether by court litigation or arbitration.
In a public contract, a contractor is not liable for any delays caused by the relevant public authority or for any act of force majeure. If unforeseen circumstances make execution of the contract impossible or may lead to substantial losses, the contractor retains the right to demand fair compensation. The public authority retains the prerogative to suspend or terminate the contract, but if the suspension continues for more than one year, the contractor shall have the right to terminate the contract and claim damages accordingly. Furthermore, if any inflationary pressures occur during performance of the contract that cause price rises of more than 15%, the contractor shall bear 15% of such an increase while the public authority shall be liable for the remaining 85%. Such a situation is comparable to an imprevisión event but the contractor may have to continue work pending a reevaluation of the contract value by a government mandated committee and not necessarily a judge initially.
If the contractor is responsible for any delays in executing the public contract, fines may be imposed ranging from 0.1% to 20% of the value of the contract but they may be reduced or even excused in certain circumstances. The public authority on the other hand is not liable to pay damages to the contractor for any delays caused by it. Nevertheless, the public authority must grant an extension of time for the contractor to perform their contractual obligations under such circumstances.
Contractors must be made aware of the importance of avoiding material breaches on their part. If a contractor commits material breaches under the agreement, the public authority may withdraw the contract from the contractor and have it completed by a third party at the expense of the breaching contractor. Such a contractor may face a temporary ban barring them from contracting with the public sector or any state entity for a maximum period of five years. Consequently, contractors are advised not to unilaterally cease works on their own initiative due to any legal shortcomings on the part of the public authority. Rather, they should in theory continue performing their obligations under the contract and claim compensation at a later time, although doing so may expose them to financial risk.
Any disputes arising from public contracts fall under the purview of the Council of State Administrative Court, a specialized part of the judiciary that adjudicates lawsuits where one of the parties is a state entity. Parties to a public contract may also provide for an arbitral tribunal under the authority of the Council of State Administrative Court to try any such disputes. Depending on whether ministerial consent is granted, an overseas arbitration center may administer the arbitral proceedings where the contractor is a foreign party.
Syrian law shall be the governing substantive law relating to the validity, interpretation and application of any public contract. Moreover, Syrian procedural law provided for in the Civil Procedure Code shall determine the adjudication of a dispute whether before the Council of State Administrative Court during litigation and as the curial law where Syria shall be considered the seat of arbitration.
The main elements of Syrian family law are codified in the Personal Status Code provided for in Legislative Decree 59/1953. The Code is divided into six books officially regulating marriages, divorces, childbirth and its effects, guardianship, wills and inheritance. As a comprehensive piece of legislation, this Code goes into much detail on certain subjects, including marital contracts and divorces in the event such contracts are terminated.
Marriages in Syria are legally conducted according to the religious faith of the individuals concerned. Accordingly, Muslims conclude what is known as the Sheikh’s Book Ceremony and then register their marital contract in the Sharia Court. Christians conduct a Church Ceremony and then register their marital contract in the Spiritual Court of the relevant denomination.
Customary marriages whereby a ceremony is held but the marital contract is not registered in the respective religious court are not deemed legally valid under Syrian law. As such, there are no legal obligations imposed on the husband, which can have broad consequences if a child is born or the marriage falls apart. As far as the state is concerned, the marriage had no merits in the eyes of the law.
Syrian citizens who decide to marry abroad should be made aware of the Civil Status Law provided for in Legislative Decree 26/2007, which was amended by Law 4/2017. Accordingly, the couple has to follow the correct legal procedures in the country where they intend to marry to conclude their marital contract as long as the foreign law does not conflict with Syrian law. They must then avail themselves of the Syrian consular services where applicable in order to register their marital contract in Syria, which is a mandatory requirement conferring legal recognition on their marriage. Furthermore, if Syrian couples marry overseas under different nationalities, they may be required to technically marry again in Syria in order to have their marriage recognized by the Syrian authorities. Failure to do so in either case could have consequences on the legal status of any children they may have and their right to inherit. As for Syrian children born overseas, the correct procedures have to be followed in the country of birth before the child’s civil status can be registered accordingly with the Syrian authorities through the consulates.
Syrian embassies, consulates or bodies representing Syrian interests in countries around the world are responsible for the personal status interests of Syrian expatriates including marriage, divorce and so forth. If a Syrian embassy is closed in a certain country, expatriates must seek the consular services of the nearest one available to them in another country. Many embassies lack specialists in the field of family law. Thus, Syrian expatriates have had to resort to marital contracts under the laws of foreign countries to avoid bureaucratic hurdles in certain circumstances.
Marital contracts concluded by proxies through powers of attorney are permissible under the Personal Status Code. Any Syrian citizen inside or outside the country can authorize another individual through a power of attorney to sign a marital contract on their behalf. Syrians overseas can grant powers of attorney at their nearest Syrian consulate, which then has to be certified by the Ministry of Foreign and Expatriate Affairs in Damascus. After the power of attorney has been certified by the Ministry, the marital contract can then be registered with the relevant religious court.
The Civil Code steps in to address marriages between spouses of different nationalities. According to the Civil Code, a marriage between nationals of different countries is governed by the national law of each spouse. With respect to the implications of the marital contract, including its financial effects, the law of the country of which the husband is a national shall apply. It is also the case for instances of divorce. The civil courts as opposed to the religious courts would oversee such proceedings.
Nevertheless, the positions mentioned above are qualified by the fact that should one of the spouses hold Syrian nationality at the time the marriage is contracted into, only Syrian law will be applicable. In accordance with the Civil Procedure Code, the Syrian courts will have jurisdiction even if the defendant is not domiciled or resident in Syria but where a nexus between a concerned party and Syria can be established. Such cases include but are not limited to a marriage concluded in Syria or a concerned party maintaining residence in Syria.
Couples who marry in Syria but decide to part ways have to apply for a divorce in Syria in order to have it legally recognized. In such situations, at least one spouse would have to approach their respective religious court and petition the judge accordingly. Divorces will not be recognized by the Syrian authorities where a couple who weds in Syria applies for a divorce overseas from a foreign court as such divorces fall under the jurisdiction of the Syrian religious courts. As far as the law is concerned, the marriage is deemed valid until the divorce is pursued in Syria or through the Syrian consulates overseas. Failure to obtain a valid divorce from the Syrian courts may cause complications when matters of inheritance inevitably arise. If a husband has not paid the dowry, which is deemed to be consideration for the marriage, in full at the time of the divorce with respect to a marital contract registered in the Sharia Court, he faces possible imprisonment for breach of such a provision. Depending on the denomination and the circumstances in question, a marriage may even be annulled and treated as though it never existed in the eyes of the law.
The legal position of women was recently improved in the latest round of amendments to the Personal Status Code contained in Law 4/2019. It grants women a priority status when dealing with matters concerning the family and children. It also mandates the minimum age of marriage for both men and women at 18 years. Another amendment to the Personal Status Code permits a prospective wife to stipulate her right to work in the marital contract.