Legal Briefing – April 2018

Property

• The recently enacted Urban Renewal Law 10/2018 provides that that one or more zoned areas may be established by decree on land subject to local planning regulations located throughout Syria’s provinces and local administrative districts based on a proposal from the Minister of Local Administration and the Environment. The Urban Renewal Law has the effect of extending the provisions of Legislative Decree 66/2012, which sanctioned the establishment of Marota City and Basilia City in the Governorate of Damascus, to all of Syria and empowering local authorities in the development of such projects.
• Once a decree has been issued establishing a zoned area in pursuance of the Urban Renewal Law, the local council authority has one week to request from the competent authorities a list of all pre-existing owners who hold title to land located in the zoned area. The competent authorities shall prepare the list of pre-existing owners within 45 days of receiving the request so that these pre-existing owners obtain shares in the land subjected to the new development. The relevant local council shall within one month of the issuance of the decree provide notice via media outlets for any interested persons whose ownership interests are not recorded in the Land Registry to declare their interests in any land located within the zoned area or to have a relative or authorized representative make the declaration on their behalf. The owners whose interests are not recorded in the Land Registry shall declare their interests within 30 days of such notice being published via the media outlets and shall submit all their relevant documents to prove their ownership. In addition, the relevant local council shall establish one or more committees to survey the zoned area within one month of the issuance of the decree.
• According to the Urban Renewal Law, the zoned areas identified in a decree based on a proposal from the Minister of Local Administration and the Environment undergo a process whereby the land is initially zoned but for the purposes of giving pre-existing landowners shares in the zoned area. Consequently, the pre-existing landowners shall obtain shares in the zoned area and can no longer claim their original specific piece of land. The amount of shares they receive should be in proportion to their former landholding in the zoned area. The new Law does not permit expropriation of private property. Rather, it converts a proprietor’s land ownership into shares in the new development. That shareholding will correspond to an ownership in a specific plot of land in the new development.
• A key provision of the Urban Renewal Law is that no person has to prove their property ownership until a new zoned development in which they originally owned land is established by decree and this requirement will only apply to persons whose ownership is not recorded in the Land Registry. Thus, the Law requires persons whose ownership interests are not recorded in the Land Registry to prove their ownership only once a zoned development has been established by a decree. The purpose of these procedures is to verify the persons with ownership interests in the lands subject to development but not recorded in the Land Registry so that they can be given shares in the plots of the new developments. As for those persons whose ownership interests are recorded in the Land Registry, they do not have to undertake any action. Their ownership interests are already recorded and they will be provided with shares accordingly if the land in which they have ownership interests is subjected to a development project.
• There are discussions to potentially regenerate the Damascus suburbs of Mezzeh 86, Qaboun, Jobar, Tadamon and Harasta, the Homs suburb of Baba Amr, which witnessed substantial clashes in 2012, and the suburbs of Aleppo city in accordance with the Urban Renewal Law.
• While not enough alternative housing accommodation has been made available to residents of the Al-Razi area of southern Damascus that has become the site of the Marota City development, progress on this issue is anticipated in the coming months.
• The Ministry of Public Works and Housing is finishing work on the new Housing Bill before it makes its way to the People’s Assembly for deliberations. The Bill will allow housing associations to purchase lands on their own from the private sector while at the present time they currently rely on the competent public authorities to provide them.

Construction

• The Minister of Public Works and Housing announced that certain provisions of the Land-Use Planning Law provided for in Legislative Decree 82/2010 could be amended. The Law applies to areas designated for land-use planning purposes by the various local administration bodies throughout the country. The proposed amendments are in response to the need to reconstruct areas that have been affected by the ongoing war in Syria. The current Law states that the construction of a building with six floors must be completed within three years of the building permit being granted. In order to hasten the rebuilding process, the time period in this case is proposed to be reduced to one year.

Tourism

• The new owner of the Four Seasons Hotel in Damascus who bought the stake of Saudi Prince Al-Walid Bin Talal is planning not to renew the lease agreements of the existing retail businesses and restaurants and plans to conclude contracts with new tenants.
• An emerging investor who also heads up the Rural Damascus Chamber of Commerce has incorporated a company with his brother to make investments in hotels and malls. His major investment in the Qassioun Mall propelled him to the economic stage as well as a recent investment in the Al-Jalaa Hotel in the popular Damascus district of Mezzeh.
• The Minister of Tourism issued Resolution 1600/2018, which divides the Chamber of Tourism of the Coastal Zone into one Chamber of Tourism for the Governorate of Lattakia and one for the Governorate of Tartous in order to encourage particular attention to touristic investments in each province. In the coastal region, the Ministry of Tourism has licensed 178 touristic projects, 100 of which are located in Lattakia and worth SYP 437 billion, and 78 in Tartous worth SYP 405 billion.

Taxation

• The committee in the Ministry of Finance charged with drafting a new taxation regime has been seeking to implement new changes that respond to the current realities, particularly tax evasion. A key problem identified is the lack of a construction relationship and trust between the tax authorities and taxpayers, which leads the latter to pursue measures that evade their tax obligations. The fact that the tax authorities exercise considerable power when determining tax liabilities has been a cause for concern. Moreover, the allegations that high net worth taxpayers are the ones evading their tax liabilities were a driving force behind legislative review in this area. A more simplified taxation system that takes all these considerations into account is widely seen as the objective of the relevant committee in charge of drafting the new law.

Finance

• The Chairman of the Damascus Chamber of Industry stated that financing difficulties are among the main problems facing the industrial sector, both in terms of how banks are treating non-performing loans and a lack on their part to extend loans with lower interest rates.
• The Commercial Bank of Syria shed light on a new proposed bill that would prohibit the use of cash to pay for large commercial transactions, which instead would be processed exclusively by banks.
• The Central Bank suspended any further approvals for domestic financial remittance companies to contract directly with global financial remittance networks.
• The Council of Ministers approved the provision of funds necessary to restore basic services and public institutions in the Eastern Ghouta region of Damascus after it was brought back under the control of the state.

Insurance

• The Syrian Insurance Supervisory Commission is expected to start licensing brokerage companies in the local insurance market that will take the form of either limited liability or joint stock companies. The capital of the brokerage companies will range from SYP 50 million to SYP 100 million.

Commerce

• A leading Syrian businessman has signed an exclusive agency agreement with the Hyundai Motor Company to import and assemble all their products locally in Syria. Previously, the same businessman signed an agency agreement with Kia Motors.
• A Syrian delegation of 80 businessmen led by the Minister of Economy and Foreign Trade arrived in Crimea to attend the fourth Yalta International Economic Forum. A $1.1 billion (US) agreement was signed between the Syrian and Russian sides in the fields of agriculture, industry and tourism that could soon witness Syrian products entering the Russian markets via Crimea, which could potentially shorten transport times.

Industry

• Egyptian authorities said that they are planning to establish an industrial city to cater for the various Syrian investors who set up businesses in the country following the crisis that engulfed Syria starting in 2011.

Agriculture

• The Syrian Investment Authority has licensed a project for the storage and crushing of 300,000 tons of grain annually.

Transport

• The Ministry of Internal Trade and Consumer Protection ratified the articles of association of Fly Aman LLC, a private airline company owned by a new leading Syrian businessman.
• As the air transport sector takes off and new private airlines are licensed, the Ministry of Transport is considering alternative sites for a new airport in Damascus that could help cater for the potential increased demand that the reconstruction phase is expected to yield. According to the Minister of Transport, there are more than 10 applications to establish private airline companies.
• The Ministry of Transport issued Resolution 446/2018, which sets the licensing conditions for establishing private airline companies. Accordingly, such companies must have a minimum share capital of SYP 500 million, not including the value of the actual airplanes. The airplanes can be either purchased or leased and must be registered in the National Aviation Registry. The airplanes must also be certified by the Civil Aviation Authority. The application processing fee is fixed at SYP 10 million and once approval is granted, a licensing fee of SYP 50 million is payable. The license is renewable on an annual basis and in return for SYP 25 million.

Health

• The Ministry of Health permitted an increase in the prices of some pharmaceutical products to prevent producers from manufacturing at a loss. Despite the price rise, Syrian medicines remain among the cheapest in the world while providing quality treatment.
• The Syrian Investment Authority has licensed a project for the manufacture of pharmaceutical products and insulin that is expected to provide 150 employment opportunities.

Education

• A pre-war businessman known for his investments in the education sector has contributed 30% of the share capital of a new private joint stock company incorporated in the province of Rural Damascus that will establish private schools in Syria. The articles of association of the company were ratified by the Ministry of Internal Trade and Consumer Protection and its share capital has been set at SYP 927 million.

Employment

• The Council of Ministers discussed extending the provisions of Law 4/2016 for another year. Law 4/2016 exempts businessmen and employers registered with the General Establishment for Social Security from making penalty and interest payments if they pay their dues within a year. The then-Ministry of Labour issued the executive regulations to implement this Law.

Reconstruction

• An Aleppo MP who is also a leading industrialist has stated that with respect to reconstruction contracts, priority will be given to companies from friendly countries such as Russia and China.

Judiciary

• The Minister of Justice confirmed that he is continuing his campaign to punish any judge found to be corrupt as well as ensuring litigants are adequately represented in the courtroom and protected from lawyers who may attempt to prey on their vulnerabilities. Syrian MPs have continued to shed light on the need to raise the salaries of judges to help build more confidence in the judicial system.
• Syrian MPs called for more cooperation between the Ministry of Justice and the Bar Association to develop legislation, particularly laws relating to real estate and amendments to the Civil Procedure Code that would help hasten and facilitate the litigation process.
• Deliberations surrounded the potential establishment of a second Terrorism Court to ease the burden on the current chamber and speed up the process of passing judgments.
• The Attorney General of Rural Damascus announced that around 1,200 judicial documents were found in the recently freed Damascus suburb of Douma and that they were not actually discovered in the relevant judicial complex.

Administration

• The Ministry of Internal Trade and Consumer Protection introduced a new set of administrative fees that are applicable to all types of commercial companies and which are classified into four categories depending on the share capital of each company.
• Law 13/2018 provides for an amendment to Law 19/2013 by raising the ceiling for concerned ministers to ratify public contracts to SYP 400 million for investments from SYP 200 million and SYP 150 million for expenditures from SYP 100 million. The amendments come in light of fluctuations in the prices of materials and the exchange rate of the Syrian Pound.
• A bill is currently being considered that would expand the powers and authorities of the Ministry of Economy and Foreign Trade. The bill contains provisions that will give the Ministry competencies to formulate the economic policies of the state as well as supervise foreign trade relations. Other articles in the bill relate to the sanctioning of investment projects. The bill was approved by the Economic Committee linked to the Council of Ministers before being submitted to the Ministry of Justice for review. The Ministry of Justice then forwarded it to the Council of State. The Council of State has a judicial arm, which hears disputes involving the public sector, and an advisory arm that consults on proposed legislation involving public bodies. After its review by the Council of State, the bill will pass by the Ministry of Economy and Foreign Trade and the Council of Ministers before being forwarded on to the People’s Assembly for approval and the President of the Republic for ratification.
• The President of the Bar Association issued a circular specifying that powers of attorney granted in favour of lawyers that are not signed by the head of the respective branch of the Bar Association to which the relevant lawyer belongs shall be deemed invalid.

Family Law

• A bill is being considered that could potentially criminalize customary marriages because they are not certified by the Sharia Courts and have become widespread throughout the current conflict. There have been a number of controversies surrounding customary marriages, which have led the authorities to consider amendments to the Criminal Code in this respect.