Constitutional amendment required for Port city laws
The Government is preparing history-making laws governing the administration of the under-construction Colombo Port city but could face opposition if it, as pointed by legal experts, requires Constitutional amendments.
The proposed draft bill creating the Colombo International Financial City (CIFC), formerly named Colombo Port city, and which in turn includes an International Financial Zone (IFZ) is intended to simplify procedures for foreign investors. The bill is to be presented to Parliament shortly. The project developer is the CHEC Port City Colombo (Pvt) Ltd.
A senior official of the Ministry of National Policies and Economic Affairs said the zone will have its own legal, regulatory, tax and business infrastructure.
And, this is where constitutional law experts see the problem. “In Sri Lanka, unless you change the Constitution, you cannot have a separate law even in a newly created area of the country,” one President’s Counsel told the Business Times, noting that “arbitration decisions and judicial rulings on commercial matters should be made under the existing Sri Lankan law.”
The Ministry official disclosed that the IFZ will create an environment for the international financial services industry by attracting reputed international banking and financial services companies to locate within the CIFC.
The draft is being prepared by the Ministry’s legal division headed by former Attorney General Yuvanjana Wijethilake with a cadre of supporting staff of senior and junior research officers. A group of university interns is also engaged in research work during the period of devising the new law, he revealed.
The CIFC would operate under a separate set of laws with a separate court and separate arbitration centres – a city that is run under a different set of rules. “The CIFC will not come under the purview of the Colombo Municipal Council and its administration will be governed by a separate authority,” the official said.
This is not the first time the authorities have been contemplating separate laws to govern this development which began under the aegis of the Mahinda Rajapaksa regime, with moves to bring in separate laws reported by the Business Times at that time too.
Last year in a February 21 Business Times story headlined “Hong Kong-based law firm to draft and revise Sri Lanka’s fiscal and monetary laws”, it was reported that Hong Kong-based consultancy Baker McKenzie is to draft new laws on various sectors including the CIFC.
Another corporate and tax law expert told the Business Times that while amending the Constitution is inevitable in this scenario, changing the Constitution won’t be an easy exercise.
He cited examples where Singapore, Dubai and China have set up separate cities with different rules based on British law to govern it by changing their Constitutions. He said this the first time that Sri Lanka is planning to govern an artificially-created city through a separate legal framework based probably on English law.
Finance Ministry sources said that Sri Lanka expects to attract investments to the tune of US$13 billion to start coming in from 2018 onwards targetting investors from South Asia, particularly India.
CIFC is a concept developed through the joint efforts of the Government and CHEC Port City Colombo’s parent company China Communications Construction Company Limited (CCCC) – a Chinese multinational corporate. The project spans 269 hectares, and is estimated to be a $15 billion investment upon completion.