executive_seizure – Syria Report

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Social Insurance Body Willing ‘to Seize Everything’ to Recover Debt

06-08-2024/in HLP, News /by Rand Shamaa

The Syrian authorities continue their practice of making provisional seizures a routine procedure that any public institution or entity can impose on its debtors, rather than limiting it to judicial action. This time, the General Organisation for Social Insurance (GOSI), also known as the Social Security Organisation, is targeting with provisional seizures those who failed to pay taxes and fines due to GOSI, despite a clear law granting them a deadline until the end of this year to pay.

After a ten-day grace period that ended in mid-July, the Rural Damascus branch of the GOSI began imposing travel bans and administrative seizures on the assets and properties of 6,383 traders and industrialists from the private sector due to delays in paying GOSI the monthly instalments for workers officially registered in their establishments. An administrative seizure is a precautionary asset seizure that some ministries and their institutions can impose without judicial oversight.

The GOSI, which falls under the Ministry of Social Affairs and Labour, has a board of directors and a general manager, with its headquarters in Damascus and branches in the governorates. The GOSI requires mandatory insurance for workers and employees in both the public and private sectors to protect their rights in cases of disability, old age, and risks. By the end of 2020, the number of workers registered with GOSI reached 1.03 million in the public sector and 850,000 in the private sector.

Since 2021, the general administration of the GOSI has demanded all its branches take immediate and urgent measures to collect its debts. Between 2021 and June 2024, 15,138 administrative seizure decisions were reached in favour of GOSI, and 7,160 warnings were issued, according to an article published by Qasioun newspaper (mouthpiece of the People’s Will Party) on June 6. The newspaper also reported that GOSI’s debts amounted to SYP 216.7 billion from public entities and SYP 26 billion from the private sector by the end of 2020.

The Director General of GOSI, Jaafar Al-Skaf, told the official Tishreen newspaper on July 2, that the measures taken against those who fail to pay their debts to GOSI begin with travel bans and the imposition of administrative seizures on their properties. These administrative seizure decisions are then disseminated through the national system for provisional seizure orders. To lift the administrative seizure, the debts, along with fines amounting to 6 percent and interest on delayed payments, must be paid. In a departure from all institutional and legal norms, Mr Al-Skaf said: “We will seize everything to recover our debts.” He threatened that if these debts were not paid, the provisional seizure would be turned into an executive seizure, and the properties would be sold at public auctions.

The grace period, warnings, and subsequent administrative seizure and travel ban procedures directed at those who fail to pay their instalments and fines are entirely at odds with Law No. 13 of 2024. This law, issued by the President in April, grants applicants to GOSI an exemption from interest, fines, and additional amounts if they pay their dues by the end of this year. The grace period provided by Law No. 13 of 2024 for late payers to settle their dues without penalties does not end until December 31, 2024.

Social Insurance Law No. 92 of 1959 and its amendments, which govern the operation of GOSI, grants GOSI the right to exercise the powers conferred on the competent financial authorities under the Public Funds Collection Law against delinquent applicants.

According to Law No. 92 of 1959, insurance is mandatory for both the employer and the worker, and any agreement to the contrary is not permitted. The main resources of social insurance funds come from contributions paid jointly by the employer and the worker, or solely by the employer. The contributions owed to GOSI by the employer and the worker are distributed as follows: the worker pays 7 percent of their monthly wage, while the employer pays 14 percent of the wages of their workers for old age, disability, and death insurance, and 3 percent of the wages of their workers for work injury insurance.

New Decision Excludes Non-compliant Contractors from Engaging with Public Authorities

02-07-2024/in HLP, News /by Rand Shamaa

On March 14, the Syrian Prime Minister issued Decision No. 11 outlining the mechanism for issuing exclusion decisions against any investor or contractor found to have violated the terms of contracts made with public authorities. Exclusion means preventing the investor or contractor from obtaining contracts to execute projects with public authorities for the duration of the exclusion period.

Decision No. 11 of 2024 does not explicitly mention construction contractors, but they are implicitly included under the category of contractors. A contractor is someone who enters into a contract with a public authority to meet its needs in various fields, while a construction contractor is a specialist in construction works registered with the Construction Contractors Syndicate.

According to the decision, the exclusion measure is applied if a final judicial ruling, an oversight report, or a final arbitration decision establishes a violation of contract terms. Subsequently, the relevant ministry submits a request for exclusion to the Prime Minister’s Office. The exclusion decision is then issued solely by the Prime Minister’s Office, stating the reasons and duration of the exclusion. Before Decision No. 11 of 2024, ministers had the authority to issue exclusion decisions for contractors who violated contract terms with their ministries, under Law No. 51 of 2004 concerning the public contract system and its executive instructions.

The contractual relationships between contractors, construction contractors, and investors with public authorities are governed by Law No. 51 of 2004 concerning the public contract system, its amendments, and its executive instructions. There are six methods of contracting between the parties: direct purchase, tender, request for proposals, competition, negotiated contract, and execution of works on trust.

Law No. 51 of 2004 did not expand on the penalties resulting from breaches of contracts, instead designating the administrative judiciary as the competent authority to resolve disputes related to contracts with public authorities. The law also allowed for arbitration in disputes, following the procedures used in administrative judiciary. It permitted the selection of a specific arbitration body for foreign contracts.

Law No. 51 did not regulate the contractual relationship between contractors and the private sector. Therefore, it is notable that Prime Ministerial Decision No. 11 of2024 also stipulates the exclusion of contractors who violate the terms of contracts with private sector establishments, institutions, or companies. However, the text of Decision No. 11 does not clarify the mechanism for excluding contractors in this case or the legal basis for it.

Additionally, under Decision No. 11 of 2024, exclusion decisions must be published in the Official Gazette and through the National System for Precautionary Seizure Orders (NSPSO), an electronic system that covers all precautionary measures, such as precautionary seizure, compulsory insurance, and other measures that restrict property transactions. These measures are issued by competent authorities as precautionary steps to protect public funds. After the issuance of final judicial rulings that are not subject to appeal and include the confiscation of the convicted parties’ assets, the Ministry of Justice circulates these rulings through the NSPSO, enabling their conversion from precautionary to executive seizure. The aim of using the NSPSO is to replace paper circulars with electronic ones, facilitating their accessibility to relevant authorities.

According to Decision No. 11 of 2024, the seizure of the contractor’s or investor’s property through the NSPSO will be automatic upon the issuance of the exclusion decision by the Prime Minister. However, the relationship between precautionary seizure and exclusion decisions, even if based on a final judicial ruling, oversight report, or final arbitration ruling proving contract violations, is unclear. A breach of contract terms does not automatically warrant precautionary seizure. Therefore, there is no direct connection between exclusion decisions and precautionary seizure.

There are two types of precautionary seizure: judicial and administrative. Judicial precautionary seizure is issued by ordinary courts based on personal lawsuits or official entities with a financial basis or results in financial consequences, such as cases of debt and tax evasion. Administrative precautionary seizure can be imposed by certain ministries under Decree No. 12 of 1953. This includes the precautionary seizure of the property of municipal employees, officials overseeing municipal affairs, and employees in all state departments and public institutions, to secure compensation for losses and damages caused to public funds. The property of employees’ spouses can also be seized.

Under Legislative Decree No. 177 of 1969, administrative precautionary seizure can be imposed on the property of non-employees and their spouses. In 2022, the Minister of Public Works and Housing, following a proposal from the Construction Contractors Syndicate, requested the Ministry of Finance (in letter No. 2968, referencing the Syndicate’s letter No. 264) to exempt the monthly financial statements due to contractors even if the contractor is subject to precautionary seizure. These monthly statements are the payments due to the contractor from public authorities for completed stages of work. This exemption ensures that contractors can continue to fulfill their contracts with public authorities, even if their property is under precautionary seizure, whether due to issues related to the same contract or previous contracts. Failure to pay these statements would halt the contractor’s work, preventing public authorities from suing them since they would be responsible for the non-performance.

Additionally, the Construction Contractors Syndicate‘s Regulation No. 9 of 2014 outlined five reasons for excluding a contractor from the syndicate, four of which are related to conduct: breaching professional ethics, undermining the dignity of a syndicate member, failing to perform syndicate duties, and not informing the syndicate of ongoing work. The fifth reason is wasting public funds, which was not clearly defined in Law No. 9 of 2014. Exclusion from the syndicate prevents a contractor from working in both the public and private sectors, as they lose the official status required to practice the profession.

The Construction Contractors Syndicate can issue exclusion decisions through its Disciplinary Council, composed of the branch head, a judge appointed by the Minister of Justice, and a syndicate member. The council can revoke a contractor’s membership. In both cases, exclusion and revocation, the contractor cannot enter into contracts with public authorities until the exclusion period ends or they regain their syndicate membership.

Explained: New Law for Managing Funds Confiscated via Judicial Rulings

05-12-2023/in Analysis & Features, HLP /by Rand Shamaa

The Parliament approved a bill on November 30 granting the Presidency of the Council of Ministers the authority to manage movable and immovable assets confiscated under final judicial rulings. The bill will now be sent to the President for ratification, issuance, and subsequent publication in the Official Gazette.

The bill stipulates that confiscating assets and properties must be based on a final, unappealable ruling. That is, if the judgement were appealable, the transfer of ownership from the defendant to the state cannot be executed.

The law has not yet been published. Official media only published some articles about it. According to the available information, the bill could target political opponents accused of “terrorism” in special courts. The assets of these accused are provisionally seized then confiscated under judgments issued by the Antiterrorism Court, established under Law No. 22 of 2012. This court has the authority to issue judgments, either in the presence or absence of the defendant, whereby it confiscates all movable and immovable properties of the defendant. The legal norms of litigation do not bind the Antiterrorism Court, and its judgments lack the necessary guarantees for fair trials.

This new law also could apply to verdicts issued by criminal courts that order the confiscation of movable and immovable assets, regardless of the nature of the case. This appears in harmony with the official statements that indicated that those convicted of corruption cases may be included in this law.

This new bill differentiates between properties located within and outside zoning plans in managing real estate assets. Within zoning plans, the responsibility of managing these properties lies with the Ministry of Finance, which also has the authority to manage movable assets, shares, or stakes in a company. The Ministry of Agriculture and Agrarian Reform will manage properties outside of zoning plans.

The law stipulates that the Prime Minister is empowered to issue a decision, upon the request of the relevant minister, to transfer the ownership of confiscated movable and immovable assets to public entities. If the beneficiary public entity is administrative, i.e., a public facility based on public service, such as a municipality or a government department, no fees, taxes, or other compensation are owed. If the beneficiary public entity is of an economic nature, i.e., a public sector company engaged in commercial, agricultural, industrial or financial activities, then a financial compensation has to be paid to the public treasury.

The Prime Minister can allocate a portion of seized properties to any public entity upon the request of the relevant minister.

The new law gives the Council of Ministers the authority to issue a special system or executive instructions based on the Ministers of Finance and Agriculture proposal. This will include defining the mechanism for managing, investing, transferring ownership and allocating these movable and immovable assets transferred to the state.

This new law applies retroactively, meaning it applies even if the confiscation occurred under judgments issued before the enactment of this law. The final article of the law states that “without prejudice to the rights accrued to others under the effective laws and without affecting them, the provisions of this law shall apply to movable and immovable assets confiscated under a final judicial ruling, whether the ruling was issued before or after the enactment of this law.” This contradicts a well-known principle in criminal law, which prohibits the retrospective application of criminal and penal provisions and requires immediate application to subsequent instances only.

Article 10, paragraph 1 of the Syrian Penal Code states: “Any new law that amends the method of executing a punishment in a way that changes its nature shall not apply to acts committed before its enforcement unless it is more favourable to the defendant or the convict.” This means that the retrospective effect of the new law in procedural matters is only permissible if it benefits the convict. However, the new law stipulates its retrospective application despite being against the interests of the convict.

Explained: How Academic Sponsorship Impacts Housing, Land, and Property Rights

16-05-2023/in Analysis & Features, HLP /by Rand Shamaa

Syria’s Academic Delegations Law, issued by Legislative Decree No. 6 of 2013, requires any person to study abroad on an academic delegation to have a guarantor who will pay all expenses and fees incurred by the student if they fail to fulfil their obligations to the sending entity or refuse to return home to Syria.

The agreement between the student and the guarantor, according to Law No. 6 of 2013, is one of mutual and solidary liability, meaning the creditor can seize funds from either party to recover the debt. If the state confiscates the guarantor’s assets, the guarantor may also initiate separate proceedings against the student to recover the funds they paid on their behalf.

Law No. 6 of 2013 defines a delegate student as a student sent on an academic delegation to study, train, or learn at a university or institute inside Syria or abroad at the state’s expense, on a scholarship, or with study leave. The law emphasizes that a sponsorship guarantee is mandatory for the student, or they risk losing their right to attend their delegation.

Articles 738-747 of the Syrian Civil Code define such sponsorship as a contract in which a person guarantees to fulfil an obligation imposed on another person, such as the guarantor promising the creditor to pay the debt if the debtor fails. This means that the guarantor commits to paying a debt in which they have no personal interest. The guarantee contract is only between the guarantor and the debtor’s creditor, with the debtor not being a party. In addition, the Civil Code requires the guarantor to be solvent, capable of fulfilling the guarantee and residing in Syria.

Under Minister of Higher Education Decision No. 10, issued on January 27, 2020, there are several different types of guarantees for students sent away for study: real estate, commercial, industrial, or agricultural. In a real estate guarantee, the guarantor provides a piece of real estate whose value is not less than a certain amount. It must not be mortgaged to any public or private entity and must not have any mark placed on its land record. As part of the real estate guarantee, a compulsory insurance mark is placed on the land record of the guarantor’s property to benefit the Ministry of Higher Education. During compulsory insurance, the property remains in the hands of its owner. This does not prevent them from disposing of the mortgaged property and selling it, so long as the creditor can collect their debt from the mortgaged property and sell it, regardless of who it has been transferred to.

A single guarantor may provide a guarantee for more than one property for one delegate student if the value of one property is insufficient. If the student fails to meet their obligations, the creditor, i.e. the Ministry of Higher Education, can initiate executive seizure procedures to sell the property and recover the debt. Any surplus beyond the debt amount and the legal action costs belongs to the property owner.

As for commercial, industrial or agricultural guarantees, the guarantor must be registered in the Chamber of Commerce, Industry, or Agriculture, and their classification within those chambers must be excellent or first-degree, or there must be two guarantors of the second-degree. In addition, the Chamber of Commerce, Industry, or Agriculture must approve the solvency of the guarantor (their ability to pay the debt), regardless of their degree.

As for the guarantee procedures, the guarantor must obtain a guarantee document from the Directorate of Academic Delegations at the Ministry of Higher Education and sign it in front of a notary who authenticates it. The guarantee is a written document by which the guarantor commits to sponsor the student by paying all amounts stipulated by Academic Delegations Law No. 6 of 2013, should the student violate what they committed to in this guarantee, and solidary liability with them. The guarantor remains obligated to this agreement until the student’s commitment under the provisions of Law No. 6 is fulfilled. After authentication by the notary, the guarantee is photocopied twice. Finally, the Directorate of Academic Delegations receives the original document and the two authenticated photocopies.