property_seizure – Syria Report

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Explained: The Management and Investment of Confiscated Assets

21-05-2024/in Analysis & Features, HLP /by Rand Shamaa

On April 4, the Council of Ministers issued Decision No. 16, containing the executive instructions for Law No. 26 of 2023, related to the Disposal of Movable and Immovable Properties Confiscated under a Final Judicial Ruling, under the name “Special System for the Management and Investment of Confiscated Assets.” Law No. 26 of 2023 concerns the management, investment, and transfer of ownership of movable and immovable assets confiscated from those convicted by a final court ruling issued by any competent court dealing with felonies or terrorism, in accordance with various preceding laws.

Distribution of Responsibilities among Ministries

The special system, issued by Decision No. 16, consists of six chapters comprising 23 articles and was published in Part I of Issue 15 of the Official Gazette on April 16, 2024. The system assigns the responsibilities and tasks of implementing Law No. 26 of 2023 among the government ministries. It assigns the Ministry of Agriculture and Agrarian Reform the task of managing and investing in lands outside of zoning plans, while the Ministry of Finance is tasked with managing and investing in properties within zoning plans, as well as movable assets. The system requires the Ministry of Justice and the Military Judiciary Administration to send certified copies of final non-appealable court rulings to the Ministries of Finance and Agriculture for the necessary procedures.

Decision No. 16 also mandates the Ministry of Justice to circulate judicial rulings on the confiscation of convicts’ properties through the National System for Provisional Seizure Orders to facilitate the execution process on those properties. The National System for Provisional Seizure Orders is an electronic system launched by the Ministry of Communication and Technology in 2018, in collaboration with the Ministries of Finance and Justice, and with the participation of the entities involved in issuing and executing these orders. These entities include the Ministry of Transport, the Central Organisation Financial Control, the Combating Money Laundering and Terrorism Financing Commission, the General Directorate of Cadastral Affairs, the General Directorate of Customs, and the banks. The scope of the system includes all precautionary measures such as provisional seizure, compulsory insurance, and asset freezing, which restrict the disposal of ownership and are issued by the competent authorities as a precautionary measure to safeguard public assets. This means that after the issuance of final, non-appealable court rulings that include the confiscation of convicts’ assets, the Ministry of Justice circulates these rulings through the National System for Provisional Seizure Orders, allowing them to be converted from provisional to executive seizures.

The Ministries of Agriculture and Finance are responsible for following up on the execution of final court rulings that confiscate properties and registering them under the name “Syrian Arab Republic” or in the official records of confiscated assets, regardless of which judicial authority issued those rulings. The official records of confiscated assets are detailed registers containing information about these assets, their descriptions, the actions taken regarding them, and proposals for their management and investment.

Investment of Confiscated Properties

Decision No. 16 requires the General Directorate of Public Revenues under the Ministry of Finance and the General Commission for the Management and Protection of State Properties, established by Law No. 43 of 2023 and affiliated with the Ministry of Agriculture, to maintain detailed records of confiscated properties. These records should include information about the properties, their descriptions, the actions taken regarding them, and proposals for their management and investment.

Each of the Ministries of Finance and Agriculture, within their respective areas of responsibility, is to form a special committee for the management and investment of confiscated properties. These committees are tasked with proposing ways to manage and invest in these properties and protect them from damage. Specifically, the committee formed by the Ministry of Finance is responsible for managing and investing in movable properties and properties within zoning boundaries, while the committee of the Ministry of Agriculture is responsible for managing and investing in lands outside of zoning boundaries.

Additionally, the ministries can invest in, lease, or sell the confiscated properties according to the provisions of current laws, such as the Contracts Law No. 51 of 2004, the Investment Law No. 18 of 2021, the Real Estate Sales Law No. 15 of 2021, the State Property Law No. 252 of 1959, the Trade Law No. 33 of 2007, and others.

Decision No. 16 also allows the Ministers of Finance or Agriculture to transfer confiscated properties to other public entities upon their request, provided they explain their need for these properties. The committee for the management and investment of confiscated properties in each ministry will study the proposal and submit it to the minister, who will then forward it to the Prime Minister for a final decision. If the transfer of ownership is approved to an administrative public entity, the transfer is done free of charge. However, if the transfer is to an economic public entity, that is, a state-owned company, that entity is required to pay a fee determined by the Prime Minister for the benefit of the public treasury.

Other public entities can request the allocation of confiscated properties from the Ministries of Finance or Agriculture in the same manner as property transfer. Allocation involves placing these properties at the disposal of a public entity for a specified period and purpose, after which the properties must be returned. The Prime Minister can cancel the allocation if the public entity violates the specified conditions.

According to Decision No. 16, the revenue generated from the management and investment of confiscated properties is directed to the public treasury and deposited into a special account for confiscated assets. The Ministries of Finance and Agriculture are required to submit regular reports to the Cabinet detailing the status of the investment and management of confiscated properties, the profits achieved, and any difficulties encountered.

When transferring property ownership to the name “Syrian Arab Republic,” third-party claims such as lawsuits, mortgages, or seizures noted on the property record are disregarded. Consequently, any claims made by third parties on the confiscated property are considered futile.

Confiscation of a Company or Store

If the confiscated properties include a store or a company, they remain subject to the regulations governing them, whether company law, commercial law, or tax laws, to ensure the rights of the treasury. The Ministry of Finance appoints a representative to oversee the management and investment of the store or company, or the confiscated share thereof. This representative submits their report and recommendations on the process.

The Committee for the Management and Investment of Confiscated Assets within the Ministry of Finance is responsible for identifying the companies and stores, and the type and scale of the commercial activities they engage in, to make appropriate investment decisions. The Minister of Finance has the authority to propose changes to the legal structure of the confiscated company, merge it with another company, liquidate it, withdraw from it, or sell the confiscated share.

It should be noted that if the confiscated property is a share in a real estate property or a store, this can negatively impact the remaining partners due to the restrictive measures imposed by Decision No. 16. The encroachment on the ownership of the remaining partners might compel them to relinquish their shares for less than their market value. Decision No. 16 does not address the rights of the partners and fails to establish any rules to protect their interests.

Idlib Farmers Suffer Difficult Wheat Season

09-01-2024/in HLP, News /by Rand Shamaa

Since 2022, the Damascus-run Idlib governorate has been organising annual public auctions for investing in lands owned by absentees, including people forcibly displaced from Idlib. The winning investors in these auctions must cultivate specific crops according to the annual agricultural plan approved by the Ministry of Agriculture and Agrarian Reform. This requirement applies to both investors and farmland owners residing in regime-controlled areas. In both cases, the farmers face numerous difficulties in completing the cultivation of their land or in reneging on their investment contracts.

The Idlib governorate declared that its Announcement No. 1075, issued on October 15, 2023, serves as an official notification to all previous auction winners for the 2023-2024 agricultural season, emphasising the need to settle their financial obligations within three days. Failure to comply will lead the governorate to take legal action, including fines for withdrawal or default and re-listing these lands in new public auctions. In case of default, investors risk losing their initial deposits. They may be liable for damage costs, potentially leading to administrative seizure of their properties, as happened with an investor in rural Hama in February 2022.

The Idlib governorate invited investors to participate in public auctions for 18,169 hectares of uncultivated, non-forested land on November 15, 2023. These lands were previously offered for investment. However, they attracted no bidders, or the winners were deemed to have withdrawn due to non-fulfilment of their financial obligations.

A local correspondent for The Syria Report explained that the lack of previous investment in these lands is partly due to their proximity to the front lines between regime and opposition forces, making them relatively dangerous. This has led to some winners withdrawing their investments or failing to complete the required documentation and financial obligations.

The Idlib governorate had divided the lands offered for investment in auctions according to the administrative division of areas under regime control in Idlib. The auctions were held in the last quarter of 2023 at the governorate’s General Secretariat building in Khan Sheikhoun. The winning investors received their contracts from the local contracts office so they could start farming.

The Syria Report’s correspondent reported that the bidding procedures have become well-known and are being repeated for the second consecutive season in Idlib. Typically, agreements are made among investors within the same area to bid for lands owned by their acquaintances or relatives.

However, other reasons prevent farmers, whether they are landowners or investors, from completing the cultivation of their land. These include the obligation to adhere to the agricultural plan set by the Ministry of Agriculture and Agrarian Reform regarding the type of crops and the conditions for obtaining diesel and other production essentials like fertiliser and seeds at government-subsidised prices. Many farmers cannot meet these conditions, leading them to purchase these essentials at market prices, increasing their production costs. This is one of the reasons why some farmers default on completing their investment contracts.

To encourage wheat cultivation, the Idlib Agriculture Directorate has allowed farmers to plant wheat even if they exceed the areas determined by the Ministry’s agricultural plan for the 2023-2024 season in Idlib. The Director of Agriculture in Idlib, in a recorded meeting on October 21, 2023, and published by the Ministry of Agriculture’s Agricultural Media page on Facebook, stated that the plan allocated 18,000 hectares for wheat cultivation in Idlib Governorate, consisting of 4,000 hectares of irrigated land and the rest of non-irrigated land. However, at the same time, the directorate did not provide incentives or facilitation for obtaining official documents that would enable farmers to obtain production essentials at subsidised prices.

Farmers receive specified quantities of diesel, termed “agricultural diesel,” for farming and irrigation purposes, priced officially at SYP 2,000 per litre. This diesel is distinct from so-called “free diesel,” which is available at gas stations at SYP 13,000 per litre. On August 9, 2023, the Agricultural Subcommittee, chaired by the governor of Idlib, decided to provide wheat farmers with 120 litres of agricultural diesel per hectare annually. The distribution of agricultural diesel is automated, using the “smart” family card managed by Integration for Trading LLC (Takamol) Company.

Landowning farmers must obtain an “agricultural organising notice” document based on proof of land ownership. This document allows them to access government-subsidised agricultural essentials like seeds, fertilisers, and agricultural diesel and obtain a crop certificate of origin. The agricultural organising notice is not a deed of ownership in itself. In contrast, investing farmers, either non-landowners or joint owners, must obtain a document called a “physical inspection notice” issued by a committee formed by the Agricultural Extension Unit affiliated with the General Union of Farmers. Based on the “physical inspection notice,” which notes the land surface and specifications, the committee determines the quantity of subsidised agricultural diesel for the farmer.

The General Organisation for Seed Multiplication set the price of wheat seed this year at SYP 3,950 per kilogram. Wheat seed is distributed at 250 kilograms per hectare for irrigated land and 200 kilograms per hectare for rainfed land. This distribution occurs between November 15 and December 15 each year, the optimal period for wheat planting.

Explained: Seizure and Expropriation in Syria’s Public Assets Collection Law

18-10-2022/in Analysis & Features, HLP /by Rand Shamaa

Syria’s Public Assets Collection Law allows the General Commission for Taxes and Fees, part of the Ministry of Finance, to transfer private real estate to state ownership if the original owners fail to pay the necessary taxes and fees. The law was promulgated by Legislative Decree No. 341 of 1956 and its amendments.

Decree No. 341 sets the general terms for the categories of taxes that authorise the state’s seizure of taxpayers’ properties. It includes various types of taxes and direct and indirect fees, as well as additions and fines to those fees. In other words, the payments listed in the decree include all taxes and fees payable to state administrations and institutions under the applicable laws and regulations. Generally, the Public Assets Collection Law applies to income taxes, real estate sales tax, and others.

Decree No. 341 also outlines the methods for paying taxes and fees and the procedures against those who fail to pay. The process begins with a warning, then property seizure, and, finally, the sale of the seized property. The taxpayer must cover all the costs associated with the sale procedure.

Under Decree No. 341 and its amendments, the judicial authorities do not have the right to halt the implementation of these procedures. Meanwhile, the right to carry out these procedures is granted only to Syria’s financial authorities, which violates the principle of judicial independence. The seizure begins with a warning sent by the relevant Financial Department to taxpayers who have failed to pay their taxes and fees. Then, there is another warning. After ten days, the Financial Department director issues a decision to seize the taxpayer’s assets.

There are two cases in which Decree No. 341 grants financial authorities the right to make asset seizures without issuing a warning to the owners. First, if the failed taxpayer no longer lives in Syria permanently, and second, if there are legitimate reasons to expect that the failed taxpayer may be hiding their assets. These two provisions give financial departments far-reaching powers to seize assets belonging to Syrians abroad on the pretext that they are no longer permanently based in the country.

The government may also enforce a property seizure against a failed taxpayer’s movable and immovable assets and their proceeds, whether those assets are in the taxpayer’s possession or a third party. Such individuals may be tenants of the property. In these cases, seizure leads to the tenants losing their rights to benefit from the property without a valid reason.

Afterwards, the Minister of Finance issues a regulatory decision that includes the sale of the seized property. When a sale cannot be processed, the General Commission for Taxes and Fees may amend the property’s records within the Land Registry to be listed under the state’s name.

During the issuance of the Minister of Finance’s decision to register the property under the state’s name, the owner may pay a sum equal to the financial dues and any expenses. Payment of this sum then cancels the registration of the property under the state’s name, and the original owner may then retain their property.

But in cases where the owner fails to make the payment and after ownership of the property is formally transferred to the state, the state must wait at least three years until it can sell it. During these three years, the original owner or the inheritor of the property may request that it be recovered to them, provided that they pay all financial dues, expenses, fees, and fines incurred during the time the property was registered in the state’s name.