ECONOMYNEXT – Sri Lanka’s Supreme Court has suggested a series of changes to set up a Colombo Port City Commission to run a special economic zone on land reclaimed by a Chinese company so that the law complies with the constitution.

Sri Lanka’s parliamentary speaker read out the changes suggested by the Supreme Court to avoid a two-thirds majority or a referendum.

The Court has suggested that the authority of regulatory agencies be preserved allowing them to make decisions and communicate the decisions instead of giving concurrence by compulsion as contained in the bill.

The SC also proposed changes preventing tax exemptions from being allowed outside the Colombo Port City area.

The proposed changes are as follows:

The determination of the Court as to the constitutionality of the Bill titled “Colombo Port City Economic Commission” is as follows:

(i) The provisions of Clauses 3(6), 30(3) second proviso, 55(2) and 58(1) of the Bill are inconsistent with Article 12(1) of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution.

However, the said inconsistencies will cease if the clauses are amended as follows:

Clause 3(6)

Page 3, Line 33- Delete the words “provide such concurrence” and substitute therefore the words “communicate its decision”

Existing Clause 3(6)

“The relevant Regulatory Authority from whom such concurrence is being sought by the Commission, shall as soon as practicable in the circumstances, as a matter of priority, provide such concurrence to the Commission.” 

Clause 30(3) second proviso

Page 30, Line 15 – – Delete the words “render such concurrence” and substitute therefore the words “communicate its decision” 

Existing Clause 30 (3) second proviso

“Provided further, the relevant Regulatory Authority from whom such concurrence is being sought by the Commission, shall as soon as practicable in the circumstances, as a matter of priority, render such concurrence to the Commission,” 

Clause 55(2) 

Page 49, Lines 16 and 17- Delete the words “provide such concurrence” and substitute therefore the words “communicate its decision” 

Existing Clause 55(2)-

“The Condominium Management Authority, shall as a matter of priority in the circumstances, provide such concurrence to the Commission.”

Clause 58(1) 

Page 52, Lines 9 and 10 – Delete the words “render such concurrence” and substitute therefore the words “communicate its decision”

Existing Clause 58(1)-

“Where the concurrence of the Securities and Exchange Commission is sought by the Commission, Securities and Exchange Commission shall as soon as practicable in the circumstances, as a matter of priority, render such concurrence to the Commission.”

(ii) the provisions of Clauses 3(5) proviso, 3(7), 6(1)(b), 30(3) first proviso, 71(1) and 74 [interpretation “Regulatory Authority”] of the Bill are inconsistent with Article 12(1) of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution. 

However, the said inconsistencies will cease if the clauses are amended as follows: 

Clause 3(5) proviso

Page 3, Line 27- Add the words “by the Commission” after the word “implementation” 

Existing Clause 3(5)- 

“The Commission shall, in the exercise, performance and discharge of its powers, duties and functions, where so required by the respective written laws applicable to any Regulatory Authority, obtain the concurrence of the relevant Regulatory Authority in respect of the subjects vested in or assigned to, such Regulatory Authority and to the extent specifically provided for in this Act: Provided that, the concurrence of the relevant Regulatory Authority sought shall be limited to the implementation, within the Area of Authority of the Colombo Port City, of the respective written laws applicable to such Regulatory Authority.”

Clause 6(1)(b)

Page 6, Line 27- Delete the word “overall” Page 6, Line 32- Delete the words “as the Commission considers necessary” 

Existing Clause 6(1)(b)-

 “to facilitate and exercise overall regulatory supervision and control over all investments and businesses in and from the Area of Authority of the Colombo Port City, in terms of this Act, with the concurrence, of the relevant Regulatory Authority, as the Commission considers necessary: Provided that, the concurrence of the relevant Regulatory Authority sought shall be limited to the implementation, within the Area of Authority of the Colombo Port City, of the respective written laws applicable to such authority;”

 Clause 30(3) first proviso 

Page 30, Line 9- Add the words “by the Commission” after the word “implementation” 

Existing Clause 30(3)-

“The Commission shall obtain the concurrence of any relevant Regulatory Authority in the process of granting such registration, licence, authorisation or other approval, where so required by the respective written laws applicable to such authority, in respect of the subjects vested in or assigned to, such Authority and to the extent specifically provided for in this Act: Provided that, the concurrence of the relevant Regulatory Authority sought shall be limited to the implementation, within the Area of Authority of the Colombo Port City,”

Clause 71 (1)

 Page 62, Line 7- Delete the words “as is considered necessary”

Existing Clause 71 (1)-

“The President or in the event that the subject of the Colombo Port City is assigned to a Minister, such Minister may, in consultation with the Commission and any relevant Regulatory Authority as is considered necessary, make regulations in respect of all matters for which regulations are required to be prescribed or authorised by this Act to be made.”

 Clause 74

Page 70, Lines 11 to 16- Delete the words commencing from “to the extent” to “Colombo Port City”

Existing Clause 74 page 70 Lines 1 to 16-

“Regulatory Authority” includes the Monetary Board of the Central Bank of Sri Lanka, the RegistrarGeneral of Companies, the Director-General of the Central Environmental Authority, the Controller of Immigration and Emigration, the DirectorGeneral of Customs, and such other regulatory authority or approving authority, and in whom the powers, duties and functions relating to the respective subjects which are dealt with in this Act are vested in or assigned to, in terms of any applicable written law to the extent provided in this Act. The relevant Regulatory Authority shall be limited to the implementation of the respective written laws applicable to such authorities, within the Area of Authority of the Colombo Port City;”

Clause 3(7) 

To be shifted after Clause 73 of the Bill and re-numbered as Clause 74. 

The new Clause 74 will now read as follows: 

“74. Nothing in this Act shall, unless otherwise specifically provided for in this Act, be deemed to restrict in any way the powers, duties and functions vested in such Regulatory Authority by any written law in relation to the Area of Authority of the Colombo Port City.” 

Clauses 74 and 75 Present Clauses 74 and 75 be re-numbered as Clauses 75 and 76 respectively

CLAUSES REQUIRING A REFERENDUM AND SPECIAL MAJORITY

 (iii) The provisions of Clauses 3(4), 6(1)(u), 68(l)(f) and 68(3)(a) are inconsistent with Article 76 read with Articles 3 and 4 of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution and approved by the People at a Referendum by virtue of the provisions of Article 83.”

However, the said inconsistencies will cease if the clauses are amended as follows: 

Clause 3(4) 

Page 3, Line I4 – Delete the word “for” and substitute therefore the words “to facilitate” Page 3, Lines I6 and I7- Delete the words “and Development Control Regulations”

Existing Clause 3(4)-

“The Commission shall be responsible for preparing, developing, amending, updating, publishing and enforcing all Community Rules and Development Control Regulations applicable within the Area of Authority of the Colombo Port City.”

Clause 6(1)(u) 

Page I0, Lines I4 to I5 – Insert the words “enforce the” before the words “Development Control Regulations”

Existing Clause 6(1)(u)-

 “to prepare, develop, amend, update, publish and enforce all Community Rules and Development Control Regulations as may be prescribed for applicability within the Area of Authority of the Colombo Port City;”

Clause 68 (1)(f)

 Page 60, Lines I to 3 – Delete in its entirety 

Existing Clause 68 (1)(f)-

“contravenes or fails to comply with any rule, code, direction or guideline made or issued in terms of this Act,”

Clause 68(3)(a) 

Page 60, Line 25- Delete the words “rule, direction, order or requirement issued or imposed”

Existing Clause 68(3)(a)-

 “Notwithstanding the provisions contained in any other written law, any person who contravenes or fails to comply with any provision of this Act or any regulation, rule, direction, order or requirement issued or imposed thereunder commits an offence under this Act and shall be liable on conviction after summary trial before a Magistrate to a fine of not less than rupees five hundred thousand and not more than rupees one million or to imprisonment for a term of not less than three months and not exceeding one year, or to both such fine and imprisonment”

CLAUSES REQUIRING A REFERENDUM AND SPECIAL MAJORITY

(iv) The provisions of Clause 52(3) read with Clauses 52(5) and 71(2)(p) of the Bill are inconsistent with Article 148 of the Constitution read with Articles 3, 4 and 76 of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution and approved by the People at a Referendum by virtue of the provisions of Article 83.”

 However, the said inconsistencies will cease if the clauses are amended as follows: 

Clause 52(3) 

Page 44, Line 20- Add the words “in accordance with the Regulations made under this Act … ” after the words “granted thereto ” 

Existing Clause 52(3)-

“Upon a business being so identified as a Business of Strategic Importance, exemptions or incentives as provided in this Part may be granted thereto, in so far as it relates to its operations in and from the Area of Authority of the Colombo Port City. In the case of tax-related exemptions, such exemptions may be granted, either in full or part, and from all or any of the enactments set out in Schedule II hereto.”

Clause 52(5) 

Page 44, Lines 29 to 3I -Delete in its entirety and replace with the following: 

“(5) Regulations may be made prescribing guidelines on the grant of exemptions or incentives, as provided for in this Part of this Act.”

Existing Clause 52(5)-

Regulations may be made prescribing any further guidelines as may be necessary on the grant of exemptions or incentives, as provided for in this Part of this Act”

Clause 71 (2)(p)

Page 65, Line I -delete the words “any further” 

Existing Clause 71 (2)(p)-

“specifying for the purposes of section 52, any further guidelines on the grant of exemptions or incentives to a Business of Strategic Importance;”

CLAUSES REQUIRING A SPECIAL MAJORITY

(v) The provisions of Clauses 30(1 ), 33(1 ), 40(2) and 71 (2)(1) of the Bill are inconsistent with Article 14(1)(h) of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution.

However, the said inconsistencies will cease if the clauses are amended as follows: 

Clause 30(1) 

Page 29, Line 24- Delete the words “or to visit”. 

Existing Clause 30(1)-

“Subject to Part VII, Part VIII and section 33 of this Act, the Commission shall be the Single Window Investment Facilitator responsible for the consideration and determination, in an expeditious and coordinated manner, whether to accept or reject for good reason, any application made to the Commission for a registration, licence, authorisation or other approval as may be necessary, to engage in any business in, to invest in, to reside in, to be employed in, or to visit, the Area of Authority of the Colombo Port city.”

Clause 33(1)

Page 31, Lines 32 and 33- Delete the words “or to visit” 

Existing Clause 33(1)-

“The Commission, as Single Window Investment Facilitator shall accept an application for and facilitate the processing of, any visa, entry permit or work permit, and other approvals as may be required by an authorised person, any consultant of, or any person specially authorised by an authorised person or an employee of an authorised person, and a person who intends to engage in business, to invest in, to reside in, to be employed in, or to visit the Area of Authority of the Colombo Port City, as may be necessary.”

Clause 40(2) 

Page 35, Line 37- Delete the words “when leaving” and substitute therefore the words “to be taken out of’ 

Existing Clause 40(2)-

“Any levy as may be required to be paid by a citizen of Sri Lanka or a resident on goods purchased at retail facilities as set out in subsection (1), when leaving the Area of Authority of Colombo Port City, shall be as prescribed.”

Clause 71 (2) (l)

Page 64, Lines 11 and 12- Delete the words “at the time of leaving the Area of Authority of the Colombo Port City”

Existing Clause 71 (2) (l)-

“specifying for the purposes of section 40, any levy as may be required to be paid by a citizen of Sri Lanka or a resident on goods purchased at retail facilities within the Area of Authority of the Colombo Port City at the time of leaving the Area of Authority of the Colombo Port City, and the procedure applicable to the conversion of payments made by a citizen of Sri Lanka or resident when using retail facilities or services at restaurants, cinemas, entertainment facilities, shopping facilities, or parking facilities, within the Area of Authority of the Colombo Port City, into any other designated foreign currency;”

CLAUSES REQUIRING A REFERENDUM AND SPECIAL MAJORITY

(vi) The provisions of Clause 53(2)(b) read with Clause 53(3)(b) of the Bill is inconsistent with Article 76 of the Constitution read with Articles 3 and 4 of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution and approved by the People at a Referendum by virtue of the provisions of Article 83.”

However, the said inconsistencies will cease if the clauses are amended as follows: 

Clause 53(2)(b) 

Page 45, Line 20- Delete the words “the specific enactments from those listed in” and substitute, therefore, the words “the specific exemptions from those enactments listed in”  Page 45, Line 22- Delete the words “exempted from being”

Existing Clause 53(2) and 53(2)(b)-

(2)The President or in the event that the subject of the Colombo Port City is assigned to a Minister, such Minister, may, having considered such recommendations, and having

regard to the national interest or in the interest of the advancement of the national economy, in consultation with the Minister, assigned the subject of Finance, take such steps as are necessary to inform the Cabinet of Ministers, of –

(2)(b)the specific enactments from those listed in Schedule II to this Act, that are proposed to be exempted from being applicable to such Business of Strategic Importance and any other incentives;

Clause 53(3)(b) 

Page 46, Line 10- Delete the words “the specific enactments from those listed in” and substitute therefor the words “the specific exemptions from those enactments listed in” Page 46, Line II- 

Delete the words “exempted from being” 

Existing Clause 53(3) and 53(3)(b)-

(3)Within two weeks from the date on which the Cabinet of Ministers approves the designation of a business as a Business of Strategic Importance and the granting of the exemptions or incentives so approved, the President or in the event that the subject of the Colombo Port City is assigned to a Minister, such Minister shall, by Order published in the Gazette, specify – 

(3)(b)the specific enactments from those listed in Schedule II to this Act, that are exempted from being applicable to such Business of Strategic Importance and any other incentives granted;”

CLAUSES REQUIRING SPECIAL MAJORITY

(vii) The provisions of Clauses 60(c) and Clause 60(f) of the Bill is inconsistent with Article 148 of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution.”

However, the said inconsistencies will cease if the clauses are amended as follows:

Clause 60(c)

Page 53, line 14- delete the word “taxes” and substitute therefor the word “rates” 

Existing Clause 60 and 60(c)-

The Estate Manager shall act under the direction and supervision of the Commission and exercise, perform and discharge the following powers, duties and functions,

(c)to facilitate the collection of area related taxes and levies imposed by the Commission within the Area of Authority of the Colombo Port City, as authorised by this Act, and collect fees and charges for services provided within the Area of Authority of the Colombo Port City, including management fees, utility charges, vehicle parking charges, user fees and such other fees or charges from authorised persons, employees of authorised persons, residents, occupiers and visitors within the Area of Authority of the Colombo Port City;”

Clause 60(f)

 Page 54, line 2 -delete the word “taxes” and substitute therefor the word “rates” 

Existing Clause 60(f)-

“to collect on behalf of the Commission, the local rates, taxes, levies and such other charges imposed by the Commission and applicable within the Area of Authority of the Colombo Port City, and credit the total of the sum so collected to a bank account as directed by the Commission;”

CLAUSES REQUIRING A SPECIAL MAJORITY

(viii) The provisions of Clause 37 of the Bill is inconsistent with Article 12(1) and 14(1)(g) of the Constitution and could be validly passed only with the special majority provided for in Article 84(2) of the Constitution.

 “However, the said inconsistency will cease if a new sub-clause is added to Clause 37 of the Bill restraining such authorised person making use of any exemptions or incentives granted under this Bill when conducting business outside the Area of Authority of the Colombo Port City to the detriment of similar businesses conducted outside such Area of Authority but within the territory of Sri Lanka.

We have examined the rest of the clauses of the Bill and determine that they are not inconsistent with the Constitution.” 

(Colombo/May18/2021)