| August 2004We are delighted
to announce that while on a recent trip to Baghdad, Sabah M. Ali Mahmoud renewed
his membership with the Iraqi Lawyers Association to re-activate his Baghdad practice.
The Baghdad Office communications details will be shortly announced. We
also resume our practice of providing periodical updates on the situation in Iraq
to appraise visitors of this site of important legal, administrative and economic
developments that have an impact and an effect on the business environment in
Iraq. 1. General 1.1. In spite of the transfer of
formal sovereignty to a new Interim Iraqi Government at the end of June 2004 and
other major developments, that will be briefly referred to blow, the lack of essential
security and local instability remains predominant factor in Iraq. It is expected
that the escalation of violence will persist until substantial Iraqi security
and armed forces can be reorganized and become effective in imposing law and order.
To achieve the restructuring of the armed forces the new Interim Government recently
announced that it will rescind the order to dissolve the Iraqi army. 1.2.
The above mentioned prevailing lack of security remains the main obstacle to achieving
the stability which is essential for economic progress in the different sectors
including oil production and exports, production of refined products, electricity
supply, water purification, medical care and other essential services.
1.3. One of the first steps taken by the Interim Government was the
issue of the Law for the Defence of National Security (Emergency Law) allowing
for the declaration of emergency measures for specific periods and in specific
areas as and when is deemed necessary. 2. Transfer of Sovereignty 2.1.
Prior to the transfer of sovereignty important measures were taken. The issue
in March 2004 of the Transitional Administrative Law (TAL) (colloquially referred
to as the interim Constitution) by the Governing Council is considered as one
of the major developments on the ground in Iraq. The TAL will be the supreme law
in Iraq during the transitional period and provides the detailed mechanism for
the selection, election and running the country until a permanent constitution
is adopted and a Government is accordingly formed. 2.2. The formation
of the Interim Government, referred to above, on 1st June 2004, was
a major new development in the process for the transfer of sovereignty. This was
the culmination of a lengthy joint process involving the UN representative, the
CPA and the Governing Council for the transfer of sovereignty to an Iraqi Government.
The Governing Council, which until then had assisted in running the country, declared
that it was dissolved. 2.3. On 8th June 2004, the UN Security
Council unanimously adopted Resolution 1546 welcoming the termination of the Coalition’s
formal occupation of Iraq and the transfer of sovereignty to the Interim Government
that will take place on 30th June 2004. While the termination of the
occupation will lead to the dissolution of the CPA, the new interim Iraqi Government
is expected to agree the new status for the US led multinational forces presently
in Iraq. 2.4. The above mentioned UN Resolution 1546 provided the details
and timetable for the political transition to a democratic government in Iraq.
3. The Interim Government 3.1. On 28th
June 2004 sovereignty was formally transferred to new Iraqi Government referred
to in 2.2 above which included the President, two Vice Presidents, the Prime Minister,
two Deputy Prime Ministers and thirty Ministers. 3.2. Consequently, from
that date, the CPA ceased to exist in accordance with the provisions of UN Security
Council Resolution 1546 referred to in 2.4 above. 4. Economy and
Finance 4.1. The trend for economic liberalization and free market
approach adopted by the CPA is expected to be continued by the Interim Government.
Important Orders (laws), some of which are referred to below, were issued by the
CPA prior to its dissolution. These Orders in accordance with Paragraph (C) of
Article 26 of TAL will remain valid until changed or amended by new laws. 5.
Banking 5.1. In addition to the important step of issuing the
new Central Bank of Iraq (CBI) Law, on 6 March 2004 which we had referred to in
a previous update, further steps were taken for the liberalization of the previously
strictly controlled banking sector. Initially a Bank Law was issued on 19 September
2003 which rescinded and replace by a new Banking Law on 07 June 2004. The Bank
Law primarily aims to maintain public confidence in the banking system, promoting
better understanding and information and more importantly providing an appropriate
degree of depositors protection. 5.2. Foreign banks that were reportedly
given licenses to operate branches in Iraq will probably be able to establish
and expand such branches when the security situation improves. 6.
Investments & Company Law 6.1. In a previous update we reported
on the Order issued by the CPA to encourage foreign investment in Iraq, Order
(39), and anticipated that even though this Order will have major ramifications
on the business environment in Iraq, to be effectively applied the relevant laws
had to be accordingly amended. One of the important laws that had to be amended
was the Company Law. Consequently, Order 64 was issued on 05 March 2004 providing
the requisite extensive amendments to the Company Law No. (21) of 1997. 6.2.
To implement the provision in the above Order provides that foreign investors
may, to implement foreign investment using freely convertible currencies and Iraqi
legal tender, establish a wholly foreign-owned business entity in Iraq including
a subsidiary, the Company Law now allows the incorporation of Iraqi companies
by foreign individuals and corporate entities. The Department of the Companies
Registrar of the Ministry of Trade has issued the requisite forms for the registration
of these companies. 7. Intellectual Property 7.1. Very
important Orders were issued by the CPA amending the protection of intellectual
property laws to make them compatible with current internationally-recognized
standards of protection of such property, extend the scope of geographical protection
and to demonstrate the current Iraqi interest to become a full member in the international
trading system, known as the World Trade Organization. While Order (80) was issued
amending the Trademarks and Descriptions Law No. 21 of 1957, Order 81 was issued
amending the Patent, Industrial Design, Undisclosed Information, Integrated Circuits
and Plant Variety Law No. 65 of 1970 and Order 83 was issued to amend the Copyright
Law No. 3 of 1971. 8. Labor 8.1. Another important
Order Number 89 was issued to amend the provisions of the Labor Code Law No. (71)
of 1987 to improve conditions of work, technical skills, improve work opportunities
and fight unemployment. CAVEAT The above update is
a guideline not intended to be considered as a legal opinion or advice. For such
opinion and/or advice on specific legal aspects, matters or developments in Iraq,
kindly contact Gulf Lawfor detailed advice required.
Other Updates: Iraq
Update: December 2010 Iraq
Update: December 2008 Iraq
Update: August 2004 Iraq
Update: October 2003 Iraq
Update: Agency Law Iraq
Update: July 2003 Iraq
Update: April 2003 Iraq
Update on Agency Law: March 2001 Iraq Law latest update from
Gulf Law August 2004
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