“COLOMBO PORT CITY ECONOMIC COMMISSION BILL” : Determination of the Supreme Court

The Supreme Court has examined that except for the specific provisions and clauses set out in the table following the rest of the clauses of the Bill are not inconsistent with the Constitution. 

The Supreme Court has also determined that upon the amendments suggested by "the determination of Court" being affected, the Bill and its provisions will cease to be inconsistent with the Constitution. 

Earlier, the Petitioners were of the view that the proposed Bill’s provisions and clauses in particular, Clauses 3, 4, 6,7, 9, 16, 23, 24, 26, 27, 28, 30, 31, 32, 33, 34, 35, 36, 55, 58, VII, Part VIII, Part IX, Part X, Part XI, Part XII, Clauses 62, 63,64 and/or Part XVI and/or Part XVI 65, 66, 68 and 73, are inconsistent with one or more of Articles 1, 2, 3, 4, 5, 12(1), 12(2), 14(1)(g), 14(1)(h), 17, 33,75, 76, 126,140, 141,148 and Article 154(G) of the Constitution of Sri Lanka.

 

Inconsistent clauses and provisions according to the Supreme Court	Whether it can be approved by a special majority or approved by the people at a referendum	The proposed amendments by the Supreme court to cease the inconsistencies and pass with a simple majority
Establishment of the Commission 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.	Inconsistent with Article 76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority (As per Article (84(2)) and by the people at a Referendum(Article 83)	Delete the word "for" and substitute therefor the words "to facilitate"  Delete the words "and Development Control Regulations"
Establishment of the Commission 3(5) The Commission shall, in the exercise, performance 20 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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority (As per Article (84(2)).	Add the words "by the Commission" after the word "implementation"
Establishment of the Commission 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.  3(7) 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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority (As per Article (84(2)).	3(6)- Delete the words "provide such concurrence" and substitute therefor the words "communicate its decision"  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:  "Nothing in this Act shall, unless otherwise specifically provided for in this Act, be deemed to restrict in any way the powers, duties andfun"ctions vested in such Regulatory Authority by any written law in relation to the Area of Authority of the Colombo Port City."
Powers, duties and functions of the Commission  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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority (As per Article (84(2)).	Delete the word "overall" Delete the words "as the Commission considers necessary"
Powers, duties and functions of the Commission  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	Inconsistent with Article 76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority (As per Article (84(2)) and by the people at a Referendum(As per Article 83)	Insert the words "enforce the" before the words "Development Control Regulations"
Commission to function as a Single Window Investment Facilitator in relation to the grant of any registration, license, authorization or other approval in terms of this Act  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, license, authorization 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.	Inconsistent with Article 14(1)(h) of the Constitution.      Could be validly passed with a Special Majority (As per Article (84(2)).	Delete the words "or to visit".
30(3) first and second provisos 30(3) The Commission shall obtain the concurrence of any relevant Regulatory Authority in the process of granting such registration, licence, authorization 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:  v 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:  v 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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Clause 30(3), first proviso Add the words "by the Commission" after the word "implementation"    Clause 30(3), second proviso -Delete the words "render such concurrence" and substitute therefor the words "communicate its decision"
33(1) The Commission, as the 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 authorized 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.	Inconsistent with Article 14(1)(h) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "or to visit"
37(1) An authorised person may, subject to the applicability of all written laws for the time being in force and regulations which may be made hereunder, in the national interest and in order to safeguard the interest of the domestic economy, apply to the Commission for an authorisation to engage in business in Sri Lanka, with a citizen of Sri Lanka or a resident, who is engaged in business in Sri Lanka, outside the Area of Authority of the Colombo Port City.  (2) The Commission having considered such request, may in the national interest, in the interest of the advancement of the national economy, and while ensuring the interest of the domestic economy, issue such an authorisation, in such mannerandsubjecttosuchconditionsasshallbeprescribed.	Inconsistent with Articles 12(1) and 14(1)(g) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	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
A citizen or a resident of Sri Lanka, may utilize facilities or services within the Area of Authority of the Colombo Port City  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.	Inconsistent with Article 14(1)(h) of the Constitution.    Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "when leaving" and substitute therefor the words "to be taken out of'
Grant of exemptions or incentives to Businesses of Strategic Importance  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.  {Schedule II - ENACTMENTS FROM, OR UNDER, WHICH EXEMPTIONS OR INCENTIVES MAY BE GRANTED} READ WITH CLAUSES 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.  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. (clause 71 – The President or Ministry in consultation with the Commission regulations may be made on what matters)	Inconsistent with Article 76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority(Article (84(2)) and by the people at a Referendum(Article 83)	52(3) - Add the words "in accordance with the Regulations made under this Act... " after the words "granted thereto "    52(5) - 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."
Details of Businesses of Strategic Importance to be specified by Order (following Clauses 53 (2)(b) and (3)(b)) 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  53(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,   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  53(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;	Inconsistent with Articles 148 and 76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority(Article (84(2)) and by the people at a Referendum(Article 83)	53(2)(b) - Delete the words "the specific enactments from those listed in" .and substitute therefor the words "the specific exemptions from those enactments listed in"  Delete the words "exempted from being"      53(3)(b) - Delete the words "the specific enactments from those listed in" and substitute therefor the words "the specific exemptions from those enactments listed in"  Delete the words "exempted from being"
Commission may seek the concurrence of the Condominium Management Authority  55 (2) The Condominium Management Authority, shall as a matter of priority in the circumstances, provide such concurrence to the Commission.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "provide such concurrence" and substitute therefor the words "communicate its decision"
Commission to seek concurrence of the Security and Exchange Commission  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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "render such concurrence" and substitute therefor the words "communicate its decision"
Powers of the Estate Manager  60(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;  and 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;	Inconsistent with Article 148 of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	60(c ) - Delete the word "taxes" and substitute therefor the word "rates"      60 (f) - Delete the word "taxes" and substitute therefor the word "rates"
Offences – 68(1)(f) and 68(3)(a) Notwithstanding the provisions contained in any 10 other written law, any person who, within the Area of Authority of the Colombo Port City– 68(1) (f)contravenes or fails to comply with any rule, code, direction or guideline made or issued in terms of this Act, commits an offence and shall be liable on conviction after summary trial before a Magistrate, to a fine of not less than rupees one million and not more than rupees five million or to imprisonment for a term not less than three months and not more than two years, or both such fine and imprisonment and the court may take into consideration the grave nature of the offence committed, in fixing the amount of such fine or the period of such imprisonment.  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.	Inconsistent with Article 76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority(Article (84(2)) and by the people at a Referendum(Article 83)	68 (1) (f)- Delete in its entirety   68 (3) (a) - Delete the words "rule, direction, order or requirement issued or imposed"
Regulations 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.	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "as is considered necessary"
Without prejudice to the generality of powers conferred by subsection (1), regulations may also be made in respect of all or any of the following matters:–    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;	Inconsistent with Article 14(1)(h) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words "at the time of leaving the Area of Authority of the Colombo Port City"
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;	Inconsistent with Articles 148 and  76 read with Article 3 and 4 of the Constitution.    Could be validly passed with a Special Majority(Article (84(2)) and by the people at a Referendum(Article 83)	delete the words "any further"
Interpretations “Regulatory Authority” includes the Monetary Board of the Central Bank of Sri Lanka, the Registrar- General of Companies, the Director-General of the Central Environmental Authority, the Controller of Immigration and Emigration, the Director- General 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;	Inconsistent with Article 12(1) of the Constitution.      Could be validly passed with a Special Majority(Article (84(2)).	Delete the words commencing from "to the extent" to "Colombo Port City"  Present Clauses 74 and 75 be re-numbered as Clauses 75 and 76 respectively

 

 

  By Shehan Chamika Silva

Colombo Port City Economic Commission Bill - Oral Arguments before the Supreme Court (April 19-23)

  

 By Shehan Chamika Silva

The Bill was published in the Extra Ordinary Gazette notification on March 24, 2021.

It presented to the Parliament by the Prime Minister and Minister of Finance, Minister of Buddha Sasana, Religious & Cultural Affairs and Minister of Urban Development & Housing on April 8, 2021. 

 

As per the Article 120, 121, 123 of the Constitution, several petitions were filed challenging the constitutionality of the Bill in accordance with the certain provisions of the Constitution.

Subsequently, Chief Justice Jayantha Jayasuriya appointed a five-bench panel of Supreme Court Justices to determine the constitutionality of the proposed Bill. The five-bench panel includes CJ Jayasuriya, Justice Buwaneka Aluwihare, Justice Murdu Fernando, Justice Janak De Silva and Justice Priyantha Jayawardena.

The proceedings were started by them on April 19, 2021 by allowing the Petitioners and Intervening parties for their submissions.

All the Petitioners have named the Attorney General as the Respondent.

Saliya Pieris PC (President, Bar Association of Sri Lanka), Wajira Abeywardena, Dr Ajantha Perera, Jeran Jegadeeshan, Lakmal Anil Herath and Palitha Rangebandara were among the Petitioners, while Justice Ministry, P.B. Jayasundara, Sagara Kariyawasam, Podujana Peramuna Lawers Association and others intervened in favour of the Bill. 

 

 

The Petitioners state that the proposed Bill’s provisions and/or clauses thereof, in particular, Clauses 3, 4, 6,7, 9, 16, 23, 24, 26, 27, 28, 30, 31, 32, 33, 34, 35, 36, 55, 58, VII, Part VIII, Part IX, Part X, Part XI, Part XII, Clauses 62, 63,64 and/or Part XVI and/or Part XVI 68 and 73, are inconsistent with one or more of Articles 1, 2, 3, 4, 5, 12(1), 12(2), 14(1)(g), 14(1)(h), 17, 33,75, 76, 126,140, 141,148 and Article 154(G) of the Constitution of Sri Lanka.

 

Petitioners’ Arguments as reflected in their respective Petitions

 

In Clause 32 of the Bill which requires “Every such agreement shall include a provision whereby the parties agree to the resolution of any dispute arising therefrom, by way of arbitration in terms of Part XIII of this Act”, forces upon persons an arbitration clause whether such persons are actually willing to Arbitrate or not, and thereby effectively force an ouster of authority of the judiciary and judicial sovereignty. Hence such clause is inconsistent with Articles 3, 4, and 12(1) of the Constitution.

 

Provisions in Clause 62 (1) of the Bill makes it compulsory that any dispute between any authorized person and the Commission or the Commission and occupier in the Port City must be referred to arbitration at an Arbitration Centre established by the Bill. The same Clause also permits one party to the dispute unilaterally dictate the forum adjudication, ousts the right of one party to have recourse to court and ousts the jurisdiction of normal courts which otherwise a person would have a right to have recourse to. Thus, they are not consistent with Articles 3, 4, 12, 17 and 140 of the Constitution.

 

Clause 62(3) of the Bill forces upon an arbitration clause on Persons without regard to whether the Persons are actually willing to Arbitrate, and thereby forcing an ouster of authority of the judiciary and judicial sovereignty and is therefore inconsistent with Articles 3, 4, 12(1), 17, 126 and 140 of the Constitution.

 

People’s sovereignty as exercised through the Legislature, Executive and Judiciary, is inalienable and is so protected and vested with the people under Articles 3 read with 4 of the Constitution.

 

The Constitution of Sri Lanka must, through its provisions, strive towards enabling and ensuring a vibrant democracy that is replete with accountability, good governance, rule of law, fundamental rights and checks and balances, with judicial review of Executive and Administrative action is a predominant feature of it; hence, the total immunity from such judicial scrutiny stands to dissolve the very foundations of its true purport and ambit.

 

In terms of the penal provisions contained in Clause 68(f), anyone who, inter alia, contravenes and or fails to comply with any rule, code, direction or guideline made or issued in terms of the Act, commits an offence punishable with a fine or imprisonment. However, it appears from the Bill that only ‘regulations’ need to be placed before Parliament and not any ‘rule, code, direction or guideline’ breach of which constitutes an offence. The Petitioners state that this would be a violation of the provisions of Article 1, 2, 3, 4, 75 and 76 of the Constitution.

 

Some Petitioners specifically refer to some of the provisions as follows, 

 

Clauses 07, 15(2), 37, 44, 52, 53 & 64 of the Bill purports to give unlimited powers to the Executive President of Sri Lanka; 

 

Clause 65(1) of the Bill purports to take away the application of Urban Development Authority Act No.41 of 1978;

 

Clause 66 of the Bill purports to take away the application of Board of Investment Law No.04 of 1978

 

 

The Petitioners state that the process of aforesaid Bill has taken place in a hurried and non-transparent manner and has been timed to be tabled during the festive New Year period. No due and proper consultation process has taken place with relevant stakeholders and/or no proper expert opinion has been obtained prior to the formulation of the said Bill. Thus, the aforesaid Bill is being passed in the aforesaid manner inter alia for mala fides reasons and/or for collateral purposes.

 

Petitioners say that the proposed Bill,

 

Ø  Is contrary and repugnant to the rule of law and the independence of the Judiciary

 

Ø  Is in violation of the doctrine of separation of powers

 

Ø  Is amount to a repeal and/or suspension of the operation of the Constitution

 

Ø  Abdicates and alienates the legislative power and sets up an authority (other than Parliament), with legislative power

Ø  Is Inconsistent with the doctrine of public trust

Ø  Is Inconsistent with Parliament’s control over public finance

Ø  Leaves room for corruption and/or abuse of power

 

Petitioners thereby request the Supreme Court 

 

To declare and determine that provisions and/or clauses of the Proposed Bill shall become law only if passed by a special majority required under the provisions of Article 84(2) of the Constitution and/or approved by the people at a referendum in terms of Article 83 of the Constitution.

 

And to declare and determine that the proposed Bill requires placing before the Provincial Councils in terms of Article 154 (G) (3) of the Constitution.

 

Deliberations at the Supreme Court

Summary of the “Oral Submissions” made by the Counsel on behalf of the Petitioners on April 19, 2021 at the Supreme Courtroom 501

·      The issue with the Port City Land

Describing about the territory of Sri Lanka, President’s Counsel K. Kanag-Isvaran told the Court it is the Article 5 of the Constitution that specifies about the Territory of the Republic, “The territory of the Republic of Sri Lanka shall consist of the [twenty- five] administrative districts, the names of which are set out in the First Schedule and its [territorial waters]”.

President’s Counsel also drew the court’s attention onto the proviso of the same Article which says: “Provided that administrative districts may be subdivided or amalgamated so as to constitute different administrative districts, as Parliament may by resolution determine.” 

He contended that Sri Lanka’s territory (both land and waters) is defined under the above Article of the Constitution and it clearly provides only for consolidation or a subdivision of land of SL, but not for adding up any new territory.

“What does this Bill propose is to add-in an arbitrarily created, ‘artificial land area’ to the territory of Sri Lanka, which does not authorize by the Constitution as it is outside the territory of SL. You can’t affect the fundamental structure of Sri Lanka”, he emphasized.

He said that under the Maritime Zones Law No. 22 of 1976 (Section 5), the President may, by Proclamation published in the Gazette, declare any zone of the sea adjacent to the territorial sea, as well as the sea-bed and subsoil thereof, to be the exclusive economic zone of Sri Lanka, but cannot add up an artificial land parcel as a new territory of SL.

 

Thus, the Extra Ordinary Gazette notification issued on August 5, 2019, which added up the impugned land parcel (Port City land) to Colombo administrative district was illegal and a violation of the Article 5 of the Constitution.

Focusing on the aspect whether such artificial land may be added to the territory by the Government through Sri Lanka Land Reclamation and Development Corporation Act, Mr. Kanag-Isvaran pointed out that an artificially created land does not come under this Act to be reclaimed. For reclamation, such land has to be erupted out of natural causations but not as a reason of artificial creation, he said.

Inviting the Court’s attention into the Clause 65 of the proposed Bill, “….the President may issue a Land Grant under the Crown Lands Ordinance in the name of the Commission, in respect of all land comprising the Area of Authority of the Colombo Port City as set out in 

Schedule I to this Act, Mr. Kanag-Isvaran said the President can’t give any land under the Crown’s Ordinance as Sri Lanka is no longer a Crown’s land.

 

He concluded that SL’s territory is defined under the Article 5 of the Constitution and cannot be changed by adding up and artificial land parcel. Such act would amount to a violation of the Constitution as well as the International laws. “My contention is that you can’t even pass this Bill by a referendum because it is against the international conventions which prohibit adding up artificial lands as new territory to a country. Hence, it is beyond the competence of Sri Lankan Parliament to even consider”, he stressed.

 

·      Issues of Taxation

 

Addressing the fact that who is benefiting from this Bill, Kanag-Isvaran PC pointed out that as per schedule 2 of the Proposed Bill, following acts are completely exempted.

 

Ø  The Inland Revenue Act, No. 24 of 2017

 

Ø  The Value Added Tax Act, No. 14 of 2002

 

Ø  The Finance Act, No. 11 of 2002

 

Ø  The Finance Act, No. 5 of 2005

 

Ø  The Excise (Special Provisions) Act, No. 13 of 1989

 

Ø  The Debit Tax Act, No. 16 of 2002

 

Ø  The Customs Ordinance (Chapter 235)

 

Ø  The Ports and Airports Development Levy Act, No. 18 of    2011

 

Ø  The Sri Lanka Export Development Act, No. 40 of 1979

 

Ø  The Betting and Gaming Levy Act, No. 40 of 1988

 

Ø  Termination of Employment of Workmen (Special Provisions) Act, No. 45 of 1971

 

Ø  The Entertainment Tax Ordinance (Chapter 267)

 

Ø  The Foreign Exchange Act, No. 12 of 2017

 

Ø  Casino Business (Regulation) Act, No. 17 of 2010

 

 

As the offshore companies are exempted from the purview of the Banking Act Part 4 and the Casinos are not paying taxes to Sri Lanka, Mr. Kanag-Isvaran said it creates ‘a tax heaven and a paradise for money laundering’.

He was of the view that under the Article 148 of the Constitution, such tax exemption shall be first gone through the Parliament and without its approval, no levy or such tax exemption shall be imposed. {Article 148. Parliament shall have full control over public finance. No tax, rate or any other levy shall be imposed by any local authority or any other public authority, except by or under the authority of a law passed by Parliament or of any existing law.}

“It is a total abrogation of Legislative power of the people and it by passes the Chapter 17 (Finance) of the Constitution”, he added.

An authorized person can come outside the Port City to engage with domestic businessmen 

 

Kanag-Isvaran PC also said that an authorized person under the Clause 37 of the Bill can in fact come outside that special territory and engage in business activities with SL citizens, which might prejudice the national economy.

 

Clause 37 (1) An authorized person may, subject to the applicability of all written laws for the time being in force and regulations which may be made hereunder, in the national interest and in order to safeguard the interest of the domestic economy, apply to the Commission for an authorization to engage in business in Sri Lanka, with a citizen of Sri Lanka or a resident, who is engaged in business in Sri Lanka, outside the Area of Authority of the Colombo Port City.

 

(2) The Commission, having considered such request may in the national interest, in the interest of the advancement of the national economy and while ensuring the interest of the domestic economy, issue such an authorization, in such manner and subject to such conditions as shall be prescribed.

 

 

·      Bill should have been referred to WPC before presenting in Parliament 

 

A Preliminary Objection was raised against the Extra Ordinary Gazette notification issued on August 5, 2019, which added up the impugned land parcel (Port City land) to Colombo administrative district. It was said on behalf of the Petitioners that according to the said Extra Ordinary Gazette, the Port City land will come under the purview of the Western Province Council and therefore, according to the Article 154(G)(3) of the Constitution a Bill with regard to such land shall first be referred to the WPC. 

 

Article 154(G)(3) No Bill in respect of any matter set out in the Provincial Council List shall become law unless such Bill has been referred by the President, after its publication in the Gazette and before it is placed on the Order Paper of Parliament, to every Provincial Council for the expression of its views thereon, …….

 

·      Republic of Sri Lanka

It was submitted that the word ‘Republic’ stated in the Article 1 of the Constitution has the meaning that Sri Lanka is governed by its people and the sovereignty is vested upon the people and through their representatives, the Country is operated. Thus, the Constitution does not allow a separate tool (like Commission) to govern a territory without people’s representatives, which will result of alienating the sovereignty.

·      Status of the Commission

Appearing for the UNP Secretary, Counsel Eraj De Silva said that the Proposed Commission in the Bill will have its own life and operation once the Bill is passed by the Parliament. Referring to the Clause 68(1)(F) of the Bill, Mr. De Silva pointed out that imposing a penal provision for not following rules and guidelines imposed by the Commission and not requiring Parliament approval for making regulations by the Minister for strategic development projects have contravened the provisions of the Constitution.

“The Clause 3(1) “Establishment of the Colombo Port City Economic Commission” is a standalone provision which is not subject to any written laws, thus, depicting a status of a separate territory”, he said.

 

68(1)(F) “Notwithstanding the provisions contained in any other written law, any person who, within the Area of Authority of the Colombo Port City contravenes or fails to comply with any rule, code, direction or guideline made or issued in terms of this Act, commits an offence and shall be liable on conviction after summary trial before a Magistrate, to a fine of not less than rupees one million and not more than rupees five million or to imprisonment for a term not less than three months and not more than two years, or both such fine and imprisonment and the court may take into consideration the grave nature of the offence committed, in fixing the amount of such fine or the period of such imprisonment.”

Mr. De Silva was of the view that these provisions cannot be kept side by side with the Constitutional provisions, as it amounts to suspension of the Constitution. 

He also commented “there is a difference between a Financial Centre and a Fantasy Island, as the Commission tends to have a monopoly over the businesses in the Port City”.

………………………………………………………………………………………………….………………………………………………………………………………………………….

Summary of the “Oral Submissions” made by the Counsel on behalf of the Intervening Parties on April 21 and 22, 2021 at the Supreme Courtroom 501

 

·      Auditors

 

Rebutting the Petitioners’ viewpoint that the Bill allows international auditors to be appointed for the Commission, Romesh De Silva PC clarified that the proposed Clause itself is explanatory as it says “the accounts of the Commission shall be audited annually by a qualified auditor in terms of Article 154 of the Constitution. For the purposes of this section, the qualified auditor so appointed may be an international firm of accountants”.

 

He was of the view that though such auditors may be from international audit firms they have to be qualified auditors first in accordance with the Article 154 of the Constitution, thus no confusion or magic in it.

 

 

·      Funds of the Port City Project

 

President’s Counsel De Silva explained that, after the artificial land is created, Sri Lanka get the title of it and consequently, get to lease the land for investors without spending a single penny for its creation.  Thereafter, all the monies coming out of this project will come through the Commission to the Consolidated Fund subject to a hold of 1% monies by the Commission during the time period of 2023-2028. “This fact was lost over by the Petitioners”, he said.

·      Part of the Land which was already leased

 

When Justice Murdu Fernando questioned as to how the land of the port city may come under the Commission in connection with the funds it may generate in the future. Romesh De Silva PC said that some part of the land is already leased out to the Port City project company and the funds of that agreement have been already dealt with by the Government. Though the funds have been dealt with still the land parcel of that lease agreement too will fall under the purview of the Commission and will be managed by the Commission as well, he said.

 

·      Boundaries of the Land

 

When questioned by the Chief Justice, Mr. De Silva explained that the schedule 1 of the Bill depicts the entirety of the whole port city project comprising the land which has been already leased, marketable land, and the common land. And he further said this schedule also reflects in the Extra Ordinary Gazette issued in August 2019, which amalgamated the land into the administrative district of Colombo.

 

·      Does the Port City Land come under the territory of Sri Lanka?

 

Denying the Petitioners’ argument that this land does not form to be in the territory of Sri Lanka, Mr. De Silva told Court that the before the impugned Extra Ordinary Gazette issued in August 2019 the same had been passed by the Parliament in a resolution to be included into the administrative district of Colombo. 

 

Therefore, he said under the Article 5 of the Constitution now the land has been included into the territory of SL. 

 

“The territory of the Republic of Sri Lanka shall consist of the [twenty- five] administrative districts, the names of which are set out in the First Schedule and its [territorial waters]” (Article 5)

   

“The Parliament has passed it to be included into Colombo administrative district. No one had challenged that when it was done in 2019. So, it is illogical to say now that this land is not Sri Lanka. It is a part of Western Province”, he said.

 

Gamini Marapana PC also added that this new land has been created on the waters of Sri Lanka, where SL have full authority over it to do whatever it desires as per the United Nations Convention on Sea Article 1.

 

·      How to decide increasing boundaries of Colombo Administrative District?

 

Both Chief Justice and Mr. De Silva observed that once the new land parcel is included in Colombo Administrative District, it is the Administrative Act of SL No 22, 1955 shall be amended. Evidently, this process has been duly followed in this instance. 

 

·      Should the Provincial Councils have been consulted?

 

Gamini Marapana PC also appearing for intervening parties clarified that when the matter is of the National importance and in line with the national policy the Provincial Councils can be excluded to be informed. And as a matter of fact, that PCs are not functioning at the moment will render its irrelevancy in the petitioners’ argument he said.

 

·      Can President Grant State Land under Crown Land Ordinance?

 

Observing the Clause 65(3) of the Bill, Mr. De Silva PC pointed out that as the President exercising his executive people’s power under Article 33 of the Constitution this land can be granted under the Crowns Land Ordinance, because this land is not regarded as reserved or concurrence subject, but is supposed to be used for the development of the special economic zone.

 

·      Possible judicial intervention and issues of Appointment of the Commission and its members

 

PC De Silva was of the view that it is the President of Sri Lanka who exercises the People’s executive power under the Article 4 of the Constitution. Thereby, the Commission is appointed by the President and still such appointment is subject to the Constitution, thus, comes under the judicial purview if the President acts ultra vires.

 

Apart from that, Mr. Marapana pointed out that still the President is responsible for the Parliament under the Constitutional provisions. 

 

v Commission’s power to give exemptions

 

Mr. De Silva also said it is not the first time that a regulatory body has been given power to make exemptions, even under the BOI Act relevant minister can make exemptions time to time depending on the business nature.

 

“Parliament’s Legislative power has not been curtailed by this proposed Bill by any means. For simple reason it can repeal or amend this Act at any time if it wants”, he said.

 

·      Determination and Grant of Exemptions or Incentives for The Promotion of Businesses of Strategic Importance (Part 9 of the Bill)

 

Addressing the question as to why under this part of the Bill a consideration of granting of tax exemptions and incentives is proposed, Mr. Marapana PC said that no investments will come in the country if not for concessions for their businesses in a strategic project like port city. “These decisions have been made by the executive body of the state which represent the executive power of the people for the best interest of the country”, he said.

 

He said, development of special economic zones like port city are not new to the international community as there are more than 5400 such economic zones are being operated on different international jurisdictions. 

 

 

·      Have the Acts stated in the schedule 2 of the Bill been exempted fully?

 

Mr. Marapana drew the Court’s attention to the heading of the scgedule 2 of the Bill and invited to read it carefully, which says “Enactments From, Or Under, Which Exemptions Or Incentives May Be Granted”. He was of the view that none of the below mentioned Acts are exempted but given an opportunity to exempt from paying levies under those Acts for specifically decided businesses by the Commission. 

 

“For instance, The Custom will still operate in the port city, but only the certain goods may be exempted from levies. Thus, this is not a fantasy land. This a territory of Sri Lanka where Sri Lankan laws prevail”, he added.

 

·      Judicial purview under Article 140 and the Commission 

 

Appearing as an intervening party on behalf of the Justice Ministry, Counsel Nishan Premathiratne explained that the Petitioners were incorrect when they said that the proposed Commission will not be subject to judicial review of the country. 

 

He elaborated that the Colombo Stock Exchange Commission was also created in a similar vein in 1991 by the Securities and Exchange Commission Act. Under this Act, section 51(1) allows the Commission to make rules and Codes in relation to Securities Exchange without passing through the Parliament. In the event of any violation, the Commission is empowered to take actions in Magistrate’s Court by the Act. 

 

He was of the view that giving power to a regulatory body to make rules without going to the Parliament is not a novel thing, but the question shall be posed is whether such process will undermine the Constitution of the Country.

 

Referring to a precedent Mr. Premathiratne said that in Lanka SEC vs Colombo Stock Exchange case, where coincidently Justice Janak De Silva had presided, it was decided that even though the SEC is a private limited company, if such institution’s character is similar to the functions of a public institution then it could still come under the Article 140 of the Constitution, hence the Port City Commission and its functions too come under this judicial purview, he said.

 

However, it shall be noted that, President’s Counsel De Silva suggested that the Clause 68(1)(F) be removed from the Bill.

 

 

·      Issue of compulsory Arbitration

 

Addressing the Petitioners’ argument that Provisions in Clause 62 (1) of the Bill makes it compulsory that any dispute between any authorized person and the Commission or the Commission and occupier in the Port City must be referred to arbitration at an Arbitration Centre established by the Bill, Mr Premathiratne said even though such provisions seemingly put parties to go for Arbitration compulsorily it does not (The Bill) prevent the Arbitration Act being applicable in Port City dispute resolution mechanism as well, hence, the Act ipso facto applies in all arbitration matters.

 

Furthermore, Nihal Jayawardena PC also reiterated about this fact earlier in his submission that the Bill does not at any point prevent the arbitration award being enforced in court of law or the opportunity to challenge such award in courts.

 

Thus, according to the section 2(1) all such above matters will apparently come under the Arbitration Act of Sri Lanka.

 

 

 

Attorney General’s submissions – (Respondent)

(ASG Farzana Jameel appeared on behalf of the AG)

 

v Submitting a Cabinet paper to the Bench, ASG Jameel emphasized that the Colombo Port City Economic Commission Bill emanates from the National Policy of the Government, and that one cannot simply go against the project solely because there have been no identical mirror imaged projects like this. 

 

v Addressing on the territorial issue, the ASG explained that,

 

o   Firstly, the steps have been taken to add/reclaimed the altered/created Sri Lankan territory of waters (under State Land Ordinance) and subsequently the land was made part of the Colombo Administrative District by the Parliament, which cannot be questioned at any forum once passed. 

 

o   Then the said alteration of the waters (new land) became part of the administrative district of Colombo under the Article 5 of the Constitution.

 

o   Thereafter, the State Land Ordinance (Crown Land Law) (Sections 60 (3,5,10)) permits the President to dispose or lease such reclaimed land by proclamation.

 

“This land is included and reclaimed according to the State Land Ordinance and other laws as permitted by those laws”, ASG said.

 

v ASG Jameel also explained as to how the prospective residents in the Port City may exercise their franchise and come under the Constitution of Sri Lanka.

Exercising the ‘right to franchise’ under the Article 4(3) of the Constitution, all voters and their registering and administrative process shall come under the Registration of Electors Act. And according to the section 2 of that Act, it has referred to the Article 89 of the Constitution for reasons to be disqualified as a registered voter. On the other hand, one must bear in mind that this whole process is about a future event where a land may be populated by prospective residents, thus, it’s unreasonable to say that the people’s franchise has been violated in the proposed bill, she said.

 

Referring to a Supreme Court Determination No. 12-2010- Local Government Special Provisions Bill, she said that Petitioners argument on losing the franchise right on local authorities’ elections has no ground to stand as the Supreme Court has decided that the franchise right on local authorities’ elections does not come under the Article 4(3). 

 

v Rebutting the petitioners’ argument that, the Bill should have been referred to the Provincial Councils, the ASG said the Petitioners have somehow made a blunder by identifying the subject matter of the Port City project as a matter comes under the Provincial Council list under the Constitution. She said, after careful analysis on the items depicts in the said list it’s apparent that a project like the instance port city is not defined under the PC list. And also, item 21 of the PC list, excludes the subject matters that come under the category of National Policy. (SCSD 15/18)   

 

On April 22, the Respondent (AG) tendered the Supreme Court a letter from P.B. Jayasundara, which said to have reflected the proposed amendments of the Government at the Committee stage of this Bill in the Parliament. However, the Supreme Court observed that it needs a document directly from the AG addressing the Court Registrar. Chief Justice considered the letter given as a third-party correspondence upon which the Court can’t rely on. Subsequently, the ASG undertook to make arrangements with regard to the Court’s direction.

 

The Supreme Court has also directed the both parties to file their written submissions on or before 12 noon on April 23, 2021.  

 

 

 

Summary of the Arguments

 

Against	For
A new artificial land cannot be added to the administrative districts of Sri Lanka, hence inconsistent with the Article 5.	Creations to territorial waters come under State Land Ordinance and thereby permits the President to lease out by proclamation and also this addition was made a part of the Colombo administrative district by a parliament resolution, thus, consistent with the Constitution and the land is part of Sri Lankan sovereignty.
The President has no power to appoint a regulatory body like the Commission proposed in this Bill.	The President and the Cabinet exercise the executive power of people directly deriving from them therefore no violation of constitution. (Articles 3,4, 33)
The Judicial scrutiny has been taken away over the conduct of the Commission.	The appointment of the Commission members and its conduct still come under the Article 140 of the Constitution. Hence, the judicial scrutiny is unfettered under A 140.
The Commission is allowed to make rules and guidelines without passing through the Parliament and has the ability to take criminal actions against the violators.	The Commission like regulatory bodies are not new to Sri Lanka such as the Securities Exchange Commission.
The Commission’s power to make rules and grant exemptions have superseded the Parliament’ s legislation power over the Finance.	The Commission exercises people’s power through the President. Still under the Judicial scrutiny. And according to the Article 148 it is clear that this Bill first has to be approved by the Parliament and it can at any time repeal or amend this, hence, nothing is proposed to be done over imposing levies without the approval of the Parliament.
Exemptions proposed over several Acts under schedule 2 makes the land a money laundering heaven.	The heading of the schedule is very clear that it provides for the opportunity for imposing exemptions on levies but not that all of the Acts are inoperative in the Port City. The Custom will still employ its normal operations but certain commodities may get exemptions on levies.
Compulsory Arbitration ousts the jurisdiction of normal court.	Compulsory Arbitration has been proposed to make provisions to speed up the dispute resolution mechanism which will attract the foreign investments. However, the Bill does not prevent the Arbitration Act from being operative in the Port City, thus, any award given over a dispute can be challenged and enforced in normal courts.
The Bill should have been referred to Provincial council under the Article 154 (G)(3) of the Constitution.	This new creation of land first passed through the Parliament in 2019 before it was Gazetted in August 2019. And also, the subject matter does not fall within the ambit of the Provincial Council list under the Constitution. It is of national interest deriving directly from Government national policy by the Cabinet.