Iraq

Iraq's Economic Legislation Reform Law - Removing barriers to economic development

Mohammad Norri
Partner, Head of Office - Baghdad

Jawad Khalaf
Partner, Head of Litigation - Iraq

Ali Mahmoud
Trainee Lawyer

Abdallah Munjed
Trainee Lawyer

Zane Anani
Senior PSL

Iraq’s Economic Legislation Reform Law is a highly anticipated law aimed at revitalizing the nation's economy, and is expected to be enacted next year. This law will introduce significant amendments to existing laws governing companies, trade, and investment. The primary objective is to remove barriers to economic development and foster a more conducive environment for both domestic and foreign investments.

Key Provisions of the Law

Corporate Structure and Foreign Investment

One of the most notable changes is the amendment to the Law on Companies (Law No. 21 of 1997).

The new law will allow for the establishment of holding companies, which can control subsidiary companies through ownership of more than half of their capital or by managing their operations. This provision is expected to streamline corporate governance and enhance operational efficiencies.

Additionally, the new law will permit foreign individuals and entities to acquire membership in Iraqi companies as founders or shareholders, with a cap of 75% ownership. This is a significant shift from previous restrictions and is designed to attract foreign capital and expertise. The Council of Ministers also has the authority to exempt global companies involved in developmental projects from this ownership cap, further incentivizing foreign investment.

Trade and Commercial Activities The new law redefines what constitutes commercial activities, expanding the scope to include a wide range of services such as import and export, industrial operations, publishing, construction, tourism, and financial services. This broader definition aims to encourage entrepreneurial ventures and diversify the economic activities within the country. Moreover, the new law allows traders to adopt both Arabic and non-Arabic names for their businesses, provided they do not mislead the public or violate public order. This flexibility is expected to make Iraqi businesses more accessible and appealing to international markets.

The anticipated Economic Legislation Reform Law marks a significant milestone in Iraq's journey towards economic modernization and development. By removing barriers to investment, diversifying economic activities, and improving the business environment, the new law sets the stage for a more dynamic and prosperous Iraqi economy.

Free Zones and Property Ownership The new law will introduce significant changes to the management and investment in free zones. Foreigners are now permitted to own or lease property within these zones, subject to regulations issued by the Minister of Finance. This provision is likely to boost the attractiveness of Iraq's free zones as hubs for international trade and investment. Customs and Taxation The new law also amends the Customs Law (Law No. 23 of 1984), simplifying procedures and enhancing transparency. Importers are required to provide authenticated documents to verify prices and origins of goods, with the customs authority empowered to demand additional documentation if necessary. This measure aims to curb smuggling and ensure fair trade practices. Furthermore, the Council of Ministers can adjust income tax rates as needed, providing the government with the flexibility to respond to economic conditions and fiscal needs. Expected Impact on Iraqi Business Enhanced Investment Climate By allowing greater foreign ownership and simplifying corporate structures, the new law is expected to attract significant foreign direct investment (FDI). The ability for global companies to hold majority stakes in Iraqi enterprises will likely lead to increased capital inflows, technology transfer, and managerial expertise, all of which are crucial for economic growth.

Diversification of Economic Activities The expanded definition of commercial activities will encourage diversification beyond the traditional oil sector. By promoting industries such as manufacturing, tourism, and financial services, the law aims to create a more resilient and varied economic base. Improved Business Environment The reforms to customs procedures and the flexibility in business naming conventions are designed to make Iraq a more business-friendly environment. These changes are expected to reduce bureaucratic hurdles, lower the cost of doing business, and enhance the overall ease of operating within the country. Boost to Free Zones Allowing foreign ownership in free zones is a strategic move to position Iraq as a regional trade hub. This will likely lead to increased activity in these zones, fostering economic development and creating job opportunities. Conclusion The anticipated Economic Legislation Reform Law marks a significant milestone in Iraq's journey towards economic modernization and development. By removing barriers to investment, diversifying economic activities, and improving the business environment, the new law sets the stage for a more dynamic and prosperous Iraqi economy. When these reforms take effect, Iraq will be poised to become a more attractive destination for both domestic and international investors, paving the way for sustained economic growth and development.

The Economic Legislation Reform Law is still in the process of being reviewed by the Iraqi Parliament. Once the final form of the law is introduced and voted by parliament, the law will be published in the official gazette. The current draft of this law (that this article was based on) is therefore subject to change.

Iraq's Right to Access Information Law – Draft Law to foster a culture of openness, accountability, and democratic governance

Jawad Khalaf
Partner, Head of Litigation - Iraq

Mohammad Norri
Partner, Head of Office - Baghdad

David Yates
Partner, Head of Digital & Data

Zane Anani
Senior PSL

In 2025, Iraq is expected to enact the "Law on the Right to Access Information." This law will mark a significant step towards enhancing transparency, accountability, and democratic governance in the country. The objectives of the new law are designed to ensure that citizens have the right to access information held by various authorities, thereby fostering a more open and informed society. Below, we explore the key aspects of this law and its anticipated impact on Iraqi society.

Key Aspects of the Law

As mentioned above, the key objectives of the law are as follows:

Enabling individuals to access and obtain information in line with the constitution and international treaties.
Enhancing transparency in the operations of relevant authorities.
Empowering society to utilize information for development.
Supporting conscious participation in monitoring the activities of relevant authorities.
Promoting scientific research.
Strengthening freedom of the press and supporting freedom of expression and publication

The objectives of the new law are designed to ensure that citizens have the right to access information held by various authorities, thereby fostering a more open and informed society.

Establishment of the Information Department The draft law provides for the establishment of the Information Department within the High Commission for Human Rights which is a significant development. This department is responsible for managing and facilitating access to information requests. It ensures that there is a centralized body dedicated to overseeing the implementation of the right to information law. The Information Department is also tasked with training government employees and civil society organizations on how to enable citizens to access information. This training is essential for building the capacity of various stakeholders to effectively implement the law. The department is also responsible for preparing annual reports on its activities and achievements related to information access. These reports are submitted to the Council of Ministers and published in the media, ensuring ongoing transparency and accountability.

Procedures for Accessing Information According to the draft law, any Iraqi citizen has the right to request information. Foreign residents in Iraq can also request information if they have a legitimate interest and are treated reciprocally. Requests must be submitted to the relevant authority using a standardized form prepared by the Information Department. Once a request is submitted, it is recorded in a special register, and the applicant is provided with a receipt indicating the date and number of the request. The highest authority of the relevant entity, or their delegate, must decide on the request within five working days. Failure to respond within this period is considered a rejection of the request. If the request is accepted, the information must be provided within fifteen days. This period can be extended by an additional seven days if the request involves a large volume of information or requires consultation with other parties. In urgent cases, such as those involving the protection of an individual's life or freedom, the information must be provided within three days. Types of Information Exempt from the Law

National Security and Defence - Information related to the armed forces, state defence, and national security is exempt from disclosure. This exemption is crucial for maintaining the security and stability of the country.

International Communications - Communications and correspondence with international entities are also exempt to protect diplomatic relations and national interests.

Confidential Documents - Documents classified as confidential, which could harm state security or the national economy if disclosed, are not accessible under this law.

Government Deliberations – Deliberations of the Council of Ministers, Ministerial Councils, and deliberations related to the work of ministries and entities not affiliated with a ministry.

Personal Information - Personal files and information related to individuals are protected to ensure privacy. This includes personal communications and records, except when requested by the individuals themselves.

Commercial and Industrial Information - Information of a commercial, industrial, financial, or economic nature, including trade secrets and intellectual property, is exempt to protect business interests and fair competition.

Ongoing Investigations - Information related to ongoing administrative or criminal investigations is not accessible to prevent interference with legal processes.

Specialised Committee to handle objections and penalties A specialised committee will be established in each ministry or entity affiliated with a ministry. This committee will consider objections submitted by individuals who wish to dispute a decision where a request to obtain information was rejected. The Committee will make an assessment within 30 days from the date of notification of the decision to reject the request. Conclusion Iraq's new right to information law represents a significant advancement in promoting transparency, accountability, and democratic governance. The establishment of the Information Department plays a crucial role in ensuring the effective implementation of this law. By providing clear procedures for accessing information and outlining specific exemptions, the law balances the public's right to know with the need to protect sensitive information. This legal framework is expected to empower citizens, support research and media freedom, and ultimately contribute to a more transparent and accountable government.

The new right to information law is still in the process of being reviewed by parliament. Once the final form of the law is introduced and voted by parliament, the law will be published in the official gazette.

New legal framework for Arbitration in Iraq in 2025

Jawad Khalaf
Partner, Head of Litigation - Iraq

Paul Taylor
Partner, Head of Arbitration

Zane Anani
Senior PSL

The Iraqi Arbitration Law is expected to be enacted in the new year and it is anticipated to change the legal framework for arbitration in Iraq. It is important to note that the new law is still in the process of being debated and reviewed by the Iraqi Parliament. However, it is likely to be introduced after further consultation and scrutiny later in 2025. This new law aims to align with international standards and promote efficient dispute resolution mechanisms. By establishing a comprehensive legal framework for arbitration, the law provides legal certainty and stability for Iraq. This predictability is crucial for businesses and investors who need to understand the legal environment in which they operate. This article will describe the key features and the significance of this law.

Key Features

Objectives and Applicability

The new law will apply to any arbitration conducted within the Republic of Iraq. This includes disputes arising from both contractual and non-contractual legal relationships governed by the laws in force in Iraq, unless otherwise specified. The new law also applies to any international commercial arbitration conducted outside the Republic of Iraq if the parties involved have agreed to subject the arbitration to the provisions of this law. With respect to government contracts, the new law is applicable to disputes arising from government contracts, provided that the arbitration in these contracts is approved by the Council of Ministers or an authorized representative.

Formation of Arbitration Panel The composition and functioning of the arbitral panel are critical aspects of an arbitration law and the new law aligns closely with international standards and practices. The new law provides a comprehensive framework for the formation, qualification, and replacement of arbitrators, ensuring impartiality and efficiency in the arbitration process. The new law stipulates that the arbitral panel can be composed of one or more arbitrators as agreed upon by the parties involved in the dispute. If the parties do not agree on the number of arbitrators, the default number is set at three. This is similar to many international arbitration laws. The new law also allows the parties to agree on the procedure for appointing arbitrators. In the absence of such an agreement, default procedures apply.

The new law aims to align with international standards and promote efficient dispute resolution mechanisms. By establishing a comprehensive legal framework for arbitration, the law provides legal certainty and stability for Iraq.

Arbitration Proceedings The default language is Arabic unless otherwise agreed. Proceedings are private and confidential unless parties agree otherwise. The new law includes specific provisions regarding interim measures to allow the rights and interests of the parties to be preserved during the arbitration process. Interim measures can be requested by the parties from the competent court or from the arbitration panel. Arbitration Award The arbitration award will include particulars of the proceedings along with a breakdown of the distribution of the arbitration fees and expenses. The new law aligns closely with the principles and procedures outlined in the UNCITRAL Model Law and emphasizes the importance of written awards, provides mechanisms for correcting and interpreting awards, and sets out clear procedures for the enforcement and setting aside of awards. This alignment with international standards aims to enhance the credibility and effectiveness of arbitration in Iraq.

Challenging the Award An arbitration award can be challenged before the competent court only through an annulment lawsuit filed by one of the arbitration parties under the circumstances listed in the new law. The provisions in the new law ensure that arbitration awards are subject to judicial review, thereby maintaining legal certainty and fairness in the arbitration process. The competent court shall annul the arbitration award on its own initiative in the following cases:

If the subject matter of the dispute is not arbitrable under Iraqi law.

If the arbitration award conflicts with public order in the Republic of Iraq

Enforcement The role of courts in the enforcement of arbitration awards under the new law is pivotal. Courts ensure that arbitration awards are enforced in accordance with legal standards and public policy, providing a necessary check on the arbitration process. By requiring court approval, outlining specific submission requirements, and allowing for appeals and temporary suspensions, the law balances the need for efficient dispute resolution with the protection of parties' rights and the integrity of the legal system. An arbitration award issued under the provisions of the new law is binding on the parties, regardless of the country in which it was issued, based on the principle of reciprocity. The enforcement of an arbitration award requires ratification by the competent court in Iraq. The competent court shall ratify and execute the arbitration award within sixty (60) days from the date of submission of the request, provided that the request meets the conditions stipulated in the new law, unless the court finds a reason for annulment. The decision of the competent court to enforce or refuse the enforcement of the arbitration award can be appealed to the Court of Cassation within thirty (30) days from the day following the notification of the judgment. Establishment of Arbitration Centres The new law allows the establishment of arbitration centres in Iraq with legal personality and financial and administrative independence, subject to government regulations. Conclusion The new Iraqi Arbitration Law is a landmark legislation that introduces a modern and efficient arbitration framework in Iraq. By aligning with international standards and promoting swift dispute resolution, it aims to foster a conducive environment for investment and economic development. The new law is also designed to protect the interests of investors and businesses, encouraging both domestic and foreign investment by offering a reliable and efficient dispute resolution mechanism.

As mentioned above, the new Iraqi Arbitration Law is still in the process of being discussed and reviewed by the Iraqi Parliament. The first and second readings have been concluded and the new Iraqi Arbitration Law is expected to be passed by parliament next year. Amendments to the draft law (that this article was based on) is also expected before the law is published.