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Monday, May 20, 2024

Sri Lanka expropriation law deeply flawed: lawmakers

(LBO) – Sri Lankan lawmakers expressed deep concern over a hastily passed expropriation law, which they said arrogated judicial and executive roles to elected members, undermining a constitutional separation of powers and violated property rights.
 “This bill has been drafted with no regard to the basic process of legislating,” opposition lawmaker and lawyer Wijedasa Rajapaksa said at the debate of the law in parliament Tuesday.
 “Unfortunately executive and judicial power has both been included in this bill. The parliament has no right to decide which property or from which person to acquire property. Always the parliament decided on the policy.”

Sri Lanka this week passed a law to expropriate some 37 enterprises in some of which foreign investors were involved, which had received tax breaks or land from the state.

The ruling coalition of President Mahinda Rajapaksa has a two thirds majority in parliament.

In earlier expropriations, including land reform, which violated property rights of citizens, the law had laid general rules which were applied equally.

Anyone who fit the criteria would be captured.

The executive branch of the government by setting up a committee under the finance ministry for example, could use the criteria and decide to acquire all entities that fit the definition.

“But in the law we have brought there is no open ended power given to anyone,” economic development minster Basil Rajapaksa said.

“That power has been given to this august assembly.”

Rajapaksa said any other investors need not fear that they would be taken over because the act will not be repeated.

Deeply Flawed
But opposition lawmakers said such a ‘law’ was deeply flawed.

“This parliament is being invited to decide on these companies and pronounced them under-performing enterprises or under-utilized assets, without placing before parliament either the balance sheets or accounts of these companies,” M A Sumanthiran, also a lawyer representing the Tamil National Alliance said.

“Even if that were available it is not the task of this house to go into a matter like it and pronounce upon each of these matters.”

Sumanthiran said the bill should have set a test with laid criteria for underperformance so that all enterprises or assets given to anyone in the last 20 years would be scrutinized by a body set up for the purpose.

Citizens could then counter the decision with objections and even go to court if they felt they were unjustly treated.

But this law was selectively applied to a few entities by an unknown process and those who felt victimized had no recourse to courts for relief, because the parliament had already decided it.

By that mechanism the parliament had arrogated the power of both the executive and the judiciary.

Jathika Hela Urumaya, a monks’ party refused to back the bill unless the list of companies were removed.

Ad Hominem

While there were 36 ‘underutilized’ assets, there was only one ‘underperforming enterprise’, Hotel Developers.

“This bill is ad hominem legislation because it seeks to deal with just one matter and pronounces that it is an enterprises that is underperforming,” Sumanthiran said.

“For that alone the bill is bad.”

Ad hominem legislation is void in other countries because they target one person. Sumanthiran said in the past (before the Supreme Court) the Privy Council had thrown out such laws.

Under Sri Lanka’s constitution, the Supreme Court does not review legislation that has been passed.

Lawmaker and economist Harsha de Silva said in the case of sugar companies, Sevanagala Sugar, which belonged to a family company of an opposition lawmaker and Pelwatte Sugar of businessman Harry Jayewardene had been targeted.

Hingurana Sugar which was connected to Browns and the state had a stake, has been left out. De Silva said a ‘tyranny of majority’ was being used to violate the property rights of the people. For economic growth and investment property rights had to be protected he said.

Wijedasa Rajapaska said dozens of state enterprises were making losses according to a parliamentary committee on state entities. But the government was going after several enterprises including sugar companies that were making profits.

He said he believed the office of the legal draftsman, which had experienced lawyers, did not draft the bill, because it was so deeply flawed.

Sumanthiran said the definitions seemed to have been made to fit the enterprises.

“Look at the definition of underutilized assets and underperforming enterprises,” he said. “These have been designed they have been tailored to suit what later appears in the schedule. That is why I said it is ad hominem legislation.

“This is a classic example of what an ad hominem legislation is because it even spells out by name the enterprise that are said to have under-utilized assets and enterprise that are underperforming.

“It is outside the competence of the legislature even to pass laws like this.”


Opposition lawmakers had earlier asked for the law to be delayed due to pending cases in courts, but Speaker Chamal Rajapaksa, went ahead with the debate citing an earlier ruling, which said the House should not be stopped simply because someone went to court.

The expropriation law also included several companies where the State had disputes and cases were pending. Hotel Developers, a company where various allegations had been levelled was tied up in litigation for over five years.

There was one application to wind up the company and another that was objecting. Courts were going through the matter.

“While the matter is pending for five years this House is asked to declare that this is an underperforming enterprise,” Sumanthiran said.

“If the task of judicial determination was given to the judiciary, if we respect the separation of powers in our constitution, then we ought not to take this up and pronounce upon a matter that is entirely within the competence of the court.”

Sumanthiran said the parliament itself was underperforming in its own role.

“This house has been reduced to a mere rubber stamp,” Sumanthiran said. “After the supposed passage of this bill, this is also an underperforming enterprise.

“That is the sad end we have come to. A bill like this that deals with particular situations, that only applies to a particular event, is not law. That is outside the definition of law.”


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