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What are the constitutional and legal implications of the proposed Colombo Port City Economic Commission? I take the view that in terms of design and effect, this proposed Bill seeks to carve out the Port City for differentiated treatment that is inconsistent with our Constitution. The Bill envisages a new geographical and legal space that is outside of our system of constitutional governance. It envisages a territory and a group of persons that come under 5-7 unelected persons and the President or Minister in charge.
This exceptional legal regime has a substantial impact on the sovereignty of the People as envisaged under the Constitution. Exceptional legal regimes are not new to Sri Lanka. Examples include high security zones (established under the Public Security Ordinance) and export processing zones (established under the Board of Investment Law). Lived experience and studies in a range of disciplines including law, anthropology and gender studies suggest that these types of exceptional legal regimes strengthen the power of governments to act with minimal constitutional or political accountability and can therefore result in both immediate and long-term harm.
The ‘Special Economic Zone’ that the proposed Economic Commission will establish is far more complicated in its legal form. The study of its implications requires expertise in several aspects of law including constitutional law, administrative law, environmental law, international investment law, arbitration law, banking law, and law of taxation. Here, I offer my assessment from the perspective of constitutional law, the aspect of law with which I am most familiar. Even in this regard several issues arise including how this Bill impacts devolved subjects assigned to Provincial Councils and its impact on the enjoyment of fundamental rights. In fact, because this Bill deals with devolved subjects, according to Art 154(G) of the Constitution, the Bill has to be referred to the Provincial Councils for their views/consent. I limit myself here to an assessment of how this Bill falls short of the standards required by two foundational concepts of a constitutional democracy – the rule of law and the separation of powers. As I demonstrate below, it is therefore an encroachment of the Sovereignty of the People, as recognised by Sri Lanka’s Constitution.
Stated Objectives
According to the long title of the Bill, it seeks to establish a Commission that will have the authority to manage ‘business and other activities’ in the Port City. Specific functions include ‘the promotion of ease of doing business’, to undertake transactions of land and to promote international trade and tourism, to set up an International Dispute Resolution Centre and ‘to promote urban amenity operations and the settlement of a residential community within’ the zone.
The preamble of the Bill links these purposes with the Directive Principles of State Policy of the Constitution. The preamble quotes from Article 27(2)(d) to provide that the state is required to ‘ensure’ the ‘rapid development of the country, whilst co-ordinating public and private economic activity in the national interest.’ Attracting new investment, promoting inflow of foreign exchange and the generation of new employment opportunities are among the listed objectives of establishing this Special Economic Zone.
The Directive Principles of State Policy are statements of policy in our Constitution and describe duties of the state as well as of ‘every person in Sri Lanka.’ The Constitution specifically states that these principles are not justiciable. That is, no one can go to Court and seek a remedy for the violation of these principles. However, on several occasions, Sri Lanka’s Supreme Court has held that the fundamental rights guaranteed under the Constitution must be read together with the Directive Principles of State Policy. For instance, in the Chunnakam judgement, the Supreme Court declared that “The Directive Principles of State Policy are not wasted ink in the pages of the Constitution. They are a living set of guidelines which the State and its agencies should give effect to” (Kariyawasam v CEA [SCFR 141/2015, SC Minutes 04 April 2019, p 50). The Directive Principles therefore have assumed greater significance than expected by the framers of the Constitution.
The Directive Principles referred to in the Bill, when read in full, has tied ‘rapid development’ to the advancement of public good/welfare. In this regard the two subsequent Directive Principles assume significance and I reproduce all three principles below.
The State is pledged to establish in Sri Lanka a democratic socialist society, the objectives of which include:
(d) the rapid development of the whole country by means of public and private economic activity and by laws prescribing such planning and controls as may be expedient for directing and co-ordinating such public and private economic activity towards social objectives and the public weal;
(e) the equitable distribution among all citizens of the material resources of the community and the social product, so best to subserve the common good;
(f) the establishment of a just social order in which the means of production, distribution and exchange are not concentrated and centralized in the State, State agencies or in the hands of a privileged few, but are dispersed among, and owned by, all the People of Sri Lanka; (…)
As per our Constitution, the advancement of rapid economic development is limited by, and should be aimed at, the advancement of public good and a just social order. The means of achieving such development and the benefit of such effort cannot be centralized in the state or limited to a privileged few, but must reach all the People of Sri Lanka. Needless to say, this is a very specific vision of public benefit of economic growth and has several implications. For instance, the reference to the common good indicates that rapid economic development must be approached broadly. It ought to reflect our understanding that development must be holistic. It ought to go beyond an anthropocentric approach and ensure respect for and protection of the environment. The reference to all the People of Sri Lanka reflects that development is not focused only on the present but envisages inter-generational equity.
Rule of Law and Separation of Powers
Sri Lanka’s Supreme Court has consistently recognised that the rule of law is foundational to the fundamental right to equality and non-discrimination. The institutional design of the Special Economic Zone and the Colombo Port City Economic Commission falls short of the procedural and substantive requirements of the rule of law. I say this for the following reasons.
First, the discretionary executive power exercised by the President/Minister in Charge are too broad and would be subject to minimum accountability. The Commission (5 to 7 members), including the chairperson, is appointed and removed by the President, at his sole discretion (s 7, 9 and 10). These persons are eligible for re-appointment too , except if removed from office (s 9). In Sri Lanka, while the President is in office, the only legal remedy available against that office, is the filing of a fundamental rights petition against the Attorney-General (Art 35). Therefore, unless the actions of the President in the appointment/removal of this Commission or in issuing directions to the Commission are made amenable to judicial review, such actions can be challenged in Court only if it violates a fundamental right and the petitioner files the petition within 30 days thereof. The rule of law requires that the exercise of public power be subject to scrutiny by the judiciary, except in rare circumstances such as where national security is implicated. Even in such cases, our Supreme Court has insisted that respect for fundamental rights be guaranteed. Therefore, placing the Port City under the near exclusive control of a group of persons who are appointed by a President who enjoys immunity from legal action except in relation to fundamental rights, undermines accountability and therefore also the rule of law.
Second, the Commission is vested with significant subordinate legislative and executive power ( s 5 and 6) and the resolution of disputes that may arise with the Commission (an aspect of judicial power) is subject to mandatory arbitration (s 62). This undermines the Separation of Powers as envisaged under our Constitution. The mandate of this Commission is not limited to the ‘economic’ but includes the power to ‘make recommendations relating to policy formulation’ to the President (or to a Minister assigned) ‘on any matter pertaining to’ the Port City. It has the power to license business, lease/transfer of land/apartments, facilitate investment particularly as the Single Window Investment Facilitator, ‘develop and approve environmental standards’, construction, determine local assessment rates and to establish ‘Community Rules and Development Control Regulations’ etc. Any dispute that arises within the Port City between the Commission and ‘an authorised person’ or ‘a resident or an occupier’ is to be resolved through arbitration. For this purpose, the Bill proposes to establish an International Commercial Dispute Resolution Centre. Compulsory arbitration of this type and scope places disputes within the Port City outside of the regular system of dispute resolution in Sri Lanka which is undertaken through its judicial branch. While the Bill does not expressly oust the jurisdiction of Sri Lankan Courts, one can ask whether the provision for mandatory arbitration would amount to an implied ouster. It is relevant to note here that Sri Lankan Courts have held, with consistency, that its jurisdiction cannot be ousted by legislation.
Third, the scheme of regulation that is envisaged under this Bill disregards the principles of public law as developed by the common law applicable across the common law world. Where the Commission has to obtain approval from a regulatory authority, the Bill provides that such regulatory authority ‘shall as soon as practicable in the circumstances, as a matter of priority, provide such concurrence to the Commission.’ (s 3(6)). Every regulatory authority is required to exercise its discretion, in a reasonable manner to the facts at hand, take into account relevant facts and decide on each matter on a case-by-case basis. Compelling a regulatory authority to mandatorily provide concurrence cannot be countenanced in a constitutional democracy.
Sovereignty of the People, Public Trust and Equality
Sri Lanka’s Constitution expressly states that sovereignty lies in her People (Art 3). Sovereignty is a political concept which simply put, is our inherent right to govern ourselves. The First Republican Constitution of 1972 is considered a significant turning point in our political history because it was the first time that an autochthonous constitution, or one ‘sprung from the soil’ was adopted. I take the view that the First Republican Constitution was actually a constitution that violated several principles of constitutional governance. Nevertheless, it is an example of the invocation of this idea that sovereignty lies in the People and their consent, their interest and their benefit is the goal of governance and is the bedrock of a constitution. The Port City Bill taken in its totality, if enacted, will carve out a geographical and legal space and place it beyond the reach of this scheme of government. A system of governance in a constitutional democracy includes financial scrutiny by Parliament, dispute resolution by the judicial arm of the state and governance by elected representatives. The Municipal Council Ordinance, among several other pieces of legislation, is excluded from applying to the Port City. The people who live and work there will be under the authority of an unelected group of 5-7 persons. It is questionable as to whether Sri Lanka’s Parliament has the power enact legislation to this effect under the present Constitution.
It could be argued that the Port City is to be managed this way to leverage its uniqueness 1) to attract the maximum foreign investment and 2) to maximise the prospect for rapid economic development. I have strong views about the viability of these arguments. Here, however, I limit my views to the subject matter that I have studied the most which is public law (including constitutional law). In constitutional terms, the Bill falls short of the constitutional standards required by the rule of law, separation of powers and also of the public trust doctrine, now an established idea in Sri Lanka’s public law. The stated policy objectives of the Bill are far too general, even if one were to assume that Parliament had the power to enact such a law. What aspects of rapid development require that such broad discretionary and exclusive public power be vested with a small group of persons who are at the most accountable to the President/Minister in charge? The answer is not clear. In a constitutional democracy, public representatives must have clear reasons for exercising public power on our behalf and establish that such power is being exercised for our benefit.
Furthermore, the Bill has implications for our right to equality. It is not clear as to the extent to which the Commission can regulate access to the Port City. Our Constitution guarantees that ‘no person’ be discriminated or be subject to ‘restriction or condition with regard to access to shops, public restaurants, hotels places of public entertainment’ on prohibited grounds including race and religion (Art 12 (1) and (3). The Constitution also guarantees that ‘[a]ll persons are equal before the law and are entitled to equal protection of the law’ (Art 12(1)). Several aspects of the Bill directly or indirectly undermine these guarantees. The Bill requires that courts give priority to cases that originate from the Port City (s 63). This amounts to an encroachment of judicial discretion by way of legislation and would also result in unequal treatment. The Commission’s authority to regulate who may conduct business in the Port City and who may enter the territory, for instance, can impact our enjoyment of the right to equality and the right to be free from discrimination.
BRI and the Global Context
This Bill has a transnational dimension. The Port City has been developed in partnership with China. The Belt and Road Initiative (BRI) of China is central to their diplomacy and foreign policy and by design involves large-scale infrastructure projects in foreign territories. There are regional and global dimensions to the Port City and its legal regulation. Therefore, we Sri Lankans have every reason to have the constitutional assurance that the envisaged regulatory scheme for the Port City come well within our sovereignty as recognised in our Constitution, and is in our collective interest and benefit. Maximum levels of transparency and access to relevant information must therefore be guaranteed in this process. The Bill should, for instance, clarify whether non-citizens can be appointed to the Commission or as Director General. I do not consider a person a risk to national security or to national interests because they are not Sri Lankan citizens. However, within the particular scheme envisaged for the Port City, constitutional legal and political accountability within Sri Lanka of those wielding authority within, is essential. Every effort should be made to ensure that those methods of accountability are not undermined.
For these reasons, specific aspects of the Port City Bill and the Bill read as a whole is inconsistent with our Constitution, undermine foundational constitutional principles such as the rule of law and separation of powers and would create a problematic legal regime which is antithetical to the very idea of a constitutional democracy. If this Bill is enacted as it stands, the Port City might very well be the newest port of call for unconstitutional action.
Dinesha Samararatne is a law academic with an interest in public law in Sri Lanka
