Investors Express Concerns Over Lack Of Legal Framework In Iraq

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

04 November 2003

According to a recent Financial Times report, multinational firms looking to invest in the reconstruction of Iraq have expressed concerns about the lack of a recognisable commercial legal framework.

Although the Coalition Provisional Authority (CPA) has enacted certain changes in order to allow foreign investment in the country, and the entry of international banks, some experts have suggested that the body may have contravened international law by enacting legislation which runs counter to that already in place.

However, speaking to the FT, Dan Larkin, partner at international law firm, Squire, Sanders & Dempsey (which has recently undertaken the task of reviewing the commercial legal framework in Iraq) dismissed this suggestion, arguing that the CPA has been "assiduously careful" to abide by UN resolutions, and has only put in place interim measures needed to ensure the rebuilding of the shattered economy.

Additionally, he told a conference in London, Iraq already has a reasonably sound legal framework to build on. He suggested that although decades of Saddam Hussein's rule have left the legal system weakened, prior to that period, the country had a "fairly highly evolved" commercial code which was "at the forefront of Arab legal systems".

Once the immediate problems of stripping away the 'tainted' sections of the legal system, and members of the judiciary have been tackled, according to Mr Larkin: "There's a pretty decent legal system, although it's a bit out of date".

Speaking to delegates at the conference, which was held to discuss the reconstruction of Iraq, the Squire, Sanders & Dempsey partner pointed to the lack of an effective market economy-compatible regulatory system, the absence of antitrust laws, and the unclear intellectual property protection regime, as key areas of concern for multinational businesses.

According to the FT, he then went on to add that the CPA's focus should now be on improving laws governing contracts, privatisations, bankruptcy, leasing, security, and industry sectors such as energy, electricity, and transport.

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