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The modern legal system in Iraq is well established taking its roots from Othman and European influences. In fact, the Iraqi Legal System is no different from legal systems of neighboring Arab countries. However, the period stretching from 1958 to 2003 heavily influenced the legal regime by introducing a large number of laws and regulations which reinforced the political, economic and social policies of the Ba’athist regime and strengthened the Government’s control over the national economy. In light of the recent events, numerous legal provisions are no longer applied in practice or have now been abolished by the Coalition Provisional Authority (CPA) orders and regulations, which had a de facto affect of having the force of national “legislation”. CPA “legislation” has in fact changed the legal landscape in Iraq by introducing more than a dozen economic related laws. The said laws remain enforce in Iraq despite the dissolution of the CPA. As the political process takes shape in Iraq, Tabbaa & Partners will continuously inform its clients of the latest legal developments on the ground. The outline below provides an overview of some areas of the legal system in Iraq which may be of interest to foreign investors and persons doing business with Iraq. Banking Law On September 20, 2003, the CPA issued Order No. 40 promulgated the Banking Law. The Order object is to “establish a safe, sound, competitive and accessible banking system for the purposes of providing a foundation for economic growth and the development of a stable Iraqi economy. It expressly states that the banking law attached to the Order in Annex A shall have the full force and effect of law. Any provision of Iraqi law that is inconsistent with this Order or Annex A was suspended to the extent of such inconsistency. According to the Banking Law, no person in Iraq shall engage in banking business without a banking license or permit issued by the CBI, other than a person exempted by the CBI. The new banking law permits up to six foreign banks over the next five years the right to enter the Iraqi market. In this regard, on 31 January, the Central Bank of Iraq announced the selection of three foreign banks – Hong Kong Shanghai Banking Corporation, National Bank of Kuwait and Standard Chartered Bank - to proceed to the final stage of the foreign bank licensing process. In addition to the above new banking license the Banking Law allows for the existing 17 “private” banks in Iraq to continue to operate but must raise their capital to US$ 5 million over an 18 months period. Moreover, the Banking Law authorized the existing private banks to sell up to 50% of their equity to foreign or local investors. For more information on banking law and to receive most recent updates Corporate & Commercial Law The pre war Iraqi legal system was very restrictive from foreign investor’s viewpoint. The old regime was conducive to trade, investment and commerce and saw very little in the form of FDI (with exception to areas of oil & gas and construction) The process of reform in the commercial/corporate area was officially launched on September 20, 2003 when the CPA promulgated Order No. 39 on Foreign Investment which replaced “all existing foreign investment law[s]” and which will serve, probably for an interim period, as the basis for future foreign investment in Iraq. The Order is subject to revision by the Administrator, or to adoption or replacement by an internationally recognized, representative government established by the people of Iraq. The Order specifically states that future orders or other guidance will be issued concerning various sectors of the economy. Private Companies in Iraq are governed by Company Law (No. 21/1997). Until very recently, participation in Iraqi companies was reserved to Iraqi nationals according to Article 12 of the Companies Law. However, on February 29, 2004, the CPA has adopted Regulation No. 64 which amended the Company Law (No. 21) of 1997. This is a revolutionary text and makes far-reaching amendments to the existing Company Law and allows for 100% foreign ownership if all types of companies in Iraq. To receive updated English copy of the amended Company Law or a brief overview of the said amendments, Branch Offices/Representative Offices It was a common practice for foreigners to establish branch offices for the performance of specific contracts, as foreign shareholding in Iraqi companies was not allowed under the Companies law. However, the adoption of CPA Order No. 39 regarding foreign investment and Order No. 64 amending the Company Law may change this trend. Moreover, CPA No. 64 has noticeably changed all the legal requirements to opening a foreign branch and representative office. Intellectual Property The emergence of the World Trade Organization (“WTO”) Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement"), almost all Iraqi intellectual property laws had become outdated and fell very short of TRIPS Agreement minimum protection standards. Conforming intellectual property laws in Iraq to the standards of the TRIPS Agreement and other international conventions was one of the urgent tasks considered by the Coalition Provisional Authority (CPA) in 2004. As a result, the CPA amended the Iraqi Trademark Law No.21 of 1957 by Order No. 80 (issued on April 26, 2005); amended the Patents and Industrial Designs Law No. 65 of 1970 by Order No. 81 (issued on April 26, 2004); and amended the Copyright Law No. 3 of 1971 by Order No. 83 (issued on May 1, 2004). As will all CPA “legislation”, the above amendments remain in force until adopted by national legislature. To receive updated copies of the above legislation, Despite the existing practical shortfalls of the Iraq IP System, our firm is able to provide you with effective trademark and patent protection, by utilizing existing registration mechanism. In particular, our firm is able to offers our trademark registration services in all classes (goods & services). The registration of trademarks in Iraq is governed by the provisions of the Trademark Law No. 21 of the year 1957 and its subsequent amendments. This system allows for both the registration of trademarks for goods and services. Copies of the trademark should show the Arabic transliteration of the mark in a larger lettering on top of the word in English. The Trademark law allows for the registration of trademarks by foreign and Arab companies without the need for actual presence in Iraq. Following the filing of the trademark, it is examined as to registrability to ensure that no prior identical or confusingly similar trademark has been registered. Trademark applications accepted by the Registrar are published in three consecutive issues of the Official Gazette. Any interested party may file an opposition against the registration of the trademark within ninety (90) days as of the date of the last publication. Provided that there is no opposition, a published trademark is registered, and the certificate of registration is issued. The Trade mark registration requires the following formal requirements:
The official fees for trademark registration are approximately U.S$550 per mark (in addition to classification fees). Please note that currently the trademark examination process takes up to three months to finalize. For more information, Labor Law The essential provisions of Iraqi labor Law are embodied in Law No. 71/1987 and in Articles 900 to 926 Iraq Civil Code. The "Social Security Law" (Law No. 39/1971) contains further provisions. The said law requires that an employment contract contain a number of mandatory provisions. Accordingly, an employment contract must be in writing and specify the kind of work as well as the amount of the wages. Other minimum standards relate to working hours, overtime, holidays, and dismissal. Minimum standard provisions in the Labor Law in favor of an employee shall prevail over any provisions specified in a labor contract which are below such standards. For more information, kindly direct your questions to iraq@tabbaa.com Media & Broadcasting The media industry in Iraq was regulated by several laws and regulations under the auspices of the Ministry of Information. The main objective of the said laws was to ensure maximum control and regulation by the old regime over state media and all other sources of media and information. On May 23, 2003, the CPA issued Order No. 2 which dissolved several Iraqi Governmental entities, including the Ministry of Information. In addition, the CPA issued Order No. 14 regarding the broadcasting, printing, and publishing prohibited media activity. Moreover, the CPA Order No. 65 called for the establishment of an Iraqi Communications and Media Commission ("The Commission") who shall be solely responsible for licensing and regulating Telecommunications, broadcasting, Information Services, and other forms of media in Iraq. The main functions of this Commission are:
In order to ensure compliance with license terms and conditions, codes of practice, and other rules and regulations, the commission may request the support and assistance of the Iraqi law enforcement authorities, in addition to issuing warnings, suspending licenses and operations, revoking licenses, etc. The media industry in Iraq may soon be one of the most rapidly advancing sectors. It will witness tremendous growth sector that will stimulate the local economy and attract foreign investment. Tax CPA Order No. 37 expressly repealed Law No. 113/1982 regulating tax on the income of individuals and companies. The said order suspends both corporate and personal income taxes. Under CPA Order number 49 both corporate and personal income taxes were reintroduced as of April 1 st 2004, where the order significantly lowered the highest individual and corporate tax rates for the year 2004 and subsequent years to no more than 15 percent as compared to the maximum rate of 40 percent under the previous income tax system, in addition to the suspension of 25 percent levy on corporate income. Moreover in order to simplify the administration of real estate rents tax, CPA Order Number 49, which amended the Law of Real Estate Tax No. 162 for the year 1959, provides that rents from real estate will be taxed at a flat rate of 10 percent of the combined rental income from all real estate rented by the taxpayer. In addition to the above, the CPA had imposed a reconstruction levy of 5% on all imported goods entering Iraq from other countries as of the second quarter of 2004. Telecommunications Telecommunication in Iraq was closely regulated by several laws and regulations whose objective was to ensure maximum control and regulation by the former government; this restricted the telecommunication system in Iraq which lagged behind technological advancements. On May 23, 2003, CPA Order No. 2, dissolved several Iraqi Governmental entities, including the Ministry of Information. CPA Order No. 11 recognized the need to restore essential telecommunications services throughout Iraq and to regulate the licensing and frequency spectrum management. The said order states that the Ministry of Transportation and Communications shall assume the responsibility of licensing all commercial telecommunications service in Iraq. Therefore any commercial telecommunications equipment installed without prior authorization will be subject to seizure without compensation. The order further states that The Ministry will control, plan, administer, manage, and license the radio frequency spectrum in compliance with the standards and requirements of International Telecommunications Union (ITU). In addition, CPA Order No. 65 called for the establishment of an Iraqi Communications and Media Commission ("The Commission") who shall be solely responsible for licensing and regulating Telecommunications, broadcasting, Information Services, and other forms of media in Iraq. The main functions of this Commission are:
In order to ensure compliance with license terms and conditions, codes of practice, and other rules and regulations, the commission may request the support and assistance of the Iraqi law enforcement authorities, in addition to issuing warnings, suspending licenses and operations, revoking licenses, etc.
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