Threats To Sri Lanka’s National Sovereignty Under The Proposed Colombo Port City Commission Bill 

By Suri Ratnapala –MAY 1, 2021

Prof. Suri Ratnapala

The provisions of the Port City Bill, if enacted, will erode the legal and political sovereignty of Sri Lanka in a number of ways. Most of these threats, ranging from the composition of the governing body, the exemptions from national law, the wide discretionary power granted to the Commission, the limitation of parliamentary, prudential and judicial oversight of the Commission’s operations to the impact of the Bill’s provisions on fundamental rights, franchise of Sri Lankans and the territorial integrity of Sri Lanka have been identified and discussed in the media. The following comments focus on issues arising from the impermissible transfer of legislative powers from Parliament, the removal of judicial powers from the national courts and the consequent erosion of national sovereignty. I have not specifically addressed the following issues.

(a) The discriminatory, therefore negative, effects on Sri Lankan entrepreneurs, by the privileging of Port City businesses (authorised persons), in particular by tax and labour law exemptions and the grant of various forms of assistance.

(b) The impermissible restriction of fundamental rights of Sri Lankan citizens.

(c) The effect of the Bill on the rights of franchise.

(d) The effect of the Bill on the territorial integrity of Sri Lanka.

(e) The absence of safeguards against opportunities for corrupt practices that could result from the extraordinary discretionary powers of the Commission.

COMPOSITION OF THE COMMISSION AND ITS ADMINISTRATION

The Commission will comprise 5 to 7 members one of whom will be the Chair with a casting vote. They are appointed by the President with no participation by any other body or Parliament. The Director-General to whom the powers of the Commission can be delegated is also appointed by the President at his sole discretion. Given the potential threats to the sovereignty, national security and the economic well being of the nation, it is advisable that these interests are represented on the Commission by majority membership. The presence of ex-officio members on the Commission, perhaps the heads of Treasury and Central Bank, is worth considering.

LEGISLATIVE POWER OF THE COMMISSION

Article 3 of the Constitution declares that ‘In the Republic of Sri Lanka sovereignty is in the People and is inalienable. Sovereignty includes the powers of government, fundamental rights and the franchise’. Article 4 which prescribes the manner in which the Sovereignty of the People shall be exercised commands that

(a) the legislative power of the People shall be exercised by Parliament, consisting of elected representatives of the People and by the People at a Referendum.

Article 83(a) of the Constitution enacts that ‘a Bill for the amendment or for the repeal and replacement of or which is inconsistent with any of the provisions of Articles 1, 2, 3, 6, 7, 8, 9, 10 and
11 or of this Article … shall become law if the number of votes cast in favour thereof amounts to not less than two-thirds of the whole number of Members (including those not present), is approved by the People at a Referendum’.

Article 3 is violated by legislation that contravenes the manner of the exercise of the Sovereignty of the People set out in Article 4. In considering whether a Bill offends the manner of the exercise of legislative power, Art 4(a) needs to be read with Article 76. Article 76(1) commands that ‘Parliament shall not abdicate or in any manner alienate its legislative power and shall not set up any authority with any legislative power’. (My emphasis.) Article 76(3) clarifies that Parliament may empower ‘any person or body to make subordinate legislation for prescribed purposes …’. However, the powers granted to the Port City Commission are unmistakably of the nature of primary legislative power and hence clearly violates Art 76(1).

Hence the Bill, in my view, cannot be constitutionally enacted without the approval of the People at a Referendum.

Sources of the Commission’s Legislative Power

The Commission derives legislative powers from a number of sources.

1. General Power to Govern Notwithstanding National Law

The Commission is given a general power to plan, issue and monitor compliance, of permits and authorisations ‘notwithstanding anything to the contrary in any other written law’. – section 6(1)(

i). This is the power to create new rights and obligations in disregard of national law. In other words it is legislative power in the strict sense.

The Greater Colombo Economic Commission Act No 4 of 1978 offers an illuminating contrast. The Act incorporates a significant measure of parliamentary control over executive discretions to change national law in favour of investors and to preserve national sovereignty.

i. The Minister (who was answerable to Parliament) retained power to give general and special directions to the Commission. (s 23)

ii. The Minister held power by regulation to determine the scope and extent of and exemption of modification of the laws set out in Schedule B. (s 24(1)(a))

iii. Any modification of the laws specified in Schedule C had to be made by the Minister by regulation. (s 24(1)(b))

iv. Critically, all regulations had to be approved by Parliament and those not approved were deemed rescinded. (s 24(3))

2. Power to Coerce Regulatory Authorities

There are a number of provisions of the Bill that would allow the Port City Commission to compel regulatory authorities under other laws to give their concurrence to measures that it proposes. In other words, the Commission may override or assume the powers vested in another statutory authority by Parliament. This is legislative power to set aside the national law in favour of the
Commission’s clients.

Section 3(5) of the Bill requires the Commission to ‘obtain the concurrence of the relevant Regulatory Authority in respect of the subjects vested in or assigned to, such Regulatory Authority’.

This requirement applies to all statutes that require permits, approvals or licences. However, the second proviso of s 3(6) stipulates: ‘(6) The relevant Regulatory Authority from whom such concurrence is being sought by the Commission, shall as soon as practicable in the circumstances, as a matter of priority, provide such concurrence to the Commission.’

On the one hand the Commission is required to obtain concurrence and on the other hand may compel prompt concurrence! It boggles the legal mind but the legal effect is clear enough. The
Commission has power to override national regulatory law at will. There are specific powers to compel similarly, the concurrence of the Condominium Management Authority (s 55(3)) and of the Securities and Exchange Commission. (58(1))

3. Power to Modify National Law in Favour of Businesses of Strategic Importance (Part IX)

The first point to note is the identity of ‘Businesses of Strategic Importance’ (hereafter BSI). They are the businesses designated by the Commission as BSI with the approval of the President and the Cabinet of Ministers. (ss 52 and 53) The businesses so designated and the concessions granted to them must be reported to Parliament but parliamentary approval is not required. (s 53(4))

These businesses may be granted exemptions and incentives over and above those granted to other authorised businesses for a period up to 40 years. Especially, they could be exempted from the laws specified in Schedule II of the Act. They are:

1. The Inland Revenue Act, No. 24 of 2017

Read More