ShareKUWAIT: The Board of Trustees of Silk City and Boubyan Island prepared a draft bill to regulate the affairs of the proposed northern area development project, including the long-awaited Silk City. Dubbed the 'Draft Law to Establish the Silk Region,' the proposed bill seeks to establish an investment and commercial region of international character that is attractive for investors. The following is a translation by Kuwait Times for the draft law, which was obtained and published recently by Al-Qabas Arabic daily:
Project Aims:
1- To establish an international trade transit region under Kuwait's sovereignty with independent activities, legislations and management.
2- Provide job opportunities for Kuwaiti youth and create an environment that will induce creativity and entrepreneurship in a competitive atmosphere open to international expertise.
3- Utilize both local and international private sector potentials in developing the Silk Region into a basic resource for Kuwait's economy as well as create an investment-attracting business environment.
4- Achieve better living conditions and welfare for Kuwaiti citizens and other regional inhabitants in accordance to international standards.
5- Support Kuwait's basic goals and plans to develop the national economy in compliance with the New Kuwait 2035 vision and any other strategic plans, as well as establish a flourishing, sustainable and diverse economy based on developing economic sectors other than oil.
6- Support Kuwait's security and economic stability through diversifying its economy, regional linkage and attracting more regional and international investments.
7- Encourage the state's industrial and socioeconomic sectors in parallel to environmental protection.
8- Enhance the production of goods and services by both local and foreign private sectors to enhance foreign currency reserves.
9- Increase and encourage the flow of direct local and foreign investments into the region and encourage Kuwait's industrial and economic cooperation with other states.
10- The establishment will funded from outside the state's budget after winning international investors' trust and attracting international capital as a model for non-oil based development.
11- Encourage import and export of goods, and work on boosting national products' quality to create commercial competitiveness for the state's best interests.
Charter of Principles
All the Silk Region's employees in various positions will abide by the following:
1- Utilize all their potentials to achieve the Silk Region's success and efficiently and seriously perform the tasks to which they are assigned.
2- Not to use the powers or privileges invested in them through their positions except in achieving the Silk Region's goals. They will also vow not to obtain any personal privileges or gains.
3- Doing their job tasks, employees will, at all times, practice their authorities, make independent decisions, opt for objective judgment in various matters, avoid conflicts of interest, minimize any external effects, and make decisions after studying related facts and invalidating all irrelevant ones. They can also seek views from concerned bodies prior to deciding on a certain matter. Decisions must be clearly causative.
4- All tasks, practice of jurisdictions and decision-making will at all times comply with the Silk Region's and the state's highest interests, requirements and goals.
5- All tasks, practice of jurisdictions and decision-making will be done in a way that ensures effective execution, transparency and integrity that will allow all residents, investors and other stakeholders to make the right decisions in view of the available information that allows investigating and scrutinizing all procedures.
6- The Silk Region's laws, charters and legislations will be respected and put into practice with integrity and transparency.
Laws and Regulations
The Silk Region's laws, regulations, executive regulations and the decisions accordingly made by the Silk Region Establishment will be applied within the Silk Region side by side with the laws of Kuwait, except for those exempted by special regulations.
Commitment to Issuing Special Regulations
The Silk Region's governors will be, within the maximum of one year effective on issuance of their appointment decrees, committed to issue this law's executive regulations that should include a full statement of the Silk Region's rules, activities and works, such as:
1- The mechanism of issuing the Silk Region charters and regulations and forming committees to prepare amendments for the legislations the region needs to be submitted to the concerned minister.
2- The mechanism of the Silk Region governors' work, their authorities, procedures on holding their meetings, decision making, execution and rules of governance.
3- Conflicts of interest and how to avoid them.
4- The CEO powers, tasks and authorities and his relations with the region's governors, personnel affairs and how personnel can apply for jobs with the Silk Region Establishment.
5- The rules, procedures and conditions of issuing visas for the Silk Region's workforce and the issue of visit and residency visas.
6- Regulations on employer-employee relations within the Silk Region and the rights of each party.
7- Regulations of monitoring imports and exports to and from the Silk Region.
8- Issue of licenses to practice business within the region, trust systems and the establishment of all legal bodies including all commercial establishments, companies, banks, joint ventures, organizations, associations and other legal bodies.
9- Environmental protection and development within the Silk Region.
10- Establishing the bodies needed to regulate the banking sector and fighting money laundering and terrorism funding in collaboration with the Central Bank of Kuwait.
11- Special real estate registry system that regulates all in-kind rights and subjectivity of real estate properties within the Silk Region.
12- Conditions and requirements for people desiring to own or utilize real estate properties within the Silk Region.
The Establishment will be committed to issue the law's executive regulations within the period motioned in the previous article and in case of violating this and on expiry of the said period, will be committed to report to the concerned minister in writing explaining the reasons, setting a new date for issuance and doing whatever needed to avoid further delays. The Cabinet will report to HH the Amir with the reasons of delay so that he can take proper actions he deems fit.
Relations with the state
1- The Silk Region will be under full sovereignty of the State of Kuwait and will be subject to all other agreements, treaties and memos of understanding the state is part of on passing this law.
2- None of the state's public servants will have any powers, authorities or tasks within the Silk Region except within the limits stated in this law or the Silk Region's laws and regulations.
3- The government of Kuwait will be responsible for providing the military protection needed for the Silk Region and defend it against any foreign threats. None of the bodies operating within the Silk Region will object to this regardless of their status.
4- Kuwait's ministry of interior (MoI) will be responsible for internal protection and security within the Silk Region, provided the interior minister coordinates with the Establishment and issue a decision upon which a special police unit will be formed from MoI personnel (officers and non-warrant officers) who will be selected and appointed according to specific conditions and regulations to be stated in the decision. Police personnel working within the Silk Region will be committed to implement only the Silk Region's laws and regulations and nothing else.
5- The Silk Region Establishment will have all the authorities of governmental and public establishments operating in the state. No body, other than the Establishment, will carry out any of the Silk Region Establishment tasks. In collaboration with officials in those bodies and the bodies themselves, the Establishment will be committed to founding special departments and having each play the role of a government body. The executive regulations will define the mechanism of implementing this clause.
6- Taking the previous clause into consideration, the Silk Region Establishment will have no authority or jurisdiction related to the following bodies:
a) Bodies related to armed forces and national defense.
b) The foreign ministry.
c) Kuwait Petroleum Corporation (concerning oil exploration, development and production).
In collaboration with the state's relevant bodies, the Silk Region Establishment will be committed to the following:
1- Sponsoring and issuing work permits for manpower working with the Silk Region.
2- The jurisdiction of the Silk Region Establishment employees outside the Silk Region boundaries.
3- Imports, exports, loading, unloading, storage or any other activity related to hazardous, radioactive or environment-unfriendly materials.
4- Combating criminal activities including money laundering, terrorism funding or any other crimes on both local and international levels in a way that will ensure safety of both the Silk Region and the state.
5- The currency used within the Silk Region will the Kuwaiti dinar, and the Silk Region Establishment will coordinate with the Central Bank of Kuwait through setting protocols of cooperation concerning currency control and regulating banking operations.
6- The minister in charge of the Silk Region Establishment will supervise the work of and have the power of requesting reports and documents, procure information and inquire from and advise the region's governors.
7- Any other matters that need coordination according to the region's governors' views upon agreement between the Establishment and relevant state bodies.
The Silk Region Establishment
A public institution and independent legal entity called the General Establishment of the Silk Region shall be established under this law. It will be legally independent under the supervision of a concerned minister. The Silk Region Establishment may open its offices inside and outside Kuwait.
1- The Silk Region Establishment will be managed by seven governors to be named by an Amiri decree upon nominations made by the concerned minster. The decree will appoint one of the governors as chairman and another as vice-chairman and will determine the wages, bonuses and any other incentives or allowances of the chairman, vice-chairman and other governors.
2- Appointed governors should be regular, experienced individuals known for their integrity who have never been declared bankrupt or indicted in crimes or disgraceful felonies or are employees of the government of Kuwait.
3- The Silk Region Establishment (SRE) chairman will represent it before others and courts and will execute the establishment's decisions. The SRE chairman will also supervise all its technical and administrative bodies and practice his liabilities in accordance to this law and its executive regulations. Along with other governors, the SRE chairman will be responsible for running SRE and have the right to authorize one of the other governors or any SRE administrative unit with some of his liabilities.
4- In case of the SRE chairman's absence or the vacancy of his position while the vice-chairman is, for whatever reason, incapable of performing his job responsibilities, the SRE board will meet within two weeks and authorize an acting SRE chairman.
5- SRE governors' tenures will be four years renewable for one more term with a maximum of eight years, with exemption of the first phase members, from whom three governors will be reappointed for an extra term to add up the total to three four-year tenures. A governor's position will be deemed vacant by his demise, disability or resignation. A governor will also lose his position, which be declared vacant by force of law, and a decree will be issued terminating his membership in the following cases:
a) Passing a final court order declaring his bankruptcy.
b) If he is indicted by power of a final court order in a disgraceful crime or subjected to a liberty-restricting penalty in a crime.
c) If during one year, he misses four consecutive or eight non-consecutive meetings without an excuse.
d) If he gets appointed in a government position in the State of Kuwait.
6- SRE governors can belong to any nationality and will be appointed in accordance with their local and international experiences in government affairs and legislations, international commerce supervision and administrative affairs and their reputation in other international fields.
7- SRE governors will annually hold 12 meetings at least upon invitations from the SRE chairman or requests from two other governors. Meetings will be deemed valid if attended by a majority of governors including the chairman or vice-chairman, with the exception of the meeting mentioned in clause 4 of this article. Meetings' decisions will be issued by a majority of the governors' votes.
8- SRE governors may form permanent or temporary advisory committees to be assigned to study specific topics within their specialties defined in this law.
9- SRE will have a legal affairs department that reports directly to the SRE chairman in all cases, represents it before all courts and arbitration authorities, provides legal consultancy and conducts investigations. The department can be also utilized in preparing bills and regulations related to SRE and its operations.
10- In case a member position is declared vacant, this vacancy will be filled by powers of an Amiri decree passed upon nomination made by the concerned minister.
The Chief Executive Officer (CEO)
1- SRE governors will appoint a CEO to carry out the tasks entrusted to him and which are explained and regulated in his appointment decision. The CEO's appointment will be made upon the approval of at least two-thirds of the board and he will not be dismissed unless with the same ratio. In case the CEO position is declared vacant, SRE governors will appoint a temporary CEO for no more than three months or until another is appointed according to the previous regulations.
2- The CEO can belong to any nationality and gets appointed based on his local and international experiences, good reputation and achievements in other international fields deemed fit to qualify him for the position.
Tasks and Powers
SRE will do all tasks needed to achieve the Silk Region's goals in accordance to the provisions of this law, namely the following:
1- Work and development plans according to the following:
- Develop the policies and procedures necessary for the successful development and management of the Silk Region in accordance with the provisions of this law.
- To establish, develop and maintain the entire infrastructure of the Silk Region and to provide administrative services, transportation, IT services and any other service required by the region to achieve its objectives.
- Prepare and adopt the strategies, policies and objectives of the Silk Region in full and follow up the implementation of these policies, strategies and objectives.
- To develop and provide opportunities for partnership with investors and investment funds from the public and private sectors and other institutions, both regional and international, to encourage, motivate and facilitate investment in the Silk Region.
- Establish, manage, operate and develop the free zone, industrial zones, economic zones and other areas within the Silk Region boundaries.
- Forming advisory committees of local and international experts for the Silk Region as it deems appropriate.
2- Operation of the Silk Region activities will be done by:
• Establishing legal entities, departments or economic bodies and entrusting them to the authorities and tasks required in accordance with the needs of the Silk Region.
• To play the role of state administrative bodies and replace them within the borders of the Silk Region in order to achieve the region's objectives.
• Monitor and supervise all activities in the Silk Region and ensure compliance with all laws and legislations and implement general strategies and policies adopted in the Silk Region.
• Approve the licensing, establishment and organization of all types of legal entities (including, but not limited to, companies, institutions, limited liability companies, corporate and joint-stock companies, single-person companies, investment funds, unions and organizations) within the Silk Region.
• Take necessary measures to protect and develop the environment within the Silk Region.
• Set the rules and conditions for practicing banking within the Silk Region in coordination with the Central Bank of Kuwait.
• The conclusion of contracts of partnership with the public and private sectors to invest in the Silk Region.
• The conclusion of agreements, contracts and memorandums of understanding with any party inside and outside Kuwait, provided that such agreements shall not prejudice the sovereignty of the state or cause any harm to it.
3 - Finance, accounting and financial reporting:
• Managing SRE financial resources.
• SRE shall have the right to impose fees on the services it provides, as well as on the activities specified by the executive regulations of this law.
• SRE shall have the right to collect fines within the limits of the application of this law and its executive regulations.
• Opening and managing the bank accounts for SRE.
• Issuing bonds and obtaining loans and other financial facilities for the Silk Region from local and international banks and any other entity. This shall only take place upon the consensus of the Silk Region governors. The lender shall not have recourse to the state for any claim arising from lending to SRE.
• Buy, own, sell and lease real estate assets and other assets including securities and any other intangible assets and invest inside and outside the Silk Region in the manner it deems appropriate.
• Ensure compliance with the requirements related to the financial statements and annual budgets stipulated in this law in respect of the SRE.
• Submit an annual report to the Cabinet in addition to any additional special reports that may be occasionally requested by the Cabinet on the operation of the Silk Region, the SRE and the courts.
4- Powers and real-estate related rights:
• The executive regulations of this law shall determine the regulations governing all dispositions of land and real estate owned within the boundaries of the Silk Region. SRE may conclude leasing and all types of contracts on such lands and real estate.
• Allocate a residential area within the Silk Region and mark its boundaries on the general outline shown in annex number 1 of this law. The SRE shall establish the regulations governing the sale of real estate in the Silk Region. All natural persons may apply for their purchase if they meet the regulations and conditions set by the executive regulations of this law.
• The SRE may establish separate entities for the management of real estate within the boundaries of the region and may conclude all types of contracts in order to facilitate the process of development and construction.
Financial Resources
• The SRE will be legally, financially, administratively and economically independent. It has a special commercially-prepared budget. SRE is deemed a merchant in its relations with others. It conducts its operations and organizes its accounts according to commercial rules.
• The SRE's assets and resources consist of:
1- In-kind assets, which comprise of the property allocated to SRE and detailed in the scheme attached in annex 1 of this law.
2- Cash contributions provided by the ministry of finance or any other government body upon instructions from the Cabinet.
3- Cash contributions presented to SRE from any party within the limits of the Silk Region law and its executive regulations.
4- Revenues of services and activities carried out by SRE, including corporate and investment returns, through any type of companies established, as well as fees and fines, and any amounts imposed by the SRE in accordance with this law and its executive regulations.
5- Gifts and donations that are presented to the SRE, provided the rules of transparency and integrity are fully respected.
6- Revenues made from issuing bonds, instruments or other financial facilities received directly or indirectly by the SRE.
7- Any other resources approved by the SRE in accordance with the provisions of this law and its executive regulations.
The Penal Law
- With exception from the application of the provisions of law no. 16 of 1960 pertaining the issuance of the penal code, the prison sentence provided for in articles 237 and 240 will be abolished and only financial penalties will be imposed for offenses within the borders of the Silk Region, provided this provision shall not apply to crimes relating to cheques unless it shall be proved in writing that the issuance of the cheque was linked to a contractual obligation.
- The governors of the region shall be committed to prepare a proposal for alternative amendments to the exempted texts referred to in the preceding clause and submit them to the concerned minister pending submission to the National Assembly and issuing a law thereon.
- In all cases, the customs, traditions and norms of the countries of the persons residing in the Silk Region shall be observed in respect of the acts occurring therein, as well as the laws issued for the region.
Trade Law
- Articles 23, 24, 281, 282, 283, 284, 285 and 286 of law no. 68/1980 are excluded from implementation of the law promulgating the trade law within the Silk Region.
- The executive regulations of this law shall set the rules governing the practice of foreigners for their commercial activities within the boundaries of the Silk Region. In any case, the foreigner may engage in trade without Kuwaiti partners.
- The executive regulation of this law shall specify the activities foreigners are banned from practicing within the borders of the Silk Region.
- Commercial agency contracts shall regulate the rights of both agents and principals and the compensations arising from termination of the agency. The courts of the region shall hear disputes arising from contracts of commercial agencies executed within the borders of the territory unless the concerned parties agree to resort to arbitration.
Shop Licenses
With the exception of the provisions of law no. 111 of 2013 pertaining the licenses of shops, non-Kuwaitis may open shops within the boundaries of the Silk Region in accordance with the conditions and terms specified by the executive regulations of this law.
Non-Kuwaitis' Property Ownership
- With exception from the provisions of law no. 74 of 1979 regulating non-Kuwaiti ownership of real estate, non-Kuwaiti citizens shall have the right to own real estate within the boundaries of the Silk Region, in accordance with the conditions and regulations specified by the executive regulations of this law.
- Taking the preceding clause into consideration, it is prohibited to sell the property during the period of development, processing and construction of the Silk Region. The property will only be leased. The executive regulation of this law shall specify the rules for sales operations exempted from the application of this clause.
- The executive regulations of this law shall regulate the conditions of real estate development in light of the Silk Region's general structural plan and the establishment of regulations that lead to avoiding speculation in real estate and ensure fair dealing in all real estate transactions. The regulations should also include the proportion of real estate designated for housing purposes.
Establishment of Independent Courts
The Judicial Organization of the Silk Region
The comprehensive court shall establish the "Silk Region Court", which will be headquartered in the Silk Region. The court shall consist of the following:
1- Criminal chambers will solely have jurisdiction over criminal cases related to the crimes stipulated in this law and crimes within the borders of the Silk Region. The criminal chamber shall consist of three judges, at least one of whom should be a counselor. The misdemeanor chamber shall be composed of at least one first-degree judge. The regulations and procedures set forth in this law, and the code of criminal trials and proceedings, will be followed before these courts.
2- Non-penal chambers will be exclusively concerned with adjudicating non-criminal cases relating to commercial, civil and administrative disputes arising out of the implementation of the provisions of this law and the regulations relating to the region and substantive implementation disputes arising from the judgments issued therein, regardless of the value of these disputes. These chambers shall be composed of three judges, at least one of whom should be a counselor.
3- One or more judges to be appointed by the court in a timely manner and without prejudice to the origin of the right in matters the court has jurisdiction over time. The court shall also issue temporary orders and orders for petitions and temporary orders and performance orders in accordance with the provisions of this law and its executive regulations.
The judicial papers and summonses issued by investigators or the court to the accused shall be submitted by representatives of the SRE in accordance with the rules set forth in chapter two of part one of the code of criminal procedures and trials. The accused may also be notified at his workplace by handing over photocopies of the summon warrant to whoever he deems responsible for managing this shop or one of his employees. Such documents and summon orders may be communicated to individuals other than the accused by fax or email. The executive regulations shall regulate how to notify in this manner.
Notwithstanding the rules relating to the declaration of judicial documents stipulated in the civil and commercial proceedings law, judicial documents relating to civil, commercial and administrative disputes stipulated in this law may be communicated by fax or email. In coordination with the ministry of communications and the SRE, the minister of justice will issue a decision on the conditions and regulations for the organization of declaration and notification procedures, the quality of the devices and programs used in making the declaration, the forms and shape of the summons notifications and response thereto, and the method of payment of judicial fees for them. Violation of the provisions of this article leads to annulment.
Notwithstanding the provisions of articles 49, 59 and 91 of the code of civil and commercial proceedings, the following shall be observed:
1- Upon the defendant's request, the case will be deemed null and void, if due to the plaintiff's action, the defendant had not been summoned within 30 days from the date of submitting the writ of summons.
2- If neither the plaintiff nor the defendant appears at the first hearing or at any other hearing, the court will pass a sentence or decide to cancel it, after verifying the validity of the declaration process. The court will also decide to cancel the case if both parties are present and agreed to write it off. If the plaintiff or appellant fails to attend the hearing for the second time, the court will then deem the case null and void rather than dismissing it.
3- If the absentee opponent shows up in court before the end of the hearing, the write-off shall be deemed null and void. The court shall also consider the case null and void if both parties fail to attend the proceedings or if one of the other litigants does not declare others with the case within 30 days of its write-off. Calculation of this period will include the write-off period, even if it intermittently recurs. The timing will be deemed void unless the declaration reaches the opponent before it expires.
4- Upon litigants' agreement to withhold the case for a maximum of two months effective on the court approval of such an agreement, the case may be suspended. Such suspension shall not have an effect on any time limit that the law has determined for its execution. If one of the litigants fails to decide resuming litigations within 15 days following the expiry of the suspension term - whatever the duration of the suspension is - the plaintiff shall be deemed to have dropped his claim and the appellant to have given up his appeal.
The court of appeal shall have a criminal, non-criminal chamber or more specialized chambers to hear appeals on verdicts passed by the Silk Region court, and its ruling shall not be challenged by any means of appeal. The appeal chambers in the court of appeal and the comprehensive court will continue hearing appeals issued in cases that have become the jurisdiction of the Silk Region court and have been referred to it following this law's entry into force until a final judgment is issued.
Upon filing appeals, contests or challenges against sentences, the presiding judge will determine to schedule a hearing for the appeal to be filed in the writ of summons at the time of its submission. This shall be regarded as a declaration for the appellant, even if the appeal is filed by his legal representative. The declaration department will communicate the petition to the rest of the opponents by fax through SRE representatives.
A special prosecution, called the Prosecution of the Silk Region, shall be established to be exclusively responsible for investigating, disposing and prosecuting crimes heard by the Silk Region court and challenging the verdicts issued therein.
With exception of law no. 23/1990 pertaining the organization of the judiciary and its amendments, the judges, attorney general deputies and public prosecutors appointed in accordance with the provisions of this law shall meet the following conditions:
1- Fluency in English.
2- International expertise in legal disputes and litigations.
Whenever needed, foreign judges who are good in Arabic may be appointed or legal translators shall be appointed for them.
All proceedings and sentences will be done in Arabic.
1- An arbitration center shall be established in the Silk Region under the name of the Arbitration Center for the Silk Region, and will have the authority to adjudicate the following disputes:
a) All civil and commercial disputes and proceedings to which the parties expressly agree on the jurisdiction of the arbitration center in respect of disputes arising between them.
b) Disputes the center will be responsible for in accordance with the legislation of the Silk Region.
2- The judgments issued by the center shall be final and enforceable under the terms and conditions, unless the concerned parties agree otherwise.
3- The arbitration center shall be responsible for establishing regulations governing and regulating the procedures to be followed before it, forming the members of the arbitral tribunal and their assistants, and the manner of their appointment and selection, including the rules for the establishment of the center and the issuance of judgments.
4- The arbitration clause shall be independent of the contract to which it is incorporated, and shall not be invalidated for any reason.
