The proposed Colombo Port City is undoubtedly one of the most important projects with tremendous potential for Sri Lanka. However, the ‘Colombo Port City Economic Zones Special Commission Bill’ that paves the way for the creation of an all powerful Commission was answerable only to the Executive has been disputed by legal experts. Making submissions before the Supreme Court on behalf of the petitions filed against the proposed Bill by the United National Party (UNP), Attorney at Law, Eraj de Silva has explained that there is a difference between a ‘Financial Center’ (which is what should be created) and a ‘Fantasy Island’ (which is what is being created – a sinister fantasy island, at the ‘whim, fancy and the fantasy’ of a “Commission”). De Silva has told the court that it could be sinister as it poses a great threat of a potential economic take-over, not only of the port city area, but of the rest of Sri Lanka, via the construct of a ‘Port City’. The Draft Bill titled Colombo Port City Economic Commission Act 2021 is an important piece of legislation with some calling it a game-changer for Sri Lanka. An all-powerful “Commission” is sought to be created by this new Bill, with independent corporate personality, which will be controlled, possibly by non-nationals, possibly sitting abroad. According to de Silva, this new ‘Commission’ is akin to the East India Company or the VOC of old - where several monopolies are granted, which makes it a very powerful entity indeed, which will henceforth be given recognition by Sri Lankan law. Once the Bill is passed, the entity (Commission) is formed and it can then assume a ‘life of its own’ (i.e. it may be possible for the Commission itself to file action in our courts and/or international tribunals and/or port city courts and obtain various orders against the state and/or the President). The counsel has further pointed out that Clause 3(1) of the Bill provides that the Commission “…shall be entrusted with the administration, regulation and control of, all matters connected with businesses and other operations, in and from the Area of Authority of the Colombo Port City” The counsel has observed that this is a stand-alone clause which gives the “Commission” dominion over the Port City (this power is not even made subject to any other written or unwritten law) and it’s a body corporate (Clause 3(2) of the Bill) and consists of a Membership of 5 to 7 persons (Clause 7(1)) who need not even be Sri Lankan Citizens and meetings may be held abroad (i.e. they may never have to come to Sri Lanka. I.e. Port city may be controlled by foreigners sitting in a foreign country who may not have to even visit Sri Lanka). According to de Silva, it is not a Public Corporation in terms of our law, which means Parliament has little or no power over it and the Minister does not have power to wind it up and its capital (initial contribution) is provided by Chinese Investors (LKR 400 million) – Clause 23(2)(a) of the Bill as well as it is a sui generis entity, which may mean that it may not be subject to the FR jurisdiction and/or writ jurisdiction (may not be executive and/or administrative action). Pointing out the monopoly over all aspects of human living and interaction, de Silva has noted that the Commissioner has the power to make rules, codes, directions and guidelines - Clause 6(1)(u) and (w). If anyone fails to comply with a rule, code, direction or guideline, they can be criminally liable (Summary trial before Magistrate, fine between LKR 1 million and 5 million and/or imprisonment) – Clause 68(1)(f) of the Bill. He has noted that by making such rules, codes, directions, guidelines and violations of which carry serious penal consequences, it is possible for the Commission to regulate all aspects of human life within the 446.6 hectares of Port City. Citing an example, he has pointed out that with these provisions, it may be possible for the Commission to make rules, codes, directions and guidelines. For instance like in altering the Common law (Ex: law of nuisance, law of servitudes); and/or specifying as to what language should be used and/or what religions can and cannot be practiced. The counsel has then questioned if these are not followed, could there be jail time? As for Wide tax/Taxation Powers, the Commission has wide and various tax powers, a lot of which need not be placed before Parliament and/or approved, de Silva has stated. Such taxes have been listed as Charge fees and other charges – Clause 6(1)(n); Fees payable in order to obtain a License – Clause 27(1)/28(2)(b); Levy to be paid by a citizen of Sri Lanka or a resident on goods purchased at retail facilities – Clause 40(2); Fees in respect of Offshore Companies – Clause 41(3)(f) 41(9); Fees in respect of Offshore Bank – Clause 41(3)(f) and 41(9); Penalty in respect of Off-shore banking – Clause 49(2); Fees chargeable by the Estate Manager – Clause 60(c) and (g), berthing levy, vehicle parking charges, utility charges, management fees, user fees, and other such fees from authorized persons, employees of authorized persons, residents, occupiers and visitors within the area of the Colombo Port City and credit the total of the sum so collected to a “Bank Account” as directed by the Commission. However, there is no mention of whether this “Bank Account” has to be in Sri Lanka, de Silva has noted, adding that most of these are not credited to the Consolidated Fund and are out of the financial supervision of Parliament. Referring to accountability/checks and balances, the counsel has argued that it is not an Audit-entity in terms of National Audit Act No. 19 of 2018, which means the Auditor General has no power over it. In any event, it is left out of the jurisdiction of the Auditor General as Commission Members are not public officers/public servants. He has explained that it does not fall under the purview of the Committee on Public Enterprises (COPE), Bribery Commission and there is no accountability to Parliament. Therefore, de Silva has stated that the immunity given under Clause 20 where the Commission and its Officers shall not be liable for any act done or purported to be done or any omission made, in good faith during the exercise, performance or discharge of its or their powers, duties or functions under this Act except for Criminal Offences and regulations and for any act done in contravention of the provisions of the Port City Bill, or any other applicable written law, or any regulations made thereunder. “As such, it is possible that acts cannot be challenged before the Supreme Court or the Court of Appeal,” de Silva has stated. Under judiciary/implications, the counsel has observed that Compulsory Arbitration where all disputes between the Commission and all residents and occupants within the Port City and/or persons authorized to do Business in or from the Port City (all vertical disputes) should be referred to the International Commercial Dispute Resolution Center in the Port City. “This in effect is a separate Court that is outside our Court structure and is a clear implication on Article 105 of the Constitution,” he has said. He has further explained that because this Court can formulate its own rules, it may formulate a rule stating that an appeal from this Court to for instance lies to a Court in China (For example: Belt and Road ICC in Shanghai). According to de Silva, with regard to other disputes – civil and commercial matters- (i.e. horizontal disputes between persons in the Port City where the cause of action arises in the Port City have to be given priority in the normal courts including day to day hearings) - disputes with the “Commission” are sorted out in their Courts, whereas our taxpayers pay for our court system to be used “on a high priority day to day basis” for disputes among people who reside there.Clause 62(6) may allow for foreign lawyers to practice in the Port City Court, which is contrary to Supreme Court rules, in particular Rule: 70. As for lands, land is to be vested in the Commission – Clause 65 of the Bill paving way for the question as to whether this is Private Land or State Land. “If it is private land, can the Commission deny entry to Sri Lankan citizens to this territory? Can they have their own security within this territory akin to Police? Further, land could be alienated by way of leases and sale of condominium parcels effectively transferring freehold land to whoever they please,” de Silva has noted. Another area highlighted by de Silva was the monopoly over business. De Silva has stated that only “Authorized Persons” can do business in the territory and the Commission solely decides who is given authorization to (Clause 26) Definition of Business very widely includes financial and non-financial services (Clause 74). This could include lawyers, doctors and other professionals and in granting a license, the Commission can compel any regulatory authority in Sri Lanka to grant concurrence/approval (Clause: 30(3). The Commission can give large tax exemptions (i.e. no tax even for 40 years – Clauses 52(3) and (7) and once a License is granted, it may be subject to the terms of the document and that document alone – Clause 31(3). Another area of concern highlighted by the counsel is Public Finance (Article 148) that will result in Parliament losing control According to de Silva, many implications will also arise due to this clause with very wide powers of licensing any business. Furthermore, Parliament has little or/ no control over most of the taxes imposed by the Port City and/or has no financial oversight of the Port City Commission. De Silva has also pointed out that several objectives are laid down in the proposed Bill, for example, gaming and a lot of these subjects are under Provincial List (for examples: Betting and Gaming, land powers etc. is in Ninth Schedule). Therefore, in terms of Article 154G(3), this has to be placed before all the Provincial Councils, the counsel has further argued. De Silva has also pointed out that under Schedule III there are – Wide powers of completely exempting business entities from tax (Tax including income tax, value added tax, corporate tax etc.). However, this does not have the in-built safeguards of the BOI law (where Regulations have to be placed before Parliament) or the Strategic Development Projects Act (where such exemptions have to be specifically approved by Parliament), the counsel has observed. He has further noted that Schedule III – Completely takes away laws such as UDA Act, Municipal Council Ordinance etc. which perform important functions of day-today life and that phenomenon is not found in other laws. Even the Board of Investment (BOI) is given the power in exercising the powers of the Municipality in terms of the Municipal Council Ordinance (not excluding the application of the Act completely). Finally, de Silva has observed that there are also many Customs, Treaty Obligations and implications with regard to Article 157 that warrant public scrutiny.