Two Minute Read
In a recent session, the Iraqi Federal Supreme Court struck down decades-old restrictions on foreign ownership and investment, removing a significant legislative relic of the Ba’ath era.
Below, we dissect the legal sources at the heart of this ruling, providing a brief primer for international practitioners and corporate clients exploring opportunities in Iraq.
The Historical Legal Barrier: RCC Decisions No. 23 and 33
To understand the magnitude of this ruling, we must first look at the historical context. The case challenged Decision No.23 of 1994, which was subsequently amended by Decision No. 33 of 1997, both issued by the now-dissolved Revolutionary Command Council (RCC).
These measures effectively functioned as a blanket prohibition against foreign capital. They explicitly suspended any existing laws or decisions that permitted non-Iraqis to own property or invest in Iraqi companies in any form. The regime enforced this ban strictly, stipulating prison sentences ranging from one to three years for violations.
The Constitutional Challenge
The recent case was brought before the Supreme Court by the Iraqi Prime Minister, in his official capacity, against the Speaker of the Council of Representatives. The core legal argument hinged on the incompatibility of the RCC decisions with the post-2003 legal order—specifically, the Iraqi Constitution of 2005.
The Supreme Court, chaired by Judge Mundher Ibrahim Hussein, unanimously held that the RCC decisions violated three key provisions of the Constitution:
- Article 23(Third)(A): This article enshrines the right of Iraqis to own property anywhere within the state, while explicitly allowing exceptions for non-Iraqi ownership of immovable property “as exempted by law”.
- Articles 25 and 26: These articles obligate the state to implement economic reforms, foster the development of the private sector, and actively promote investment.
The Court concluded that the absolute restrictions imposed by the 1994 and 1997 RCC decisions directly contravened these constitutional mandates for economic liberalisation and foreign direct investment. The Supreme Court’s ruling is final and binding across all authorities.
Implications and the Current Statutory Landscape
While the Supreme Court’s nullification of the RCC decisions is a big step for legal certainty, it is vital for international counsel to note that this does not create a regulatory vacuum or grant an unrestricted, unconditional right for non-Iraqis to own real estate throughout Iraq.
Instead, foreign ownership and corporate investment revert to being governed by the Constitution and active statutory frameworks. Chief among these is Iraq’s Investment Law No. 13 of 2006. This statute, which is a legacy of Bremer’s administration post-2003 US invasion of Iraq, and which urgently requires repeal or overhaul in this writer’s opinion, sets out the specific rights, privileges, and conditions afforded to foreign investors, which includes detailed provisions allowing for property ownership linked to approved housing projects.
Locating the Official Sources
For practitioners seeking to review the primary materials, we have attached the Supreme Court’s official press release confirming the ruling to this newsletter.
The full text of the judgment will be available directly through the Iraqi Federal Supreme Court’s official digital portal (iraqfsc.iq). Readers can locate the complete ruling by navigating to the “Judgments” (القرارات) or “Court Sessions” (جلسات المحكمة) archives, where the Court routinely uploads full case files shortly after the conclusion of its sessions.
Takeaway
By formally clearing away the lingering spectre of criminalised foreign ownership under Baath-era laws and reaffirming the primacy of Articles 23, 25, and 26 of the Constitution, Iraq’s highest court has cemented the legal foundation for inbound investment. Foreign corporate structuring and property acquisitions will now be evaluated strictly through the lens of frameworks like the 2006 Investment Law, offering a more predictable and legally sound environment for international capital.