Session 03 –  “Law Reforms & Enhancing Regulatory Frameworks”

Speaker 01  – Ms. Lihini De Silva

In her presentation on “Strengthening Intellectual Property Rights Protection,” Ms. Lihini De Silva noted the intellectual property rights can include patents, trademarks, copyrights. However, for this seminar, she would focus on geographical indications, which are the names given to products that originate from a certain geographical area and possess certain qualities, reputation and features that are attributable to a specific location. Examples include Ceylon Tea, French Champagne and Ceylon Cinnamon. Moreover, they didn’t need to be agricultural products as they could also include Ambalangoda masks and Dumbara mats. She emphasized that geographical indicators are very important as they are symbols of cultural heritage and can bring significant socio-economic benefits to a country. Consequently, they deserved greater attention in the arena of intellectual property rights.

Ms. de Silva observed that the recent Intellectual Property Rights Act Amendment, which came into effect in 2022, expanded on the rights afforded to geographical indications in Sri Lanka.  She also noted that the European Union and India were very concerned about rural development, which had led them to take a considerable interest in the protection of these types of intellectual property.

In Sri Lanka. Ms. de Silva noted that under the previous 2018 amendment, there was simply one provision which empowered the relevant Minister to prescribe geographical indications. She described this as a very outdated law, especially in comparison to countries such as France, where geographical indications originated. French authorities were empowered by legislation to prescribe geographical indications in 1905. However, lacunas in the law were identified and now they had a very comprehensive legal framework. She additionally noted that many European countries had a produced-based system This was in contrast to the top-down method established by the 2018 amendment, which was very outdated in the international context.

Ms. de Silva noted that, at the time, Sri Lanka was engaged in efforts to register Ceylon Tea and Ceylon Cinnamon in Europe. These endeavors revealed shortcomings in our legal framework. As a result, she 2022 amendment were introduced in order to strengthen the law. She stated that, in this new amendment, Sri Lanka was following the Indian approach more closely than the European one.  Items such as Ambalangoda masks had not been registered as the amendments were still pending, in contrast to India where many handicrafts had been registered. She further observed that, in the European Union, they have had regional laws since 1992 with regard to geographical indications, which they have been updating periodically. New amendments have extended protection to non-agricultural geographical indicators, such as crafts and handicrafts, as well. In the international context, Sri Lanka enjoys protection from the TRIPS agreement or Trade-Related Aspects of Intellectual Property Rights, which is an agreement between all member nations of the World Trade Organisation. Thus, Sri Lanka can register Ceylon, Tea, Ceylon Cinnamon and other agricultural and non-agricultural geographical indications. Moreover, under the new law, producer associations and governmental authorities can also apply to register to geographical indications. This situation is similar to India. Export Development Board has initiated the registration for Ceylon Cinnamon while the Sri Lanka Tea Board has initiated the registration of Ceylon Tea. However, she observed that the registration system in Europe is different as registrations are typically initiated by producers.  While the top down system may be more appropriate for Sri Lanka, she warned that it is important to guard against bias. However, she stated that certain lacunas,in the 2022 Act should addressed such as which geographical indication gets precedence if the registration of two similar names is initiated as well as defining how these indications can be used by authorized parties.  

Speaker 02 – Mr. Harsha Fernando

Mr. Harsha Fernando spoke on “Reforming Commercial Laws to Promote Business Growth”.  He defined commercial law as the body of legal rules and regulations that govern the conduct of business activities and commercial transactions and their enforcement. He stressed the need to reform commercial law as the commercial law framework is foundational infrastructure upon which businesses can thrive and contribute to the overall economic development of a country.

He observed that the underlying political ideology of the government shapes the approach to commercial law while the political system determines the distribution of legislative and regulatory powers. Judicial independence was essential in order to provide a stable and predictable environment for commercial activities as was institutional integrity in order to guard against corruption, undue influence and arbitrary decision-making. Moreover, political stability and policy continuity were required to create predictability and consistency of commercial law for long-term investments and strategic decisions.  In addition, commercial law was influenced by international relations and trade agreements which were impacted by Sri Lanka political relationships and its participation in international organisations and value chains.

Mr. Fernando observed that business operations in Sri Lanka were constrained by slagging​, constraining​, corruption​ as well as regulatory inconsistency, ad hoc and arbitrary changes​, and politicization. Furthermore, there were issues with enforcement quality and ADR laws. He noted ​ that it took 1300 days for contract enforcement​. Furthermore, the provisions & framing of tax laws were outdated and disconnected. He emphasized the need for 360-degree reform of laws in areas such as such contract and property, business ownership/structure, intellectual property, insolvency laws, sector regulatory, and competition. and the Judicature Act. He also called for reforms of the Electronic Transaction Act of 2006, Secured Transaction Act of 2009, ADR laws, Consumer Affairs Authority Act of 2003 as well Investment (e.g. BOI Act, Port City Act) & Tax laws

He cited several international success stories where countries have achieved notable results through the reform of laws. These included India’s ‘Ease of doing business’ project which was a reform program with target improvements, including administrative procedures and tax. This resulted in India’s ranking improving from 142 (2014) to 63 (2019). In the UK, bankruptcy law reforms in the Enterprise Act overhauled bankruptcy and insolvency laws and set up bankruptcy courts, resulting in reduced stigma and greater protection to Directors while the sale of distressed assets was facilitated. This resulted in productivity and employment growth, especially in the SME sector. In Ghana, the commercial court system had been overhauled with the introduction of a specialized commercial court, better case management and the training of judges and staff on commercial law.

Mr. Fernando said that improvement to Sri Lanka’s commercial law should include simplifying and streamlining laws and regulations, enhancing contract enforcement and speedy dispute resolution and modernizing commercial transactions and digital commerce​. Furthermore, access to finance and investments​ should be fostered, innovation and IP protection ​encouraged. He stressed that fair competition and market efficiency ​should be improved while transparency and good governance​ must be enhanced. He pointed out that the immediate priorities were earning more foreign exchange and enhancing tax through value creation. He called for process reengineering and legal reforms to unblock and smoothen the value chain.

Speaker 03 – Dr. Arittha Wikramanayake

 Dr. Arittha Wikramanayake spoke on “Improving Regulatory Framework to attract FDIs”. He stated that he would focus on the Economic Transformation Act, particularly as there were a lot of misconceptions about that law that need to be clarified. However, he stressed that a single law can’t transform a broken system. He observed that the challenge in attracting FDI has fundamentally changed over the years. What other countries such as Singapore and Vietnam have done in the past are no longer relevant to Sri Lanka as we don’t have the advantages that those countries enjoyed. In addition, Sri Lanka is burdened by expropriations, inconsistent fiscal policies, labour shortages, high costs of power, political and economic instability, and weak administrative and legal infrastructures. These issues have gravely impacted our ability to get FDIs.

He declared that the days when we attracted investment by touting our friendly smiles, beautiful beaches or even the generous incentives that were once given, but which, in any event, we can no longer afford, were over.  He stressed that strengthening the regulatory infrastructure, while essential, is just one aspect of attracting more FDIs. Foreign investors don’t just look at the investment law, but also consider the broader regulatory framework that governs the sanctity of contracts, dispute resolution mechanisms, and the ability to enforce judgements. Corporate laws, foreign exchange laws, tax laws, data protection laws, IP laws, as well as a host of other laws affects the operation of a business in the country.

On the ETA, Dr. Wikramnayake said that it was part of the regulatory framework that was designed to build the ground for targeted investment. He added that physical infrastructure would also be required for this purpose. The objectives and powers of the Economic Commision have been clearly enunciated in the new law.  He asserted that one of the few remaining advantages of the country was our strategic location as a gateway to South Asia and potential as a center for exports. This would also serve to improve our balance of trade, employment opportunities, He added that this was explicitly recognized in the ETA.

Furthermore, this ACT also requires the formulation of National Policy of Economic Transformaton. The Economic Commission is required to formulate and make recommendations to the Cabinet on investment, international trade, and investment zones in order to realise the objectives of the Policy. Once adopted by Parliament, the Policy becomes legally binding on all government institutions and other stakeholders and requires them to comply with these national policies on investment.

Digitization will be fostered in order to create a fair and transparent regulatory and operational environment that will encourage new investors while existing investors will be encouraged to reinvest and expand. Up to now investors had relied on the protection of bilateral trade agreement, without which investors would be left to the mercy of the local legal system, deterring them from coming in. The ETA seeks to address this situation by providing registered investors with certain guarantees. These include fair and equitable treatment, free transferability of funds arising from investment, and guarantees against indiscriminate expropriation. Moreover, periodic reviews of policies are required while private sector participation at every level has also been provided for.  The Economic Commission will also enable investors to easily invest in Sri Lanka, doing away with the hassle of a lengthy approval process. Importantly, the Commission is empowered to actively facilitate the approvals required from other government institutions. Dr. Wikramanayake underscored the importance of commitment on the part of stakeholders and professionals in achieving the objectives of the ETA.