The Right of Disposal is a primary real right outlined by the legislator in Article 1169 of the Iraqi Civil Code, granting its owner the right to exploit and use agricultural land and to benefit from it. It is a right of usufruct but is limited to state-owned agricultural lands.

The right is established solely for agricultural exploitation (both plant and animal) and generally allows the owner to benefit from the land, exploit it, and dispose of their rights in accordance with the law, while the ownership of the land remains with the state.

Vacating the Right of Disposal

Article 1169/2 of the civil code permits the holder of the right of disposal to vacate their right (that is, to sell it), or to lease it, or to lend it, or to mortgage their right in it, either as a security mortgage or a possession-based mortgage.

Additionally, Article 1202 allows the holder to transfer their right to anyone they wish, in exchange for money or other considerations, or to exchange it for property, provided that the transfer is registered with the relevant real estate registration authority. However, this does not extend to ownership of the land, which remains with the state.

Investment of the Right of Disposal

Article (14/ First) of Investment Regulation No. (2) of 2009 permits the allocation or leasing of properties necessary for establishing investment projects by agreement between the investor and the property owner or the holder of the right of disposal.

Article (5) of Regulation No. (6) of 2017 allows the property owner or the holder of the right of disposal for lands and properties allocated for investment projects to lease these lands according to the percentage of the annual rent estimated for each party. However, this provision has been criticized for not clearly specifying the share of the landowner (the state) from the rental payments.

Article (10/ Third/ e) of the Investment Law permits investors to establish industrial investment projects and private storage facilities for the agricultural sector on agricultural lands and agricultural contracts, both within and outside the boundaries of the basic design.

Decision of the Revolutionary Command Council

The dissolved Revolutionary Command Council Decision No. (590) of 1989 allowed holders of the right of disposal for state-owned lands to establish tourism projects or casinos on them, excluding the provisions of paragraph (First) of Article Two of the Law on Unification of State Land Categories No. (53) of 1976.

Decision of the State Council

The State Council Decision No. (37) of 2022 stated that it is not permissible to grant holders of the right of disposal for state-owned agricultural lands an investment license to construct hotels on them, as the provisions of Article (10/ Third/ e) of the Investment Law restrict investment in agricultural lands and contracts to projects specific to the agricultural sector. Additionally, Article (5) of Regulation No. (6) of 2017 considers hotels as commercial projects for the purposes of the Investment Law.

General Secretariat of the Council of Ministers Directive

The General Secretariat of the Council of Ministers, in its legal department's letter number 19244 dated 3/5/2023, based on Article (10/ Third/ e) of the Investment Law, allows the holder of the right of disposal to establish the investment projects mentioned in the above article on lands burdened with the right of disposal without needing to present or announce such projects as investment opportunities, provided that there is approval from the entity holding the land ownership and the other partners, if there are other partners in the right of disposal.

Federal General Budget Law

Article (54) of the Federal General Budget Law for the years (2023, 2024, 2025), Law No. (13) of 2023, permits the establishment of industrial, agricultural, food, and service projects on all agricultural lands that do not have an assigned water share or are unsuitable for agriculture after obtaining approval from the Ministry of Environment and the Ministry of Agriculture, as an exception to the Law on Unification of State Land Categories No. (53) of 1976.

Council of Ministers Decision No. (24931) of 2024

This decision issued regulations for projects exempt from announcement and competition, where paragraph First/4 includes an exemption for projects established on lands burdened with the right of disposal with the approval of the holder of the right of disposal.

This consideration aligns with the General Secretariat’s letter number 19244 dated 3/5/2023, representing a clear allowance for the investment of these lands according to Article (10/ Third/ e) of the Investment Law, exempting it from the announcement requirement stated in Council of Ministers Decision No. (245) of 2019, amended by Decision No. (23374) of 2023.

Recommendations for the investment of lands burdened with the right of disposal

It is proposed to include clear provisions to amend the Investment Law or the regulations issued under it, allowing for the investment of lands burdened with the right of disposal for all investment projects, while clearly specifying the rental payments for the landowner (the state) within the system of selling and leasing state properties and lands for investment purposes.

In conclusion, understanding the Investment of Lands Burdened with the Right of Disposal is crucial for making informed decisions in the agricultural sector. By leveraging expert insights, you can navigate the complexities of land rights and optimize your investment strategies.

For personalized guidance and legal support, consider consulting a reputable law firm in Iraq. Empower your projects with our guide on the Investment of Lands Burdened with the Right of Disposal. Invest smartly and grow sustainably!