Investment Law

According to Article (28/First) of the Investment Law, in the event of an investor violating the provisions of this law, the competent authority is allowed to take the following actions:

Issue a warning to the investor to remedy the violation or to commence the project within the period specified by the authority.

If the investor does not remedy the violation within the period specified by the authority, a final warning shall be issued to the investor for a duration of thirty (30) days from the date of the warning.

Upon the expiration of this period, a late penalty shall be imposed proportional to the length of time the violation persists, provided that the total cumulative amount shall not exceed ten percent (10%) of the project's cost.

If the investor does not respond to the initial and final warnings and after imposing the late penalties, the authority has the right to revoke the investment license from the date the violation occurred, while retaining the right of others to demand compensation from the investor for any damages caused by the violation, without prejudice to any other penalties.

Furthermore, Article (28/Second) permits the authority to revoke the investment license if the investor provided false or misleading information or used illegal methods resulting in obtaining any privilege or benefit under the provisions of this law.

Investment System

Article (35) of the amended Investment Law No. (2) of 2009 stipulates that an investment license shall not be granted in the following cases:

• If the investor violates any of the obligations set forth in Chapter Four of the Investment Law more than once.
• If the investor has been found to have committed a crime that affects honor within or outside the Republic of Iraq.
• If the investor causes a breach of any bilateral agreement or international treaty to which Iraq is a party.

Obligation to Appeal the Decision to Withdraw or Refuse to Grant the License

Article (20/Fourth/A) of the Investment Law requires the applicant, when their request for an investment license is denied, to seek reconsideration from the head of the relevant authority within fifteen (15) days from the date they are notified of the rejection decision.

The head of the relevant authority must decide on the request within seven (7) days from the date it is registered in their office. The applicant is also permitted to file an objection with the National Investment Authority within fifteen (15) days from the date the rejection decision is issued, and the authority must decide on the objection within fifteen (15) days from the date it is registered in the head of the authority's office.

Article (20/Fourth/D) of the Investment Law obliges the investor, in case of withdrawal of the investment license by the granting authority for any reason, to appeal to the head of the relevant authority within fifteen (15) days from the date they are notified.

The head of the authority must decide on this within fifteen (15) days from the date the appeal is registered with the authority. Failure to respond within this period is considered a rejection of the appeal. An applicant whose appeal has been denied, either factually or by judgment, may appeal to the head of the National Investment Authority within fifteen (15) days from the date they are notified of the rejection decision, and the head of the authority must decide on the appeal within fifteen (15) days from the date the appeal is registered in their office.

If the appeal is rejected or if the above-mentioned period elapses without considering the appeal, the applicant has the right to challenge it before the competent courts.

State Council and Administrative Judiciary Rulings

The State Council's Decision No. (54/2022) states that the Administrative Judiciary Court has jurisdiction to review the decision to withdraw the investment license.

The ruling of the Administrative Judiciary Court No. (415/ Administrative Judiciary - Cassation 2014 dated 19/5/2016) emphasizes that the investor must follow the procedure outlined in Article (20) of the Investment Law to contest the decision to refuse the granting of the license, as it is considered a final administrative decision that falls under the jurisdiction of the Administrative Judiciary Court to adjudicate its validity.

The ruling of the Administrative Judiciary Court No. (65 Administrative Judiciary - Cassation 2016 dated 28/6/2018) states that Article (20/Fourth) of the Investment Law has established a specific procedure for appealing the decision to withdraw the investment license.

This requires the investor to first file a complaint with the head of the relevant authority within fifteen (15) days, and then to file an appeal with the head of the National Investment Authority within fifteen (15) days from the date they are notified of the rejection decision before appealing to the competent court.

Circulars of the National Investment Authority

Circular No. (2025, dated 26/7/2015) from the National Investment Authority states that the authority to withdraw the investment license lies with the relevant authority, taking into consideration the provisions of Article (28) above.

This power does not fall within the exclusive powers of the Board of Directors as stipulated in Article (4/Second) of Law No. (3) of 2009, which states that "the Board of Directors shall undertake the following tasks: b- Granting the investment license," as the Board does not have the authority to withdraw the license.

Circular No. (2456, dated 21/10/2020) from the National Investment Authority reaffirms adherence to Circular No. (2025, dated 26/7/2015), including investment licenses issued by the National Investment Authority on behalf of the Provincial Investment Authority.

Circular No. (7791, dated 12/9/2021) from the National Investment Authority addresses legal measures for withdrawing zero and stalled investment licenses, particularly in cases where execution is impossible under the provisions of the Investment Law. However, this circular is criticized for not specifying clear criteria for impossibility, especially in cases where the investor has not received the land for various reasons.

According to Circular No. (7572, dated 6/6/2024) from the National Investment Authority, regulations have been issued imposing late penalties when a deviation of (10%) is noted during implementation from the work progress schedule, or when there is a mismatch between actual and planned work schedules, resulting in a time gap of more than six (6) months, or in cases where the project is halted for more than three (3) months without a legitimate reason among partners in the investment license.

The total late penalties shall not exceed ten percent (10%) of the contract value or the capital of the project, including any additional work, after issuing a preliminary warning and a final warning in accordance with the provisions of the law.

Comparison of Procedures for Withdrawal of License or Closure of the Project Under the Industrial Cities Law and the Industrial Investment Law

Procedures for Withdrawing the License or Refusing the Application Under the Industrial Cities Law

• The authority shall decide on the application for a license within thirty (30) days from the date of submission.
• Failure to respond to the application within the time specified in item (First) of this article shall be considered acceptance.
• Anyone whose application is rejected may appeal the rejection decision before the Administrative Judiciary Court in accordance with the law.

The authority may withdraw the license in any of the following cases:

• The developer or manager of the industrial city declares bankruptcy.
  Failure to commence the establishment or development of the city within one year from the date of signing the contract without a legitimate excuse.
• In the case of the developer or manager's delay, or failure to establish or develop the city effectively within three (3) years from the date of signing the contract.
• Providing false or misleading information or using illegal methods that result in obtaining any privileges or benefits under the provisions of this law.
• The Industrial Cities Authority may withdraw the license if the developer fails to execute the contract according to the specified conditions and timelines.

In the case of violating the provisions of the law, the authority shall follow the following procedures:

Issue a warning to rectify the violation or to commence project implementation within the timeframe specified by the authority.

If the violation is not rectified within the timeframe set by the authority, a final warning shall be issued for a duration of thirty (30) days from the date of the warning. Upon the expiration of this period, a late penalty shall be imposed proportional to the duration of the violation, provided that the total cumulative amount does not exceed ten percent (10%) of the project cost.

If there is no response to rectify the violation after exhausting the procedures outlined in items (1) and (2) of paragraph (A) of this section, the authority may revoke the license from the date of the violation, while retaining the right of others to claim compensation from the developer for any harm caused by the violation, without prejudice to any other penalties.

2. Closure of the Project Under the Industrial Investment Law No. (20) of 1998

Article (13/First) of the Industrial Investment Law states that the violator of the provisions of the law shall be warned to take corrective actions within a period not exceeding seven (7) days from the date of notification to rectify the violation.

The violator must rectify the violation within a period not exceeding ninety (90) days from the date of initiating the corrective actions. The violator shall be fined not less than twenty-five thousand (25,000) dinars and not exceeding one hundred thousand (100,000) dinars if the violation is not rectified upon the expiration of the specified period.

The fine shall be doubled in case of repeat violations, and if the violation persists, the project shall be closed until the violation and its consequences are removed.

Ways of Appeal (Challenging):

First – The owner of the industrial project and any party with a vested interest or harm may appeal to the appellate authority against any decision made under the provisions of this law within thirty (30) days from the day following the date of notification.

Second – The appellate authority shall decide on the appeal within a period not exceeding fifteen (15) days from the date the prescribed fee mentioned in item Third of this article is paid, and its decision shall be final upon ratification by the minister.

Conclusion Regarding Filing Complaints and Instituting Legal Action

As a law firm in Iraq, our legal team plays a crucial role due to its expertise and legal knowledge in this field, representing the investor whose license has been revoked by submitting complaints to the relevant authority while observing legal deadlines.

Failure to adhere to these deadlines may result in the loss of the right to appeal, and subsequently, legal action in the Administrative Judiciary Court can be initiated.

We will prepare and submit the necessary legal briefs and defenses to challenge the decision to withdraw the investment license, aiming toward issuing an appropriate judicial decision that reinstates the investment project to the investor.

In conclusion, navigating the complexities of investment laws and regulations in Iraq can be challenging for investors, especially when faced with the potential revocation of investment licenses. It is crucial for stakeholders to understand their rights and the appeal processes available to them.