Written evidence from Nick Hills (KUR0029)

Iraq; the Kurdistan Region; and the Iraq Constitution

1. Introduction: I am an English Solicitor (non-practising[1]) who, although I am not a licensed Iraq lawyer, has worked as necessary with a respected member of the Iraq and Kurdistan Region bars in connection with the Kurdistan Region of Iraq petroleum industry since early 2006.  I was based in Erbil from January 2006 until June 2008, which period saw the fusion of the two antecedent (Erbil and Sulaymaniya) Kurdistan Regional Government (KRG) administrations by the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), the coming into force of the 2005 Iraq Constitution and the establishment of Iraq’s Federal Government, the enactment of the Kurdistan Region Oil & Gas Law and the award by the KRG of at least 20 Production Sharing Contracts (PSCs) as well as other Petroleum Contracts. Inevitably I have acquired considerable experience of and familiarity with those aspects of the Iraq Constitution which affect the Kurdistan Region. This paper is not a “pleading” but it seeks to explain and inform about the status and protections of the Kurdistan Region set out in the Iraq Constitution, which may assist in understanding the background to recent events.  

2. Following the Kurdistan Region’s non-binding referendum on 25 September 2017 and the subsequent reaction to it by the Federal Government, the international community (including HMG) is exhorting the Federal Government and the KRG to resolve their differences “in accordance with the Iraq Constitution”. Whilst this sounds like a very proper purpose, generic reference to the Iraq Constitution is little more than a platitude unless interested parties (including HMG) address the fundamental provisions in the Iraq Constitution which affect the Kurdistan Region and which are the cause of its differences with the Federal Government. It is also clear that the media seems largely ignorant of what the Iraq Constitution actually provides.

3. The Iraq Constitution: In this paper references to Articles are, unless stated otherwise, references to Articles of the Iraq Constitution[2].

4. The Iraq Constitution, approved by national referendum in the autumn of 2005 and which came into full force and effect after a general election and the formation of the Federal Government in May 2006, was a compromise reached primarily between the Shia majority parties in Iraq and the Iraqi Kurds[3]. As with all compromises, neither of these parties (nor indeed the Sunni minority) was or is entirely happy with the terms of the Iraq Constitution, some of which were drafted in language which, in the spirit of compromise, is less than definitive.

5. However, what is absolutely clear is that the Iraq Constitution includes certain fundamental rights and protections for the Kurdistan Region including those at Article 141:

“Legislation enacted in the region of Kurdistan since 1992 shall remain in force, and decisions issued by the government of the region of Kurdistan, including court decisions and contracts, shall be considered valid unless they are amended or annulled pursuant to the laws of the region of Kurdistan by the competent entity in the region, provided that they do not contradict with the Constitution.”

6. The Kurdistan Region and its territory: the first and foremost of the Kurds’ rights was the recognition of the Kurdistan Region as a constitutionally recognised Region (Article 117), the only such Region established to date in Iraq; and the second (often misinterpreted) was the delimitation of the Kurdistan Region (as provided in Article 53 (A) of the preceding Transitional Administrative Law (the TAL) of 2004 which Article was preserved by Article 143). Article 53 (A) of the TAL states that:

“The Kurdistan Regional Government is recognized as the official government of the territories that were administered by that government on 19 March 2003 in the governorates of Dohuk, Arbil, Sulaymaniya, Kirkuk, Diyala and Neneveh.  The term “Kurdistan Regional Government” shall refer to the Kurdistan National Assembly, the Kurdistan Council of Ministers, and the regional judicial authority in the Kurdistan region.”

It is, therefore a misconception that the writ of the KRG is limited to the governorates of Erbil, Sulaymaniya, Dohuk and (now) Halabja, which has now been constituted as a governorate separate from Sulaymaniya.

7. Certain areas outwith this delimitation are referred to as “disputed territories”, a term undefined in the Iraq Constitution, but which is addressed in Article 140 (Second), which (by reference to Article 58 of the TAL which is also preserved by Article 143) provides as follows:

Second: The responsibility placed upon the executive branch of the Iraqi Transitional Government stipulated in Article 58 of the Transitional Administrative Law shall extend and continue to the executive authority elected in accordance with this Constitution, provided that it accomplishes completely (normalization and census and concludes with a referendum in Kirkuk and other disputed territories to determine the will of their citizens), by a date not to exceed the 31st of December 2007.”

The census and referendum prescribed by Article 140 (Second) have not taken place, let alone before the 2007 deadline, and hence remain outstanding, although the requirement for their implementation has been consistently pressed for by the KRG and never waived. 

8. Revenue sharing: Having addressed the constitutional legitimacy of the Kurdistan Region and the underlying constitutional provisions concerning its territory, the next most important issue is how the Iraq Constitution provides financially for the Kurdistan Region, bearing in mind that when the Iraq Constitution came into force in May 2006 there was no indigenous production of petroleum within the constitutionally delimited Kurdistan Region. This is addressed in Articles 106, 112 (First) and in particular 121 (Third), which provides that

“Regions ……  shall be allocated an equitable share of the national revenues sufficient to discharge their responsibilities and duties, but having regard to their resources, needs, and the percentage of their population.” 

Article 112 (First) additionally provides that:

“The federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields” [none of which were the Kurdistan Region at the time the Iraq Constitution was agreed] “provided that it distributes its revenues in a fair manner in proportion to the population distribution in all parts of the country, specifying an allotment for a specified period for the damaged regions which were unjustly deprived of them by the former regime, and the regions that were damaged afterwards in a way that ensures balanced development in different areas of the country, and this shall be regulated by a law.”

This, inter alia, contemplated the enactment of a federal revenue sharing law, which, although a draft was apparently agreed in June 2007, has not happened. Any resolution between the Federal Government and the KRG based on the Iraq Constitution must not only address but prioritise revenue sharing in the context also of oil and gas (discussed in the next section of this paper). The economy of Iraq (including the Kurdistan Region) is almost totally dependent on the production and export of petroleum.

9. Oil & Gas: The economic issue has, of course, been complicated by the development and management and control since 2005 by the KRG of the Kurdistan Region’s petroleum resources, which has been a serious contentious issue between the Federal Government and the KRG. Management and control (as opposed to ownership) of Iraq’s Oil & Gas, which (per Article 111) “are owned by all the people of Iraq in all the regions and governorates”, are specifically NOT among the competences reserved exclusively to the Federal Government by Article 110[4].

10. Article 112 (First), quoted above, addresses “present fields”, of which there were none in the Kurdistan Region in 2005. The clear inference from this is that future fields developed in and by the KRG are not constitutionally required to be subject to central government control and management, although, of course, the oil & gas belongs to the State and not the KRG and the revenues from the production of which are to be shared as above. This interpretation has been categorically endorsed by the authoritative and published opinion of Professor James Crawford SC, FBA, LLD[5].  The opinion in consequence determines that the KRG is empowered by the Iraq Constitution to award, as it has done, petroleum contracts for new prospects in the Kurdistan Region and to manage and control the development and production in such acreages. Further, because the management of oil and gas resources is not an exclusive competence of the Federal Government, the opinion confirms that the KRG legitimately enacted the Kurdistan Region Oil & Gas Law in 2007 because Articles 115 and 121 (Second) expressly permit legislative supremacy of the Kurdistan Region law over federal law in regard to matters over which the Federal Government does not hold exclusive competence. The Kurdistan Region Oil & Gas Law defers to the Iraq Constitution and acknowledges both State ownership of oil and gas and the obligation to share revenue.

11. Also, in the context of oil and gas, there is a fundamental philosophical difference between the Federal Government, committed to a nationalised industry entirely managed by a national oil company, and the KRG, which, per the Kurdistan Region Oil & Gas Law, has encouraged private sector investment and proceeded to award a number petroleum contracts involving foreign private sector investment to international petroleum companies. Article 112 (Second) recognised the desirability of a modern approach to petroleum development and provides that:

“The federal government, with the producing regional and governorate governments, shall together formulate the necessary strategic policies to develop the oil and gas wealth in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of the market principles and encouraging investment.”

The fact that these policies may not have been formulated collectively in no way detracts from the rights of the Kurdistan Region to manage and control its own fields and to enact its own legislation to regulate such management, in particular utilising foreign investment with advanced technical resources.

12. In resolving economic issues in accordance with the Iraq Constitution, it has further become necessary to address the sharing of revenue between the Federal Government and the KRG in the context of what has happened since the KRG started production from its own newly developed fields and has succeeded in exporting such production to compensate for the Federal Government’s practice of withholding and/or delaying the Kurdistan Region’s (originally agreed) 17% revenue share. Since 2014 when the Federal Government basically cut off the KRG’s revenue, the KRG has been compensating itself not just from production from fields within the Kurdistan Region but also from fields outside the Kurdistan Region (some in “disputed territory”), annexed and managed by the KRG until retaken by the Federal Government in October 2017.

13. These issues will only be resolved by the enactment simultaneously with a federal revenue sharing law of a federal oil & gas law, which, inter alia, will need to address the constitutional rights of the KRG to manage its own petroleum operations in prospects developed since 2005, to legislate as to how it manages its petroleum industry, and to award petroleum contracts involving private sector investment through production sharing contracts and the like. It must be assumed that the KRG will be unlikely to concede any ground on the legitimacy of the Kurdistan Region Oil & Gas Law which expressly defers to and respects the Iraq Constitution and which has been in operation for 10 years and which is also applauded by the international petroleum industry. Efforts since 2007 to agree the terms of a federal oil & gas law have been singularly unsuccessful because of the fundamental differences of philosophy; centralised State control versus private sector investment. Whilst the KRG recognises that the Iraq Constitution provides that oil & gas are owned by the State, this does not mean that the management and control pf exploration, production and marketing of petroleum in the Kurdistan Region falls under the remit of the Federal Government Ministry of Oil or State owned companies including the State Organisation for Marketing of Oil (SOMO).

14. Peshmerga & security forces: Another major issue (following utterances in recent months by the Iraq Prime Minister) is bound to be the Kurdistan Region’s right (set out in Article 121 (Fifth)) as follows;

“The regional government shall be responsible for all the administrative requirements of the region, particularly the establishment and organization of the internal security forces for the region such as police, security forces, and guards of the region.”

The Federal Government has no constitutional locus standi to interfere with, control, restrict or disband the KRG’s discrete security forces, including the Peshmerga, police and Asiyesh; and it is inevitable that in consequence the KRG will require its own security apparatus to be responsible for or at least share control of land borders and airports within the Kurdistan Region. 

15. Iraq borders within the Kurdistan Region & customs duties: On the subject of borders (land and airports) an agreed resolution is needed between the Iraq security forces and the Peshmerga because Article 110 (Second) does provide the following exclusive competence to the Federal Government:

“Formulating and executing national security policy, including establishing and managing armed forces to secure the protection and guarantee the security of Iraq’s borders and to defend Iraq.”

This will necessarily also extend to the management and collection of customs duties paid at the border posts in the Kurdistan Region; the Iraq Constitution at Article 110 (Third) only addresses customs policy; but Article 114 (First) expressly recognises the management and collection of customs duty as a joint competence requiring future legislation which has not yet been enacted. In regard to borders there is also the question of visas which hitherto the Kurdistan Region has issued separately from Baghdad.

16. Tax and courts: In two other important areas there are distinctions which the Kurdistan Region will strive to protect.

17. The first is taxation. No federal corporate or income taxation has been levied in the Kurdistan Region since 1992. Article 110 does not reserve to the Federal Government the exclusive right to levy taxes (only per Article 110 (Third) prescribing a generic power to determine fiscal policy).  The KRG through its own Ministry of Finance asserts exclusive authority to raise these taxes in the Kurdistan Region.

18. The other is the independence of the Kurdistan Region civil and criminal law courts (assured inter alia by Article 121 (First) and confirmed by Article 141 (supra)); these courts in the Kurdistan Region are entirely separate from those in the rest of Iraq; and from within the Kurdistan Region there is not even a right of appeal to any Iraq court outside the Kurdistan Region.

19. Iraq Supreme Court: The ultimate arbiter of constitutional questions within Iraq is the Federal Supreme Court established by Article 92 and whose jurisdiction, including disputes between Regions and the Federal Government, is set out in Article 93 and covers interpretation and implementation of the Iraq Constitution.  On 7 October 2017 the Supreme Court issued a judgement to the Federal Government ex parte to the effect that secession of any part of Iraq was not permitted under the Iraq Constitution and cited Article 1 and Article 109 which reads:

“The federal authorities shall preserve the unity, integrity, independence, and sovereignty of Iraq and its federal democratic system.”

The KRG has accepted this judgement “as a basis for dialogue”.  However, in the context of the history of Iraq since 2005 and indeed since September 2017, the Kurdistan Region will certainly argue that the Federal Government has not preserved or upheld Iraq’s “federal democratic system”.

20. Deployment of Iraq military forces within Iraq: Article 9 (First) prohibits the use of the Iraq armed forces to “oppress” the Iraqi people and to have any “role in the transfer of authority”.  Further, the establishment of militias outside the military authority is prohibited by Article 9 (Second) and it is arguable that this should apply to the Hashd a-Shaabi. Article 9 cannot delegitimise the Peshmerga which are constitutionally recognised by Article 121 (Fifth).

21. Amendment of the Iraq Constitution: How could the Iraq Constitution be amended ? The provisions for doing so are set out in Article 126; but the final and transitional arrangements in the Iraq Constitution (at Article 142) suspended Article 126 pending a review which was intended to take place immediately the Federal Government was established in 2006. This required the appointment of a committee to agree and to propose amendments and subsequent legislation followed by a referendum, which required a simple majority of Iraqi voters “if not rejected by two-thirds of the voters in three or more governorates” (Article 142 (Fourth)). It is understood that the committee was formed but that the process got nowhere during 2007 for a number of reasons, including the inevitability that changes which diminished the rights of the Kurdistan Region would have been rejected by two thirds of the citizens of Erbil, Sulaymaniya and Dohuk governorates in the Kurdistan Region. [It also got nowhere because at that time when the insurgency was at its height the Shia provinces in the south were pressing for a constitutionally recognised autonomous region akin to the Kurdistan Region.]

22. It is probably reasonable to conclude that Article 142 Fourth) is no longer effective due to lapse of time because its process failed in 2007 and the fact that the 2005 Iraq Constitution has now been in force for over 11 years. This would mean that Article 126 is no longer suspended and that Article 126 provides the constitutional diktat for any amendment to the Iraq Constitution. In the context of this paper the critical provision is Article 126 (Fifth) which provides:

“Articles of the Constitution may not be amended if such amendment takes away from the powers of the regions that are not within the exclusive powers of the federal authorities, except by the approval of the legislative authority of the concerned region and the approval of the majority of its citizens in a general referendum.”

23. Therefore, it is in practice outwith the constitutional powers of the Federal Government to force through any amendment to the Iraq Constitution which would detract from the various rights and protections of the Kurdistan Region outlined above.
24. Conclusion: All of the above demonstrates that merely encouraging the Federal Government and the KRG to settle their differences “in accordance with the Iraq Constitution” will, in present circumstances, achieve no more than exacerbate what is and has almost since the Iraq Constitution was adopted in 2005 been an impasse. Impasses can only be resolved by force and conflict (which are utterly unacceptable) or (in the absence of access to an impartial tribunal) by some form of mediation.  It is inconceivable that the Iraq Supreme Court which sits in Baghdad would be acceptable as an impartial tribunal notwithstanding the recognised integrity of its members. Some form of educated formal or informal mediation or external direction, therefore, is essential; and it is essential that any “educated mediators” understand what is contained in the Iraq Constitution and the difficulties inherent in resolving the impasse “in accordance with the Iraq Constitution”. Broadly this means that both the Federal Government and the KRG must accept and perform the letter of the Iraq Constitution or there will have to be negotiated and agreed compromises which would require amendment to the Iraq Constitution, which (see above) will be difficult to obtain if they detract from the Kurdistan Region’s rights and protections.
25. Whilst the recent “non-binding” independence referendum in the Kurdistan Region may be criticised as “unconstitutional” and has been ruled as being so by the Federal Supreme Court in a second judgement given ex parte on 20 November 2017, it has followed progressive and sustained disregard by the Federal Government of those provisions in the Iraq Constitution agreed and intended to protect the autonomy and rights of the Kurdistan Region.
26. I hope that this paper highlights the most important provisions which need to be addressed if the differences are to be resolved “in accordance with the Iraq Constitution”.

January 2018

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