Unlocking the sugarcoated emergency in Sri Lanka: Complete legal guide.

Aljazeera reporting on Sri Lanka's economic emergency.
 

The recently introduced state of emergency has become a hot topic among the general public in the wake of Presidential proclamation of a state of economic emergency came into effect to combat the alleged artificial food shortage being created in the country owing to massive hoarding by traders. The Public Security Ordinance (PSO) is the law governing declaration of states of emergency and enactment of emergency regulations. Accordingly President declared a state of an economic emergency on 30th of August 2021 and Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 followed on the same day. On 6th September the parliament approved the state of emergency by a majority of 81 votes. Now the current state of emergency will be in force for a period of one month. It has created confusions and heightened fear among the public. The government maintains that the state of economic emergency will be temporary, and fearmongers should stop making mountains out of molehills. In this backdrop, this article intends to give the reader a timeline of events and guide the reader on legal provisions of PSO, emergency regulations and other relevant statutes to help the reader untie legal issues surrounding them and constructively criticize the entire situation.  

What is the law which confers power on the president to declare a state of emergency in Sri Lanka?

Public Security Ordinance (Chapter 40) as amended by Act No. 8 of 1959 and Act No. 6 of 1978 and Act No. 28 of 1988 of the National State Assembly is the law governing states of emergencies. 

As empowered by section 2(1) of the PSO president can form an opinion that it is expedient to declare a state of emergency for  purposes of supply of essential items of food in order to ensure the Public Security and well being and maintenance of supplies and services essential to the life of the community in view of the prevailing emergency situation the country is faced with amidst the steady rise of COVID – 19 pandemic. Therefore under section 2(1) of PSO, president has been given a wide discretion to declare a state of emergency solely at his will. 

Is a mere proclamation by the president alone sufficient to confer validity on such declaration of a state of emergency? 

Section 2(3) read with section 2(4) of PSO requires parliamentary approval of the proclamation within a period of 14 days from the declaration coming into effect. Therefore a declaration of a state of emergency expires after a period of fourteen days unless it is approved by a resolution of Parliament. A proclamation under section 2(1) is legally valid only after a notice of the approval by Parliament is published in the Gazette.  However according to section 4 where a proclamation is expired or revoked as the case may be, anything duly done or suffered to be done preceding such revocation or expiration shall not be deemed to have been affected  by such revocation or expiration. The state of emergency currently in operation received the approval of parliament within 7 days of its proclamation.

How long a state of emergency will be in operation?

A state of emergency will be in operation for a period of one month from date of the declaration coming into effect as specified in the Gazette, unless such declaration is revoked before expiration of the period of one month. The current state of economic emergency will expire on 30th September 2021, unless the President moves to extend its operation by gazette and parliament approves such extension.

Can declaration of a state of emergency be challenged in a court of law?

According to section 2(1) read with section 3 of PSO, if President makes an opinion that it is expedient to declare a state of emergency in the interests of public security and public order or for the maintenance of supplies and services essential to the life of the community, the fact of the existence or imminence of such state of emergency must be presumed and cannot not be called in question in any court. 

The legal effect of declaring a state of emergency under PSO.

When President declares a state of emergency, the provisions of Part II of PSO comes into effect. Section 5(1) of the part II of PSO empowers president to make emergency regulations as appear him to be necessary or expedient in the interests of public security and public order. Thus, consequent to the proclamation of the state of emergency by the Extraordinary Gazette No. 2243/1 dated 30th August 2021, provisions of Part II of PSO came into operation throughout Sri Lanka. On the same day Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 was enacted by the President and published on the Extraordinary Gazette No. 2243/3 .

When does an emergency regulation come into force? 

According to section 11 of PSO, an emergency regulation comes into operation upon its being enacted by the President and shall be deemed valid and effective thereon. Thus emergency regulations abandon the normal legislative procedure and come into force as soon as they are enacted by the president.

Can the parliament vary or revoke any emergency regulation enacted by the president?

Section 5(3) clearly empowers the parliament to add to, alter or revoke any emergency regulation by way of passing a resolution.

Can emergency regulations made under a state of emergency violate fundamental rights enshrined in the Constitution?

Since emergency regulations cannot override the constitutional provisions, generally emergency regulations cannot violate the fundamental rights guaranteed under Chapter III of the Constitution. However article 15 provides for restrictions to be placed on fundamental rights enshrined in Articles 12, 13(1) and (2) and 14 which we consider as relative rights. The absolute fundamental rights such as freedom of thought and conscience, prohibition from torture and the right to be heard at a fair trial are not subject to any restrictions under Article 15 of the Constitution. Nor can such absolute rights be restricted by emergency regulations. However  fundamental rights such as freedom of expression, equality before law and equal protection of law, right to assembly, association and right of movement which are generally subject to restrictions under Article 15 are anyway compromised and vulnerable under a state of emergency. Despite government's assurance that the state of emergency currently in force does not extend to restricting these relative fundamental rights such as freedom of expression and right to assembly, there is no legal or constitutional guarantee that these rights will not be impinged by emergency regulations.

Is president legally and constitutionally empowered to declare a state of emergency for economic reasons? 

Neither Public Security Ordinance nor the Constitution contain a definition of a state of emergency. Logically speaking, there cannot be a precise legal definition as to when and what circumstances  constitute a state of emergency, since it is usually the unpredictable nature of particular situations which often compel invoking of states of emergencies. Generally it is not the acts of terrorism and threats to public security alone which lead to imposing of states of emergencies.  All kinds of emergencies ranging from natural disasters, public health disasters like Covid-19 pandemic to economic crises necessitate states of emergencies. In this context, any legal definition of what constitutes emergencies have to be broad. Section 2(1) of PSO recognizes invoking of states of emergencies in interests of public security and for preservation of public order or for the maintenance of supplies and services essential to the life of the community. As such, the president is legally empowered to declare a state of economic emergency for economic reasons.

Are states of economic-financial emergencies a thing of the past?

In the early 20th century, particularly during the Great Depression, there was a huge tendency among liberal democracies to equate economic exigencies to pubic security emergencies as would justify states' use of emergency measures as a legitimate instrument of economic regulation to help steer their troubled economic management and to allow the executive to single handedly tackle economic exigencies. In 1933, when the US economy was crippling from the Great depression, President Roosevelt exercised broad emergency powers to address the banking crisis, and eventually the banking sector was able to successfully emerge out of the crisis owing to the drastic emergency measures President Roosevelt took. Moreover, president Nixon in 1971 declared a national emergency to impose supplemental duties on imports to address the balance-of-payments crisis then prevailed in the US. The Economic Stabilization Act of 1970 authorized President Nixon to  exercise emergency powers to impose wage and price controls. 

However the contemporary history of deploying emergency regulations in response to economic crises has been very minimal. It shows states which are struggling with their economies whose governance is characterized by authoritarianism tend to irrationally depend on emergency powers as a permanent means of economic management, which will bear unimaginable social, economic and political consequences for those states in the long term. These irrational economic policies will not be temporary and are more likely to usher these states in a more troubled economic normalcy. It will also distort the free market forces, thus plunging an already troubled economy into an ever-deepening economic crisis. Further, equating an economic crisis let alone a mere political rhetoric of hoarding  by traders, to public security is not a familiar sight in the international economic realms and such drastic emergency economic measures are not received with the same force as in the twentieth century. 

Scope of the state of emergency proclaimed by Extraordinary Gazette No. 2243/1.

Seven days after the state of emergency was proclaimed by the president, the state of emergency was approved by the parliament with a majority of 81 votes, 132 in favor and 52 against. Now for the next thirty days, the state of emergency will be in force throughout the country.  However the president's position over scope of the state of emergency and whether the current state of emergency will be restricted to the maintenance of supply of essential items of food remains unclear.  Despite assurances given by the government that the state of  emergency will be temporary, the bitter experience of living under a 28 year-long state of emergency naturally force the right-conscious people to be wary of a future where there will be possible encroachment of civil liberties. Since there is no legal assurance that president will keep himself to economic paradigm of the current state of emergency, in case he moves to overstep these self-imposed limits, no one will be able to take the bull by its horns.  

How did sugar become an essential food commodity?

Everyone must be wondering why the the state of emergency is all about sugar and when sugar was clothed the essential label. Three days after declaring the state of economic emergency, President by Extraordinary Gazette No. 2243/3 incorporated a provision into the Schedule to the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 to the effect that any work or labor required in performing any service for the collection, storing, refining, transporting and distributing of the essential consumer items such as paddy, rice and sugar, is an essential service required for the due maintenance of the day today life of the community. Thus, sugar became an essential food item alongside paddy and rice.

Some have mistakenly understood that sugar was declared an essential commodity by virtue of a presidential proclamation made under provisions of Essential Public Services Act, No. 61 of 1979 which was published on the same day the state of emergency was declared. By Extraordinary Gazette No. 2243/4 dated 30th August 2021 president acting under section 2 of the Essential Public Services Act, No. 61 of 1979 declared a set of listed services provided by Public Corporations or Government Departments or Local Authorities or Co-operative Societies as essential services for the conduct of ordinary public life. This declaration of essential services was never made under the state of emergency declared by president on the same day. 

Some claim that in declaring paddy, rice and sugar as essential commodities the president could well have resorted to section 17(1) of PSO which empowers him to declare a particular service as an essential service without declaring a state of emergency. But the provisions of section 17(2) is insufficient to adequately provide for aggressive raiding and seizing of massive amounts of hoarded food bulks and redistributing them to the public at fair prices. Thus incorporating a provision to the schedule to the Emergency Regulation enacted under section 5 of PSO is a practically wise move on the part of the government. However if ordinary laws are inadequate and too cumbersome for the task, the Parliament should have stepped in to amend those laws. Hoarding is not something new to this country. Markets have been plagued by monopolies for years. Thus it's manifestly clear there was no exceptional economic circumstances justifying the government's resorting to declaring a state of emergency. 

How did recent price controls on rice and sugar come about? 

The Consumer Affairs Authority acting under the powers vested in it by Section 20(5) of the Consumer Affairs Authority Act, No. 09 of 2003, set maximum retail prices for sugar and rice by Extraordinary Gazettes No. 2243/13 and No.2243/14 dated 2nd September 2021. The price ceilings were imposed by Consumer Affairs Authority itself within the legal framework already created by the Consumer Affairs Authority Act, No. 09 of 2003. The presidential proclamation of the state of economic emergency did not in any way affect the setting of such maximum retail prices by the Consumer Affairs Authority. 

Critiques make this a point to argue that the government attempts to create a sentiment within the society that this state of emergency was introduced to safeguard consumer by controlling food prices and preventing hoarding.  But imposing price controls to address much hyped sugar price-hikes did not come under emergency regulations, but rather under an already existing law. They alleged that under the pretext of protecting consumers the government had found a way to bring in a state of emergency to consolidate power amidst increasing unpopularity among the electorate. Legally speaking, their claims are legally unconvincing since the state of emergency was declared not to control food prices, but only to maintain a continuous supply of some essential staples by preventing stockpiling.  Every laissez faire fan should at least be happy for now that price controls were not imposed under emergency regulations, but under an ordinary law.

What is the law which authorizes Consumer Affairs Authority and other competent authorities to raid and seize hoarded staples?

A state of emergency must usually be followed by enactment of Emergency Regulations under section 5of the PSO. Accordingly, Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 was published on gazette on 30th August 2021. Its main objective is to prevent market irregularities created by deliberate hoarding, interrupting of the distribution of food staples such as rice and sugar and charging high prices for them, in view of convenience and welfare of consumers. Officers of the competent authorities are empowered by this Emergency Regulation to raid, seize and purchase bulks of hoarded essential food at the guaranteed price or the imported prices at the customs and, redistribute to the public at a reasonable price. 

Can emergency regulations or orders made under PSO be questioned in court?

Section 8 of PSO makes it clear that no emergency regulation, or order or rule made thereunder can be called in question in any court.

Does the Emergency Regulation enacted for distribution of food supplies suspend the operation of other ordinary laws?

In a legal sense, emergency regulations under a state of emergency are inherently a state of exception, because what public  would normally regard as law will no longer be the law under a state of emergency, if such ordinary law is inconsistent with the emergency regulations. Article 155(2) of the Constitution recognizes the overriding effect of emergency regulations over ordinary laws, except the provisions of the Constitution.  According to section 7 of PSO, an emergency regulation overrides and prevails over any ordinary laws inconsistent therewith, irrespective of whether provisions of such ordinary laws are specifically amended or suspended under those emergency regulations enacted under section 5 of PSO. However provisions of ordinary laws as are not inconsistent with the emergency regulation shall continue to have effect.

Moreover, regulation 4 of the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 makes it clear that any powers assigned to President by the Emergency Regulation, shall be in addition to any other rights or powers vested in the President or other authority or person by ordinary laws and not in derogation of such rights or powers. 

Which legal provisions empower authorities to take into their possession any paddy stores, mills or sugar go-downs?

Part 3 of the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 deals with taking into possession of warehouses of essential food commodities. Regulation 11 therein specifically empowers the Superintendent of Police of the relevant area to take into his possession any premises where essential food stocks are stored, including paddy, rice and sugar. Any person found or residing in such premises shall be removed, and thereafter, no person shall enter any such premises without permission. 

An owner of such premises is entitled to make an application to Court of Appeal to obtain an order releasing such premises from the possession of the authorities. If the Court of Appeal after the expiration of two weeks of issuing such an order, is satisfied that such premises have been used without the owner's knowledge or in contravention of his instructions, such premises may be released to the owner. Even where an application is not filed by an owner seeking an order for the release of such premises, those premises, unless liable for confiscation, shall be released after a period of six months from the date of taking into possession of authorities.

Are premises or buildings taken into possession of authorities liable for confiscation?

In terms of regulation 11(3) of the Emergency Regulation, if any person has been convicted of an offence and the Court of Appeal is satisfied that premises concerned have been used in connection with the commission of such offence, Court of Appeal may make an order to confiscate such building or premises, in addition to any punishment imposed by the Court of Appeal in respect of such offence.

Who are the competent authorities empowered to seize essential food stocks under the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021?

According to regulation 12,  the following persons shall be deemed to be competent authorities for the purpose of seizing food stocks.

Chairman of the Consumer Affairs Authority 

Inspector General of Police 

A District Secretary of any District.

Regulation 12(4) provides that when a competent authority requests for assistance from any police officer or other public officer, in exercising powers of seizure, such police officer or public officer shall provide such assistance as required.

From where do the authorities derive their power to seize stocks of essential food being transported or kept in warehouses ?

In terms of regulation 12(1), where a competent authority deems it necessary to seize any essential food items kept in warehouses or being transported in any vehicle, for maintaining public order and providing essential supplies and services to the public, it is entitled to seize such food items and any such vehicle. 

Such stocks of food commodities seized by the authorities shall be provided to consumers at fair prices after considering the state certified prices and custom specified prices under the instructions of the Commissioner General of Essential suppliers.

According to regulation 12(3), where a competent authority considers it necessary for the purpose of regulation 12(1), it can make an order directing any person who is in control or has in his possession a vehicle to not to remove such vehicle until a person or an authority specified in the Order permits its removal. 

Who is in charge of implementing and coordinating activities relating to maintenance of essential services under the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021?

Paragraph 1 of regulation 9 in the Part 2 of the Emergency Regulation requires that there shall be a Commissioner General of Essential Services appointed by the president, by name or office, for the whole of Sri Lanka or any part thereof. By virtue of  the above regulation, president appointed Major General Niwunhellage Don Senarath Piyasiri Niwunhella, RWP RSP PGD – CPS to be the Commissioner General of Essential Services for the whole of Sri Lanka to execute and co-ordinate all activities relating to maintenance of essential services under the Emergency Regulation. This appointment was made on 30th of August 2021, after Extraordinary Gazette No. 2243/5 was published giving effect to such appointment. 

Is Commissioner General of Essential Services empowered to give directions to District Secretaries?

Paragraph 5 of regulation 10 of the Emergency Regulation empowers Commissioner General of Essential Services to give necessary direction to any of the competent authorities appointed under regulation 11 and any authority or officer who has been assigned any power under regulation 13 for the purpose of ensuring the duly maintenance of the essential services. The District Secretaries are made a competent authority only for the purpose of regulation 12, particularly for seizure of purchases and transportation of bulks of essential food items. The argument that the Commissioner General of Essential Services is empowered to coordinate and initiate all activities to maintain supply of essential services as per section 5 of the PSO is a preposterous one. Section 5 of PSO merely provides for the power of the president to make emergency regulations as appear him to be necessary. Since the only regulation made under the state of emergency particularly the Emergency (Provision of Essential Food) Regulation, No. 1 of 2021 does not contain an express provision empowering Commissioner General of Essential Services to give directions to District Secretaries, the latter is not legally bound to follow any directions made by the Commissioner. 

You might wonder why a state of emergency was introduced when there are said to be adequate laws.

The rationale underlying the use of emergency powers under a state of emergency is that the provisions in the ordinary laws are not feasible and adequate to address a particular emergency situation with required speed. A state of emergency must be a situation that necessitates a restructuring of state functions overnight, in view of alleviating negative consequences such situation may bear upon both the citizenry and the state. Therefore when there are no adequate or sufficient ordinary laws to deal with a particular emergency situation, introducing emergency regulations under a state of emergency is the most convenient, speedy and less cumbersome process for a government. 

The claim made by some critiques that president could have well declared a state of disaster under section 11 of the Sri Lanka Disaster Management Act No.13 of 2005, instead of declaring of a state of emergency, is not a sound argument, since Sri Lanka's crippling economy or the alleged artificial food shortage created by hoarding is not something entirely pandemic-driven. According to the interpretation section 25 of the Act, neither economic exigencies nor mere hoarding of food staples would fit into the definition of disaster. However in view of surging COVID-19 fatalities, for public health reasons a state of disaster could ideally be imposed under section 11. 

The truth is that the ordinary legal regime in Sri Lanka does not provide for the aggressive pace of massive-scale raiding, seizing and redistributing of essential food stocks. For instance section 17  of the Consumer Affairs Authority Act though it addresses the issue of hoarding by providing that traders shall not conceal goods in excess of the normal trading requirements, does not confer enough powers on officials to deal with the so called mafia traders. Section 58 of the Act also permits the Authority or  officials authorized by the Authority to inspect at all reasonable hours any manufacturing or business premises on reasonable grounds. However the procedure set out in section 58(2) requires seized goods to be produced in court and those goods shall be disposed or forfeited only upon conviction of the traders. Therefore the Act clearly does not provide for redistribution of seized goods to the public. Therefore a state of emergency was declared to aggressively hunt down hoarders and redistribute seized bulks. Under Emergency Regulations currently in operation, once essential food bulks are seized by the the competent authorities, they are to be re-distributed to public at a fair prices according to the instructions of Commissioner General of Essential Services. 

However, it is conventional wisdom that a declaration of a state of emergency carries with it unnecessary concentration of a tremendous amount of unharnessed power in the executive. Judiciary, legislature and the executive become whims and fancies of one single person. For the moment emergency regulations have been enacted only for maintaining supply of essential food bulks, and dangerous provisions of Part II of PSO have not yet been the subject of any emergency regulation. It seems that the government has found a way with a jack hammer to merely go all out on cracking down hoarders, when it could well have taken less drastic and economically-sound policy decisions to address the problem. 

Emergency powers, a double-edged sword?

In a state of emergency, a nation becomes less and less democratic and is inevitably thrusted into full-blown authoritarianism, if emergency powers are misused for ulterior motives. In the words of Robert Jackson J in Korematsu v United States, emergency powers are described as 'a loaded weapon ready for the hand of any authority willing to bring forward a plausible claim of an urgency.' The reason why it's considered a loaded weapon is the fact that emergency regulations enacted under states of emergencies are not subject to judicial review or any checks and balances. 

Sri Lanka's legal regime relating to states of emergency under PSO has a legislative model as its institutional design, meaning Parliament is expected to oversee the use of emergency powers and can add to, alter or revoke any emergency regulation as empowered by Section 5(3) of the Ordinance. But given the super majority the executive commands in the current parliament, once declaration of a state of emergency is given green light by the parliament, rule of law is necessarily put to test as there will be no checks and balances over the exercise of legislative power overtaken by the executive arm. Despite assurances given by the Cabinet spokesperson that emergency powers will not be used to crackdown dissidents and impinge fundamental freedoms and rights of citizens, the scope and the extent of use of emergency regulations will be determined exclusively by the will of executive itself. The government's assurances cannot guarantee the citizenry that the executive will not abuse the state of emergency, until the executive makes his position clear and reassure it to the public. 

Where should the citizen stand?

Sri Lanka is plagued by a worsening economic crisis and a raging COVID-19 pandemic. These are no doubt exceptional circumstances. Both the health and wealth of the citizenry are compromised in these circumstances. But the economic crisis was not something that happened overnight. Sri Lanka has been caught up in a mounting debt crisis, and experiencing economic decline way before the pandemic started. But we all have been in denial of this harsh truth.

In determining the appropriateness of declaring a state of emergency to wage war on the economic exigency we are faced with, one must measure the expedience and necessity of the emergency measures taken against the level of urgency created by such exigency. Further one must also look into whether the president single-handedly possesses the necessary expertise to tackle the real underlying economic issues.  

The gravity of the economic crisis today cannot be restricted to mere hoarding by traders. A scarcity mindset has been created in the minds of  importers and traders just like in the minds of consumers. Traders are not able to find dollars to open Letters of Credit to go ahead with their imports, so they tend to stockpile whatever the amount of stock they have. This tendency to stockpile worsens when price controls are imposed. When hoarding happens, market supply reduces. And consumers sense a shortage of supply in the markets, the panic-buying mindset of consumers forces them to que up to bulk-buy resulting in even more demand. This is an unholy vicious cycle. However the root cause of this situation is the dollar crisis.  A state of economic emergency is by no means a sustainable solution to address this underlying forex crisis. Thus there has clearly not arisen a necessity to declare a state of emergency for economic reasons. A state of emergency neither seems to be a workable economic management tool and thus cannot be said to be expedient. 

Deploying a state of economic emergency to address a long term economic crisis of this scale is both an unconventional and unsustainable means of economic management. The executive cannot be expected to single handedly run what used to be an open market economy.  Government's resorting to an executive-dominated economic management is a clear indication of adhocism of government's economic policy. First they reduced the taxes on sugar imports, then they banned sugar imports, then slapped price controls on it, ultimately resorted to raiding warehouses. Policy certainty has been negatively impacted over the past months and now it's even worsely affected during a state of emergency. Let alone importers, if officials continue to hunt after innocent paddy farmers, incentive for production will drop resulting in lower supply. 

Further, the current economic crisis Sri Lanka is facing is not something that can be managed by mere interventionist economic policies, Certainly not by drastic economic emergency measures. The need for executive interference in the economic management of a country is a clear indication that markets are plagued by monopoly and less competition. As the government claims if monopoly and hoarding is the problem here, instead of drastic interventionist policies, the markets should be opened to new competitors. 

Essentially states of economic emergencies are declared temporarily, but the gravity of Sri Lanka's deepening economic crisis reveals that such a complicated crisis cannot be expected to be undone within a matter of time by the use of emergency laws. Therefore the declaration of a state of food or economic emergency, however the government wants to put it, is an economically, politically and legally an unwise move, despite president is empowered legally to make such declaration for economic reasons.  

In a state of emergency, political prospects for a democratically weak, inefficient and unpopular government are high. Emergency powers can be used to tighten its grip on power. This is why the declaration of a state of emergency is feared by many.  There are good enough reasons for the anxiety in the public. Remember the pot-lamp game back in 1982? JRJ who was believed by many to be a true democrat and the messiah of the nation just turned his back on the very citizens who trusted him, when he abused the referendum clause he himself incorporated into the Constitution, eroding the democratic institutions and dragging the country into a shameful political culture. As they say, absolute power corrupts absolutely. Therefore there are a lot of lessons to be learnt from the past, before we move to take a stand on any political, economic or legal issue like the one we are confronted with today. 

Please share your thoughts and comments on the appropriateness of declaring a state of emergency in the country and where you differ on the legal points raised in this article.