Lawyers for everyone?

The Jordan Bar Association (JBA) recently amended its law, benefiting its members by further burdening SMEs, direct investment in Jordan whether local or foreign, and the general economic climate.

The new piece of legislation sets fines on SMEs and forces them to incur additional expenditures, clearly not a positive step that signals a return to the pre-reform paternalistic mindset of 1989.

Law No. 25 for the year 2014, which ratifies the 1972 Jordan Bar Association Law, was published in the issue 5294 of the Official Gazette on July 16, 2014. 

Article 14 of this law requires that (translating from the Arabic text) any of the following types of companies and organisations must appoint an agent or legal counsel of registered lawyers: a) public shareholding companies and their subsidiaries and private equity firms; b) limited liability companies with a capital of JD20,000 or more; c) foreign companies or any branches or agencies or regional or representative offices; d) any company or institution registered with the development zones or free zones or the Aqaba Special Economic Zone Authority or Petra Development Authority regardless of capital; e) offshore companies, and not for profit companies; f) any company or other institution with capital of JD50,000 or more.

The legal adviser must be appointed through a written contract deposited with the JBA within 60 days from the date of appointment.

There is a fine of JD5 per day imposed on any firm that fails to comply with the law, which became effective as of the date of publishing — no grace or adjustment period is given in the law.

Worse, there is the requirement that limited-liability companies of JD20,000 must comply, which means that many companies will want to downsize their capital.

The previous draft required that the law apply to any company employing five workers or more, which would have applied to 99.6 per cent of the 160,000 registered companies.

At least, the new law will encourage the growth of the informal sector, as people further move away from the formal economy, which is already harming the government budget and Jordan’s competitiveness.

The logic of the JBA is that it is protecting companies and citizens. It believes that everyone should hire a lawyer.

Note that the law of an association such as JBA, which is basically a civil society organisation, enables it to impose fines on the public at large for non-compliance with its stipulations.

Should the engineers association require that every building have an engineer to overlook its safety, and the physicians that each one of us be registered with a doctor, etc.?

I believe that there may be a case of abuse of dominance by the JBA under the Competition Law No. 33 for the Year 2004, as JBA uses its monopolistic control to hamper trade and derogate competition.

There is also the issue of restricting the business environment in Jordan, something that many have been trying hard to improve.

Furthermore, this makes us look really bad to foreign investors and sets a precedent that is extremely dangerous.

The law must be repealed on legal grounds alone.

In addition, its application at a time the government raises taxes (social security tax and income tax) and considers removing cash transfers in lieu of subsidies, and given the already depressed state of the economy, adds to a rising sense of injustice and resentment.

At the very least, the government should reserve imposing fines and taxes to itself.

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