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In an important development in the commercial leases dossier, on May 30 the State Council adopted a preliminary ruling, numbered 215, to reject an appeal against another preliminary ruling it had made on April 4, 2024, numbered 160, in which it had suspended the application of a government decision. That decision referred back to parliament the law that aimed at liberalizing non-residential rents and preserving the rights of old rent landlords. The law had been passed by Parliament on December 15, 2023.

After examining the appeal file, the report of the judge rapporteur and that of the government commissioner, the State Council noted that there were no new practical or legal elements to justify going back on the decision and referring the contentious decree-law on non-residential rents to Parliament.

The decision of the State Council, which has yet to rule on the merits, is significant because it indicates that this body considers the law on commercial leases enforceable and thus publishable in the Official Gazette, in accordance with the rules.

Above all, it highlights the perennial problem between tenants and owners of old buildings, in which caretaker Prime Minister Najib Mikati has now become involved.

The problem has only become more acute since Mikati bowed to pressure from a number of old tenants, by sending back the law passed in Parliament, in agreement with the Speaker of the House, Nabih Berri.

Appeals

Parliament had adopted 14 bills and proposals at a two-day meeting on December 14 and 15. On December 19, the Council of Ministers decided to promulgate these laws on behalf of the President of the Republic. However, following a number of appeals and his own consultations, Mikati decided to promulgate only 11 of them, which he demanded to be published in the Official Gazette.

The laws that Mikati had refused to promulgate included two for amending certain provisions of the laws related to the teaching staff of private schools and the organization of school budgets, with the aim of sustaining the Mutual Fund for private teachers. The third provided for amending the law on non-residential rents.


The law on non-residential rents determines in detail the rates on the basis of which rents are to be set: a first estimated rate is 8% spread over a four-year period. Thus, if the estimated rent is $100,000 for a commercial property, for example, the tenant would pay 25% of this sum in the first year, 50% in the second year, then 100% in the third and fourth years. If the landlord decides to waive his right to the increase, the tenant continues to occupy the premises, with the same status, for two years. If, on the other hand, the landlord accepts the increase, the tenant will stay for four years.


“An attack on the Constitution” 


Commenting on the Council of State’s decision, Patrick Rizkallah, President of the Property Owners’ Union, considered that it “represents a first step towards the invalidation of the decree-law referring the law to Parliament, on the grounds that it emanates from a non-competent authority, especially as the law in question had been promulgated by the Council of Ministers.”


He considered that Mikati had “violated the Constitution by unilaterally infringing the decision of the Council of Ministers to promulgate all laws passed in Parliament, in a manner contrary to normal legislative and governmental practice.”


Rizkallah also saw the prime minister’s refusal to publish the text in question in the Official Gazette as “a dangerous precedent denoting a desire to control decision-making centers and act individually.”


He held Mikati responsible for the deplorable situation in which landlords find themselves today, while Parliament has assumed its responsibilities by adopting a new law on the liberalization of non-residential rents. In particular, he blames him for trying to deprive landlords of the income from renting out their properties in these difficult circumstances.


For Rizkallah, Mikati’s silence on this issue seems to testify to his indifference to their suffering. He called on him to publish the law in the next issue of the Official Gazette, while urging MPs to intervene in this context.