MCC Compact should conform to the Constitution
Posted on November 15th, 2019

By Neville Ladduwahetty Courtesy The Island

November 14, 2019, 12:00 pm


The Millennium Challenge Corporation (MCC) Compact is temporarily down but is not out. Despite this set-back, it is bound to resurface after the Presidential Election when it would be submitted to Parliament as required by the provisions of the Compact. However, a fact that needs to be acknowledged is that if not for the concerted public pressure that included Ven. Ududumbara Kashyapa Thera to launch a protest fast, the Compact would have been signed by now.

The issue is not whether the MCC Compact was beneficial to Sri Lanka as claimed by some or inimical to Sri Lanka’s national interest as claimed by others, it is the secrecy with which the Government set about handling issues relating to this Compact that caused the public to be wary of the true motives behind the smoke screen of addressing poverty with a grant of $480 million. These doubts had justification because until recently, there was a threat that the Cabinet was keen on signing the Compact without submitting it to Parliament, thus repeating the practice the Government adopted when they co-sponsored UNHRC Resolution 30/1.

Strange as it may seem, it has now come to light that the MCC Compact still requires it to be submitted to and enacted by Parliament for Entry into Force. Had this been known from the beginning, most of the concerns would have been assuaged, as it has been a lack of transparency by the Government throughout that has dented U.S.-Sri Lanka relations.


The need to have Parliamentary approval is not prompted by constitutional necessity or for reasons of good governance as some advocate, but instead by a requirement of the Compact itself as stated in Article 7 “ENTRY INTO FORCE”. Section 7.1 titled “Domestic Proceedings”. Section 7.1 which states:

“The Government shall proceed in a timely manner to complete all of the domestic requirements for this Compact and PIA to enter into force. The parties understand that, consistent with Sri Lankan Law, prior to the Government sending letters described in Section 7.3, this Compact is to be SUBMITTED TO AND ENACTED BY THE PARLIAMENT OF SRI LANKA”.

“Submitted to and Enacted by Parliament” means that the MCC Compact would (invariably) be debated in Parliament after which it (should) be transformed into a Legislative Statute before Entry into Force. It is during these debates that Parliament would have the opportunity to raise issues that are of a controversial nature such as the following:

Section 3.6 “Procurement and Grants. The Government shall ensure that the procurement of all goods, works and services by the government or Provider to implement the Program shall be in accordance with MCC’s Program Procurement Guidelines… Accordingly, neither the Government Procurement Guidelines (2006), nor any other laws or Regulations of Sri Lanka regarding procurement shall apply…”

Section 6.4 “Governing Law. This Compact is an international agreement shall be governed by international law”. Since Sri Lanka operates on a dualist legal system the only international laws that would be applicable to Sri Lanka would be those that have been incorporated into domestic law.

Section 6.8 “MCC Status. MCC is a United States government corporation acting on behalf of the United States Government in the due implementation of the Compact. MCC and the United States Government assume no liability for any claims or loss arising out of activities or omissions under this Compact…The Government agrees that MCC and the United States Government or any current or former officer or employee of the MCC or the United States government shall be immune from jurisdiction of all courts and tribunals of Sri Lanka for any claim or loss arising out of activities or omissions under the Compact”.

These and other contentious issues, the most significant being issues relating to the two main objectives of the Compact, namely, the Transport Project and the Land Project, are likely to be raised when the MCC Compact is submitted to Parliament. However, the Compact itself needs to be presented in a form that it would have the status of a Legislative Statute following which it needs to incorporate any amendments prior to approval by Parliament.

The all-important question that needs to be resolved is whether it would be approved by a simple majority, a two-third majority of Parliament or by a two-third majority of Parliament and a referendum.


The two Project Objectives are the TRANSPORT PROJECT and the LAND PROJECT. Of the two, it would be the Land Project that would determine which majority in Parliament would make the MCC Compact a Legislative Statute.


(a) Summary of Project and Activities

“The Project Objective of the Land Project is to increase the availability of information on private land and under-utilized State Land in order to increase land market activity. The land Project would increase tenure security and tradability of land for smallholders, women and firms through policy and legal reforms….”.

(b) Parcel Fabric Map and State Land Inventory Activity

“The aim of the Parcel Fabric map and State Land Inventory Activity is the creation of a parcel fabric map that covers up to 28 percent of the land area of Sri Lanka, focused on seven districts…The parcel fabric map is intended to become the base map for the completion of an inventory of State lands in the same districts, which is intended to help the Government determine which state lands are underutilized and available for investment and which lands are in active use….”.

(c) Registration of Absolute Land Grants Sub-Activity

“MCC Funding shall support Government efforts to convert permits and grants in State Lands “absolute land grants” that are expected to be registered as freehold rights in land. The sub-activity would support conversion of State Land to the private domain creating a marketable and bankable title to this land holder…”


As admitted in the MCC Compact document the intention of the Land Project is to convert State Lands that are currently held by members of the public on the basis of permits and grants into Private land in order to make them marketable and bankable. Since ALL STATE LAND IS VESTED IN THE REPUBLIC it belongs to all the People of Sri Lanka. It therefore follows that any Legislation that enables permit and grant holders the right to absolute title amounts to a privilege that is denied to others. This violates the Fundamental Rights of those who do NOT hold permits and grants to State Land as provided in Article 12 (1) of the Constitution. Furthermore, since Fundamental Rights are part of the Sovereignty of the people as per Article 3 of the Constitution that state “Sovereignty includes the powers of government, fundamental rights and franchise”, any impact of Article 3 requires a 2/3 approval of Parliament and a referendum. Therefore, if the objectives relating to the Land Project in the MCC Compact are to be fulfilled, a special majority applicable to entrenched Articles is an absolute necessity. If such a majority is not possible, the Land Project component of the MCC Compact cannot be implemented.

The intention of the State Land (Special Provisions) Bill was to be an “AN ACT TO GRANT ABSOLUTE TITLE TO STATE LAND HELD BY CITIZENS WHO ARE HOLDERS OF GRANTS OR INSTRUMENTS OF DISPOSITION; AND TO PROVIDE FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL THERETO”. Since this Bill was withdrawn no law currently exists to grant absolute title to State Land. Under these circumstances what is the future of the MCC Compact?


The MCC Compact has run into a storm of protests from the public. The main reason is speculation arising through the lack of frank information regarding the scope and nature of the project. The fact is that whatever information that was available was what the public could gather in dribs and drabs released by the Government and their spokespersons. For this the government has to take full responsibility.

For instance, these spokespersons keep insisting that there is no mention of a transport link connecting the Ports of Colombo and Trincomalee in the MCC Compact. This is correct. What they do not mention is that the seven targeted districts judiciously selected link the two Ports. Furthermore, growth in these seven districts is not possible without Transport Networks. It is through such networks that the transport link between the two Ports would be established. The credibility deficit in the minds of the public is natural in that if the stated goal of the MCC Compact is to address poverty, why were these particular districts selected considering that the majority are well above the national poverty index?

More importantly, it is the Land Project that is bound to encounter the most resistance. Historically, past attempts to make State Land available to the public have met with considerable resistance, primarily because State Land belongs to the Republic and consequently belongs to ALL the People as part of their sovereignty; a fact stated in Supreme Court judgments. Consequently, granting absolute title to current permit and grant holders would be discriminatory by the rest. Therefore, the only manner by which State Land could be made available with Absolute Title to the public is by securing a 2/3 approval of Parliament and approval by the People at a referendum. This is too high a mountain to climb.

Those associated with the development of the MCC Compact in Sri Lanka should have appraised the U.S. Authorities that the Constitutional impediments associated with the Land Project make it a near insurmountable undertaking. It is inevitable that the ensuing disappointment for this lapse could have an impact on U.S.-Sri Lanka relations.

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