Doing Business in Syria Post-Sanctions: A Legal Risk Map for Foreign Investors

The legal environment for foreign investment in Syria has changed substantially over the past eighteen months. Transactions that were previously difficult or impossible to pursue because of comprehensive international sanctions are once again being considered by investors, financial institutions and businesses looking at opportunities arising from Syria's economic reopening and reconstruction.

For those considering entry into the market, however, sanctions relief is only the beginning of the legal analysis.

In our experience advising on cross-border transactions involving Syria, some of the issues that ultimately determine whether an investment succeeds arise well before the definitive agreements are signed. The identity and control of the counterparty, the legal status of the underlying asset, the ability to move funds through acceptable banking channels, the enforceability of the contractual arrangements and the practical route for repatriating capital all need to be understood before substantial funds are committed.

The removal of broad sanctions has made those questions considerably more immediate.

The post-sanctions legal environment

The international sanctions framework applicable to Syria has undergone fundamental change.

In the United States, the comprehensive Syria sanctions programme was terminated effective 1 July 2025 following Executive Order 14312. The Central Bank of Syria and other Syrian financial institutions had been removed from OFAC's Specially Designated Nationals and Blocked Persons List on 30 June 2025. The Caesar Syria Civilian Protection Act was subsequently repealed on 18 December 2025 through the FY2026 National Defense Authorization Act, and the United States rescinded Syria's designation as a State Sponsor of Terrorism effective 24 August 2026.

The European Union also lifted its economic sanctions against Syria in May 2025, while retaining measures on security grounds, including the arms embargo and restrictions concerning certain dual-use goods, equipment that may be used for internal repression and Syrian cultural heritage. Full application of the EU-Syria Cooperation Agreement was restored on 11 May 2026.

These developments have removed many of the restrictions that previously prevented ordinary commercial engagement with Syria. Targeted measures nevertheless remain relevant.

In the United States, the Promoting Accountability for Assad and Regional Stabilization Sanctions framework continues to target designated persons and entities associated with the former regime, human-rights abuses, narcotics trafficking and other destabilising conduct. Separate U.S. sanctions authorities relating to terrorism, Iran and proliferation may also apply depending on the parties and circumstances involved. In the European Union, targeted measures against individuals and entities linked to the former regime were renewed on 18 May 2026 until 1 June 2027.

The practical compliance exercise has therefore changed. Instead of treating Syria itself as the principal sanctions issue, investors now need to examine the particular parties, ownership and control structures, intermediaries, banks, payment routes, goods and technology involved in each transaction.

That analysis needs to be current. A transaction cleared against the applicable sanctions framework at an early stage should be screened again where there is a material change in the parties, ownership, financing or performance arrangements.

The domestic investment framework is changing as well

International sanctions relief has coincided with significant developments in Syria's domestic investment legislation.

Decree No. 114 of 2025 amended Investment Law No. 18 of 2021 and reorganised aspects of investment governance. Among other changes, it established the Supreme Council for Economic Development, chaired by the President or his delegate, and reorganised the Syrian Investment Authority as an administratively and financially independent public body linked to the Presidency.

The amendments also strengthened a number of statutory protections available within the investment framework. These include provisions concerning precautionary attachment and judicial receivership over investment projects, expropriation and compensation, a six-month cure period before revocation of an investment licence, and the application of investment guarantees to BOT, BOO and PPP structures.

The investment-dispute provisions were also revised. The amended framework expressly provides for arbitration in accordance with applicable laws and relevant international agreements and permits the establishment of a specialised investment arbitration centre. This is properly understood as a development of the existing arbitration framework rather than the introduction of arbitration as an entirely new remedy.

These reforms are significant, particularly when considered alongside the easing of international sanctions. They do not, however, remove the need for transaction-specific due diligence.

The availability of particular investment protections, incentives and administrative facilities may depend on the classification and approval of the project under the Investment Law and its implementing framework. Property rights, licensing, sectoral requirements, banking arrangements and the practical exercise of statutory transfer rights should therefore be verified for the particular investment rather than assumed from the general provisions of the legislation.

The principal risks in practice

Although the risk profile varies considerably by sector and transaction, several issues recur often enough to deserve particular attention.

Counterparty risk

The identity of the contractual counterparty is only the starting point. An investor also needs to understand who owns and controls that counterparty, who exercises operational influence over it, what assets it actually holds and whether there are relationships or exposures that may not be apparent from conventional corporate documentation.

This is particularly important in a market emerging from a prolonged period of sanctions and political transition. Legacy commercial relationships, informal control arrangements and historical affiliations may have consequences for sanctions screening, banking acceptance and ultimately the enforceability or commercial value of the contractual arrangements.

Beneficial ownership and control should therefore be mapped carefully, and the exercise should extend to the location and ownership of material assets where those assets may be relevant to performance or enforcement.

Asset and title risk

Transactions involving land, infrastructure and other substantial physical assets require an equally careful examination of title.

Depending on the asset and location, the historical record may include informal transfers, competing claims, reallocations or incomplete chains of title. Reliance on contractual representations alone may therefore be insufficient.

Where title is material to the investment, verification should be undertaken against the available primary records and relevant administrative authorities. The transaction documents should then be prepared with an appreciation of the issues identified during that exercise, including appropriate representations, conditions precedent and contractual remedies where necessary.

Contractual enforcement

Syrian law, including the Syrian Civil Code, provides an established framework for contractual obligations. For an international investor, the additional question is how a contractual remedy would operate if a substantial cross-border dispute actually arose.

That issue becomes more significant where a dispute may require urgent interim measures, specialist technical evidence or enforcement in more than one jurisdiction. In those circumstances, the dispute-resolution provisions should be designed with the nature of the project and the likely enforcement requirements in mind.

Arbitration will often form part of that analysis, particularly in significant cross-border transactions. This should not be understood as a general judgment on the Syrian judiciary. The appropriate mechanism depends on the contract, the parties, applicable mandatory rules and the jurisdictions in which enforcement may ultimately be required.

The important point is to address those matters when the agreement is being negotiated rather than after a dispute has developed.

Arbitration, enforcement and state-related counterparties

Syria has been a party to the New York Convention since 1959, providing a long-standing treaty framework for the recognition and enforcement of foreign and non-domestic arbitral awards. The amendments introduced in 2025 to the investment-dispute framework provide additional relevance to arbitration in the present investment environment.

The effectiveness of an arbitration arrangement nevertheless depends on its drafting and on the enforcement strategy surrounding it. The validity and scope of the arbitration agreement, the institutional rules, governing law, seat, availability of interim measures and location of assets should be considered as parts of the same exercise.

The choice of arbitral seat should be made on the circumstances of the transaction. Relevant considerations include the parties involved, the applicable legal framework, the supervisory courts, the availability of interim relief and the jurisdictions in which recognition or enforcement may eventually be sought. There is no reason to approach this exercise with an automatic preference either for or against Syria as the seat.

Where the counterparty is the State or a state-linked entity, sovereign immunity introduces a separate layer of analysis. Immunity from jurisdiction and immunity from execution should not be treated as interchangeable. An agreement to arbitrate, or a contractual waiver relevant to jurisdiction, does not necessarily expose every category of state property to enforcement.

The position will depend on the status of the counterparty, the assets concerned and the immunity rules of the jurisdiction in which enforcement is pursued. For substantial state-facing transactions, the location and legal status of potentially relevant assets should therefore be considered at the structuring stage.

Exit and repatriation

The Investment Law provides statutory rights concerning the transfer abroad of investment returns and the repatriation of foreign capital. For an investor, however, the existence of the statutory right is only one part of the exit analysis.

Banking capacity, documentary requirements, tax clearance, foreign-exchange procedures and access to correspondent banking channels may all affect how efficiently those rights can be exercised in practice. These issues are particularly important while Syria's international banking relationships continue to normalise.

The proposed exit route should therefore be considered when the investment structure is established. Share transfers, dividend distributions, repayment of shareholder funding, sale proceeds and other anticipated methods of returning capital should be tested against the applicable corporate, tax, regulatory and banking requirements before funds are deployed.

Structuring the investment

There is no standard structure that will be appropriate for every foreign investment into Syria.

The preferred arrangement will depend on the investor's nationality, the nature of the project, the relevant sector, tax considerations, financing arrangements and any investment-treaty protections that may be available.

For some cross-border investments, an appropriately structured regional holding company combined with a separate Syrian operating entity may offer practical advantages. In GCC-linked transactions, the UAE is likely to be among the jurisdictions considered for such a role, although the choice should follow a proper assessment of the particular investment rather than operate as a default.

Legal separation between the investment vehicle and the Syrian operating business may assist in defining liabilities, financing the project and planning an eventual exit. The extent to which assets and capital should be held at each level is a matter to be determined by the commercial and legal requirements of the transaction.

The governing law and dispute-resolution arrangements require the same transaction-specific approach. Where an internationally recognised governing law is appropriate and legally available, it may provide additional familiarity for investors, lenders and transaction counsel. The arbitral seat should likewise be selected after considering the legal framework, the parties and the jurisdictions in which enforcement may eventually be necessary.

This analysis should be undertaken before signing. By the time a dispute has arisen, many of the decisions that determine the effectiveness of the enforcement strategy have already been made.

Compliance and bankability

Sanctions compliance remains an essential part of the investment process, even though the nature of that exercise has changed substantially.

Informal arrangements, undocumented intermediaries and payment structures designed principally to work around institutional compliance requirements create risks that can extend well beyond the immediate transaction. Banks, regulators, lenders and internal investment committees are likely to scrutinise Syria-related transactions closely during this period of transition.

A sound structure should therefore be capable of being explained clearly. The investor should be able to identify the parties and beneficial owners, explain the commercial purpose of the transaction, document the source and destination of funds, demonstrate the applicable sanctions analysis and provide a coherent legal basis for the proposed corporate and payment arrangements.

This has a direct bearing on bankability. Even where a transaction is legally permissible, an international financial institution may apply more conservative internal risk criteria. Early engagement with the relevant banks can identify those issues before they affect closing or subsequent payment flows.

For the same reason, compliance should continue throughout the life of the investment. Changes in ownership, counterparties, banks, intermediaries, goods or applicable sanctions may require the original analysis to be revisited.

Preparing for entry

For an investor considering Syria today, the most useful legal work is generally undertaken before the investment structure becomes difficult to change.

The counterparty and its ownership should be understood. The asset and relevant title should be verified. Regulatory and investment approvals should be identified. Banking and payment routes should be tested. The dispute-resolution mechanism should be designed with enforcement in mind. Repatriation and exit should be considered while the investor still has the ability to structure them efficiently.

None of these steps eliminates commercial or political risk. Their purpose is to identify which risks can be addressed contractually, which can be mitigated through the investment structure, and which ultimately have to be accepted and priced as part of entering the market.

That distinction is particularly important in Syria's present environment. Risks that have been identified and documented can be assessed by an investment committee, considered by lenders and banks, and addressed transparently with regulators and counterparties. Risks discovered only after capital has been committed are considerably more difficult to manage.

Conclusion

Syria's economic reopening is creating opportunities that would have been difficult to contemplate only a short time ago. The removal of comprehensive sanctions and the development of the domestic investment framework have materially altered the environment for foreign investors.

Entry into the market nevertheless requires careful preparation. The issues most likely to affect a transaction are often practical as much as doctrinal: who controls the counterparty, whether the asset and title withstand scrutiny, whether the investment structure works across jurisdictions, whether banks will process the required payments, how disputes will be resolved and how capital can ultimately be repatriated.

For investors prepared to undertake that work at the outset, the changing legal environment offers considerably greater scope for properly structured investment. The objective is not to remove every element of risk—no emerging or reconstruction market permits that—but to understand the risks sufficiently well to allocate, mitigate and document them before the investment is made.

That is ultimately what turns an available investment opportunity into a transaction capable of proceeding on a sound legal and commercial basis.

Disclaimer: This article provides general information and professional commentary only and does not constitute legal advice. Syrian legislation, international sanctions, banking arrangements and regulatory practice remain subject to change. Specific investments and transactions require current, transaction-specific analysis having regard to the parties, sector, structure and applicable legal and regulatory framework.