Labour Movements in Sri Lanka: Opposition to the Port City Economic Commission Bill

In April 2021, Sri Lanka’s parliament took up a piece of legislation that would set off one of the most significant civil society confrontations in the country’s recent history. The Colombo Port City Economic Commission Bill promised foreign investment, jobs, and a glittering financial hub built on land reclaimed from the sea. Yet within weeks, opposition parties, labour unions, lawyers, and civil society groups had filed roughly 20 petitions in the Supreme Court, arguing that the bill threatened workers’ rights, national sovereignty, and the country’s constitutional order. The episode offers a clear case study in how organised civil activism can shape national policy in South Asia.

What the Port City Bill actually proposed 🔗

The Colombo Port City is a Special Economic Zone (SEZ) built on roughly 269 hectares of land reclaimed from the Indian Ocean, adjoining the Port of Colombo. It began in 2014 as a joint venture between the Sri Lankan government and CHEC Port City Colombo, a unit of the state-owned China Communications Construction Company. At an estimated cost of $1.4 billion, it represents the single largest foreign investment in Sri Lanka’s history.

The bill itself, gazetted in March 2021 and tabled in parliament in early April, was a 76-page document. Its core purpose was to create a legal framework for the SEZ and establish a Commission empowered to grant registrations, licences, authorisations, and other approvals for businesses operating inside the zone. In effect, the Commission would function as a powerful regulator with sweeping discretion over economic activity within the Port City.

The government framed the project as a much-needed lifeline. Facing economic collapse worsened by the COVID-19 pandemic, Colombo presented the Port City as Sri Lanka’s answer to Dubai or Singapore: a tax-free enclave that would attract top-tier IT and financial services firms and generate tens of thousands of jobs.

The labour question at the heart of the bill 🔗

For Sri Lanka’s trade unions, the most alarming feature of the bill was its treatment of labour law. The proposed Commission would have the authority to exempt businesses inside the zone from a range of national statutes, including those governing taxation and labour. This raised the prospect of a workspace where the ordinary protections available to Sri Lankan workers simply would not apply.

Why unions saw a threat to workers’ rights 🔗

Trade union petitioners pointed to specific clauses they considered dangerous. According to the petitions, certain provisions would render the labour inspectorate of the Department of Labour incapable of performing its statutory functions, and would allow the suspension of the Termination of Employment of Workmen (Special Provisions) Act at the Commission’s discretion. The Termination of Employment of Workmen Act, or TEWA, is one of the key laws regulating how employers can dismiss workers in the formal sector.

The fear was straightforward. If labour inspection could be sidelined and termination protections suspended, workers inside the Port City would be left with far weaker safeguards than other Sri Lankan employees. Unions argued this created two parallel legal regimes within one country, a concern with historical roots: in 1978, when the government tried to exempt labour laws within the Free Trade Zone, the Supreme Court had ruled that a country cannot operate two different sets of laws simultaneously.

This worry was not abstract. Sri Lanka already operated 16 free trade zones employing hundreds of thousands of workers, and even there, employers frequently failed to honour existing labour protections. Critics argued that a Port City zone with even fewer safeguards could become a model for eroding workers’ rights across the country.

The unions that led the charge 🔗

The campaign drew in some of the country’s most established labour organisations. The petitioners included the National Union of Seafarers, the Free Trade Zones and General Services Employees Union, the Ceylon Mercantile Union, and the United Federation of Labour, several of which are members of the National Labour Advisory Council. The involvement of the National Labour Advisory Council members mattered because these bodies sit at the formal table of tripartite labour consultation in Sri Lanka.

It is worth noting that trade unions represent a relatively small share of Sri Lanka’s total workforce, and that the country has a large informal sector. This makes the scale of the mobilisation around the Port City Bill all the more striking. Despite limited unionisation overall, organised labour managed to position itself as a central voice in a national debate.

Sovereignty and the China factor 🔗

Beyond labour, a second set of concerns dominated the controversy: national sovereignty. Because the project was Chinese-backed and a Chinese company held significant control over land use, opponents repeatedly warned that the zone could become a “Chinese colony” or enclave operating outside the reach of Sri Lankan law.

Constitutional objections 🔗

The legal challenge was not only about labour clauses but about the structure of power itself. The Commission would be appointed by the President, and its activities would largely escape parliamentary scrutiny. Petitioners argued this undermined the exclusive lawmaking powers of parliament. The Bar Association of Sri Lanka went so far as to argue that the bill paved the way for the creation of a federal state within the country.

Legal scholars added weight to these arguments. Constitutional law professor Suri Ratnapala contended that the bill’s provisions would erode Sri Lanka’s legal and political sovereignty through exemptions from national law, wide discretionary powers for the commission, and limits on parliamentary, prudential, and judicial oversight. There was also criticism that the draft had not been subjected to proper pre-parliamentary review by professional organisations before being rushed forward.

Why China loomed so large 🔗

The geopolitical anxiety was tied to the broader Belt and Road Initiative. The Port City is one of several large infrastructure projects in the region funded by Beijing as it expands its footprint across the Indian Ocean. Concerns about debt dependence were already widespread following the earlier controversy over the Hambantota port, which Sri Lanka had leased to a Chinese firm on a long-term basis after struggling to service its debt. Against this backdrop, granting a Chinese-linked zone special legal status touched a deep nerve about economic dependence and strategic autonomy.

How civil society mobilised 🔗

What makes this episode a textbook example of civil society in action is the breadth of the coalition that formed. The opposition was not confined to a single political party or interest group. It brought together the main opposition Samagi Jana Balawegaya, the Janatha Vimukthi Peramuna, the United National Party, the Bar Association, trade unions, environmental activists, and assorted civic organisations.

Petitions as a tool of activism 🔗

The primary instrument was the courts. Roughly 20 petitions were filed in the Supreme Court challenging the bill’s constitutionality. The petitioners did not simply ask the court to strike down the legislation. They argued that the bill could only be enacted if it was passed by a two-thirds majority in parliament and approved by the people in a national referendum. This was a strategic demand. By insisting on a referendum, opponents sought to turn a parliamentary matter into a question of direct popular consent.

This use of litigation reflects a wider pattern in South Asian democracies, where the judiciary often becomes the arena in which civil society contests executive decisions. When ordinary political channels seem stacked against them, organised groups turn to constitutional review as a check on government power.

Protests and public pressure 🔗

Civil mobilisation extended beyond the courtroom. The Port City project had drawn public demonstrations even in earlier years, with environmental activists and fishermen protesting in Colombo over fears about ecological damage to the coastline. In 2021, the combination of street-level concern, professional advocacy, and political opposition created sustained pressure that the government could not ignore. Parliament even postponed a scheduled debate on the bill, with party leaders agreeing to wait until the Supreme Court’s determination had been received.

What the Supreme Court decided 🔗

The court’s ruling, delivered in May 2021, was a partial victory for the petitioners. The Supreme Court found that several provisions of the bill were inconsistent with the Constitution. In particular, it held that empowering the proposed commission to set and enforce rules within the Port City, backed by heavy fines and long prison terms, could undermine the exclusive lawmaking powers of parliament. Those specific provisions would require both a two-thirds parliamentary majority and approval in a public referendum.

Crucially, however, the court determined that the bill as a whole was not unconstitutional. It could be passed with a simple majority provided that the government incorporated the amendments the court recommended. As one analysis noted, the court’s review was limited to assessing whether the bill fit within the four corners of the Constitution, not the broader socio-economic and political impact of the project.

The government accepted the recommended amendments, and the Colombo Port City Economic Commission Act, No. 11 of 2021, was passed by parliament on 20 May 2021 with a large majority. It came into force later that month. The legislation became law, but in a modified form shaped directly by the legal challenge.

What the episode tells us about civil society 🔗

The Port City controversy is often summarised as a defeat for the opposition, since the bill ultimately passed. That reading misses the point. Civil activism did not stop the legislation, but it materially changed it and forced public accountability.

Constraint on executive power. The mobilisation demonstrated that even a government with a strong parliamentary majority cannot legislate entirely free of scrutiny. The threat of a referendum requirement compelled the government to negotiate amendments rather than pass its original draft unchanged.

The coalition model. The campaign worked precisely because it united actors with different priorities. Unions cared about labour protections, lawyers about constitutional integrity, and political parties about sovereignty and electoral advantage. This convergence is a defining feature of effective civil society movements across South Asia.

Courts as a democratic arena. The episode confirmed the judiciary’s role as a venue where civil society can hold power to account. Constitutional review functioned as a genuine check, even if it did not deliver everything the petitioners wanted.

The longer-term significance is still unfolding. Legal questions about labour rights inside the zone have continued to surface in Sri Lankan courts in the years since, suggesting that the activism of 2021 set in motion a debate that is far from settled. For students of South Asian politics, the Port City case is a reminder that civil society is not just about protest. It is about the patient, organised use of every available institutional channel, from petitions to public pressure, to defend rights and national interests.

What do you think? Was the Supreme Court’s compromise, allowing the bill to pass with amendments rather than blocking it outright, the right balance between attracting investment and protecting workers’ rights? And when a government has a clear parliamentary majority, should major decisions involving national sovereignty require direct public approval through a referendum?

References

1. https://www.deccanherald.com/amp/story/world%2Fdh-deciphers-the-controversy-over-the-colombo-port-city-project-993551.html
2. https://www.themorning.lk/colombo-port-city-project-addressing-issues/
3. https://www.sundaytimes.lk/210418/business-times/trade-unions-14-others-challenge-port-city-commission-bill-440157.html
4. https://www.sundaytimes.lk/251102/business-times/court-ruling-to-retain-workers-rights-in-the-colombo-port-city-618320.html
5. https://blogs.lse.ac.uk/cff/2021/07/08/before-the-phoenix-nest-questions-surrounding-the-port-city-of-colombo/
6. https://thediplomat.com/2021/05/china-in-sri-lanka-the-colombo-port-conundrum/
7. https://www.outlookindia.com/newsscroll/lankas-sc-moved-against-legislation-on-chinabacked-colombo-port-city/2065755
8. https://www.marketbeat.com/articles/sri-lankan-court-china-built-port-board-needs-public-assent-2021-05-18/
9. https://www.isas.nus.edu.sg/papers/sri-lankas-port-city-economic-commission-act-a-social-legal-insight