Yemeni Law Insights
December 2025
Practice Area(s): Public Law; Real Estate, construction & infrastructure; Regulatory Compliance
Statutory Division of Competence Between Central and Local Authorities in the Republic of Yemen
Executive Summary
The constitutional and administrative architecture of the Republic of Yemen presents a unique dichotomy for international investors and development organizations. While constitutionally defined as a unitary and indivisible state, Yemen’s statutory framework - specifically the Local Authority Law No. 4 of 2000 - establishes a robust system of decentralization that confers distinct "nominal personality" upon local administrative units. This legal status grants Governorates and Districts financial and administrative autonomy, distinct from the Central Government, creating a complex web of jurisdictional competence.
For entities implementing sector-focused projects, whether funded by the state or international donors, navigating this landscape requires a precise understanding of the "Double Subordination" principle. This principle mandates that local executive organs report administratively to Local Councils and technically to Central Ministries. Furthermore, the validity of project agreements often rests on the correct classification of a project as either "local" or "central" in nature - a classification determined by statutory tests regarding benefit, capacity, and strategic importance.
This article provides a comprehensive legal analysis of these dividing lines. It examines the breakdown of authority under the Constitution and the Local Authority Law, the procedural nuances of the Executive Regulations, and the practical implications of the current political fragmentation, where the de jure unitary system functions as a de facto dual-administration.
The Constitutional Architecture: Unitary Sovereignty vs. Corporate Personality
To understand the derivative powers of a District Director or a Governor regarding project jurisdiction, one must first analyse the supreme law of the land. The Constitution of the Republic of Yemen creates a framework that balances the imperatives of a strong central state with the necessities of local administration. Article 1 of the Constitution explicitly defines the Republic as an "independent, sovereign, unitary, and indivisible state," asserting that ultimate legislative and sovereign power remains indivisible and resides with the Central Government in the capital.
However, the constitutional amendments of 2001 introduced a profound shift in the exercise of this power by granting specific protections to local governance. Article 145 divides the territory of the Republic into administrative units - Governorates and Districts - and mandates that the law specify their number and boundaries based on objective criteria. More critically, Article 146 confers upon these units the status of "nominal personality" (Personnalité Morale or Shakhsiya I'tibariya). This is a pivotal legal concept which establishes that local units are not merely administrative branches of the central state but are distinct legal entities possessing financial and administrative independence.
The possession of nominal personality carries significant legal implications for project implementation. It grants local authorities the capacity to own assets, incur liabilities, and maintain independent financial accounts separate from the central treasury. Furthermore, it provides them with litigation capacity, allowing a Local Council to sue and be sued in its own name. Most importantly for infrastructure and development projects, this status confers contractual capacity, enabling local authorities to enter into binding contracts for works, supplies, and services within their jurisdiction without requiring a central countersignature, provided the project falls within their statutory competence.
The Statutory Framework: The Local Authority Law No. 4 of 2000
Enacted to operationalize the constitutional promise of decentralization, the Local Authority Law (LAL) No. 4 of 2000 serves as the organic statute governing the division of power. The law effectively dismantled the rigid centralization of the pre-2000 era by creating a hierarchical yet interdependent relationship between the District, the Governorate, and the Central Authority.
The Principle of Double Subordination
The most complex feature of this statutory framework is the principle of "Double Subordination" (Al-Taba'iya Al-Muzdawaja), codified in Article 14 of the LAL and clarified in Article 15 of the Executive Regulations (Republican Decree No. 269 of 2000). This principle dictates that the head of a local executive organ, such as the Director of the Health Office or the Public Works Office in a governorate, is subject to two distinct lines of authority.
Administratively, the director is subordinate to the Head of the Administrative Unit (the Governor or District Director) and the elected Local Council. This subordination covers daily operations, discipline, leave approval, and the integration of the office’s activities into the local development plan. Technically, however, the same director remains subordinate to the relevant Minister in the capital. This technical subordination covers adherence to national policies, medical protocols, engineering standards, and strategic sectoral planning. For project implementers, this means that while the "what" and "how" of a project (technical standards) are governed by the Central Ministry, the "where" and "when" (implementation and location) are often the prerogative of the Local Authority.
The Division of Competence in Projects
The LAL and its Executive Regulations establish a "Nature of Project" test to determine jurisdiction. Article 7 of the Executive Regulations entrusts the Local Council with the supervision and direction of executive organs and the monitoring of plan implementation. Conversely, Article 14 of the LAL reserves specific powers for the Central Authority, including the formulation of general policy and the implementation of projects that are "national in nature" or those that local councils are unable to execute due to technical or financial constraints.
A project is deemed "local" and under the jurisdiction of the Local Authority if its benefits are confined to the specific administrative unit, if the local executive organs possess the technical capacity to supervise it, and if it is funded by the unit's local budget or its allocated share of central subsidies. Examples typically include the construction of primary schools, health units, rural feeder roads, and local water networks.
A project remains "central" if it is strategic in nature, relates to sovereign resources such as oil and gas, involves national defense, or spans multiple governorates, such as national highways or university campuses. In these instances, the Central Government retains exclusive jurisdiction over tendering, contracting, and supervision, although the Local Authority may play a coordinating role.
Financial Autonomy and Donor Engagement
The viability of the local jurisdiction over projects is inextricably linked to the financial provisions of the Public Funds Collection Law No. 13 of 1993 (Financial Law) and its Executive Regulations by Ministerial Decree No. 49 of 1993 (Financial Regulations). The law categorizes public funds into local resources, which are generated and retained 100% within the district; joint resources, which are shared between districts and the governorate; and central resources, which are sovereign revenues like customs and corporate taxes. Historically, the law designated 50% of Zakat revenues as a local resource, a provision that provided significant fiscal autonomy to local councils for community projects.
For international donors and NGOs, the engagement framework adds another layer of legal complexity. While the Local Authority Law empowers local councils to accept gifts and donations for local developmental purposes, the Law on Associations and Foundations (Law No. 1 of 2001) and regulations from the Ministry of Planning and International Cooperation (MOPIC) centralize the approval process for foreign funding. International NGOs are required to sign a Principal Agreement with MOPIC in the capital, which serves as the primary legal umbrella for their operations.
However, specific project agreements often require a dual-validation process. Under the statutory framework, a "Sub-Agreement" for a specific project should ideally be ratified by the Local Council of the beneficiary district to ensure it aligns with the local development plan. In practice, this creates a procedural necessity where donors must secure high-level sovereign approval from MOPIC to satisfy international law and import regulations, while simultaneously securing local ratification to satisfy administrative law and ensure community access.
The Impact of Conflict on Legal Jurisdiction
The post-2015 conflict has not abrogated these laws but has bifurcated their application, creating a divergence between de jure text and de facto reality. In areas controlled by the Internationally Recognized Government (primarily the South and East), there has been a marked shift towards hyper-decentralization. Governors in resource-rich provinces like Hadramout and Marib effectively exercise powers that exceed the statutory limits of the LAL, often retaining sovereign revenues to fund local infrastructure projects due to the paralysis of the central budget.
Conversely, in areas under the control of the de facto authorities in Sana'a, the trend has been towards intense recentralization. The establishment of parallel bodies, such as the Supreme Council for Management and Coordination of Humanitarian Affairs (SCMCHA), has effectively stripped local councils of their statutory oversight regarding international aid projects. Furthermore, the centralization of Zakat revenues into a General Authority in the capital has nullified the fiscal autonomy granted to districts by the LAL.
For Osan Sultan Naji Law Firm's clients, this necessitates a compliance strategy that acknowledges the continued validity of the 2000/2001 statutory framework while adapting to the operational demands of the fragmented authorities. Contracts and project agreements must be drafted to survive this duality, ensuring that signatures are obtained from the officials who hold statutory competence under the law, as well as those who hold effective control on the ground.
For further information or advice on this topic, please contact Osan Sultan Naji or visit our website www.osanlaw.com.
DISCLAIMER: Nothing contained in this article is to be considered as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Osan Sultan Naji Law Firm disclaims liability for actions taken based on the materials.