CAIRO: Egypt on Tuesday amended its rules for public private partnerships (PPP) to allow disputes to be resolved through arbitration rather than through Egyptian courts, a Finance Ministry official said.
The move is part of a series of measures to make the PPPs more attractive to investors, said Atter Hannoura, director of the ministry’s PPP Central Unit.
Egypt has been working for years to develop PPPs. Economists say they could be an important vehicle to channel some of the billions of dollars Cairo is seeking from foreign donors to help it fill a balance of payment gap widened by a year of political turmoil.
The government’s Supreme PPP Committee, headed by Prime Minister Kamal El-Ganzoury, approved a request submitted by the Finance Ministry on Tuesday to change the procedures.
"This is the first time to introduce in this committee the request from the PPP unit in the Finance Ministry that arbitration be the dispute resolution mechanism," Hannoura said.
Under the new rule, arbitrations would be carried out at the Cairo International Arbitration Center and be based on the regulations and procedures of the United Nations Commission on International Trade Law (UNCITRAL), he said.
Each party to a dispute would select one arbitrator and both would have to agree on a third; arbitrators could be Egyptians or foreigners.
Foreign investors tend to look for neutral, third-party arbitrators because PPP disputes usually pit investors against governments, said a PPP specialist based outside of Egypt.
Projects
Minister for Planning and International Cooperation Fayza Aboul Naga said on Tuesday that Egypt was looking at three joint PPP projects in the Cairo area.
The three are: a LE 980 million wastewater treatment plant at Sixth of October City; a LE 5.5 billion treatment plant at Abu Rawash; and a LE 4.5 billion road from Sixth of October to Cairo’s Rod El-Farag district.
"For the coming three projects, we asked the committee to approve arbitration as the dispute resolution arm rather than the courts," Hannoura said, adding that the three projects were now in the tendering phase.
A fourth PPP project, for hospitals in Alexandria, will be awarded within weeks, Hannoura added. A special dispensation had already been made for that project to allow for arbitration.
Egypt said last year it was considering sovereign guarantees and measures to mitigate currency risk to encourage companies to bid for PPPs and had been discussing the issue with a number of entities willing to lend support.
These included the European Development Bank, the African Development Bank, the World Bank’s Multilateral Investment Guarantee Agency and the United States’ Overseas Private Investment Corporation, the Finance Ministry said in June.
"There are sensitivities regarding arbitration issues, given that some of the arbitration, some international and multinational companies take the Egyptian government to arbitration somewhere in the world based on different laws," Hannoura said.
"Egypt hasn’t succeeded in defending its case in most of the arbitrations," he said.
