(Photo courtesy of Egypt’s Cabinet)
The government is forming a new committee to deal with all investment disputes pending before international arbitration or before the Egyptian Disputes Settlement Committee, according to a cabinet press release issued on Thursday.
The new committee comes in the framework of measures being taken to reassure investors and avoid international arbitration fines, and aims to settle the disputes “amicably”, the press release stated.
“The committee will be permitted to hire specialists on technical matters,” whether in engineering, accounting, finance, banking, agriculture, manufacturing, taxes, or customs, “in order to give technical opinions on subjects related to the disputes,” said a source closely related to the Dispute Settlement Committee.
“The state wishes to send a serious message about encouraging investment, reconciling with serious investors, and settling disputes raised with them, while preserving the right of the state and public money, and not harming serious investors,” the source added.
There have been more than seven cases raised against Egypt since the 25 January Revolution out of a total of nearly 22 cases which combine for more than $20bn in compensation.
Egypt has suffered deep economic hardship since the revolution in 2011, witnessing unemployment, the exodus of foreign investors and tourists, slowed economic growth, and court verdicts voiding the privatisation contracts of nearly 11 companies and returning them to the state. These re-nationalisation decisions angered investors, who restored to international arbitration centres to raise cases against Egypt. The cases involve possible heavy fines that the state’s treasury cannot bear.
Prime Minster Ibrahim Mehleb met Thursday with the ministers of justice, transitional justice, investment, and international cooperation as well as the assistant minister of justice and representatives of the Egyptian State Lawsuits Authority, to discuss the international arbitration raised against Egypt by investors and pending before international arbitration bodies. The discussion focused on settling these cases amicably rather than through litigation.
Former president Hosni Mubarak sold a number of state companies between 1991 and 2008 in a bid to stimulate private sector growth.
“The threat of re-nationalisation scares foreign investors, who are already reluctant to commit to any new investments in light of the weakness of the economic situation and political turmoil. These disputes must be settled amicably,” said Fakhry Al-Feky, former assistant executive director of the IMF.
“Foreign investor confidence has diminished,” Al-Feky added, “because of the Egyptian government’s slowness in paying dues owed to foreign oil companies while struggling to pay its energy bills.”
Hani Sari-Eldin, chairman of Sari-Eldin Legal Advisors, said:”Amicable settlements that do not harm serious investors and that do not waste public money are a good step to reassure the financial and international business community and to restore confidence in investing in Egypt.”
The results of the cases against Egypt show that state attorneys in international arbitration cases have a weak position, said Sari Eldin.
Egypt was fined $300m in the Siag Tourism investment case over land in Taba, which showed that the company sold the land to Israeli investors; the case was brought to the international arbitration centre that belongs to the World Bank. This was followed by another ruling from a Madrid international arbitration centre fining Egypt $530m in a case between the Ministry of Civil Aviation and a British body over Ras Sidr aiport.
