Highlights

On December 9, 2020, The Prime Minister issued the decree no. 2592 of 2020 (“Decree”) amending the Prime Minister’s previous decree no. 1062 of 2019 (“Decree no. 1062 of 2019”) regarding the regulation of “The Supreme Commission to Study and Provide Opinion in International Arbitration Disputes”.

Scope of Application

The Decree broadens the scope of application of the Decree no. 1062 of 2019. The Decree empowers the Commission to study and provide opinion in any and all investment and commercial arbitrations where the Arab Republic of Egypt, any of its ministries, public authorities, governmental entities, affiliated bodies, state-owned companies or companies in which the state contributes by any kind of contribution is a party thereto.

Letter of the Amendment

The Decree sets forth some important controversial and broad amendments that will create a fundamental change in the regulation of all arbitrations and contracts where any of the aforementioned authorities or entities is a party thereto.

A. The Commission’s Formation

At the outset, the Decree amended the name of the committee to be as follows “The Supreme Commission for Arbitration and International Disputes” (the “Commission”).

Additionally, other governmental authorities and representatives were added to the constitution of  the Commission which now includes the Prime Minister (the Commission President) and the membership of the following: The Governor of the Central Bank or his deputy, the Minister of Justice (shall act as a president of the Commission in case of the president’s absence), the Minister of Petroleum and Mineral Resources, the Minister of Investment and International Cooperation, the Minister of Finance, the Minster of Public Business Sector, the Minister of Trade and Industry, the Minister of Parliamentary Affairs, the Head of the State Lawsuit Authority, the Head of the Cabinet Advisory Commission, the Chief Executive Officer of the General Authority For Investments and Free Zones,  the Assistant of the Minister of Justice for Arbitration and International Disputes, the Assistant of the Minister of Foreign Affairs for Legal Affairs and Treaties, Representative of the Ministry of Defense, Representative of the Ministry of Interior, Representative of the Administrative Control Authority and Representative of the General Intelligence Agency.

B. The Commission’s Highlighted Additional Competences

In addition to the Commission’s competences that were previously stipulated under Decree no. 1062 of 2019, Article 2 of the Decree broadens the Commission’s competences by adding the following:

• The Commission shall approve international experiences offices and appropriate arbitrators based on the nature of each dispute and the law firms/offices which will be assigned to defend the Arab Republic of Egypt in any arbitration dispute.

• The Commission shall provide its opinion in contracts entered into by the state with a foreign investor or contracts which approve resorting to international arbitration. Additionally, the Commission shall draft the arbitration clause and other governing clauses in the said contracts, including but not limited to force majeure and change of laws clauses in order to be balanced between the parties. It is to be noted that the Decree does not set definitive criteria of what is deemed “governing clauses” that the Committee shall draft.

• The Commission shall approve arbitration fees, counsels’ fees and any other expenses necessary to defend the international arbitration disputes.

• The Commission shall coordinate with the Ministerial Committee for Settlement of Investment Contracts Disputes while exercising its competence stipulated under the Decree 1062 of 2019 of proposing and seeking settlement of disputes.

• The Commission shall assume any other tasks assigned to the Commission by the President or the Prime Minister.It is worth mentioning that the competences included in Article 2 of the Decree suffer ambiguity and uncertainty. The Decree no. 1062 of 2019 provides that the Commission’s decisions shall be binding to ‘all competent administrative entities’ after being ratified by the Cabinet. However, it is not clear under the Decree whether the Commission’s opinion in the contracts subject to its review  shall be also binding or not on the state-owned companies and companies in which the state contributes by any kind of contribution. Also, the Decree does not set a threshold of a minimum amount of the contracts that should be subject to the Commission’s review and consideration.

C. Restrictions Imposed by the Decree

• Article (6) of the Decree stipulates that none of the administrative entities of ministries, public authorities, governmental entities, affiliated bodies, state-owned companies or companies in which the state contributes by any kind of contribution shall take any of the following actions without submitting for the Commission’s consideration:

  1- Entering into any contracts with a foreign investor or signing any contracts that approve resorting to international arbitration or any amendment thereto. This means that the Decree applies to any contract concluded with a foreign investor even if it includes the jurisdiction of Egyptian or foreign courts.

  2- Taking any measure or action in respect of any arbitral dispute.

  In alignment with the wide range of uncertainty and ambiguity of the Decree’s articles, the Decree does not provide for the consequences/penalties in case of non-compliance of its requirements by the state authorities or entities covered by its scope. Furthermore, it doesn’t set timelines for the Commission to exercise its competences with respect to the matters referred to it.

  In general, this Decree and the competencies granted to the Commission thereunder raise doubts about its potential impact on the flow of foreign investments to Egypt and to what extent it would facilitate or hinder the execution of contracts with foreign investors. On a different front, questions arise as to the effectiveness of this Decree in investment arbitration disputes in which the state’s defenses based on national law requirements may not prevail in case the state commits violation of international investment treaties.

If you have any questions please do not hesitate to contact our team members Mohamed Fathy and Abdulla Hosny.