The Egyptian Centre for Economic and Social Rights (ECESR) heavily criticised the Egyptian Bilateral Investment Treaties (BITs), their relationship to international arbitration and their impact on corruption in Egypt in its latest report, issued earlier this month.
ECESR pointed out that Egypt is one of the top four countries facing international litigation from foreign investors.
The “Egypt & International Arbitration: Protections of Investors, No consolation for Public Money” report stated that since January 2011, foreign investors have filed more than ten lawsuits against Egypt at the International Center for Settlement of Investment Disputes (ICSID) alone.
It added that the real number of lawsuits is more than those publicised, since “many are dealt with in secret, based on the rules followed by various international courts specialised in arbitrating investment issues.”
The report also added that Egypt is one of the countries facing the highest number of cases involving litigation in international investment courts and is always in the top 10, regardless of the source.
“When foreign investors go to a foreign country, they select a country with which their country has a treaty that allows for international arbitration,” Ahmed El-Far, an international arbitration attorney at Zulficar and Partners, said.
“It is true that Egypt has several investment related lawsuits but it has nothing to do with the regulations or facilities that the country offers,” he added.
On the reliance on international arbitration, El-Far said that it offers faster and easier awards.
“The implementation of the court ruling is much faster when using the international arbitration,” he said.
“Investors also prefer international arbitration because they fear the local ruling of the countries,” he added.
ECESR mentioned in its report that BITs open the door of international courts to investors, which guarantees their rights, regardless of the laws of the country, which empowers investors and allows them to claim the position of the victim in any dispute and seek international arbitration.
“After studying the lawsuits filed against Egypt and looking into the experiences of other states, it is clear that BITs are being used as a tool by investors to seek international courts, due to the great privileges guaranteed in such agreements,” the report read.
The report also criticised the exceptional measures it takes to protect foreign investors, such as the ability to overstep local courts, presenting cases against the state and demanding compensation before courts specialised in investment issues, even if the investment was proven to be corrupt.
CEO of Comesa for Trading and Marketing Sherif El-Khereiby said the facilities provided for the foreign investors “spoil them.”
“The law of investment must be revised to comply with the international investment laws worldwide,” El-Khereiby said. “Egypt offers the easiest regulations when it comes to land ownership.”
The report stated that the Egyptian state neglects the dangerous negative impacts that result from its entry into such international investment agreements.
In the section “Priority for foreign investors, but what investment?” the report added that the Egyptian government continues to address the question of investments in a superficial manner that lacks an in-depth analysis of the problematic nature of investment in Egypt; the country remains”stuck to the idea that the best way to encourage investment is to offer tremendous privileges for investors, especially from other countries.”
“Egypt has several advantages that make it a good choice for any investor, such as its location and international cooperation with foreign countries,” El-Khereiby said, adding that in order to attract these investors, “Egypt needs a strong economy and political stability.”
The research report stated that the announcement made by Minister of Investments Osama Saleh on how Egypt “has signed agreements with most the world’s countries to protect investments and how foreign investors can transfer their money out of Egypt and I think the return on investments in Egypt would be very attractive for any investor” as a return to Mubarak’s policies.
Media Adviser to Saleh could not be reached for comment.
With regards to the nature of foreign investments during the past years, ECESR explained that they were limited to purchasing assets controlled by the state, which was a result of the privatisation programme. The report added that this led to the dismantling of the Egyptian industry and the redundancy of a large section of the Egyptian labour force.
The report suggested that social participation should be allowed for the decisions and negotiations regarding investment and trade agreements and should also ensure transparency in decision making, adding that “public scrutiny is the first and only guarantee for integrity and maintaining public interest.”