An Insightful Publication in BCDR International Arbitration Review
Karim A. Youssef, CEO of Youssef & Partners (Youssef + Partners), extensively explores the implications of the ministerial approval requirement for arbitration of state contracts and its relevance in Egypt in his BCDR International Arbitration Review publication, titled ‘Consent Ltd.: A Brief History of Egypt’s Ministerial Approval Requirement for Arbitration of State Contracts and Why It Should Be Abolished’, September 2016. The publication traces the development of the requirement of the minister’s approval of arbitration agreements in state contracts from the time before the Revolution and its application in the aftermath of the Arab Spring. Through this analysis, it considers whether the stipulated legislative requirement is truly beneficial and highlights why it should be abolished. It analyses the recourse to arbitration in state contracts and state entity contracts, a recurring concern in Egypt. This publication presents a comprehensive overview of the requirement of ministerial approval for arbitration of state contracts and its meaning for Egyptian legal principles. It also provides recommendations for the abolishment of the legislative requirement and alternatives that could better serve the interests of all parties involved.
‘Consent Ltd.: A Brief History of Egypt’s Ministerial Approval Requirement for Arbitration of State Contracts and Why It Should Be Abolished’, BCDR International Arbitration Review, 3.1, September 2016 Kluwer Law International – Home (kluwerarbitration.com)
Recourse to arbitration in state contracts or state entity contracts has been a longstanding hot topic in Egypt. In the aftermath of the Arab Spring, Egyptian courts have caused a major implosion in the rules governing arbitration in state contracts and state entity contracts. A brief history of the requirement of the minister’s approval of arbitration agreements in state contracts and how it has been applied before and after the Revolution raises legitimate considerations about whether this legislative requirement is useful. This requirement should be abolished.
The decision to abolish the requirement of the minister’s approval should be seen through the lens of the developments brought about by Law No. 32 of 2014 and the balance the law aims to strike between the legitimate interest of the state in protecting the integrity of state contracts and the legitimate interest of investors in protecting their contractual rights. From that balance emerges a key notion, namely, the legitimate right (not only obligation) of the state (as in the executive branch of the government) to protect its investment climate and the sanctity of its commitments, and by proxy, also its international law obligations to observe standards of conduct afforded to foreign investors in bilateral investment treaties and other general international law obligations. It is that right to which the government of Egypt has availed itself by eliminating third-party nullification rights of state contracts and the post-2011 enforcement of those rights. It is also through the lens of that right that the necessity of abolishing the requirement of the minister’s approval should be considered.