Youssef & Partners Secures Landmark Settlement in Major Arab Spring Privatization Case
Youssef & Partners have secured a landmark settlement for Al-Kholoud in its dispute with Egypt.
On Tuesday 23 October 2018, the Youssef & Partners team representing Al-Kholoud for Touristic and Real Estate Development S.A.E., led by Karim A. Youssef, notified the arbitral tribunal of their ongoing case against the Arab Republic of Egypt, the Holding Company for Chemical Industries, and the Holding Company for Metallurgic Industries, that the parties have settled their dispute.
The settlement agreement was approved by the Egyptian Council of Ministers last week. News of the settlement received significant media coverage in Egyptian newspapers.
As one of the first disputes to arise from the unwinding of the Privatization Program, this is a landmark settlement for the firm, and has received attention in the Global Arbitration Review and Enterprise.
The dispute, known as the Steam Boilers dispute, has been of interest to the media for some time, and has been referred to in a number of GAR articles (Egypt Legislates to Safeguard Public Contracts and Revolution and Arbitration).
The case was the first arbitration to deal with privatisation issues surrounding post–Arab Spring in Egypt and the Middle East. It involved complex issues, considering the passage of time and the nature of the dispute: a 20-year-old transaction, unwound by a court decision in the aftermath of the Arab Spring, involving assets and contractual obligations that had changed hands many times before finally being acquired by the non-signatory parties that brought the claims. The arbitration also involved designated respondents that were not signatories to the arbitration agreement and it concerned novel and key problems of standing to sue, jurisdiction, res judicata, and liability.
Taking more than two years of negotiations, this was one of the longest-standing settlements in the Arab Spring cases. The Ministry of Investment, the Ministry of Justice of Egypt, and the High Council for International Arbitration, which reports to the Council of Ministers of Egypt, were involved in the settlement discussions.
The dispute involved a number of fundamental issues, including that the court nullified the decree ordering the privatisation, the SPA, and all subsequent transactions. It also nullified the 1994 arbitration clause contained in the SPA and is one of very few cases where none of the parties to the proceedings were actually signatories to the original SPA and, therefore, the agreement to arbitrate.
In light of the highly complex history and nature of the dispute, the settlement is a huge success for all involved and is further evidence of the Egyptian government’s positive attitude toward meritorious Arab Spring claims.