Author: Ibrahim Shehata
Introduction:
On the 29th of June of 2021, the Egyptian Parliament has passed a couple of amendments to the powers of the Supreme Constitutional Court in Egypt (“SCC”). In essence, these amendments empower the SCC to review the constitutionality of the decrees, decisions, judgments, and awards issued by foreign courts, foreign arbitral tribunals, and international tribunals that are purported to be enforced against the Egyptian State in the Egyptian territory (the “Foreign & International Decrees”). In addition, the Prime Minister will also have the power to request the SCC to consider such Foreign & International Decrees as un-enforceable vis-à-vis the Egyptian State. In any event, the SCC will have to state the constitutional provision that has been violated by such Foreign & International Decrees and the merits of the violation itself.
Controversial Issues:
These inexplicable amendments have stirred a highly controversial debate within the circles of both the Egyptian and international legal communities. In sum, there are the main concerns with such bewildering amendments:
1- Potential Violations of the Provisions of the New York Convention
Egypt has acceded to the New York Convention which governs the enforcement of foreign arbitral awards in the year 1959. Since then, Egypt has been known for its pro-enforcement regime in the MENA region. These amendments might be considered as a setback to such an arbitration-friendly stance. The New York Convention envisions an exclusive set of grounds for the rejection of annulment whereby the violation of a constitutional provision might fall sometimes only under the public policy defense but not in all cases. More importantly, these amendments will definitely violate article (III) of the New York Convention which requires that national and foreign arbitral awards are treated on an equal footing at the stage of enforcement.
2- Stark Violations of the Provisions of the ICSID Convention
ICSID has a self-enforcing regime, whereby arbitral awards issued against States in ICSID cases have to be enforced by the State in question or otherwise economic sanctions may be levied by the World Bank or the International Monetary Fund. In this regard, these amendments posit that Egypt is trying to create a fictitious defense against such a self-enforcing regime. Accordingly, these amendments, if applied, might put the Egyptian government at the risk of being in default under its current loans with the International Monetary Fund.
3- Ignoring the possibility of enforcing the Egyptian State abroad
The Egyptian Government has to be conscious that these amendments are futile in the sense that nothing prevents any award creditor from enforcing their claims vis-à-vis the funds or the properties owned by the Egyptian Government abroad. Hence, these amendments seem to solely serve the purpose of creating a bad image for the Egyptian legal system worldwide.
Conclusion:
In light of the above, we strongly believe that these amendments do not service the Egypt 2030 vision as it will put huge constraints on Foreign Direct Investment in Egypt which might very well put Egypt at a disadvantage with other competing economies in the MENA region. In this respect, we hope that the Egyptian government revises its position and puts into consideration the severe ramifications the Egyptian economy might suffer as a result of these utterly baffling amendments.
