Suez Canal for Educational Services
Repurchase Agreements “Repos” Ground-Breaking Precedent
Shehata & Partners has successfully represented one of the shareholders in Suez Canal for Educational Services in his 13-year battle to vindicate his rights against the Suez Canal Bank. In 2001 a shareholder in Suez Canal for Educational Services entered into a repurchase agreement with Suez Canal Bank. The agreement stated that the client would sell a certain amount of his shares at approximately USD 3 million, but would be entitled to repurchase these shares within 6 months for a slightly higher price. Unfortunately, unexpected economic events made the repurchase impossible within the set time.
Being a leader in banking and finance disputes, Shehata & Partners were hired to resolve this dilemma. At the time, repurchase agreements were not common in neither the Egyptian market, nor other emerging markets. However, being aware of the legal risks associated with such agreements under Egyptian law, Shehata & Partners knew that the only way to win the case was to claim that the agreement was null and void for violating the Sale with Repurchase Options provisions under the Civil Code.
The issue in this case was the absolute lack of precedents or applications for repurchase agreements before the Egyptian courts or legal authorities. Shehata & Partners proceeded to break down the underlying financial mechanism and utilize our written and oral advocacy skills to paint the full picture for the court to prove that the said agreement was particularly violating the Egyptian Civil Code. Up to date, this is the first and only precedent whereby a repurchase agreement has been nullified by an Egyptian court proving Shehata & Partners’ exemplary grasp of banking and finance instruments, placing our rich experience to the benefit of our clients.
