EGYPT Trends and Developments Contributed by: Inji Fathalla, Salma Nasreldine, Haya El Samra and Ismaël Sedky, Shahid Law Firm
Enhancing the Dispute Resolution Framework to Strengthen Investor’s Rights and Protections The Egyptian Arbitration Law, though unchanged since its entry into force more than 30 years ago, remains one of the most important incentives for for- eign investors. Alongside the arbitration law, Egypt has taken many initiatives to facilitate the resolution of disputes between investors and the state. These initiatives were – and continue to be – undertaken as a result of the boom in foreign direct investment in Egypt. Naturally, as both the number and scale of investment increase, the risk of disputes rises accordingly. The initiatives we will examine in more detail below are specifically designed to match the scale of invest- ments made in Egypt. Naturally, it also becomes necessary for the legislator to introduce reforms, both to address the shortcom- ings of arbitration law and to reflect the progress and development that Egypt is undergoing today. This reflection is above all that of the place Egypt grants to investment and to investors, through its guarantee of the rights and standards of protection recognised worldwide for investors and their invest- ments. Always with an innovative outlook, and to keep pace with economic development and growth of foreign investment on its territory, Egypt has been working on improving its Bilateral Investment Treaties (BITs). As evidence of this development and its presence on the global stage as a trustworthy actor, and, above all, as a strong competitor, the new BIT with the Kingdom of Saudi Arabia (the “Egypt―KSA BIT”) represents Egypt’s alignment with the innovative standards of international investment law. This new BIT, concluded in 2024, thus reflects Egypt’s position regarding its approach to this constantly evolving field of law. Among the protections offered to investors under the Egypt―KSA BIT, certain standards stand out as they are often at the root of claims brough by foreign inves- tors. Egypt does not simply introduce new protec-
tions, but also revisits well established standards of protection, adapting them through approaches that differ from those found in older BITs. On point, the Egypt―KSA BIT grants foreign inves- tors treatment no less favourable than that accorded to local investors. However, Egypt attaches certain exceptions to this principle, particularly in strategic or sensitive areas for social and economic development, such as health and education. Since these exceptions were not explicitly included in older BITs, their enu- meration in the Egypt―KSA BIT represents a notable innovation, as Egypt expressly reserves the right to treat foreign investors differently in the sectors set out in the BIT. This reworking of the national treatment standard could be perceived as a drawback for foreign inves- tors who might fear being treated less favourably than local investors. Yet the approach of the Egypt―KSA is more nuanced, adopting a case-by-case method to assess whether less favourable treatment or dis - crimination has occurred, considering all the factors behind the rational for such discrimination. Instead of applying the rule rigidly, this approach allows for a concrete assessment of whether discrimination is legitimate, particularly when justified by regulatory or policy objectives, or more generally by the circum- stances at the time. The definition of “less favourable treatment” or “dis- crimination” would have been an interesting addition to the Egypt―KSA BIT, as it would clarify what con- stitutes a breach of the national treatment standard. The drafting of the Most-Favoured-Nation (NFN) clause in the Egypt―KSA BIT further introduces three exclusions: one temporal, one procedural, and one substantive. The temporal limitation excludes from its scope any BIT that predates the Egypt―KSA BIT. As a result, it prevents investors from invoking more favour- able treatment found in older treaties. This exclusion reduces the flexibility of investors seeking the most advantageous treatment. The procedural exclusion removes dispute settlement provisions from the scope of the MFN clause. This exclusion particularly notable, as the interpretation of
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