By Damon Vis-Dunbar
17 November 2008
The Egyptian government has deflected a US$ 80 million dollar claim by two companies hired to dredge the Suez Canal.
Jan de Nul N.V. and Dredging International, both incorporated in Belgium, won a bid to dredge sections of the Suez Canal 1992, a job they completed some three years later. However, allegations that the Suez Canal Authority (SCA)—the Egyptian agency responsible for the canal—misrepresented the size of the task has led to protracted legal disputes in the Egyptian courts and international arbitration.
A claim for breaches of the Belgo-Luxembourg bilateral investment treaty was registered with ICSID in 2003 on the grounds of the alleged fraud, and on charges that a ten-year effort to seek redress in the Egyptian courts amounted to denial of justice.
In a 6 November 2008 award, these claims were dismissed by the three-person Tribunal of Prof. Pierre Mayer, Prof. Brigitte Stern and Prof. Gabrielle Kaufmann-Kohler (President).
In rejecting the first claim, the Tribunal determined that the SCA’s actions could not be attributed to the Egyptian government. Although the SCA carries out a public service, the tribunal held that structurally it was independent of the state. Moreover, its dealings with the claimants were commercial, rather than governmental, in nature.
The Tribunal also found no reason to believe that the long legal dispute in the Egyptian courts could be considered denial of justice on either procedural or substantive grounds.
The Tribunal concurred that “there is no doubt that ten years to obtain a first instance judgment is a long period of time.” Nonetheless, the tribunal did not find a lack of due process; nor, given the complexity of the case, could the duration of the proceedings amount to denial of justice.
The Tribunal also found no fault with the substance of the court’s decision. While the claimants alleged fraud on the part of the SCA, through a “willful withholding of information”, the Tribunal agreed with the Egyptian court that no deception appeared evident.
Having dismissed all claims on the merits, the Tribunal ordered that costs of the arbitration should be split between the parties, and each was ordered to cover its own legal fees.
Egypt has won half of the ten cases that it has faced at ICSID, the World Bank’s investment arbitration facility.
The award in Jan de Nul N.V. and Dredging International N.V. v. the Arab Republic of Egypt (ICSID Case No. ARB/04/13) is available from the Investment Treaty Arbitration website at http://ita.law.uvic.ca/documents/JandeNulNVaward.pdf