Egypt's parliament rejected on Sunday a decree-law banning third-party challenges to contracts signed between the government and investors after a majority of MPs voted against it, state news agency MENA reported.

The law number 32, which was passed in April 2014 under the former interim president Adly Mansour, aimed to assure investors that their deals with the Egyptian government would be shielded from lengthy legal disputes incurred by citizens' legal complaints.

The law has caused a major source of controversy since it was passed, with critics alleging that it opens a door to corruption by restricting appeals to the parties involved only; the government and investors.

"In the view of most MPs who voted down the law, it legalises corruption," Medhat El-Sherif, an MP and member of the economic committee, told Ahram Online by phone on Monday.

This move means that anyone can currently challenge government contracts in court, said El-Sherif, denying that there is any article in the investment law – passed by the parliament – tackling challenges to contracts.

Since the 2011 uprising, at least 11 court rulings have ordered the state to rescind privatisation deals made under the government of former autocrat Hosni Mubarak. The court cases were brought by lawyers and activists claiming that some deals involved corruption as companies were cheaply sold to businessmen.

Defending the law, legal and parliamentary affairs minister Magdy El-Agaty told the assembly Sunday that "the government does not protect corruption" through the law but rather reclaims its right to protect its deals.

Parliament speaker Ali Abdel-Al suggested Sunday the law be referred back to the respective committee for discussion.

The vote on the bill comes as part of parliament's review of 341 laws within 15 days as of its first meeting last week. This includes laws issued by Mansour and current President Abdel-Fattah El-Sisi since the new constitution was passed in January 2014.