Proposed legislative amendments to Supreme Constitutional Court's law, new safeguards for the economy?

Gamal Essam El-Din , Thursday 24 Jun 2021

Two new legislative amendments would give the Supreme Constitutional Court the right to revise international arbitration rulings if proven harmful to the local economy, reports Gamal Essam El-Din

Safeguarding the economy?
Safeguarding the economy?

Egypt’s House of Representatives is expected next week to discuss new controversial amendments to the law regulating the performance of the Supreme Constitutional Court (48/1979).

Ibrahim Al-Heneidi, head of parliament’s Legislative and Constitutional Affairs Committee, told reporters he had received a message from the general assembly of the Supreme Constitutional Court (SCC) saying it supported two government-drafted amendments to Law 48/1979.

The amendments will allow the SCC to revise international rulings and foreign agreements which might affect Egypt’s economic security and state whether any of these rulings or agreements violate the constitution. “The changes are necessary in order to give the SCC authority over international arbitration rulings and foreign agreements that impact Egypt’s economy,” Al-Heneidi said.

Said Marei, head of the SCC, said in an interview that the SCC’s support of the amendments came after careful study and that the changes “aim to safeguard Egypt’s strategic economic interests”.

Ali Badr, a member of parliament’s Legislative and Constitutional Affairs Committee, explained that the two amendments would expand the SCC’s jurisdiction which is currently limited to local laws and decrees. The two amendments extend the SCC’s authority to include rulings issued by international institutions and allow it a say on international agreements. “If the prime minister thinks that an international ruling or a foreign agreement could impact Egypt’s national economic security,” said Badr, “he could ask SCC to review the ruling or agreement in constitutional terms.”

Atef Al-Meghawri, head of the Tagammu Party’s parliamentary group, told reporters many Legislative and Constitutional Committee members were worried the amendments could discourage foreign businesses from investing in Egypt. “Foreign investors always look at how commercial and investment disputes are settled in the country before they invest,” Al-Meghawri said. “They are unlikely to invest in countries where they think international rulings on investment disputes could be ignored by the government on constitutional grounds.”

Al-Meghawri recommended that the Ministry of Investment and Cairo’s International Arbitration Centre conduct a careful review of the two amendments and inform parliament whether they will harm the investment climate in Egypt.

MPs Suleiman Wahdan and Diaaeddin Dawoud argued during the meeting that the committee should invite the minister of Investment and international arbitration experts to give their views on the proposed changes.

Dawoud said Article 192 of the constitution is clear that SCC’s jurisdiction is limited to local laws and decrees. “Besides, I think that parliament’s approval of the two amendments could cause negative implications in international investment circles,” Dawoud said.

MP Nasser Othman defended the draft changes. “The amendments come after a number of international arbitration rulings were issued against Egypt, costing the country millions of dollars,” said Othman, indicating that “in 2009, for example, the Washington-based International Centre for Settlement of Investment Disputes (ICSID) ruled that businessman Waguih Siag should receive $134 million in compensation for land he bought from the government to develop as a tourist resort in Sinai. Siag bought the land in 2007 to develop it as a tourist destination, but the government decided in 2008 to expropriate the land for public use, and as a result Siag decided to take the resort to international arbitration.” Othman added that “according to the new amendments, the government could ask SCC to revise ICSID’s ruling in constitutional terms, and if the court said the ruling contravenes internal Egyptian laws or decrees or the constitution, this would be an excuse for the government to ignore.”

Othman also argued that “many in government circles believe these rulings were politicised. The proposed changes will give the SCC the power to review such rulings and ensure they do not contravene the constitution and will not harm Egypt’s economic security.”

A semi-official report in 2018 shows that the number of compensation claims made against Egypt before ICSID increased sharply after 2011. “As many as 19 cases were filed against the Egyptian government in just five years, or from 2011 to 2016, and most sought financial compensation for measures taken by the Egyptian government or for verdicts issued by Egypt’s Supreme Administrative Court,” the report said, revealing that “Egypt was forced to pay $224.2 million in compensation for three cases settled in favour of investors between 2011 and 2016.”

Othman indicated that the government opted in the last three years to reach bilateral settlements with investors instead of resorting to international arbitration centres. “In 2018, for example, ICSID ruled that Egypt should pay the Spanish Company Union Fenosa $2 billion as a result of the government’s failure to provide gas to the company after 2011, but the government was able to reach a settlement with the company after 2014, when the country recovered its stability and was able to resume gas supplies to the company,” Othman said.

Egypt also faced a fine of up $2 billion in another case with Israel’s electricity company but the government was able to reach a settlement with the company, allowing it to pay only $470 million.

Ashraf Rashad, spokesperson of the Mostaqbal Watan Party, echoed Othman’s concerns. “Many rulings issued by international arbitration courts are politicised. The amendments are necessary to safeguard us against any harmful effects from these rulings,” Rashad said.

Rashad also said that “contrary to what some MPs believe, the two amendments will improve the investment climate in Egypt because they make clear to foreign investors the mechanism used in settling commercial disputes.”

Deputy Minister of Justice Haitham Al-Baqli explained that the new amendments do not provide the government with a tool to ignore foreign agreements or international arbitration rulings.

“The changes will allow the government to refer foreign agreements and international arbitration rulings to the SCC to decide whether they are constitutional. The prime minister will send a request to the SCC, saying that he believes that a certain ruling violates a certain article in the constitution, and ask the court to meet to give a final say,” Al-Baqli said.

*A version of this article appears in print in the 24 June, 2021 edition of Al-Ahram Weekly

Short link: