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Consent Ltd.:A Brief History of Egypt’s Ministerial Approval Requirement for Arbitration of State Contracts and Why It Should Be Abolished

Karim A. Youssef

ABSTRACT

Recourse to arbitration in state contracts or state entity contracts has been a longstanding hot topic in Egypt. In the aftermath of the Arab Spring, Egyptian courts have caused a major implosion in the rules governing arbitration in state contracts and state entity contracts. The so-called requirement of the minister’s approval was and continues to be at the centre of the post-2011 judicial unwinding of a number of Mubarak era transactions. A brief history of the requirement of the minister’s approval of arbitration agreements in state contracts and how it has been applied before and after the Revolution raises legitimate considerations about whether this legislative requirement is useful. The author believes that this requirement should be abolished.

The decision to abolish the requirement of the minister’s approval should be seen through the lens of the developments brought about by Law No. 32 of 2014 and the balance the law aims to strike between the legitimate interest of the state in protecting the integrity of state contracts and the legitimate interest of investors in protecting their contractual rights. From that balance emerges a key notion, namely, the legitimate right (not only obligation) of the state (as in the executive branch of the government) to protect its investment climate and the sanctity of its commitments, and by proxy, also its international law obligations to observe standards of conduct afforded to foreign investors in bilateral investment treaties and other general international law obligations. It is that right to which the government of Egypt has availed itself by eliminating third-party nullification rights of state contracts and the post-2011 enforcement of those rights. It is also through the lens of that right that the necessity of abolishing the requirement of the minister’s approval should be considered.