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The Investment Authority Inaugurate

The Investment Authority Inaugurates its Dispute Resolution Center
Investment and commercial dispute settlement remains one of the most serious obstacles to improving the investment climate in Egypt. The slow judicial process and unpredictable outcomes mean that with all the improvement achieved in the last few years in the business climate indicators, dispute resolution continues to lag behind. Last year, Parliament introduced the Special Economic Courts Law Number 120 of 2008 , but its impact has not been significantly felt yet on the speed of resolution of commercial disputes. It is in this context that a year ago the Board of Trustees of the Investment Authority embarked on an initiative to set up a Center for the Resolution of Investors' Disputes in order to use alternative dispute resolution methods (ADR) in investment matters. ADR is a term that refers to all types of non-judicial methods of resolving disputes. This includes arbitration and conciliation as the two most widely used methods. In application of this idea, the Minister of Investment issued Decisions No. 170 and 171 of 2009 – published in the Egyptian Gazette on 18 August 2009 – establishing the Center and appointing its Executive Director.
What the New Center Will Do
In order to understand the role attributed to the new Center, it is important to determine what it will – and accordingly what it will not – do. Here are the key elements:
  • The parties to disputes brought to the Center will be private sector players, particularly shareholders in the same company. In other words, the prime focus of the Center will be to resolve inter-company disputes.
  • The Center will not be involved in resolving disputes between investors and the governmental agencies. This is a role played by the Investment Dispute Resolution Committees which are an integral part of the Investment Authority and which are then submitted to a ministerial committee headed by the Minister of Justice.
  • The Center will primarily use conciliation as the means of resolving disputes. This means that no dispute will be referred to the Center without approval by the parties involved. Moreover, conciliation means that parties involved in a dispute do not accept to abide by a decision by a panel – as the case would be in arbitration – but merely to accept to engage in an effort to find a resolution agreeable to them. If they do not, then they would be under no obligation to accept a decision by the conciliators. This may sound like a soft approach to dispute resolution, but its real value lies in its capacity to bring disputing parties to a negotiating table whereby they find a compromise that allows their company to continue to operate.
Process and Procedures
In order for the Center to be fully operational, it was made part of the Investment Authority, but independent from its management. In fact, by virtue of Prime Minister Decree Number … of 2008, and the new Minister of Investment Decision, it is an independent body, under the supervision not of the executive management of the Investment Authority, but that of its Board of Trustees. This ensures its impartiality and independence as the Board of Trustees itself is composed of a independent members. The Center will provide the procedures and rules for conciliation, training for conciliators, space for adjudication, and facilities for reaching agreement.
Conclusion
The operation of the Center is a welcome addition in Egypt's investment climate. Its focus on resolving inter-company disputes should allow it to make an impact on one of the most important sources of company failures. Disputes among partners or shareholders often end in bringing down an otherwise promising or successful business, and pre-empting those disputes from escalation is the real objective of the Center. Whether it achieves this objective or not will depend on how it is received by the investment community, and whether it manages to gain enough momentum and credibility to do so.    
Investment and commercial dispute settlement remains one of the most serious obstacles to improving the investment climate in Egypt. The slow judicial process and unpredictable outcomes mean that with all the improvement achieved in the last few years in the business climate indicators, dispute resolution continues to lag behind. Last year, Parliament introduced the Special Economic Courts Law Number 120 of 2008 , but its impact has not been significantly felt yet on the speed of resolution of commercial disputes. It is in this context that a year ago the Board of Trustees of the Investment Authority embarked on an initiative to set up a Center for the Resolution of Investors' Disputes in order to use alternative dispute resolution methods (ADR) in investment matters. ADR is a term that refers to all types of non-judicial methods of resolving disputes. This includes arbitration and conciliation as the two most widely used methods. In application of this idea, the Minister of Investment issued Decisions No. 170 and 171 of 2009 – published in the Egyptian Gazette on 18 August 2009 – establishing the Center and appointing its Executive Director.
What the New Center Will Do
In order to understand the role attributed to the new Center, it is important to determine what it will – and accordingly what it will not – do. Here are the key elements:
  • The parties to disputes brought to the Center will be private sector players, particularly shareholders in the same company. In other words, the prime focus of the Center will be to resolve inter-company disputes.
  • The Center will not be involved in resolving disputes between investors and the governmental agencies. This is a role played by the Investment Dispute Resolution Committees which are an integral part of the Investment Authority and which are then submitted to a ministerial committee headed by the Minister of Justice.
  • The Center will primarily use conciliation as the means of resolving disputes. This means that no dispute will be referred to the Center without approval by the parties involved. Moreover, conciliation means that parties involved in a dispute do not accept to abide by a decision by a panel – as the case would be in arbitration – but merely to accept to engage in an effort to find a resolution agreeable to them. If they do not, then they would be under no obligation to accept a decision by the conciliators. This may sound like a soft approach to dispute resolution, but its real value lies in its capacity to bring disputing parties to a negotiating table whereby they find a compromise that allows their company to continue to operate.
Process and Procedures
In order for the Center to be fully operational, it was made part of the Investment Authority, but independent from its management. In fact, by virtue of Prime Minister Decree Number … of 2008, and the new Minister of Investment Decision, it is an independent body, under the supervision not of the executive management of the Investment Authority, but that of its Board of Trustees. This ensures its impartiality and independence as the Board of Trustees itself is composed of a independent members. The Center will provide the procedures and rules for conciliation, training for conciliators, space for adjudication, and facilities for reaching agreement.
Conclusion
The operation of the Center is a welcome addition in Egypt's investment climate. Its focus on resolving inter-company disputes should allow it to make an impact on one of the most important sources of company failures. Disputes among partners or shareholders often end in bringing down an otherwise promising or successful business, and pre-empting those disputes from escalation is the real objective of the Center. Whether it achieves this objective or not will depend on how it is received by the investment community, and whether it manages to gain enough momentum and credibility to do so.