Minister of Education Issues Unlawf

On 24 October 2019, the Egyptian Gazette published Minister of Education Decision No. 183 of 2019 (the “Decision”)[1] amending a previous Ministry of Education Decision that regulates international private schools. The amendment restricts foreign ownership of private international schools to 20% of capital, a restriction that was not previously provided for. In our opinion, this Decision is against the law and should be amended by the Ministry before being challenged in front of the Administrative Court.

Background

In 2014, the Minister of Education issued decision No. 422[2] with the conditions and rules for international private schools, constituting a comprehensive regulation of this type of schools. The decision defined the school subject to its provisions as "every non-governmental educational institution that teaches foreign curricula in accordance to a cooperation agreement with a donor organization, [given that said curricula] are brought to par with Egyptian curricula and [that the school] gives its students internationally recognized certificates. [The school] also commits to teaching Arabic, religious subjects, history and geography of Egypt and national identity subjects in accordance to the curriculum of the Ministry of Education”. The decision included the rules of establishment of these schools, the procedures for obtaining their license, the obligations and supervision mechanisms imposed on them by the Ministry of Education, without any restriction on foreign ownership of these schools.

The New Decision

The new Decision added new conditions for the licensing of private international schools. It states that "in the event the corporate entity includes ownership by foreign companies, foreign funds, foreign institutions, foreigners, or dual nationals" it must adhere to the following:

1. Provide evidence of the distribution of capital among the shareholders of the company owning the school.
2. Be restricted from amending these ratios after obtaining the approval at the time of incorporation.
3. The share of foreigners or dual nationals in the company should not exceed 20%.
4. Foreigners may not assign their shares in the company without obtaining the approval of the Ministry.

The Decision also provides for severe penalties for violating the above-mentioned conditions. It should be noted that the original decision of 2014 stipulated the following penalties for schools that violate the licensing conditions: warning, placing the school under financial and administrative supervision, preventing the school from accepting new students, and revoking the license permanently. Finally, the new Decision stipulates that it will come into force from the day following its publication, i.e., 25 October 2019.

Conclusion

Unfortunately, this Decision violates not only the policy of attracting private and foreign investment in the field of education at a time when Egypt desperately needs it, but it also violates the rules and principles of legislation on more than one way, as follows:

• The original decision was issued to regulate the licensing procedures for international private schools without mentioning restrictions on the ownership of foreigners in this important sector, as it is better to have restrictions of this importance in a law issued by the House of Representatives and not in an administrative decree.

• The Decision introduces a provision that does not seem to have been thoroughly thought out as it places Egyptians of dual nationality on the same footing as foreigners. This is a dangerous precedent in the investment field as it is common for such distinctions to be applied only in strictly defined areas, such as the presidency, ministerial offices, membership of parliament, or military service. This rule has never been implemented in the investment field, even in sectors of high security or strategic nature. Therefore, it is inconceivable to be the subject of education alone.

• The Decision does not clarify whether its provisions apply only to new investments or to existing ones. Although the absence of such distinction legally means that the provisions of the Decision should only apply to new licenses, this in itself leads to an incomprehensible discrimination between existing and new investments. If the restriction on foreign ownership is to apply to existing schools at the time of renewal of their license, this would be a more serious breach of the stability of established legal positions.

• Finally, the Decision was formulated in a flawed manner that indicates the absence of rigorous legal review. An example is the imposition of penalties for violating any of the Decision’s provisions (which are in any case administrative measures and not penalties), where it states: “given that the imposed penalty against the corporate entity shall be severe", an expression that is unbecoming of text that is supposed to be objective and impartial.

For these reasons, it would be better if the Ministry initiates the reversal, cancellation or rectification of this Decision before it is challenged in front of the Administrative Court.   [1] Minister of Education Decision No. 183/2019 amending Paragraph (a) of Item (3) of Article (2) of the Ministerial Decision No. 422/2014 on the rules and conditions of regulating private schools that apply curricula of a special nature (International), Egyptian Gazette, Issue No. 238, 24 October 2019. [2] Ministry of Education Decision No. 422/2014 on the rules and conditions of regulating private schools that apply curricula of a special nature (International), Egyptian Gazette, Issue No. 223 (cont.), 30 September 2014.