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Law Regulating Procedures for Appea

Law Regulating Procedures for Appealing State Contracts
On 22 April 2014, a Presidential Decree-Law No. 23 of 2014 was issued regulating the procedures for appealing State Contracts, in order to better protect contracts that the State has entered into with investors (the “Law”).[1] The introduction of this Law comes after several attempts by successive governments to deal with the effects and legal complications resulting from Administrative Court rulings invalidating a number of contracts of the sale of State-owned companies under the privatisation program initiated by the government in the early 90s, in addition to appeals still to be considered by the Administrative Courts as well as other verdicts issued by the Civil Courts. Egypt’s long-running privatisation program has affected 382 separate companies; since the 1990s the government has sold their shares in full or in part, amid ongoing debate regarding the justification to do so and the validity of sales procedures. The issuance of the new Law is meant to restore investor confidence in the contracts entered into by the State in order to attract more investments, as well as to avoid the risk of more international arbitration suits being brought against Egypt. The Law also aims to protect the interests of investors and provide them with greater certainty in their dealings with the State.
Features of the Law
The Law defines “State contracts” as contracts in which the State or one of its organs is a party to the contract; organs considered to be a part of the State include State ministries, authorities, local government units, public bodies and institutions, and businesses owned by the State or in which the State holds shares. A new prohibition has been introduced, ensuring that appeals can only be brought about by the parties to the relevant State contract. It is notable that generally, most previous appeals of administrative decisions have been focused on the potential invalidity of State contracts concluded with investors, often stemming from unsoundness of the tender process or waste of public funds in the assessment of the values of these assets; the Law provides a new protection for such State contracts by ensuring that only the parties to the contract itself can appeal the administrative decision. However, the Law provides recourse to those not a party to the contract to appeal against the State contracts or administrative decisions, but only in two specific cases:
  1. All citizens shall have the right to petition the court for the invalidation of a State contract, provided that a party to the State contract has been indicted for committing financial crimes with public money (bribery, misappropriation of public money, etc), is the subject of a final, enforceable, and non-appealable verdict, and as long as the State contract had been concluded on the basis of such crimes in the first place.
  1. The process of appeals is available “to the owners of rights either personal or real” against the funds which are the subject of the contracting. “Owners of personal rights” refers, for example, to those who own shares of the relevant company, or are holders of primary sales contracts or leases to the factory floor, while “the owners of real rights” refers, for example, to creditor banks, the individuals who own rights to land sold, and those holding mortgage rights or other rights in rem.
Legal Consequences of the Issuance of the Law
Perhaps the most important legal consequence of the issuance of this law is the removal of the basis upon which the majority of appeals cases were founded. Accordingly, most cases regarding invalidity of privatisation contracts, which were mostly brought by the citizens who were non-parties to those contracts based on what the Administrative Courts refers to every citizen’s, “commitment to the protection of public property from any attack and to defend such property anyone who tries to tamper with or desecrate it, which would provide every citizen with not just a right, but a vested interest in the resort to the judiciary for the protection of public property” (Administrative Court ruling invalidating the privatisation of Tanta Linen Company, Investment/Economic Disputes Circuit, Case No. 34248 of Judicial Year 65), which was ruled on the basis of the provision of Article 33 of the 1971 Constitution that “public ownership is sacrosanct, and its protection and support the duty of every citizen according to the law”. This Law is expected to apply (with immediate effect, not retroactively, as stipulated in Article 2), to all appeals pending before the Court at this current time as long as no ruling of invalidity has yet been made, as well as to all future challenges. It also means that the application of the Law by the Administrative Judiciary will be reversed in terms of the appeals currently refused because they are brought by non-parties to the contract or are based on invalid criminal convictions. Finally, the Law allows the Courts to ease the burden on themselves by rejecting various appeals brought in the future, which do not comply with the provisions set out in the new Law. The final Article of the Law requires publication in the Official Gazette and implementation by the next working day; in this case, 23 April 2014.   [1] Presidential Decree-Law No. 23/2014 on the Procedures for Appealing State Contracts, Official Gazette, Issue No. 16 (bis) (h) on 22 April 2014.
On 22 April 2014, a Presidential Decree-Law No. 23 of 2014 was issued regulating the procedures for appealing State Contracts, in order to better protect contracts that the State has entered into with investors (the “Law”).[1] The introduction of this Law comes after several attempts by successive governments to deal with the effects and legal complications resulting from Administrative Court rulings invalidating a number of contracts of the sale of State-owned companies under the privatisation program initiated by the government in the early 90s, in addition to appeals still to be considered by the Administrative Courts as well as other verdicts issued by the Civil Courts. Egypt’s long-running privatisation program has affected 382 separate companies; since the 1990s the government has sold their shares in full or in part, amid ongoing debate regarding the justification to do so and the validity of sales procedures. The issuance of the new Law is meant to restore investor confidence in the contracts entered into by the State in order to attract more investments, as well as to avoid the risk of more international arbitration suits being brought against Egypt. The Law also aims to protect the interests of investors and provide them with greater certainty in their dealings with the State.
Features of the Law
The Law defines “State contracts” as contracts in which the State or one of its organs is a party to the contract; organs considered to be a part of the State include State ministries, authorities, local government units, public bodies and institutions, and businesses owned by the State or in which the State holds shares. A new prohibition has been introduced, ensuring that appeals can only be brought about by the parties to the relevant State contract. It is notable that generally, most previous appeals of administrative decisions have been focused on the potential invalidity of State contracts concluded with investors, often stemming from unsoundness of the tender process or waste of public funds in the assessment of the values of these assets; the Law provides a new protection for such State contracts by ensuring that only the parties to the contract itself can appeal the administrative decision. However, the Law provides recourse to those not a party to the contract to appeal against the State contracts or administrative decisions, but only in two specific cases:
  1. All citizens shall have the right to petition the court for the invalidation of a State contract, provided that a party to the State contract has been indicted for committing financial crimes with public money (bribery, misappropriation of public money, etc), is the subject of a final, enforceable, and non-appealable verdict, and as long as the State contract had been concluded on the basis of such crimes in the first place.
  1. The process of appeals is available “to the owners of rights either personal or real” against the funds which are the subject of the contracting. “Owners of personal rights” refers, for example, to those who own shares of the relevant company, or are holders of primary sales contracts or leases to the factory floor, while “the owners of real rights” refers, for example, to creditor banks, the individuals who own rights to land sold, and those holding mortgage rights or other rights in rem.
Legal Consequences of the Issuance of the Law
Perhaps the most important legal consequence of the issuance of this law is the removal of the basis upon which the majority of appeals cases were founded. Accordingly, most cases regarding invalidity of privatisation contracts, which were mostly brought by the citizens who were non-parties to those contracts based on what the Administrative Courts refers to every citizen’s, “commitment to the protection of public property from any attack and to defend such property anyone who tries to tamper with or desecrate it, which would provide every citizen with not just a right, but a vested interest in the resort to the judiciary for the protection of public property” (Administrative Court ruling invalidating the privatisation of Tanta Linen Company, Investment/Economic Disputes Circuit, Case No. 34248 of Judicial Year 65), which was ruled on the basis of the provision of Article 33 of the 1971 Constitution that “public ownership is sacrosanct, and its protection and support the duty of every citizen according to the law”. This Law is expected to apply (with immediate effect, not retroactively, as stipulated in Article 2), to all appeals pending before the Court at this current time as long as no ruling of invalidity has yet been made, as well as to all future challenges. It also means that the application of the Law by the Administrative Judiciary will be reversed in terms of the appeals currently refused because they are brought by non-parties to the contract or are based on invalid criminal convictions. Finally, the Law allows the Courts to ease the burden on themselves by rejecting various appeals brought in the future, which do not comply with the provisions set out in the new Law. The final Article of the Law requires publication in the Official Gazette and implementation by the next working day; in this case, 23 April 2014.   [1] Presidential Decree-Law No. 23/2014 on the Procedures for Appealing State Contracts, Official Gazette, Issue No. 16 (bis) (h) on 22 April 2014.