Kuwaiti Investors Threaten Egypt With Lawsuit Over Land

Via Egypt’s Daily News, a report on a dispute between Kuwaiti investors who own farmland in Egypt and Egyptian authorities:

Kuwaiti investors who own 26,000 acres of land in Ayat, Giza, intend to prosecute Egypt in international courts. In comments to Daily News Egypt, Hany Sarie-Eldin, head of Sarie-Eldin and Partners Legal Advisors, said the move will thwart the government’s efforts to revive confidence in the economy.

Sarie-Eldin said: “The state’s lawyer in international arbitration is very weak, evidenced by the results of such cases against  Egypt,” adding that Egypt needs to speed up settlements for all commercial and investment disputes before the economic summit scheduled to be held in mid-March.

The total number of cases brought against Egypt after the 25 January Revolution have reached at least seven involving demands totalling more than $20bn in compensation.

The Egyptian government requested nearly EGP 47bn from the Egyptian-Kuwaiti Company for Development and Investment as a price difference for converting the purpose of the Ayat plot from agricultural to residential, with a 25% down payment due and the remainder to be paid over five years. This was rejected by the company, and no new settlement has been reached.

Tarek Eissa al-Sultan, Vice-President of the International Holding Projects Group that represent with its subsidiaries companies the main contributor to the Kuwaiti side of the project, said in press statements on Sunday that prosecuting Egypt internationally came after the investors found an “unjustified disruption…and lack of seriousness” on the part of successive governments to resolve the fate of the Ayat area.

The dispute dates back to 2002 when the Egyptian government at the time agreed through a decision issued by former president Hosni Mubarak, to transfer ownership of the land to the Egyptian-Kuwaiti Company for Development and Investment, which is 90%-owned by Kuwaiti investors. The land was to be used for agricultural purposes at a price of EGP 200 per acre, but the company describes the price as higher than that of similar contracts.

The Kuwaiti company stated: “We cannot cultivate the land because the Egyptian government has not provided us with water as agreed upon, and the National Center for Planning State Land Uses recommended in 2007 that it be used for residential purposes. This was approved by the government before the uprising of 2011, but a Presidential Decree was not issued.”

The Egyptian-Kuwaiti Company for Development and Investment requested that it be supplied with water as agreed upon in order to cultivate the land, or that an agreement be made to convert the land to serve urban purposes with the company paying a fair value for conversion fees.

Egypt has suffered from a range of serious economic issues since the 25 January Revolution, including soaring unemployment, the exodus of foreign tourists and investors, and stalled growth rates, and court rulings have invalidated the privatisation of nearly 11 government companies, returning them to state-ownership. This has angered investors who have resorted to international arbitration against Egypt, threatening huge fines that cannot be borne by the treasury.

“Amicable settlements that do not harm serious investors nor destroy public funds are a positive step toward reassuring the international financial and business community and restoring confidence in Egypt’s investment environment,” said Sarie El-Din.

Egypt was fined $300m during a land dispute tried at the International Centre for the Settlement of Investment Disputes of the World Bank. This was followed by another centre ruling in Madrid that imposed a $530m fine on the country for the Ministry of Civil Aviation/Ras Sidr Airport case.

Fakhry al-Faki, former Assistant to the Executive Director of the International Monetary Fund, said that foreign investors’ confidence has waned due to the slowness of the Egyptian government in settling investment disputes. He explained that the government must turn the page on investment conflicts in order to reassure investors and attract new funds to push along the development process in Egypt.

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.