1992

ICSID

Southern Pacific Properties (Middle East) Ltd v Arab Republic of Egypt 3 ICSID 112

A HK company concluded an agreement, according to the Egyptian 1974 Law No. 43, with Egypt in relation to the development of two international tourist complexes in Egypt. The agreement was signed by the Minister of Tourism and next to his signature appeared ‘approved, agreed and ratified by the Minister of Tourism’. The agreement referred to arbitration under ICC. A second statement was signed in which it was said that the agreement was subject to the approval of the competent authorities. After an investment of $5 million the project was cancelled by presidential decree because of the Egyptian Assembly’s opposition. Under ICC arbitration the HK company was awarded $12.5 million damages 11-III-83. Egypt appealed the ICC award to the Court of appeals in Paris, arguing the he never consented arbitration so the award was null, in further appeal the Court the Cassation said that Egypt had not consented to submit the dispute to the ICC 6-II-87. Meanwhile, 24-VIII-84 the company have asked ICSID under art 8 of law No. 43 ‘investment disputes shall be settled… within ICSID’. ICSID awarded $27.6 million

Claimants asked the tribunal to state that Egypt under art 8, law 43 had accepted ICSID arbitration. Egypt contended although it was possible that State’s consent to jurisdiction was given in advance by investment law, the article 8, law 43 was not an acceptance to ICSID jurisdiction, but was intended to inform potential investor of that possibility. Held: the ordinary and grammatical meaning of the words in article 8 together with an analysis of the historical framework of its enactment leads to the conclusion that it is a sufficient manifestation of written consent to the jurisdiction of the centre and that not separate ad hoc written consent was required. The Tribunal award in favour of the company not because expropriation was denied as a sovereign right, but because there was not fair compensation, such a thing was a violation of International law