Egypt

Egypt is a major country in the Middle East and the Arab world and one of the largest economies in Africa. The rule of law is enshrined in the 2014 Constitution. Any law, decree or regulation contradicting the Constitution shall be declared null and void by the Supreme Constitutional Court and inapplicable by the ordinary courts. Egypt functions under a Civil Law system and is predominantly influenced by the French civil code and the French judicial system. The Judiciary consists of judicial courts and administrative courts, a Supreme Constitutional Court, and a military court. There are no special courts to hear environmental disputes or the application of laws relating to environmental protections. Which court presides over these matters is thus determined according to the ratione materiae rules which govern the jurisdiction and attributions of the various courts. If the environmental dispute has an administrative aspect or when a judicial review of an executive regulation or of an administrative decision is sought, the administrative courts have exclusive jurisdiction to rule over the matter.

According to the Constitution, the State commits to protecting and preserving natural resources and fisheries, and their exploitation, and to take into consideration the rights of future generations. The Constitution also safeguards the right to live in a healthy, sound and balanced environment and the State commits to rationally use its natural resources to ensure that sustainable development is achieved, and to guarantee the rights of future generations thereto. According to Article 103 of the Environmental Law No. 4 of 1994, any concerned citizen or entity has the right to report any violation of the said law to the concerned public entity, and the authorities, including the police and public prosecution.

Egypt adopted multiple regulations and policy measures to safeguard the environment protection and implement mitigation and adaptation projects, such as the Environmental Law no. 4 of 1994, the Renewable Energy Law (issued by Presidential Decree No. 203 of 2014), the Integrated Energy Strategy (ISES) 2035 (in 2016).  

There are no specific laws regulating climate change, air quality or gas emissions, but these matters are organized by multiple laws and regulations, including the Environmental Law, and relevant decrees and regulations. Water resources are protected from pollution pursuant to the Water Resources and Irrigation Law No. 147 of 2021, Waste Management Law No. 202 of 2020 and Nile River and the Water Channels Protection from Pollution Law No.48 of 1982.

Egypt published its First Nationally Determined Contribution on 8 June 2022 and its updated Second Nationally Determined Contribution on 26 June 2023. Egypt’s National Climate Change Strategy (NCCS) 2050, sets out directives to increase the contribution of new and renewable energy to reach 42% of the total electrical energy produced in 2035 and a strategy to reach a net-zero greenhouse gas emissions. The National Council of Climate Change was formed by the Prime Minister Decree No. 1912 of 2015 and became operational on 7 May 2019,

The Egyptian Environmental Affairs Agency (EEAA) is responsible for the enforcement of the Environmental Law No. 4 of 1994, and the environmental management plans, and defines with the Ministry of Finance the incentives to be granted by the Agency and other authorities to the entities, plants/factories and persons who provide services or projects that can contribute to the protection of the environment. It issued in January 2009 the Second Edition of the Guidelines of Principles and Procedures for Environmental Impact Assessment. The Environmental Impact Assessment (EIA) is a prerequisite to obtaining the necessary permits and licenses for many activities and projects. Violating the environmental safety regulations and rules is punishable by a fine and/or closing of the establishment.

Under the Investment Law no. 72 of 2017 and Law No. 152 of 2020 on the Micro, Small and Medium Enterprises (MSMEs), energy and green projects benefit from valuable incentives. Protection of the environment and public health is among the main principles governing investments according to the Investment Law.

There is no specific law in Egypt that regulates carbon management or mitigation in particular. Carbon management is governed by the Executive Regulations of Law No. 95 of 1992 on the Capital Market. The Financial Regulatory Authority (FRA) issued two resolutions in 2023, on the creation of the Supervisory and Control Committee on Carbon Emissions Reduction Units, which sets the rules for issuing “carbon emission reduction certificates” and supervises and controls their issuance, circulation and trading.  Egypt does not impose a carbon tax, but proposals have been made by the Government and the House of Representatives to impose this tax. The Egyptian Stock Exchange recently recognized the circulation of “climate bonds”.

The energy sector is regulated by Electricity Law No. 87 of 2015, the Promotion of Electrical Production from Renewable Energy Sources Law No. 203 of 2014 and Law No.2 of 2024 on incentives for projects producing green hydrogen through electrolysis of desalinated water.

Since 2016, Egypt witnessed major mitigation and adaptation projects in fields of clean energy, Hydrogen Manufacturing, transport and recycling.

Successful Renewable Energy projects were implemented to generate 3016 MW. By 2035.

Many licences and approvals are required from investors by various laws and regulations. The Investment Law created the “single approval license” or “all in one license”, known as the “Golden license”, to facilitate and attract investments in strategic national and partnership-based projects between the private and public sectors. Are eligible to the golden licence namely companies who establish strategic or national projects that contribute to the reduction of GHG emissions and negative impacts on the environment. Egyptian Laws and regulations provide various privileges and incentives to encourage investments. In addition to the investment law, investors should also consider Law no. 182 of 2018 on Public Contracts and Law no. 67 of 2010 on public private partnerships, in addition to the relevant sectorial laws.

Egypt has a robust finance and tax legal regime as well as comprehensive labour, social security and pensions laws both in the private and public sectors. The Tax and Finance regime is governed by many laws, such as The Capital Market Law No. 95 of 1992 which regulates the stock exchange, Central Bank and Banking System Law No. 194 of 2020, Law No. 18 of 2019 which controls non-cash payment methods, Income Tax Law No. 91 of 2005, Law No. 67 of 2016 on the Value Added Tax, Law no. 206 of 2020 on Unified Tax Procedures.

Egypt has a robust Enforcement /Monitoring legal regime regulated by various laws providing for a complaint, recourse, remediation and compensation system before courts and the various authorities and bodies.

Finally, Egypt is an arbitration-friendly forum and is party to the New York Convention on the recognition of foreign awards and the ICSID Convention. Law No. 27 of 1994 on Arbitration in Civil and Commercial Matters, as amended by Law No. 9 of 1997 is inspired by the UNCITRAL Model Law on Arbitration. Administrative contracts may be subject to arbitration according to Article 1(2) of Law No. 27 of 1994 on Arbitration, as amended by Law No. 9 of 1997. The arbitration agreement must however be approved by the concerned minister and the relevant authorities and commissions according to this law and other regulations and policies.

‍

List of abbreviation

a) GDP and capital wealth

Egypt is the most populated country in the Arab world and one of the largest economies of the region.

Egypt’s capital wealth relies on many sources, mainly the Suez Canal revenues; tourism; cash remittances from Egyptians working abroad; agriculture exports; and oil and gas exports. Additionally, the Tax revenues are a key funding source for the State’s budget.¹

According to the World Bank, Egypt’s GDP in 2022 was approximately 476,747,720.36 USD.² Egypt has been facing a foreign exchange shortage crisis since March 2022 and its GDP in USD growth rates has declined over the past two years. It was affected by the repercussions of the global inflation wave and the Russian-Ukrainian war, which caused the exit of billions of dollars of indirect foreign investments, and an increase in the import bill of basic goods, most of which are imported from abroad. S&P Global revised Egypt’s real GDP growth forecast in its latest report (FY2023/2024), lowering its prediction to 4% for FY2023/2024 and 3.5% for the next fiscal year. S&P expects growth to climb to 3.8% in FY2025/2026.³ The International Monetary Fund estimates the GDP will hit 357.825 billion USD by 2024.⁴ Additionally, the Israel-Gaza war has gravely impacted the tourism and Suez Canal revenues.

b) Level of unemployment (general and youth)

According to public reports, Egypt had an unemployment rate of 7% during the second quarter of 2023, compared to 7.1% in the previous quarter, and about 7.2% in the same quarter of 2022, and 7.4% in 2021. The number of unemployed persons continued to decline during the 3rd quarter of 2023, with a decrease of two thousand unemployed persons compared to the previous one. While the number of unemployed persons increased by 18 thousand when compared to the same quarter of 2022, the labor force increased by about 1.3% compared to the previous quarter and 3.3% compared to the previous year.⁵

According to the Labor Force Survey of 2020, the percentage of youth participation (age 18-29) in the labor force was 38.7% (with 62.9% being male, and 13.3% being female).⁶

The Egyptian Ministry of Planning and Economic Development aims to lower youth unemployment in the 15-19 years age group, reducing the total number of unemployed persons from 63% to 60% during the 2023/2024 financial year.⁷

c) Human wealth, population and education

Population: with a population of 105,732,398⁸, Egypt is the most populated country in the Middle East, the 14th-most populated country in the world, and the third-most populated in Africa, behind Nigeria and Ethiopia.

Human wealth: According to public reports, poverty rates have decreased from 32.5% in 2017/2018 to 29.7% in 2019/2020 (the first important decrease in 20 years).⁹ Approximately 69 million people benefit from Egypt’s ration card system, and nearly 79 million benefit from the bread subsidy system.¹⁰

Education: The right to education is guaranteed by Articles 19, 20, 21, and 22 of Egypt's Constitution of 2014 (the Constitution). The State commits to encouraging and developing technical education and professional training and expanding all types of education in accordance with global quality criteria. The State also oversees education to ensure that all public and private schools and institutes abide by its educational policies.

Public reports indicate that the performance of the pre-university education sector in Egypt has improved over the past 10 years, according to accessibility indicators. Data on enrolment rates for boys and girls show that the gender gap disappeared between the academic years 2010/2011 and 2019/2020. The net enrolment rates for girls exceeded those for boys at all levels of pre-university education by 2019/2020, and as a result, the gender gap index has a negative value in this year.¹¹  Regional disparities in enrolment rates (between rural and urban areas) have improved significantly over the past ten years. However, enrolment rates for all levels of pre-university education in the governorates of Upper Egypt remain lower than the corresponding rates in the rest of the country.¹²

In terms of educational outcomes, the pre-university education system in Egypt has made progress on a number of indicators:

• dropout rates have decreased, especially at the lower secondary stage;

• the rates of transition from primary to lower secondary school have increased;

• the transition rates from lower secondary to secondary (both to general secondary schools and to technical secondary schools) have increased.¹³

Illiteracy rate: The rate of illiteracy in 2017 scored above 25.8% for children of 10 years old (with illiteracy in females at 30.8%, and males at 21.2%).¹⁴

d) natural wealth, including metals and minerals deposits (such as critical mineral resources, rare earth elements and green/battery minerals and metals) and other natural resources

Natural wealth: According to Articles 30 and 32 of the Constitution, the State commits to protecting and preserving natural resources and fisheries, and their exploitation, and to take into consideration the rights of future generations. Disposing of the State’s public property is forbidden. Granting the right to exploit natural resources or a concession to a public utility shall take place by a law and for a period which may not exceed 30 years.

Oil & Gas: Egypt has engaged in continuous and intensive petroleum exploration programs. As a result, 449 discoveries (315 oil, 134 gas) were achieved, which added to Egypt’s oil and gas reserves about 522.3 million barrels of oil and condensates in addition to 41.7 TCF gas from 2013 until 2020. Development leases for new discoveries were signed in the Mediterranean, Western and Eastern Desert.¹⁵ The Western Desert represents the largest share of oil production in Egypt (56%) followed by the Gulf of Suez (23%), the Eastern Desert (12%) and Sinai (9%), produced by 43 companies. The Mediterranean Sea represents the largest share of natural gas production in Egypt (62%) followed by the Nile Delta (19%) and lastly the Western Desert (18%), produced by 20 companies.¹⁶

Gold mines: Egypt possesses valuable gold mines in the Eastern Desert near the Red Sea shores such as Al Sukari Gold Mines, Hammash Gold, and El Fawakheir Mine.¹⁷

It also possesses:¹⁸

• Iron ore (Bahariya oasis);

• Maghara Coal mine, North Sinai;

• Phosphate Ore (Nile Valley, the Red Sea, Abu Tartour);

• Ilmenite ore (Abu Ghalga - Abu Ghosoun);

• Kaolin ore zone (Kalabsha – Aswan, and East of the city of Abu Zenima);

• White sand (sand glass) Kinds (Wadi Qena and North and South Sinai).  Egypt has the best types of white sand in the world (where the concentration of silica ore is about 99%) and high reserves of white sand amounting to 20 billion tons. Due to the ease and low costs of white sand extraction in Egypt, its ton price is low compared to many other countries. Therefore, the Prime Minister’s Decree No. 108 of 2022 banned the exportation of any raw materials from mines, quarries or salt pans “including white sand” unless the approval of the Egyptian Mineral Resources Authority (EMRA) is obtained.¹⁹

• limestone ore and dolomite zones (Bani Khalid in Samalout and North Sinai and Abu Rawash near Cairo);

• Some metals and other raw materials in the process of exploitation, such as niobium and tantalum ores, tin, quartz and feldspar zone (Abu Dabab).

e) renewable/green energy wealth (opportunities and requirements):

Overview

In 2014, the Egyptian Government announced the importance of creating power plants and finding new sources of energy to overcome the electricity demand deficit which caused power-cuts across Egypt. Thus, it set the following targets:

• in 2021, renewable energy should feed 31% of Egypt's generated energy.²⁰

• by 2035, Egypt’s total generated energy from renewable energy should exceed 42%.

In 2020/2021, Egypt generated 3016 MW from solar and wind energy plants.²¹

On 21 September 2023, the Egyptian Cabinet approved a proposal by the Emirati renewable energy company, AMEA Power, to build solar and wind power projects in Egypt with a capacity of 1,500 MW. The International Finance Corporation (IFC) and other international partners announced a $1.1 billion financing package to support AMEA Power for projects in Egypt.²²

The European Bank for Reconstruction and Development (EBRD) will finance the Egyptian development of a hydrogen strategy. The EBRD’s financing will be used to acquire and construct a 100 MW electrolyser facility to be powered by renewable energy. When fully developed, the facility will deliver up to 15,000 tons of green hydrogen annually. At full capacity, the facility’s green hydrogen production will save more than 130,000 tons of CO2 emissions per year.²³

Different sources of renewable energy

Wind: Egypt is characterized by relatively constant wind activity, and an average speed of up to 10 meters per second in the Gulf of Suez region and the Red Sea coast between Ras Ghareb and Safaga, and in the East Owainat region. Wind plants have been established to generate electricity in Hurghada and Zaafarana, with a total installed capacity of 145 MW, providing fuel consumption of about 125,000  tons of equivalent oil per year.²⁴ Among the most important recent opportunities are the installation of a 10-GW wind power project (allocated to about 3,000 square kilometers, or 1,160 square miles, of land west of Sohag in upper Egypt) by the Saudi Arabia-based ACWA Power,²⁵ and the $5 billion wind energy plant west of Sohag  with an expected production capacity of 5 GW annually, by the Norwegian company, Scatec ASA.²⁶

Solar: the Construction and operation of 16 solar plants at Benban (€410 million), the largest solar park in Africa, which is projected to generate 750 MW of clean and reliable energy.²⁷

Hydro: the High Dam in Aswan represents 7.6% of Egypt’s generated electricity mixture.²⁸ A series of power stations are located in Aswan, with a combined capacity of 2800 MW, and a corresponding electric generation of 13545 GW annually.²⁹

In 2018, four additional hydroelectric plants became operational in Assiut, in Upper Egypt, with a capacity of 32 MW. In 2015, plans to build a 2400 MW pumped storage hydroelectric plant in Attaqa were initiated, due for completion in 2022 and expected to operate in 2024.

Waste management: On the 24th of May 2022, the Egyptian Environment Ministry signed a non-binding agreement with US-based Energy 3 International (E3i) for a project to convert solid waste into biofuel, hydrogen, and graphene. The proposed solid waste recycling facility will be located in Egypt’s Fayoum area in south Cairo and is expected to reduce carbon dioxide emissions in the governorate by 500,000 tons per year.³⁰ According to the International Finance Corporation (IFC), the share of alternative fuels could almost double, increasing to 13%, with a potential to reach 30%. This would also benefit the development of more sustainable waste management solutions by incorporating added value to the collection and adequate processing of solid waste, agricultural residues, and wastewater treatment sludge.³¹

The promotion of green and sustainable maritime transport: The Egyptian Ports Authority has developed plans for managing hazardous and non-hazardous solid and liquid waste, as well as contingency plans which were approved by the Egyptian Environmental Affairs Agency. In the framework of the promotion of green and sustainable maritime transport, solar energy is fed into the Egyptian Port's power grid.³²

f) carbon removal or reduction wealth.

The industrial sector accounts for 30% of carbon dioxide emissions in Egypt.³³ Egypt adopted multiple regulations and policy measures such as the Renewable Energy Law (issued by Presidential Decree No. 203 of 2014), the Integrated Energy Strategy (ISES) 2035 (in 2016)³⁴, a feed-in tariff for renewable energy supplies, a net consumption measurement policy, and competitive bidding and tender procedures. In 2016, the Ministry of Petroleum and Mineral Resources launched Egypt’s Oil and Gas Sector Modernization Project³⁵ where “improving the energy efficiency within the sector” was implemented under its Program 4-B.³⁶ Thirty-one companies succeeded in applying no/low-cost energy efficiency measures.³⁷

In 2017, Egypt launched the Green Economy Financing Facility (GEFF) to attract green finance through public and private financial institutions.³⁸   Projects in green hydrogen, green ammonia, electric vehicle manufacturing and charging, plastics alternatives, and waste management will be fast-tracked through the approvals and permit process, with a 20-working day window for making decisions on new investment and project proposals under the 2017 Investment Law.³⁹

In July 2018, the Chairman of Egypt’s Financial Board Regulatory Authority announced the approval to regulate the issuance of Green Bonds and contribution to eco-friendly projects. Following the announcement, the Egyptian government established the Green Financing Framework, to enable Egypt to finance existing and future Eligible Green Projects,⁴⁰ and the Bonds were issued in 2021.

In September 2020, the World Bank’s Board approved a US$200 million project to support Egypt’s initiatives to reduce air and climate pollution from critical sectors and to increase resilience to air pollution in Greater Cairo (a population of 25 million). The project’s target is:

a. reducing vehicle emissions,

b. improving the management of solid waste, and

c. strengthening the air and climate decision-making system.⁴¹

In March 2021, Egypt pioneered the first Sovereign Green Bond in the Middle East and North Africa, worth US$750 million,⁴² to support climate initiatives in a range of areas, including renewable energy, clean transportation, and water sustainability.⁴³ Its first impact report shows that proceeds earmarked were:

• 46% for clean transportation (the Cairo monorail), and

• 54% for sustainable water supplies and wastewater management.⁴⁴

Egypt’s portfolio of eligible green projects worth $1.9 billion was allocated as follows in September 2020:⁴⁵ 16% in renewable energy, 19% in clean transportation, 26% in sustainable water and wastewater management, and 39% in pollution reduction and control.

The Environmental Sustainability Criteria Guideline adopted by the Ministry of Planning and Economic Development led to the increase of green investments from 15% in FY2019/20 to 30% in FY 2020/21, with projections to reach 50% in FY2024/25.

Egypt adopted Decree No. 107 of 2021 on the Financial Regulatory Authority and No. 108 of 2021 on the Egyptian Stock Exchange and companies operating in the non-banking sector, which provide for an obligation to submit environmental, social and governance disclosure reports related to sustainability (ESG standards) and the financial impacts of climate change.

Egypt’s National Climate Change Strategy (NCCS) 2050, sets out directives to increase the contribution of new and renewable energy to reach 42% of the total electrical energy produced in 2035.⁴⁶

Egypt’s 2023 Nationally Determined Contribution sets out targets and directives for the reduction of the intensity of energy consumption, and transition to low carbon pathways.⁴⁷

_{1. According to FY 2023/24 budget, 1,529,990,804,000 EGP taxes (One trillion five hundred and twenty-nine billion nine hundred and ninety million eight hundred and four thousand) will form about 12.9% of the GDP. In FY 2023/24 budget, tax revenues account for around 71.4% of the total public revenues, National Bank of Egypt- Economic Bulletin, 2nd issue - June 2023 Volume 73.}

_{2. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=EG.}

_{3. S&P lowers Egypt’s GDP growth forecast for FY2023/2024, growth to avg. 4% in next 3 years- Business Today (businesstodayegypt.com).}

_{4. International Monetary Fund, World Economic Outlook Database, October 2023, Report for Selected Countries and Subjects (imf.org).}

_{5. Unemployment Note published by the Egyptian Ministry of Planning, 31 August 2023, p 1.}

_{6. Press release, Egyptian Central Agency for Public Mobilization and Statistics, August 2020.}

_{7. The Ministry of Planning and Economy published a report on the employment goals of the plan for the financial year 2023/2024: https://mped.gov.eg/singlenews?id=5162&lang=en&The-Ministry-of-Planning-and-Economy-publishes-a-report-on-the-employment-goals-of-the-plan-for-the-current-financial-year-23/2024-.}

_{8. The Egyptian Central Agency for Public Mobilization and Statistics, 24 November 2023.}

_{9. Egypt Human Development Report 2021, published by the United Nations Development Programme, The Egyptian Ministry of Planning, p 25.}

_{10. Idem, p 26-27.}

_{11. Idem, p 23.}

_{12. Idem.}

_{13. Idem.}

_{14. Egypt’s Second Updated Nationally Determined contribution, p 5.}

_{15. Egyptian Ministry of Petroleum & Mineral Resources, https://www.petroleum.gov.eg/en/gas-and-petrol/discovery-search-production/Pages/discovery.aspx.}

_{16. Egyptian Ministry of Petroleum & Mineral Resources, https://www.petroleum.gov.eg/en/gas-and-petrol/discovery-search-production/Pages/discovery.aspx.}

_{17. https://www.petroleum.gov.eg/en/mineral-resources/Pages/companies.aspx.}

_{18. Sayed Ahmed Ali, Mining Sector in Egypt, Egyptian Mineral Resources Authority (EMRA), https://unece.org/fileadmin/DAM/energy/se/pp/unfc/unfc_ws_U.Th_Luxor.Oct.2015/6_Mining.Egypt.pdf , p. 15.}

_{19. National Bank of Egypt, Economic Bulletin, June 2023, Volume 73(2), p 33.}

_{20. https://www.sis.gov.eg/Story/161622/Info-graphic-Renewable-energy-allocates-31%25-of-Egypt's-generated-energy-in-2021?lang=en-us.}

_{21. D Doaa Salman and  Nadine Amr Hosny, The nexus between Egyptian renewable energy resources and economic growth for achieving sustainable development goals-;, Egyptian Electricity Holding Company’s Annual Report, 2020/2021, ,  Egyptian Electricity Holding Company, Annual Report 2022, http://www.moee.gov.eg/english_new/EEHC_Rep/REP2021-2022en.pdf, REP2021-2022en.pdf (moee.gov.eg), pages 18, 19 and .22.}

_{22. https://english.ahram.org.eg/NewsContent/3/16/508815/Business/Energy/Emirati-AMEA-Power-to-develop-major-renewable-ener.aspx#:~:text=Ahram%20Online%20%2C%20Thursday%2021%20Sep,to%20a%20statement%20on%20Wednesday.}

_{23. EBRD supports first green hydrogen facility in Egypt, https://www.ebrd.com/news/2022/ebrd-supports-first-green-hydrogen-facility-in-egypt-.html.}

_{24. Energy- Egyptian Economy Sector, https://sis.gov.eg/Story/173487/Energy?lang=en-us.}

_{25. Darrell Proctor Saudi Group Set to Build 10-GW Wind Farm in Egypt, https://www.powermag.com/saudi-group-set-to-build-10-gw-wind-farm-in-egypt/.}

_{26. PM: Land allocated for Norway’s Scatec for west Sohag wind plant, https://egyptian-gazette.com/egypt/local/pm-land-allocated-for-norways-scatec-for-west-sohag-wind-plant/.}

_{27. Egypt Country Strategy 2022-2027 approved by the Board of Directors on 9 February 2022, p 7.}

_{28. Summary for policymakers, Egypt National Climate Change Strategy (NCCS) 2050, p 13-14.}

_{29. Nour Moharram & others, Brief review on Egypt’s renewable energy current status and future vision, Energy report, vol. 8, Supplement 9, Nov. 2022, p 165-172, https://www.sciencedirect.com/science/article/pii/S2352484722012446; Doaa Salman and Nadine Amr Hosny, The nexus between Egyptian renewable energy sources and economic growth for achieving sustainable development goals, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8502113/.}

_{30. https://power-technology.com/comment/egypt-biowaste-project/?cf-view.}

_{31. Renewable Energy Outlook Egypt, IRENA International Renewable Energy Agency, 2018, Abu Dhabi, IRENA, p 67.}

_{32. National Bank of Egypt, Economic bulletin, 2nd issue, June 2023, Vol. 73, p 31.}

_{33. Egypt says 'come long way' to reduce carbon emissions in local industry, https://sis.gov.eg/Story/172705/Egypt-says-'come-long-way'-to-reduce-carbon-emissions-in-local-industry?lang=en-us.}

_{34. Egypt's Second Updated Nationally Determined Contributions, 26th June 2023, p 9.}

_{35. https://www.petroleum.gov.eg/en/energy-efficiency/Enterprise-system-energy-efficiency/Energy-efficiency-departments-in-the-Ministry/Organizational-Structure/Pages/default.aspx.}

_{36. The petroleum sector’s Modernization Project is the energy efficiency and conservation program under the Ministry of Petroleum modernization project, https://www.petroleum.gov.eg/en/energy-efficiency/Enterprise-system-energy-efficiency/Energy-efficiency-departments-in-the-Ministry/Organizational-Structure/Pages/default.aspx.}

_{37. Egypt’s Second Updated Nationally Determined Contributions 26 June 2023, p 9.}

_{38. Egypt's Second Updated Nationally Determined Contributions, 26 June 2023, p 11.}

_{39. Elizabeth Stratton, Economic Officer, U.S. Embassy Cairo, 2022 Investment Climate Statements: Egypt, p. 18, https://www.state.gov/reports/2022-investment-climate-statements/egypt/.}

_{40. Sovereign Green Financing Framework, September 2020, published by the Egyptian Ministry of Finance.}

_{41. New Project to Support the Improvement of Air Quality and the Fight Against Climate Change in Greater Cairo, https://worldbank.org/en/news/press-release/2020/09/30/new-project-to-support-the-improvement-of-air-quality-and-the-fight-against-climate-change-in-greater-cairo.}

_{42. Central Bank of Egypt, Economic Review, Vol. 61, No. 3, 2020/2021, p 84; The Arab Republic of Egypt, Sovereign Green Financing Framework, September 2020, p 2.}

_{43. International Monetary Fund, Middle East and Central Asia Department, Feeling the Heat Adapting to Climate Change in the Middle East and Central Asia, March 2022, p 38, 45.}

_{44. Egypt: Acting Against Climate Change for a Healthier, More Prosperous Future, https://worldbank.org/en/news/opinion/2022/04/19/-egypt-acting-against-climate-change-for-a-healthier-more-prosperous-future.}

_{45. Egypt's Second Updated Nationally Determined Contributions, 26th June 2023, p 9.}

_{46. Summary For Policymakers, Egypt National Climate Change Strategy (NCCS) 2050, p 14.}

_{47. Egypt's Second Updated Nationally Determined Contributions, 26th June 2023, p 13, 18; 19, 21, 23.}

‍

a) Undertaking, including key dates and caveats

Egypt has taken proactive steps to support the achievement of the Sustainable Development Goals (SDGs) and to promote its adaptive capacity to climate change by implementing its Nationally Determined Contribution (NDC) as follows:

1. Submission of Egypt’s Intended Nationally Determined Contribution (INDC) to the UNFCCC in 2015

The INDC has defined national objectives and priorities, namely:

• “Create an enabling and favorable environment for local and foreign private investments, redistribute investments in a manner which ensures geographical balance, and develop the State’s administrative apparatus and fight corruption.

• Improve the living standards of citizens, empower the youth through the provision of decent and productive job opportunities and build their skills in order to keep up with the demands of the competitive labor market.

• Create an enabling infrastructure for the development of Micro, Small and Medium Enterprises (MSME) and provide substantial support to vocational education and training.

• Focus efforts on controlling population growth.

• Support the current production base and remove barriers.

• Focus on marginalized social groups, and those mostly affected by economic reform policies.

• Combat all forms of corruption, apply required restructuring measures, and enforce the new Civil Service Law no. 18/2015.

• Implement economic structural reforms to increase productivity, provide job opportunities, and generate income for different community sectors.

• Provide protection to the poor, low-income groups and the middle class”.⁴⁸

2. Publication of Egypt’s First Nationally Determined Contribution on 8 June 2022

This First NDC lists the actions taken by Egyptian Government since 2015 for the implementation of NDC objectives, such as:

• Energy policy reform including substantial renewable energy and energy efficiency programs reflected in the Integrated Energy Strategy 2035;⁴⁹

• Support of investments in renewable energy, resulting in major renewable energy power plants such as Benban Solar Park (total of 1,465 MW), Assiut hydropower plant (32 MW), Kom Ombo Solar PV Plant (26 MW), and Gabal El-Zeit Wind Power Plant (580 MW);⁵⁰

• Improvement in electricity generation efficiency:

– by a substantial decline in fuel consumption for electricity generation in two years;

– by launching, in 2016, Egypt’s Oil and Gas Sector Modernization Project where, under its Program 4B, “improving the energy efficiency within the sector” was implemented;

– through the implementation of numerous energy efficiency programs including: Improving the Energy Efficiency of Lighting and Building Appliances (2010 – 2017), Industrial Energy Efficiency (IEE) Project (2013 – 2018), Solar Heating in Industrial Processes (SHIP) (2014 – 2022), Motor Efficiency Improvement (Phase I: 2015 – 2018, Phase II: 2018 – 2022), and Egyptian Pollution Abatement Project Phase III (2017- 2022).⁵¹

– issuance of Waste Management Regulation Law No. 202 of 2020 and its Executive Regulations;

– through investments in establishing the solid waste management infrastructure in the four pilot governorates (Kafr El-Sheikh, Assuit, Qena, and Al Gharbiya) under the Egyptian National Solid Waste Management Program;⁵²

– through the adoption of the Air Pollution Management and Climate Change Project (2020 – 2026) to reduce vehicle emissions, to improve the management of solid waste, and strengthen the air and climate decision-making system.⁵³

• These waste management policies and regulations are contributing to electricity generation improvement. For instance, a coalition of the Ministry of Military Production, Green Tech Egypt and OAK Holding is implementing a solid waste treatment station in Giza’s Abu Rawash district, with the purpose of generating 30 megawatts of electricity per hour from the treatment of 1200 tons of waste per day.⁵⁴

• In 2021, the first state-owned WtE (waste to energy) plant was launched in Fayoum, South Cairo, to produce 100 kWh of electricity from 2.5 tons of waste daily, with zero carbon emissions.

• In 2022, the General Authority of the Suez Canal Economic Zone approved the development of a USD 3 billion waste-to-hydrogen plant in East Port Said by the New York-based H2-Industries.

• In May 2022, two waste-recycling factories were established in Abu Khreita, North Cairo by the Egyptian Arab British Company for Dynamic Industries (ABD) and two global industrial entities with investments of USD 750 million. The WtE project would use 2,800 tons of waste per day to produce 123 MWh.⁵⁵

• The launch of the first Sovereign Green Bonds in Middle East and North Africa region by Egypt’s Ministry of Finance in 2021 at a value of USD 750 million listed in London Stock Exchange;⁵⁶

• Financing sustainable projects for climate action, including the Sustainable Agriculture Investments and Livelihoods Project (2014-2023), Building Resilient Food Security Systems to Benefit the Southern Egypt Region (2013-2018), Participatory Development Program in Urban Areas (PDP) (2010-2018), Adaptation to Climate Change in the Nile Delta through Integrated Coastal Zone Management (2009-2017), and Enhancing Climate Change Adaptation in the North Coast and Nile Delta Regions in Egypt (2018-2024).⁵⁷

Besides, the First NDC identifies challenges such as the negative impacts of rising temperatures on the efficiency of conventional power plants and photovoltaic cells; the risk of changing rainfall rates on hydropower generation; and the potential impact of sea level rise on power plants and networks located along the coasts.

Other actions taken to achieve Egypt's 2030 mitigation targets include:

• Accelerating the scale-up of on-grid renewable energy by reducing coal capacity in the generation mix and replacement of inefficient thermal power plants;

• The recovery and utilization of associated gases generated from the crude oil fields, and the production of alternative green fuels (such as the extraction of algae oil and bioethanol);

• Developing and extending public transport (metro, buses) with the view to lowering GHG and carbon emissions;

• Decarbonizing the industrial sector by reducing the energy intensity, increasing the use of renewable and alternative fuels, and low carbon process improvements;

• Promoting sustainability in existing and new buildings.

3. Publication of Egypt’s updated Second Nationally Determined Contribution on 26 June 2023

Egypt updated Second NDC includes a review of the implementation of adaptation measures proposed in the First NDC. The Second NDC suggests additional adaptation actions in five sectors: water resources and irrigation; agriculture; coastal zones; urban development; and tourism. Although the climate resilience of the energy sector is not specifically addressed in the Second NDC, the cross-cutting measures (for example, the improvement of weather forecasting and early warning systems to minimize the impacts of extreme weather events, and structural anti-flood interventions) would contribute to the general enhancement of adaptation ability and resilience.

b) Use of net zero wealth for own target

In its National Climate Change Strategy (NCCS) 2050, Egypt committed to adopt an ambitious 2050 long-term strategy to reach a net-zero greenhouse gas emissions target by:

• Accelerating the transition towards a low-carbon development pathway through increasing the development and deployment of renewable energy to reach the 42% target by 2030 instead of 2035;

• Reducing emissions by 37% in the electricity sector (80 Mt CO2e), 65% in the oil and gas sector (1.7 Mt CO2e), and 7% in the transportation sector (9 Mt CO2e) by 2030 compared to business-as-usual, conditional on external support;

• Promoting low investment energy efficiency measures in petroleum companies to reduce 5% of the sector’s energy consumption;

• Developing 16,960 residential units according to green building standards by 2030;

• Upgrading the solid waste management infrastructure in all governorates to improve collection efficiency from 55% to 95% by 2025 and increase recycling and energy recovery rates;⁵⁸

• Increasing waste-to-energy contribution in solid waste management up to 20% of collected waste by 2026 through utilization of waste as alternative fuel in the cement sector, waste to biofuels, and installation of 300 MW to generate electric power through incineration, pyrolysis, and other modern technologies.⁵⁹

c) International Agreements

Egypt is party to different bilateral and multilateral cooperation treaties for the achievement of NDC undertakings and targets, such as:

• The three Rio Conventions (UNFCCC, CBD, and UNCCD). Egypt recognizes the interconnectivity between the three conventions, particularly with regard to adaptation and resilience, in addition to the Montreal Protocol and chemicals conventions, among other multilateral international agreements.

• The Paris Agreement dated 2015 (COP 21) where parties committed to “Holding the increase in the global average temperature to well below 2°C above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5°C above preindustrial levels”.⁶⁰

• Egypt strengthened its cooperation with Nile Basin countries to promote efficient use of water resources in an integrated and harmonious manner that would benefit all the countries.  

• Egypt developed a cooperation with the EU and EIB on infrastructure and energy investments.

• Since COP27, and through the NWFE Platform, Egypt signed a debt swap for climate action with Germany to support the transmission grids.

_{48. Egyptian Intended Nationally Determined Contribution, p 4, https://unfccc.int/sites/default/files/NDC/2022-06/Egyptian%20INDC.pdf.}

_{49. Egypt’s First Updated Nationally Determined Contributions, 8 June 2022, p 8-9.}

_{50. Egypt's First Updated Nationally Determined Contributions, 8 June 2022, p 9.}

_{51. Egypt's First Updated Nationally Determined Contributions, 8 June 2022, p 9.}

_{52. Egypt’s First Updated Nationally Determined Contributions, 8 June 2022, p 11.}

_{53. Egypt's First Updated Nationally Determined Contributions, 8 June 2022, p 11.}

_{54. The Ministry of Military Production follows-up the establishment of waste-to-electricity plant, https://www.sis.gov.eg/Story/186974/Military-production-min.-follows-up-establishment-of-waste-to-electricity-plant?lang=en-us}

_{55. Green Energy: Fueling Egypt’s Future, Nov. 2022, Waste-to-Energy, American Chamber of Commerce in Egypt, https://www.amcham.org.eg/publications/industry-insight/issue/58/waste-to-energy#:~:text=In%20June%202021%2C%20Egypt%20launched,daily%2C%20with%20zero%20carbon%20emissions}

_{56. Egypt's First Updated Nationally Determined Contributions, 8 June 2022, p 11.}

_{57. Ibid; https://www.adaptation-undp.org/sites/default/files/resources/naps_in_focus_lessons_from_egypt.pdf.}

_{58. Egypt's First Updated Nationally Determined Contributions, 8 June 2022, p 21.w}

_{59. Egypt's Updated Second Nationally Determined Contributions, 26 June 2023, p 21.}

_{60. Lamiaa Abdallah, “Egypt's nationally determined contributions to Paris Agreement: Review and Recommendation”, p 51.}

‍

Some examples of successful mitigation and adaption projects are:

• Egypt adopted 'Dawarha', a social recycling platform, in cooperation with numerous multinational companies. The app-powered device allows the start-up to collect an average of 15,000 bottles per month from people in Cairo.⁶⁴

• Since 2015, the World Bank has supported Egypt’s national housing program through its USD 1 billion Inclusive Housing Finance Program-for-Results (PforR). The program has supported the delivery of over 420,000 subsidies to low-income households. 51% of the program's beneficiaries are below the age of 45, and 25% are women.⁶⁵

• Increased efficient use of water through agricultural drainage.⁶⁶  Egypt established the largest drainage water treatment facility in the world at Bahr El-Baqr drain in the Nile Delta. The facility capacity reaches 5.6 million m3/day that will be used for irrigating nearly 500,000 acres in North Sinai.

• The Egyptian Presidential Initiative allocated EGP 10 billion to replace 147,000 obsolete transport vehicles and microbuses using traditional gasoline,  at a cost of EGP 1.2 billion over a three-year period, and 240,000 obsolete vehicles with natural gas vehicles at a cost of EGP 53 billion, out of an overall planned cost of about EGP 250 billion.⁶⁷ By April 2023, Egypt has converted 507,000 vehicles to run on natural gas as part of this national initiative.⁶⁸

• Use of Clean Fuel to Reduce Emissions and a Hydrogen Manufacturing Strategy: the Ministry of Petroleum and Mineral Wealth encourages green investments, exploits and maximizes the returns on investment in the petroleum and mineral sectors by applying environmentally sound and sustainable practices in the sector.

– For instance, in 2021, approximately 6.1 million residential units were supplied with Gas, which represents about 49% of the total supply of Gas to residential units (12.4 million residential units, approximately) since the start of gas delivery activity in Egypt in 1981.⁶⁹

– Decarbonization projects to progressively lower the carbon footprint (carbon intensity) of the oil & gas sector are under way pursuant to the adoption of a six-year decarbonization project plan to reach reductions of 8 million tons of CO2 equivalent to USD 600 million of investments.⁷⁰

– The first half of the FY 2020/2021 witnessed a drop of fuel subsidies by 45 % compared to the first half of the previous year (EGP 8.4 billion down from EGP 15.2 billion).⁷¹

• In respect of solar energy and wind farming in particular:

– Benban Solar Energy Farm: to generate 1.8 GW through the Feed in Tariff Program.⁷²

– Zafarana Wind Farm in the Red Sea: up to 547 MW installed, 1444 GWh production in 2015, and 0.9 MtCO2 reduction in 2015.  400 MW of the 547 MW installed capacity (74%) is registered under 4 CDM projects.⁷³

– EGYSOL Project for Solar Water Heaters in Hotels (Red Sea, South Sinai), in cooperation with UNEP & Italy: the Project aims namely to use solar energy in water heating of hotels with a target of 5000 m2 to reduce the consumption of electricity and fuel.⁷⁴

– Solar PVs for Off-grid villages, with a 300-Watt capacity each, covering 6943 households.

– Kureimat Hybrid Concentrated Solar Power (CSP) plant: 20 MW CSP installed, 167 GWh production in 2015, and 0.1 MtCO2e reduction in 2015.⁷⁵

_{64. Benoit-Ivan Wansi , 2022, EGYPT: Dawarha’s RVM collects 15,000 plastic bottles per month in Cairo, Afrik21, , https://www.afrik21.africa/en/egypt-dawarhas-rvm-collects-15000-plastic-bottles-per-month-in-cairo/}

_{65. Egypt’s Green Social Housing Supports Climate Efforts and Improves Quality of Life for Citizens, https://worldbank.org/en/news/feature/2022/09/21/egypt-s-green-social-housing-supports-climate-efforts-and-improves-quality-of-life-for-citizens.}

_{66. Best Climate Adaptation Examples in Egypt, Jordan, and Lebanon, https://climateadaptationplatform.com/best-climate-adaptation-examples-in-egypt-jordan-and-lebanon/.}

_{67. Egypt and Climate Change, State Information Service, 4 September 2022, https://www.sis.gov.eg/Story/160255/Egypt-and-Climate-Change?lang=en-us.}

_{68. Egypt converted over half a million vehicles to run on natural gas: Petroleum Ministry, 20/09/2023, https://english.ahram.org.eg/NewsContent/3/12/509250/Business/Economy/Egypt-converted-over-half-a-million-vehicles-to-ru.aspx.}

_{69. The most important achievements of the Ministry of Petroleum and Mineral Resources during the period July 2014/June 2021, https://www.petroleum.gov.eg/ar-eg/media-center/news/news-pages/Pages/mop_6-3-2021.aspx.}

_{70. Egypt's Ministry of Petroleum and Mineral Resources Efforts Toward a Decarbonized Future, June 2023, p 8.}

_{71. https://english.ahram.org.eg/NewsContent/3/12/405322/Business/Economy/Egypt%E2%80%99s-fuel-subsidies-saw-drop-by--in-H-of-FY,-re.aspx.}

_{72. SESA Benban 1.8GW PV Solar Park Final Report -February 2016, https://eib.org/attachments/registers/65771943.pdf.}

_{73. http://nrea.gov.eg/test/en/Technology/WindStations; Wael Farag Keshk-Measures Taken in Egypt to Combat Climate Change, https://unfccc.int/sites/default/files/resource/Wael_Egypt%27s%20efforts%20on%20Climate%20Change.pdf.}

_{74. Solar Thermal Heating Systems, Ministry of Electricity and Renewable Energy, New and Renewable Energy Authority, https://nrea.gov.eg/test/en/Technology/HeatingSystems.}

_{75. Measures Taken in Egypt to Combat Climate Change, Climate Change Central Department- by Ministry of Environment, published on https://unfccc.int/sites/default/files/resource/Wael_Egypt%27s%20efforts%20on%20Climate%20Change.pdf.}

‍

a) Legal framework

Egypt functions under a Civil Law system and is predominantly influenced by the French civil code and the French judicial system. The legal framework also incorporates aspects of Islamic Sharia law. The Constitution provides that the principles of Islamic Sharia are the principal source of legislation, and that the interpretation of such principles lies with the Supreme Constitutional Court. Accordingly, any laws or regulations enacted in violation of these principles shall be declared null and void by the Supreme Constitutional Court if the matter is referred to the court according to the procedures set by Law No.48 of 1979 on the Constitutional Court.

In addition, pursuant to Article 3 of the Constitution, the principles of Christian and Jewish laws are the main source of legislation that regulates the respective personal status, religious affairs, and selection of spiritual leaders of Christian and Jewish people in Egypt.

b) Structure of the judiciary

The Judiciary consists of judicial courts and administrative courts, a Supreme Constitutional Court, and a military court. Criminal courts, civil courts, economic courts, personal status and family courts, national security courts, and employment courts all fall under the civil/judicial branch.

The structure and jurisdiction of the courts is mainly regulated by: the Civil Code under Law No. 141 of 1948, and the Commercial Procedures Code under Law of No. 13 of 1986, which set out the general rules commonly applicable to all kinds of disputes before Egyptian courts; the Judicial Authority Law No. 46 of 1972; the Code of Criminal Procedure under Law No. 150 of 1950; the State Council Law No.47 of 1972; the Economic Courts Law No. 120 of 2008; the Supreme Constitutional Court (SCC) Law No.48 of 1979; Law No. 26 of 1968 on Evidence;  Law No. 17 of 1983 governing the legal profession, and Law No. 90 of 1944 on court fees and their subsequent amendments.

The Supreme Constitutional Court is an autonomous and independent judicial body. It has an independent budget and:

• exclusive jurisdiction to decide on the constitutionality of laws and regulations;

• interpret legislative provisions; and

• adjudicate on:

– disputes pertaining to the affairs of its members,

– conflicts of jurisdictions between courts and judicial bodies exercising judicial powers,

– disputes pertaining to the implementation of two final contradictory judgments, rendered by a judicial body (civil or administrative) or an authority exercising judicial powers, and

– disputes pertaining to the execution of its judgments and decisions.

In June 2021, the Egyptian House of Representatives approved a controversial amendment of the SCC Law. According to new article 27 (bis) and 33 (bis), the Court has jurisdiction to decide on the constitutionality of the decisions issued by international institutions and organizations and foreign court judgments issued against the state. The Bill included arbitral awards, but the Egyptian government carved out arbitral awards before the vote on the final version.

The Judicial/civil Branch: The Court of Cassation is the supreme court of the civil judiciary branch. It has jurisdiction to review judgments of the courts of appeal (civil, economic and criminal chambers), but its review is limited to matters of law.

The Administrative Branch: Law No.47 of 1972 organizes the courts of the State Council (the administrative courts of first instance and the Supreme Administrative Court), their powers, attributions and jurisdiction and the procedures governing them.

According to Article 190 of the Constitution, the State Council is an autonomous judicial body, and has exclusive jurisdiction to rule over administrative disputes and disputes arising from the execution and enforcement of its rulings, as well as over disciplinary lawsuits and appeals.  

The State Council has an advisory role too. It has exclusive jurisdiction to provide advice to the administrative bodies on legal issues determined by the law. It drafts and reviews bills and decrees, as well as the draft contracts to which the state or any other public entity is a party.

c) Jurisdiction of national courts and tribunals to hear and determine judicial review applications regarding Environmental Protection, standard of review applicable, time frame, and available remedies in judicial review applications.

There are no special courts to hear environmental disputes or the application of laws relating to environmental protections. Which court presides over these matters is thus determined according to the ratione materiae rules which govern the jurisdiction and attributions of the various courts. Accordingly, penalties and sanctions such as fines, confiscations, and imprisonment are applied by criminal courts. Civil courts are competent to grant compensation in favor of the injured party based on a criminal judgment.

The injured or concerned party may seek interim/provisional measures before the Summary court (the Court of Urgent Matters) for instance, to record testimonies, collect evidence where there is fear of its loss with the lapse of time, or to prove the occurrence of an accident, obtain judicial custody or seek an injunction to access the site of a project, etc. Decisions of summary courts are provisional and not final.

According to Article 103 of the Environmental Law No. 4 of 1994, any concerned citizen or entity has the right to report any violation of the said law to the concerned public entity, and the authorities, including the police and public prosecution.

If the environmental dispute has an administrative aspect or when a judicial review of an executive regulation or of an administrative decision is sought, the administrative courts have exclusive jurisdiction to rule over the matter.

According to Article 10 of Law No. 47 of 1972, the administrative courts have jurisdiction to grant compensation pursuant to the annulment of an administrative decision.  A final administrative decision is challenged before the administrative courts for the following reasons: the administrative decision was issued ultra vires, i.e. by a body without legal power in a matter which did not fall within its legal jurisdiction; in case of defect in formality; violation of the laws or regulations or error in their application or interpretation; or abuse of power.

The refusal or abstention of administrative authorities from taking a decision that they should have taken in accordance with the laws and regulations is considered an administrative decision.

The time limit for filing a lawsuit before the court to nullify an administrative decision is sixty days from the date of publication of the contested administrative decision in the Official Gazette or in bulletins issued by public departments, or notification thereof to the concerned party. This period shall be interrupted by filing a petition to the administrative body that issued the decision or the governing bodies. The grievance/petition must be decided upon within sixty days from the date of its submission. If such petition is dismissed, it must be reasoned. The lapse of sixty days after submitting the petition without a response from the competent authorities is considered a rejection. Appeals of the rejection decision must be filed within 60 days from the date of the rejection.

The Supreme Administrative Court declared that the annulment of an administrative decision does not necessarily result in a compensation in favour of the injured party.  In many cases, the annulment of the administrative decision is a sufficient satisfactory remedy.⁷⁶

The Supreme Administrative Court emphasized that the administrative court may grant compensation for decisions and procedures that were legitimate but caused harm to certain individuals by application of the principle of equality before public funds. The court reasoned in its judgment that the rules of social solidarity and ensuring the security and safety of society and justice require compensation.⁷⁷

The criterion to determine the jurisdiction of the competent court over a compensation claim of an environmental dispute depends on whether the dispute is related or not to the application of an administrative decision.⁷⁸

Egypt suffers from excessive delays in adjudication and enforcement of judgments. Court congestion caused by the small number of judges, the large number of claims, the very long duration of the procedure, and the insufficient number of experts is a serious concern. Accordingly, the average duration of court proceedings in Egypt is between 7 and 10 years.

_{76. The Supreme Administrative Court, Appeal No.20669 JY58, 1 June 2015.}

_{77. The Supreme Administrative Court, Appeal No.28746 JY54, 4 May 2015.}

_{78. Court of Cassation, case No. 269 of 79 JY, 28 February 2010; The Court of Cassation also declared that compensation for the damage sustained as a result of the library spraying operation falls under the jurisdiction of the civil/judicial court as a spraying act is a mere physical work done by the administration and is not considered as an execution of an administrative decision, Court of Cassation, case No. 15539 of 78 JY, 28 February 2010.}

_‍

1. Constitution

According to Article 46 of the Constitution, “every individual has the right to live in a healthy, sound and balanced environment. Its protection is a national duty. The state is committed to taking the necessary measures to preserve it, avoid harming it, rationally use its natural resources to ensure that sustainable development is achieved, and guarantee the rights of future generations thereto.”⁷⁹

2. Climate law framework

a) Laws and regulations on the climate impact and environmental safety

These include: Environment Protection Law No. 4 of 1994 (the Environmental Law) and its Executive Regulations issued by virtue of the ministerial Decree No. 338 of 1994; Law No. 7 of 2010 regulating Nuclear and Radiological Activities and its Executive Regulations issued by the Ministerial Decree No. 1326 of 2011; Ministerial Decree No. 566 of 2002 for the Requirement and Measures of Carrying out Activities at the Egyptian Ports; Stimulation of Producing Electricity from Renewable Energy Sources Law No. 203 of 2014; Law No. 48 of 1982 regarding the protection of the Nile River and waterways from pollution; Law No. 102 of 1983 on Natural reserves Protectorates; Law No. 202 of 2020 regulating waste management;⁸⁰ Law No. 15 of 2017 facilitating the granting of licenses for industrial establishments; and Investment Law No. 72 of 2017 (which replaced the Investment Law No. 8 of 1997).

The Egyptian Environmental Affairs Agency (EEAA) is responsible for the enforcement of the Environmental Law No. 4 of 1994, the environmental management plans, environmental data collection, pollution prevention and control, and facilitating the enforcement of International and Regional Environmental Treaties.  According to Article 17 of the Environmental Law, the Environmental Affairs Agency, together with the Ministry of Finance, defines the incentives to be granted by the Agency and other authorities to the entities, plants/factories and persons who provide services or projects that can contribute to the protection of the environment.

Under the New Investment Law no. 72 of 2017, “investment is governed by the following principles … protection of the environment and public health” (article 2§3(2) of the said law).

According to Article 15 of the Investment Law, “toward achieving the goals of the comprehensive and sustainable development, the Investor may dedicate a percentage of his annual profits to create a social development system, outside of his Investment Project, by participating … in taking the necessary action to protect and enhance the environment”.

The Executive Regulations of the Investment law, in Article 2 especially, urge Investors to allocate a percentage of their profits to participate in community development outside their investment projects through the participation in taking the necessary measures to protect and improve the environment, or improve the environmental conditions of society and address various environmental problems, including, for example, the following: finding mechanisms to recycle waste; use treatment plants to reuse water; use of new and renewable energy; dispose of waste in a safe manner; reducing greenhouse gas emissions and any projects to adapt to the effects of climate change; preparing studies aimed at improving the environment and avoiding harmful environmental impact.

The Investment Law No. 72 of 2017, divides Projects into Sectors A and B. The projects under Sector A are eligible for the general investment incentives and exemptions set out in article 10 of the Investment Law. Sector B covers all geographic areas outside of those included in Sector A. It includes similar sub-sector investment activities to those found under Sector A, but also additional activities, such as hydrogen cells, and thermal and lithium battery manufacturing; as well as an expanded scope for wood, furniture, printing, packaging, and chemical industries, engineering and mineral industries, and textile and leather manufacturing. Most activities in Sector B must either be labour intensive; small or medium sized; use new and renewable energies; or export their production outside of Egypt. The Investment Law also provides:

• special incentives, for example a 30% discount off the investment costs for Projects depending on or producing new and renewable energy (included in Sector B of the Law);⁸¹

• a discount period which may not exceed 7 years from date of start of the activity.

• a possible “all in one approval”⁸² for strategic or national projects in the field of new or renewable energy.

In January 2022, the new Prime Ministerial Decree No. 104 of 2022, set further implementing measures of the 2017 Investment Law, by:

i) Setting out the sub-sectors for investment activities in Investment Sectors A and B.

ii) expanding the geographic scope of Sector A to encompass the Suez Canal Economic Zone, the Golden Triangle Economic Zone, and the New Administrative Capital,⁸³ as well as the conditions to benefit from the new incentives.

b) Air quality-focused laws

There are no specific laws regulating air quality, but this matter is organized by the Environmental Law.

The Environmental Law provides a definition of “environment protection” (Article 1(9)) and “air pollution” (Article 1(10), which means any change in the properties or specifications of the natural air which causes hazards to human health or to the environment, whether resulting from natural factors or human activities, including noise.

Article 34 of the Environmental Law subjects the grant of a permit for the establishment of a project to the appropriateness of the site chosen in relation to the project’s activity, ensuring compliance with the accepted limits of air pollutants, and that the total pollution resulting from all the establishments in one area lies within the permissible limits.

The Executive Regulations of Law 4 of 1994 determine the maximum levels of permitted emissions or leakages of air pollutants, and the maximum limits of gas. The fume emissions from industrial establishments are defined per activity and pollutant.  Annex 6 of the Executive Regulations provides a definition of air pollutants, while Annex 5 of the Executive Regulations defines the maximum limits of outdoor air pollutants in terms of microgram per cubic meter. If these levels are exceeded, the Court may suspend the relevant license for a period not less than a week but not exceeding 6 months, in addition to imposing fines. In the case of repeated contraventions, the court may cancel the license and impose fines.

Article 37 strictly prohibits dumping, treating or burning garbage and solid waste in the chosen site except in especially designated places which must be far from residential, industrial and agricultural areas and waterways.

The Environmental Law distinguishes between on the one hand, merchant ships, and on the other hand, naval or state-owned ships, in respect of the discharge of oil and oily mixture in the Egyptian territorial sea. According to Article 49, ships of any nationality are forbidden to discharge oil or oily mixtures in the Egyptian territorial sea or its exclusive economic zone. On the other hand, naval and state-owned ships which are used for non-commercial governmental purposes (i.e., public utility) and which are not subject to the provisions of the International Convention for the Prevention of Marine Pollution from Ships (1973-1978), must take all necessary precautions to prevent pollution of the Egyptian territorial sea or its exclusive economic zone.

Conversely, according to Article 2 of Protecting the Nile River and Waterways from Pollution, throwing solid, liquid or gaseous waste from real estate, shops, commercial, industrial and touristic establishments and from sewage operations and others into waterways over their entire lengths and surfaces is allowed if a permit is obtained. The Environmental Law has not repealed the “Nile River” Law and expressly reserves its application as a special provision.

c) Climate change-specific law(s)

The National Council of Climate Change was formed by the Prime Minister Decree No. 1912 of 2015 and became operational on 7 May 2019, when the Egyptian Prime Minister issued Decision No. 1129 of 2019 on the creation of the Council.  According to Article 1 of this Decision, the Council is responsible for drawing up the state’s general policies dealing with climate change; developing and updating sector strategies and plans for climate change, in light of international agreements and national interests, and formulating and updating a comprehensive national strategy for climate change.

The main objectives of the Council are:

1. Setting the state’s policy regarding climate change in consideration of international agreements and treaties.

2. Incorporating climate change concepts along with Egypt’s sustainability vision 2030.

3. Overseeing of the follow-up of agreements under the UNFCCC and related protocols and agreements.

4. Integrating climate change concepts with the national strategy of sustainable development and intersectoral services and providing adequate local and international funds.

5. Increasing scientific research and publications on climate change, and follow-up on international reports.

6. Increasing awareness levels among different stakeholders regarding climate change.

7. Incorporating climate change concepts within different education levels.

8. Institutional and individual capacity building for concerned stakeholders.

9. Incorporating the responsibilities and mandate of the Egyptian Council for Clean Development and the responsibilities of the National Council for Climate Change.

d) Energy laws that consider climate change issues, including renewable energy

Neither the Electricity Law No. 87 of 2015 nor the Promotion of Electrical Production from Renewable Energy Sources Law No. 203 of 2014 expressly refer to or address climate change issues.

The Renewable Energy Sources Law defines, in Article 1, “renewable energy sources” as the natural sources of electric and thermal energy which can be replenished and used for the production of electricity, and “energy strategy” as the strategy of the Council of ministers which determines the goals of the electricity sector as well as the appropriate means to reach them according to the sustainable development standards on the mid and long terms.

Any activity of production or sale of electricity produced from renewable energy without a prior licence from the competent authority is prohibited (per Article 5).

Article 2 of the Renewable Energy Sources Law entrusts the New and Renewable Energy Authority with defining energy projects frameworks, including competitive bids, feed-in tariff, and energy purchase price to be sold to the Egyptian Electricity Transmission Company, while the Egyptian Electricity Transmission Company issues the tenders for the establishment, ownership, operation of plants, and production of electricity from renewable energy by investors.

Article 4 of Renewable Energy Sources Law imposes the creation of an Egyptian company by the investor who establishes an electric power production station from renewable energy sources whose capacity exceeds (500 KW). The investor must comply with the provisions of the Investment Law and the conditions and terms issued by the Council of Ministers in this regard.

The allocation of lands to establish energy production projects from renewable energy sources are granted in the form of usufruct rights, in accordance with the rules issued by the Council of Ministers in this regard, upon the proposal of the competent minister. The usufruct right on such lands by feed-in tariff system are granted in return of not less than 2% of the total value of the energy produced from the project (per Article 3).

e) Licensing, authorisations and permitting requirements

Article 20 of the Investment Law created the “single approval license” or “all in one license”, known as the “Golden license”, which provides the investor with a single approval that encompasses the establishment, operation, and management of projects, including the necessary building and land allocation permits. The purpose of the Golden License is to facilitate and attract investments in strategic national and partnership-based projects between the private and public sectors.⁸⁴

The Golden License is granted to eligible companies to establish:

a) strategic or national projects that contribute to the reduction of GHG emissions and negative impacts on the environment;⁸⁵ or

b) a public-private partnership in certain sectors, namely: public utilities and infrastructure, new and renewable energy, roads and transportation, ports, and telecommunications and information technology.⁸⁶

There are various requirements for obtaining a Golden Licence. The project must satisfy certain criteria prescribed by the Investment Law, including the investor’s undertaking to comply with all requirements and controls pertaining to the company’s activity in accordance with laws and regulations. In addition, the project should submit proof of financial solvency for the implementation of the project; submit a preliminary feasibility study on the project prepared by a reputable and licensed national or international consultancy firm; and submit the timeline for the implementation of the project.  

Aside from the general incentives given to all projects, Golden License projects may be granted special incentives and additional incentives, such as a deduction of 30% or 50% of the investment costs in certain sectors; allocating land free of charge for some strategic activities; or other non-tax incentives which may be created by the Cabinet of Ministers.⁸⁷

According to Article 19 of the Environmental Law, every natural or legal person, whether public or private, must submit, to the competent administrative authority or the authority granting the licence, a study evaluating the environmental impact of the facility or project, before implementing the project. The study must be conducted in accordance with the elements, designs, specifications, foundations, and specific loads issued by the Environmental Affairs Agency in coordination with the administrative authorities. The competent administrative authorities are obliged to provide maps of industrial zones showing the types of permitted industries according to environmental loads.

Annex 2 of the Executive Regulations lists the criteria for the activities which require submission of a study evaluating the environmental impact thereof. These criteria are defined by: type of activity; the extent of depletion of natural resources, especially water, agricultural land and mineral wealth; the activity location; as well as the type of energy used in operating the establishment.

The Environmental Law and its Executive Regulations set out licensing and building permit conditions and feasibility reports with respect to activities having an impact on the environment. They also include prohibitions and limitations with respect to hazardous waste, the discharge of polluting substances, the construction of establishments within certain perimeters of the coastlines, territorial seas and maritime economic zones, and the Nile. The EEAA plays an important role in the licensing and approval process.

According to Article 37 of the Mineral Resources Law No. 198 of 2014, to obtain the exploration and exploitation licence, the licensee must undertake in writing to abide by the provisions of the Environmental Law, its Executive Regulations and decrees of implementation; and to observe health, safety and environmental standards (Article 35 of the Executive Regulations). A licence will be suspended for any failure to comply with the environmental requirements (per Article 57(3) of the Executive Regulations).

According to Article 35 of Law No. 15 of 2017 on Facilitating the grant of licenses to industrial establishments, the industrial enterprise license shall be revoked where the establishment constitutes an imminent threat, which cannot be remedied, to health, security, environment, or safety. Moreover, Article 34 of the Executive Regulations provides for a possible closing of the establishment.

Pursuant to Article 27 of the Waste Management Law No. 202 of 2020, the manufacturing, import or export of single-use plastic bags must be in accordance with the controls, requirements and technical specifications issued by a decision of the Minister of Trade and Industry in agreement with the competent minister. The decision may include a ban on the manufacturing, import or export of the bags if their components include inputs or materials that would cause serious harm to the environment.

According to Article 15 of said law, the waste generator or owner shall take all necessary measures within the waste management hierarchy, in order to achieve the following:

1. Reduce waste generation.

2. Promote re-use.

3. Ensure the recycling, treatment, and final disposal of waste.

4. Manage waste in a way that limits the harm to public health and the environment.

Pursuant to Article 29 of the same Law, the Waste Management Regulatory Authority shall grant the licence for any non-hazardous integrated waste management activity. Those conducting any integrated waste management activity must take all necessary precautions to avoid any damage to the environment.

According to the Gas Market Law No. 196 of 2017, operators must abide by applicable laws and regulations which mandate the protection of the environment and the optimal use of energy resources. According to Article 27(7) of the Executive Regulations, the licensee must abide by the laws and rules of safety, occupational health and the environment. Additionally, in order to obtain a licence, the applicant must provide information on the standards of health, safety and environmental protection related to the activity and the necessary approvals required.

The Water Resources and Irrigation Law No. 147 of 2021 prohibits the establishment of any facilities or digging land relating to water resources and irrigation without a licence from the Ministry (per Article 4). The Law also grants the competent engineer (a civil servant) the power (including through administrative methods) to stop the works, immediately remove the cause of harm and reinstate the original condition at the expense of the perpetrator if he considers that the works are in violation of the provisions of the Water Resources and Irrigation Law on the state’s marine beaches (per Article 89).

_{79. Available: https://www.constituteproject.org/constitution/Egypt_2014.}

_{80. The Law aims at stimulating growth in the waste-management business sector. In this regard, any company whose primary object is Waste Management will benefit from the same investment incentives and guarantees provided under the Investment Law No. 72 of 2017 and any expenses borne by companies whose object is the exercise of waste management activities will be deemed tax-deductible expenses in accordance with the Income Tax Law No. 91 of 2005 (Articles 23 and 24 of the Law).}

_{81. See Article 11.}

_{82. “for the setup, operation and management of such projects, including the building licenses project and the allocation of the real property required therefore.”}

_{83. As well as areas most in need of development determined by Prime Ministerial Decree.}

_{84. Egyptian Regulatory Reform Activity (ERRADA), Ministry of Planning and Economic Development, 2023, 'Investor's Guide to the Single Approval', p 3.}

_{85. Egyptian Regulatory Reform Activity (ERRADA), Ministry of Planning and Economic Development, 2023, 'Investor's Guide to the Single Approval', p 7.}

_{86. Ibid.}

_{87. Ibid, p 5.}

‍

There is no specific law in Egypt that regulates carbon management or mitigation in particular. According to the Organisation for Economic Co-operation and Development  (OECD), “Egypt does not levy an explicit carbon tax. Fuel excise taxes, an implicit form of carbon pricing, cover 19.4% of emissions in 2021.”⁸⁸  Some proposals have been made by the government and the House of Representatives to impose this tax.

Carbon management is governed by the Executive Regulations of Law No. 95 of 1992 on the Capital Market. Pursuant to Article 35 bis (8) of the Executive Regulations, the Financial Regulatory Authority (FRA) issued two resolutions, No. 57 and 58 of 2023, on the creation of the Supervisory and Control Committee on Carbon Emissions Reduction Units. This Committee is formed through the FRA Board of Directors’ decision in coordination with the Ministry of Environment and is composed of the representatives of the concerned authorities. The Committee sets the rules for issuing “carbon emission reduction certificates” and supervises and controls their issuance, circulation and trading.

The FRA prepares, in collaboration with the concerned authorities, a database registry of projects that have obtained the “carbon emission reduction certificates” and provides the Ministry of Environment with a list of these projects on a monthly basis. The Egyptian Stock Exchange issues the rules and procedures for trading these certificates, which do not become valid unless approved by the FRA.  The “greenhouse gas emission reduction units” certificates are tradable financial instruments and are issued for the benefit of any entity implementing projects to reduce greenhouse gas emissions after obtaining the approval of the relevant competent authorities. All government agencies, the public sector, the private sector, and all project developers must notify the FRA and the Ministry of Environment of all projects for which carbon emissions reduction certificates are issued. The entities which have obtained the carbon emission reduction certificates must disclose throughout the license period any events or changes that occur regarding the approvals issued to them by the relevant competent authorities.

Pursuant to Article 35 (bis 4) of the same Executive Regulations, the Egyptian Stock Exchange recognized the circulation of “climate bonds” which are bonds whose proceeds are allocated to finance and refinance environmentally-friendly projects for the purpose of reducing carbon emissions and mitigating the effects of climate change and global warming. The issuance of these bonds requires the preparation of a report by a certified environmental auditor to determine the extent to which the issued bonds meet the requirements of climate bond standards.

_{88. Organisation for Economic Co-operation and Development (OECD), 2022, “Pricing Greenhouse Gas Emissions, Key findings for Egypt”, https://www.oecd.org/tax/tax-policy/carbon-pricing-egypt.pdf.}

‍

In 2011, Egypt adopted the National Strategy for Adaptation to Climate Change and Disaster Risk Reduction.⁸⁹  The Strategy integrates the impacts of climate change in the Government’s sustainable development programs and plans, being mainly the impacts on the coastal areas, water resources, agriculture, health, population, tourism, and the risks related to food security. The Strategy adopts “a twin-track approach. The first five years address the urgent issues that cannot be deferred, followed by three five-year plans. The National Strategy aims at achieving the following goals: increasing the flexibility of the Egyptian community in dealing with the risks and disasters caused by climate change and its impact on different sectors and activities and enhancing the capacity to absorb and contain climate-related risks and disasters. In essence, the strategy adopts adaptation and protection as the two basic means of defense, considering the minimum temperature increase of no more than 2° Celsius and two sea level rise scenarios of 0.5 meters and 1 meter until the end of the 21st century, as foreseen by the Copenhagen Accord of 2010.”⁹⁰ Among the key determinants to achieve the goals of the Strategy, Egypt must adopt reforms and amendments of legislation, laws and institutional frameworks.

It also adopted the abovementioned National Climate Change Strategy (NCCS) 2050 in 2022 which is a multi-sectoral document aiming at the integration of climate change dimensions into the planning of all sectors in the country. It proposes many interventions, including reducing emissions associated with the use of fossil fuels and the use of low-carbon fuel alternatives.

According to Article 35 of the Environmental Law, in the exercise of their activities, establishments must not emit or leak air pollutants beyond the maximum limits permitted by applicable laws, executive regulations and ensuing decisions. The owner of an establishment must also take all precautions and necessary procedures to prevent the leakage or emission of air pollutants inside the work premises, except within the permissible limits as defined by the executive regulations of this Law, whether they result from the nature of the establishment activities or from malfunctioning equipment (Article 43 of the Environmental Law).

The 2023 Amendments to the Investment law No. 72 of 2017 grant new and renewable energy projects a deduction from net taxable profits up to 30% from the investment costs as an investment incentive.

According to the recent Law No. 2 of 2024 on the incentives for projects producing green hydrogen, a project company, which concludes an agreement with administrative agencies or state-affiliated companies responsible for managing public facilities to produce the green hydrogen, will be granted various incentives such as: income tax incentives; applying zero percent value-added tax on exports of green hydrogen production projects and its derivatives; hiring an increased percentage of foreign workers (30%) within a certain period (beyond the normal threshold); the establishment in concertation with the Minister of Finance of special customs units for the project’s exports or imports; 30% reduction of fees for use of seaports and maritime transport and for services provided to ships in Egyptian seaports; reduction of the right of use value (usufruct) of industrial lands for the establishment of a green hydrogen production factory and storage warehouse lands in ports.  The investor shall obtain the certificate to enjoy the incentives if the project fulfills the conditions set out by the Law, which include the commencement of the commercial operation within a certain period, significant financing of the project in foreign currency, local content, transfer of technology, development of local areas and capacity building, and implementing social responsibility rules.

Article 24 of Law No. 152 of 2020 on the Micro, Small and Medium Enterprises (MSMEs), grants many incentives to renewable energy projects, including refunding  the value of connecting utilities to the project land after the operation of the project; extended deadlines to pay the value of connecting utilities, including total or partial exemption from delay interest; allocating land for free or for a symbolic fee; Sate subsidizing for part of the cost of technical training for workers; refunding part of the value of the land allocated for the project; and an exemption from providing certain required guarantees and securities or reducing their value until the start of the activity.

According to the Executive Regulations of Law No. 119 of 2008 on Unified Construction, principles and standards for designing elements and components of the industrial zone must take into account the afforestation around the industrial area and protect neighboring residential areas and activities from pollution. It specifies the specifications and types of trees to be used to limit the damage caused by the industry and its impact on the surrounding environment.

_{89. Egypt’s National Strategy for Adaptation to Climate Change and Disaster Risk Reduction, available at https://www.fao.org/faolex/results/details/en/c/LEX-FAOC141200/.}

_{90. Food and Agriculture Organization of the United Nations, 2023, 'Egypt’s National Strategy for Adaptation to Climate Change and Disaster Risk Reduction', https://www.fao.org/faolex/results/details/en/c/LEX-FAOC141200/.}

_‍

1. Finance legal regime

Egypt’s Finance legal regime is governed by many laws, such as:

• The Capital Market Law No. 95 of 1992 which regulates the stock exchange in Egypt and grants the Capital Market Authority (CMA) the necessary powers and mandate to ensure the effective enforcement of stock market legislation and regulations.

• The Central Bank and Banking System Law No. 194 of 2020, which regulates the Central Bank’s role, banking activities, opening branches of foreign banks and exchange offices.

• Law No. 18 of 2019 which controls non-cash payment methods. All state authorities, public legal persons and companies in which the state owns all or the majority of the capital, must pay their financial dues to members of the boards of directors, committees, employees, experts and social insurance contributions through non-cash payment methods.

• Anti-Money Laundering Law No. 80 of 2002, which prohibits laundering of funds that are the proceeds of the crimes of planting, manufacturing, smuggling narcotics or psychotropic substances or trafficking and the crimes of hijacking means of transport and detaining of individuals, and the crimes of terrorism.

• Law No. 176 of 2018 on Financial Leasing which replaces Law No. 95 of 1995.

• The Mortgage Law No. 148 of 2001 which governs the issuance of mortgages by banks and non-banking institutions. It regulates the securitization of mortgages to increase trading activity in the stock market. According to that law, borrowers can pay a 20% down payment and the remainder in installments over 20-30 years. The Law mainly targets middle-income families.

• The Collateral Registry Law No. 115 of 2015 allows a creditor to register securities on movable assets. The registration grants the registered securities a priority privilege over the other securities on the same movable.

• Law No. 11 of 2018 regulating Restructuring, Preventive Reconciliation and Bankruptcy in Egypt (the Bankruptcy Law).

• The Income Tax Law No. 91 of 2005 governing the basic structure of the tax imposed on the total net income of natural persons residing in Egypt and those residing outside Egypt with incomes derived from permanent establishments in Egypt. This total net income is derived from many sources, including salaries and wages, professional and non-commercial activities and income derived from immovable property. Under the Amendment Law No. 30 of 2023, individual income is taxed gradually with rates determined by the law according to the different bands of income.  

According to Article 49 of Law No. 91 of 2005, the corporate income tax (CIT) rate in Egypt is 22.5% on the net taxable profits of the company. This rate applies to all types of business activities except for oil exploration companies, whose profits are taxed at 40.55%. In addition, the profits of the Suez Canal Authority, the Egyptian Petroleum Authority, and the Central Bank of Egypt are taxable at a rate of 40%. Returns on treasury bills and returns paid to entities with a credit balance in the unified treasury account are subject to tax at a rate of 20% without deducting any costs. The payer of these returns must collect the amount of tax due and deliver it to the competent tax office on the day following the day on which the deduction was made. Treasury bond returns are also subject to the same tax at the rate of 20%.

According to Law No. 67 of 2016 on the Value Added Tax, registering with the Tax Authority is mandatory for every natural or legal person who sells goods or performs a taxable service whose total sales value on taxable and exempt goods and services during the twelve months preceding the effective date of this Law amounted to or exceeded EGP 500,000.  The standard VAT rate is 14% since the financial year 2017/18. The standard rate is applicable to all goods and services; however, the reduced VAT rate of 5% is applied to the machinery and equipment that are necessary for producing goods or providing services.  As per the amended VAT Law No. 3 of 2022, the 5% reduced rate applicable to machinery and equipment that was used for the purpose of industrial production activities is suspended for one year from the importation date and may be extended for a further one year.⁹¹ Where it has been proven that such machinery and equipment have effectively been used only for industrial production activities during the suspension period, then they will be exempt from VAT; otherwise, the due VAT (5%) should be paid alongside the due additional taxes.

• Law no. 206 of 2020 on Unified Tax Procedures introduces unified tax procedures of assessment and collection of direct and indirect taxes. It also provides for the imposition of fines as a sanction for the failure to timely submit tax statements.

2. Merger and acquisition, Disposal finance and Joint Ventures

Merger and acquisition transactions in Egypt are primarily governed by the Capital Market Law No. 95 of 1992 and its Executive Regulations No. 139 of 1993; the Companies Law No. 159 of 1981 and its Executive Regulations; Law No. 3 of 2005 on the Protection of Competition and Prohibition of Monopolistic Practice; the Egyptian Exchange Listing and Delisting Rules issued by the Financial Regulatory Authority Decree No. 11 of 2014 which was amended by Decree No. 177 of 2023.

Decisions and decrees issued by the following key regulatory authorities form an integral part of the regulatory framework: the Egyptian Stock Exchange (EGX), the FRA, and the General Authority for Investment and Free Zones (GAFI). In addition, depending on the specific activity of a target company other regulatory bodies may be involved, such as the Central Bank of Egypt (CBE) and various key ministries.

The transfer of unlisted shares is conducted over-the-counter (OTC) through an accredited broker registered with the EGX and appointed for that purpose. OTC transactions are not subject to the same level of regulation as public transactions. Any transaction exceeding 20 million Egyptian pounds must be pre-approved by the FRA and the EGX Pricing Committee.⁹²

According to Article 358 bis (added by the Prime Minister Decree No. 1109 of 2022) of the Executive Regulations of Law No. 95 of 1992, any direct or indirect acquisition by an Egyptian person of 10% or more in the capital or voting rights in companies located in the Sinai Peninsula (including the cities of Sharm El-Sheikh, Dahab and the Gulf of Aqaba touristic sector), or where the ownership is limited to land or real estate built on the Sinai Peninsula, shall be approved by the Ministries of Interior Affairs and Defense, the FRA and the General Intelligence.

According to the same Article, foreigners who wish to acquire directly or indirectly, alone or with other connected persons, more than 5% of such companies’ capital or voting rights must also obtain the relevant prior approvals from the above-mentioned authorities. Moreover, any acquisition of 3% of the capital or voting rights must be disclosed to the FRA and EGX on the following day.

In addition, foreigners are prohibited from acquiring directly or indirectly listed securities of companies which are fully owned by Egyptians and which own real estate in these specific regions. However, any ownership exceeding the above-mentioned percentages through inheritance, a gift or a will, must comply with this decree within six months of its issuance. In the event of non-compliance with the rules of this decree, the FRA has the right to take necessary measures such as freezing securities or prohibiting voting rights.⁹³

In 2020, a new Banking law was issued in addition to the Data protection law which has an indirect impact on mergers and acquisitions by encouraging foreign investments.

Pursuant to Article 135 of the Companies Law No. 159 of 1981, a merger is adopted by a decision of the extraordinary general assembly of both the incorporated and incorporating companies, or the group of shareholders who own the majority of the capital. The merged companies and resulting company, as well as their shareholders, are exempted from all taxes and duties due on account of this merger (Article 134 of the Companies Law).

The company resulting from the merger is considered the successor to the merged company and is legally substituted to it in its assets or liabilities within the limit agreed on in the act of incorporation and without prejudice to the rights of creditors (Article 132 of the Companies Law).

A special approval of the merger or acquisition of an entity (either private or public) is sometimes required from the relevant minister in certain sectors, depending on the company’s activity. For example, a banks’ merger or acquisition must be approved by the Central Bank (Articles 75-78 of the Central Bank Law).

The Amendments to the Egyptian Competition and Monopolistic Competition Law No. 3 of 2005 exclude certain mergers and acquisitions from the definition of “economic concentrations” which are prohibited should they limit, restrict, or harm the freedom of competition, such as:

• A merger or acquisition between two entities belonging to the same legal person (natural or legal). This action is considered a restructure that does not require a notification to the Egyptian Competition Authority (ECA) if it does not result in a direct or indirect change or a material impact in the company’s control.

• The temporary acquisition of securities. A company that temporarily acquires securities for the purpose of reselling them within one year from the date of acquisition, if they do not exercise any voting rights or take any action or measure that would influence strategic decisions. (The one-year period may be extended upon the request of the acquirer if he/she proves that the securities cannot be resold within a year).

It is noteworthy that the Competition Law No. 3 of 2005 carves out from its scope public facilities which are directly run by the State. In addition, the ECA may, upon the request of the concerned parties, remove from the scope of the prohibition all or some of the public facilities run indirectly by the State if this would promote public interest or achieve benefits for the consumer that outweigh the effects of limiting the freedom of competition (Article 9).

On 4 April 2024, the Executive Regulations of the new Egyptian pre-merger control regime was officially published by Prime Minister Decree No. 1120 of 2024 (ER). The ER introduces the implementing regulations for the newly established pre-merger control regime issued by the Law number 175 of 2022 which empowers the ECA with significant powers in reviewing and approving transactions. The ER states that it will enter into force on 1 June 2024, i.e. transactions that close on or after 1 June 2024, meet the prescribed thresholds, must obtain prior approval from the ECA.

The pre-merger control regime aims to place mergers and acquisitions under the supervision of the ECA in an effort to protect and prevent restriction to competition in the relevant market(s) on an ex-ante basis. Unlike the old regime whereby the parties notify the transactions to the ECA post-closing, the pre-merger control regime introduces a suspensory regime of mergers, acquisitions, and joint ventures that qualify as economic concentrations, whereby economic concentrations must be approved by the ECA prior to their implementation. In this regime, any transaction that fulfils a set of requirements becomes a notifiable transaction to the ECA, except for economic concentrations implemented in the activities subject to the regulatory supervision of the Financial Regulatory Authority (FRA). These concentrations must be notified to the FRA to seek its prior approval, and the FRA shall procure the opinion of the ECA before issuing its approval.

Importantly, at this stage, the ECA still does not accept COMESA as a one-stop-shop so a separate national filing to the ECA would still be required if the jurisdictional requirements and financial thresholds are met.

It should also be noted that transactions occurring in the banking sector are already exempted from the Egyptian Competition Law no. 3 of the year 2005 and fall under the jurisdiction of the Central Bank of Egypt. Additionally, in some sectors, the role of the regulator overlaps with that of the ECA, for example, in the telecoms, water, electricity, gas and insurance sectors.⁹⁴

_{91. Law no. 3 of 2022 is still in force.}

_{92. A guide to the rules and procedures of trading on the Egyptian Stock Exchange, published by the Egyptian Stock Exchange, November 2020, p 84; Matouk Bassiouny An introduction to M&A in Egypt - Lexology.}

_{93. Prime Minister Decree No. 1109 of 2022; Shalakany Law Office | New Rules Issued for Specific Regions in Sinai.}

_{94. Alexa Tiemann, Bassem Kamar, Rafik Selim and Reem Jodeh, 2021, 'Egypt country diagnostic, Private investment challenges and opportunities', European Bank for Reconstruction and Development, p 13, available: https://www.ebrd.com/publications/country-diagnostics.}

_‍

In general, contractual undertakings and covenants are governed by the Civil Law No. 131 of 1948 and the Commercial Law No. 17 of 1999.

Law No. 182 of 2018 on Public Contracts

The terms and conditions as well as the performance and termination of contracts concluded by governmental entities or state-owned companies are subject to Law No. 182 of 2018 (Law on Public Contracts). This Law repealed the former Law on Tenders and Auctions No. 89 of 1998 on the Conclusion of Governmental Contracts. However, Law No. 89 still governs all the contracts entered into before the promulgation of the new law until their full performance.

Different public utility sectors are governed by special laws which may expressly derogate from the application of other general provisions, such as the Law no. 1 of 1996 regulating ports, as amended by Law no. 22 of 1998.

As a matter of principle, every contract concluded with a public entity is not necessarily an administrative contract. According to the well-established jurisprudence of Egyptian courts, a contract must fulfil three cumulative conditions to qualify as an administrative contract:

i) one of the parties must be a public person;

ii) the contract relates to the activity of a public utility, and

iii) the contract includes onerous/exorbitant conditions or powers vested to a public legal person which derogate the generally applicable rules of civil law.

According to Article 8 of Law No. 182 of 2018, entities subject to the provisions of this law (such as governmental authorities, administrative and economic authorities and other entities which are subject to the State’s general budget) must take into account the state’s economic, social and environmental policies announced by the Council of Ministers in their contracts, quality and cost considerations, and achieve the best value for public funds for the entire life cycle of the proposed activity. Sustainable contracting requirements must include conditions and standards for qualification and evaluation, performance indicators, etc. The same provisions are incorporated into Articles 12 and 14 of the Executive Regulations.

The provisions of Law No. 182 of 2018 are applied without prejudice to:

• Law No. 67 of 2010 regulating Public Private Partnerships (PPPs);

• Law No. 129 of 1947 on the concessions of public utilities;

• Law No. 5 of 2015 on the Preference of Egyptian Products in Governmental Contracts; and

• The Investment Law No. 72 of 2017.

Contracts concluded according to Law No. 182 of 2018 are subject to the principles of transparency, freedom of competition, equality, and equal opportunities (Article 6).

The submission of a temporary bid bond is required as a precondition for the participation in a governmental procurement process. The amount of the bid bond is reduced from a maximum of 2% of the value of the transaction to 1.5% in the case of a purchase or lease of movables, construction works, procurement of services and consultancy. For the purchase or lease of real estate property, the bid bond is reduced to 0.5%.

The Law gives 15% price preference to bidders supplying products that fulfill the minimum local component percentage stipulated under Law No. 5 for 2015 on the Preference of Egyptian Products in Governmental Contracts.

Law No. 182 of 2018 governs the performance of contracts concluded with public authorities and provides for the conditions and limitations to amend the contract by the authority. The Law also sets out the conditions of termination in contracts with public authorities. Compulsory termination occurs where there has been collusion, fraud, corruption, monopoly practices, bankruptcy, or insolvency (per Article 50). Besides for compulsory termination, the administrative authority may terminate the contract or implement it at the expense of the contractor, if he/she violates any essential condition or term. Termination or implementation shall be at the expense of the contractor pursuant to a reasoned decision from the competent authority, of which the contractor shall be notified (per Article 51).

PPP Law No. 67 of 2010

According to Article 13 of this Law, the project company must submit to the contracting administrative authority periodic reports on the construction, equipment, development, maintenance, operation and exploitation works that it carries out in implementation of the partnership contract, as the case may be. The company must also ensure the availability of environmental requirements and health and safety conditions for the project workers and beneficiaries.

According to Article 24 of this Law and Article 43 of its Executive Regulations, the administrative body, in coordination with the Central Unit for Partnerships, prepares the terms and specifications booklet for the project. The booklet must include the specifications of the final product, the specifications and level of service, performance indicators, and the main requirements of the administrative, regulatory, and supervisory bodies for the facilities and services subject to the contract with regard to safety, security, environmental protection and other standards.

Law No. 15 of 2017 on the Simplification of Industrial Licensing Procedures

The Law provides a definition of an “industrial facility”.⁹⁵ According to Article 8, it is not permissible, without a prior authorization from the Industrial Development Authority (IDA), to establish, manage, or operate industrial facilities that represent a significant degree of risk related to security, health, safety, or the environment, and which are listed in the table attached to the executive regulations.  An industrial facility may not make any fundamental modification, expansion or change in the licensed purpose that would modify the requirements for exercising the activity except by following the procedures established for the licensing system to which the industrial activity is subject in accordance with the provisions of the law.

The industrial licence subject to the provisions of this law may be assigned, subject to certain conditions and procedures. The assignee must meet the conditions required from the licensee by the Law. Otherwise, the competent administrative authority has the right to close the industrial facility through administrative measures.

Article 2 of the Law divides industrial facilities into categories and subjects them to either a notification licensing system or requires prior licensing when the facility represents a significant degree of risk to health, safety or the environment. Facilities which are subject to the notification licensing system are exempt from the environmental impact assessment requirement. The Environmental Impact Assessment requirements are not defined by the Law or the Executive Regulations. Yet, the Egyptian Environmental Affairs Agency has issued guidelines which set different requirements for the Assessment depending on whether the Project falls under Category A (projects with low environmental impact), Category B (projects likely to have environmental impacts) or Category C (projects with severe environmental impacts), whereby the level of detail and analysis of the Assessment varies according to each category.⁹⁶ The most comprehensive assessment concerns projects falling under Category C, which must include namely:⁹⁷

• Clarification of the methodology used in impact assessment.

• A detailed analysis of the impacts during construction and operation phases as well as closure if relevant. This is undertaken for both normal and emergency situations while clearly indicating criteria upon which significant impacts are determined and at the same time calculating emission loads, which necessitates a detailed qualitative description of the impact. According to the case, the analysis will extend to cumulative impacts and the EEAA will make needed information available. The analysis should address impacts on the physical, biological and social environment. A high focus on social impacts is required in cases of impacts on livelihood, involuntary re-settlements and property expropriation.

• Quantification of significant impacts in normal operations whenever possible in relation to the quality threshold of different environmental attributes. This could be undertaken through modelling and simulation techniques or by deduction.

• Assessment of the decommissioning related impacts as applicable.

In addition to the Assessment, the investors must also provide an Environmental Management Plan (EMP) in which the level of detail again varies according to the category of the Project. For Category C, the Plan must include a summary of the predicted adverse environmental and social impacts for which mitigation is required and identify feasible and cost-effective mitigation measures to these adverse impacts, as well as the Monitoring Program for the implementation of these mitigation measures.⁹⁸

Pursuant to Article 21 of the Executive Regulations, an indefinite-term licence is issued if the industrial facility fulfills the requirements necessary to carry out the activity. If the facility does not meet the non-essential requirements determined by the Licensing Requirements Committee, it will be granted a temporary licence for a period of one year, renewable up to a maximum of three years in total, until these requirements are met.

The establishment or operation, without a licence, of an industrial facility which is subject to the prior licensing requirement is punishable by imprisonment and/or a fine, in addition to the closure of the violating industrial facility.

The industrial facility licence shall be canceled in the circumstances defined by the law, including where the industrial facility becomes inoperable; or if continuing its operation poses an imminent danger that cannot be remedied to health, security, the environment or safety; or no longer meets the essential requirements and its continued operation would seriously harm health, safety, the environment or security. In certain cases (including those where the industrial facility no longer meets the essential requirements and its continued operation would seriously harm health, safety, the environment or security), the cancellation decision shall be deemed null and void if the concerned party rectifies the situation within a period not exceeding six months from the date of issuance of this decision. The Executive Regulations specify the procedures for rectification.

According to Law No. 198 of 2014 on Mineral Resources, the exploration and exploitation licences issued in accordance with the provisions of this Law may not be assigned to a third party unless (i) it meets the conditions stipulated in this Law and its Executive Regulations and (ii) the assignor pays double the annual rental value to EMRA or to the Competent Body, as the case may be, in return for the assignment. Such assignment shall not be valid unless it is approved by the Competent Authority (Article 15, as amended by Law 145 of 2019).

Regarding mines, the Competent Authority, after obtaining the approval of EMRA’s board of directors, may issue a decree to cancel the licence of the exploration or exploitation in the relevant mines, quarries or salt pans if the waiver of the licence to third parties or subletting the licensed area are made without a written approval from EMRA or the Competent Body, as the case maybe.

According to Law No. 196 of 2017 on the Gas Market, parties within the gas market who are licensed to practice one of the gas market activities must take into account certain requirements under Article 22, including environmental protection and the optimal use of energy sources, in accordance with the laws and regulations in force in this regard.

_{95. According to Article 1(1) an industrial facility is “every facility, company, or industrial premises, regardless of its size, that carries out a physical or chemical transformation of the raw material, or performs changes in any product, including assembly, classification, packing, sorting, or recycling, or other operations in accordance with the standards and controls issued by the minister responsible for industrial affairs.”}

_{96. Guidelines of Principles and Procedures for Environmental Impact Assessment, Cabinet of Ministries, Ministry of State for the Environment, Egyptian Environmental Affairs Agency, 2nd Edition 2009, Section 6.}

_{97. Ibid, Section 6.4.2.6.}

_{98. Ibid, Section 6.4.2.8.}

‍

Foreign investments are primarily governed by the Investment Law No. 72 of 2017.

a) Repatriation of funds

According to Article 6 of the Investment Law, any investor has the right to set up, establish, expand, and finance his investment project from abroad with foreign currencies and with no restrictions. The investor shall also be entitled to own, manage, use, and dispose of the project and to make profits from the project and to transfer such profits abroad, as well as liquidate the project and transfer the proceeds of such liquidation, in whole or in part, abroad, without prejudice to the rights of third parties. Egypt is also party to many BITs (bilateral investment treaties) which in general guarantee the investor’s right to repatriation of the funds.

b) Access to international arbitration

Egypt is party to the ICSID Convention of 1965 and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

According to Article 91 of the Investment Law, disputes related to the enforcement of the provisions of this law may be settled in the way agreed upon with the investor or pursuant to the provisions of Arbitration Law No. 7 of 1994. At any point during the dispute, both parties may agree to pursue all types of settlement, including ad hoc arbitration or institutional arbitration.

In addition, Law No. 182 of 2018 regulating public contracts provides for a possible recourse to arbitration if the parties agree to such settlement mechanism in the contract. Article 91 of the Law refers to the requirement under the Arbitration Law to obtain approval for an arbitration clause from the minister to which the public entity is affiliated Note that depending on the amount of the contract, the approval of the minister may not be sufficient. Certain contracts require the approval by the Prime Minister or the Cabinet of Ministers.

Moreover, Article 35 of the PPP Law No. 67 of 2010 provides that the PPP is governed by Egyptian law and any contractual provision stipulating otherwise is null and void. It grants the parties the right to agree to arbitration in their contract after obtaining prior authorization from the Supreme Committee on the Partnership Affairs.

Hence, neither the Investment Law, nor the PPP Law, nor the Law on Public Contracts include an offer to arbitrate by the State.

Finally, Article 13 of Law No. 14 of 2012 on the Integrated Development in the Sinai Peninsula prohibits the authorities having jurisdiction over the Peninsula’s lands to agree to resort to arbitration in the contracts concluded on any part of the areas allocated in the region. It also prohibits the enforcement of arbitral awards in disputes arising from the right of ownership, right of use, operation, or the conduct of any form of activity in the region.

c) Protection against expropriation

According to Article 4 of the Investment law, “the Investment Projects shall not be nationalized. The Investment Projects’ property shall not be expropriated except for the public interest, and against a fair compensation paid in advance and without delay, and the value shall be equal to the fair economic value of the expropriated property on the day preceding the date of the expropriation decision. Such compensation may be repatriated without restriction. Investment Projects shall not be seized through administrative procedures, and shall not be sequestrated except upon a final court judgment. Moreover, these Projects may not be put under arrest except upon a court order or judgment, and only in the cases set out by the Law. The Project’s property shall not be attached, confiscated, or frozen except upon a court order or a final judgment, save for tax debts and social insurance subscriptions due to the State which may be collected through all types of attachment, without prejudice to the contracts concluded by the State or the public legal entities with the Investor. No Administrative Authority shall issue regulatory decisions that add a financial or a procedural burden on the establishment or operation of projects nor impose or adjust the fees or counterpart of the services of the projects, except after seeking the opinion of the General Authority for Investment and Free zones’ (GAFI) Board of Directors and obtaining the approval of the Cabinet of Ministers or the Supreme Council for Investment.”

In addition, Article 5 of the Investment Law provides that the administrative authority may not revoke or suspend the licenses issued for the Investment Project or reclaim the real-estate property allocated to the Project before issuing a warning to the Investor about the violations he/she is charged with, hearing his/her point of view, and giving him/her an adequate grace period to rectify the causes of the breach. Article 11 of the PPP Law No. 67 of 2010 also provides that it is not permissible to seize or take any enforcement measures on the facilities, tools, machines and equipment allocated for the performance of the partnership contract and the operation or exploitation of the project.

Finally, contracts concluded according to the PPP Law No. 67 of 2010 are subject to the principles of economic and financial equilibrium, mutual gains of the parties, transparency of the contracting methods and equal opportunity.

d) Standards of treatment and protection

The Investment Law guarantees the right to fair and equitable treatment, national treatment, and non-discrimination.  According to Article 3, “all investments established in Egypt shall be accorded fair and equitable treatment. The State shall ensure to the foreign investor the same treatment given to the national investor. Under a decree issued by the Cabinet of Ministers, an exception can be made to grant the foreign investors a preferential treatment in application of the principle of reciprocity. The invested funds shall not be subjected to any arbitrary procedures or discriminatory decisions. … Any allegations of deceit, fraud, or corruption by the investor to obtain the investment shall only be established by a final court judgment issued by the competent judicial authority or an arbitral award.”

The recent amendment in February 2018 of the Capital Markets Law No. 95 of 1992 allows foreign investors to buy shares on the Egyptian Stock Exchange on the same grounds as local investors.

Finally, Law No. 173 of 2023 introduces amendments to the Importers Registry Law No. 121 of 1982, allowing joint-stock companies, partnerships limited by shares, limited liability companies, and partnerships to register in the importer's registry, even when the foreign shareholders hold more than 51% of the capital.

e) Import/export controls

Export and import are regulated by Law No. 118 of 1975 on Export Regulations; Law No. 7 of 2017 amending the provisions of Law No. 121 of 1982 on the Importers Registry; and Law No. 207 of 2020 on Customs.

Export and import require a special license from the General Organization for Import and Export Control (GOEIC), an authority directly affiliated with the Minister of Trade. However, the Investment Law grants an exemption to the investor from the requirement to register with the Registry of Importers and allows it to import or export, whether directly or through third parties, the raw materials, production supplies, machinery, spare parts, and transportation which are necessary for the establishment, expansion, or operation thereof and are suitable to the nature of their activity.

According to Law No. 67 of 2016 on VAT and its Executive Regulations, VAT is 14%. A percentage of 1% of the tax will be allocated to spending on social justice programs, and the tax rate on machinery and equipment used to produce a good or perform a service is (5%), with the exception of buses and passenger cars. Goods and services exported or imported by the projects in the free zones and economic zones of a special nature⁹⁹ are subject to a VAT at a zero rate, except for buses and passenger cars.

f) Supply Chains Risks

Despite its economic growth and development potential, and the progress made over the last decade, the supply chain in Egypt still faces many challenges.¹⁰⁰

Egypt's economy has faced inflation and currency devaluation, which can affect the costs of goods and services. The major challenges facing the Egyptian supply chain pertain to regulatory complexity and important infrastructure shortcomings.  Nevertheless, there are opportunities to be seized which can contribute to the country's economic development.¹⁰¹

i) The Challenges Facing the Egyptian Supply Chain

• The Infrastructure and Logistics Challenge

Infrastructure still faces major challenges in transport, ports, and energy.

• Transport

Significant investment and improvement are required in the transport sector for the following reasons:

– The country’s road network is often congested and poorly maintained, and rail transport is limited. As a consequence, the lack of road connection to rural areas yields losses of up to 40% in the value of products transported from Upper Egypt to the wholesaler.¹⁰²

– The lack of multi-modal transport: the transport systems remain inadequate. This is partly due to the lack of an integrated scheme that would encourage intermodal rail-road-river transport.¹⁰³

• Ports

Egypt’s ports are geographically fragmented. The country’s ports are overcrowded and suffer from inadequate facilities, which leads to delays and inefficiencies. The main challenges facing the Egyptian ports include limited multimodal connectivity regarding rail access and high-speed road connection to ports; lack of logistical platforms; and IT infrastructure not fully compliant with international standards on safety and security.¹⁰⁴

• Energy

Although Egypt has improved the reliability of the electricity supply by implementing automated systems to monitor and report power outages, access to reliable electricity remains a concern for investors.¹⁰⁵

• The Regulatory Complexity Challenge

The customs procedures in Egypt are often complex and bureaucratic, making it difficult for businesses to import and export goods efficiently.¹⁰⁶ The new Customs Law No. 207 of 2020 does not completely eliminate bureaucracy.

ii) Opportunities for Improvement in the Egyptian Supply Chain

Despite the challenges facing the Egyptian supply chain, there are opportunities to advance and improve its efficiency.

“The Sustainable Development Strategy, Egypt Vision 2030 recognises infrastructure development as one of the priority areas to improve competitiveness, alongside developing human resources and skills to support the development of a modern industry and innovation, and improving governance to maximise the positive effects of reforms. In particular, the Economic Pillar of Egypt Vision 2030 incorporates infrastructure mega-projects”¹⁰⁷

The most important mega-project is the expansion of the Suez Canal and the Development of the Suez Canal Economic Zone.

• Improving the transportation infrastructure: in order to improve the logistics system and address the high logistical costs, the Ministry of Transportation has:

– planned to establish a network of logistical areas and villages;

– developed horizontal roads connecting locked governorates in Upper Egypt and Oasis to other governorates near the Red Sea and helping to spread economic activity outside of metropolitan areas while increasing market access and exports from the Red Sea ports;¹⁰⁸

– Planned the construction and rehabilitation of 3 000 kilometers of roads.

• Improving energy infrastructure

– Egypt has improved the reliability of electricity supply by implementing automated systems to monitor and report power outages.

– Egypt has recently implemented a reform program targeting gradual removal of energy subsidies, which is critical to enhance its power generation capacity and the industry’s ability to support industrial development.

– Egypt has committed to diversify its power supply with wind and solar. As previously stated, Egypt targets 42% of renewable energy by 2030.

• Regulatory reforms can also sustain the development of supply chain

For instance:

– The Egyptian Government has developed seven logistical cities and villages in Damietta, Sohag, 10th of Ramadan, Borg El Arab, Sadat and Beni Suef, and 6th of October.

– The Egyptian Government has boosted efforts to build a credible environment for PPPs and has passed a number of reforms to create a more competitive and transparent legal PPP regime to attract qualified international and domestic investors.

– The Egyptian Government committed to remove regulatory barriers to investment in sectors that are relevant to connectivity.

– updated and strengthened the legal framework for public procurement to increase tender participation and supplier diversity.

_{99. According to Law No. 83 of 2002 on Economic Zones of a Special Nature, an economic zone of a special nature is designated by a Presidential Decree.}

_{100. Infrastructure connectivity | OECD Investment Policy Reviews: Egypt 2020 | OECD iLibrary (oecd-ilibrary.org).}

_{101. See https://www.reuters.com/world/middle-east/how-deep-are-egypts-economic-troubles-2023-03-03/; see also 2013 Investment Climate Statement – Egypt, Bureau Of Economic And Business Affairs, February 2013 Report, https://2009-2017.state.gov/e/eb/rls/othr/ics/2013/204635.htm; https://fei.cipe-arabia.org/en/ResponsibleEntities/ViewProblems?ID=13.}

_{102. OECD Investment Policy Reviews: Egypt 2020, Chapter 8. Infrastructure Connectivity https://www.oecd-ilibrary.org/sites/fbde3af9-en/index.html?itemId=/content/component/fbde3af9-en}

_{103. Ibid.}

_{104. Ibid.}

_{105. Ibid.}  

_{106. 2013 Investment Climate Statement – Egypt, Bureau Of Economic And Business Affairs, February 2013 Report https://2009-2017.state.gov/e/eb/rls/othr/ics/2013/204635.htm; https://fei.cipe-arabia.org/en/ResponsibleEntities/ViewProblems?ID=13.}

_{107. OECD Investment Policy Reviews: Egypt 2020, Chapter 8. Infrastructure Connectivity https://www.oecd-ilibrary.org/sites/fbde3af9-en/index.html?itemId=/content/component/fbde3af9-en.}

_{108. Ibid.}

‍

As previously mentioned, the protection and preservation of natural resources is guaranteed by the Constitution. Hence, the exploitation of natural resources and concessions may only be granted by law and may not exceed 30 years (Articles 30 and 32 of the Constitution).

Numerous laws regulate the management and protection of Egypt’s natural resources such as:

Law No. 198 of 2014 on Mineral Resources, which applies to mineral wealth and the raw materials of mines, quarries, and salt pans.

According to Article 52 of the Environmental Law, national and foreign companies and entities licensed to explore, extract or exploit off-shore oil fields and other marine natural resources, including oil transport facilities, are forbidden to discharge any polluting substances resulting from drilling, exploring, testing of wells or production in the territorial sea or the exclusive economic zone of Egypt.

Law No. 147 of 2021 on Water Resources and Irrigation aims to establish effective water administration, distribution, irrigation, and drainage systems.

Law No. 203 of 2014 on Renewable Energy aims to exploit the country’s wind and solar resources to generate renewable energy and to encourage the private sector to produce electricity from renewable energy sources.

Law No. 129 of 1947 on Concessions of public utilities sets out conditions and limitations on the amount and use of profits from the proceeds of concessions of public utilities.

a) Environmental impact assessment law

Many laws, regulations and policies require the conducting of an environmental impact assessment (EIA) as a prerequisite to obtaining the necessary permits and licenses, such as:

• The Environmental Law No. 4 of 1994, as amended by Laws No. 9 of 2009 and 105 of 2015, require that new projects and project modifications obtain an environmental approval from the EEAA and the National Solid Waste Management Program (NSWMP). Thus, the project is expected to have limited negative environmental impacts and positive impacts on the local groups and community improvement. Accordingly, the EEEA requires an EIA Form to be filled and submitted for environmental approval as part of the projects’ local environmental permit process. The Environmental and Social Impact Assessment (ESIA) follows the latest version of the ESIA Guidelines for Municipal Solid Waste Management Projects developed for the NSWMP in 2019,¹⁰⁹ which focuses on certain aspects from the guidelines developed by the EEAA in 2009.

• According to Law No. 87 of 2015 on Energy, the EEEA’s approval of the EIA Study is a prerequisite to obtain an energy production or distribution licence.

• Law No. 7 of 2010 on nuclear and radioactive activities (per Article 38) requires from the licensee who is exercising a nuclear and radiological activity to prepare an EIA study, including a risk assessment study covering the environmental feasibility of the proposed projects and the safety of the environment.

• Investors should also have regard to Law No. 117 of 1983 on Antiquities Protection which require a licence from the Supreme Antiquities Council to safeguard the protection of the archaeological environment.

b) Relevant consultation and public participation in environmental decision making

Pursuant to the Constitution, the Government shall encourage civil society participation in the development of the economic, social, cultural and entertainment rights. Additionally, the State is committed to considering the cultural and environmental patterns of the local community, when developing and executing economic and urban plans, especially for residents of Nubia.¹¹⁰

However, there are no specific laws or regulations providing for the consultation of communities or residents of certain regions or provinces which are affected by the project’s operations or regarding environmental safety.

That said, the Egyptian Environmental Affairs Agency issued Guidelines of Principles and Procedures of the Environmental Impact Assessment in 2009 which requires mandatory public consultation for Category C Projects (such as large infrastructure projects).¹¹¹ Such public consultation is undertaken with the EIA process, concerns the environment and social aspects related to the project to the exclusion of its economic and political aspects, and is carried out at a minimum of two stages of the EIA process: “shortly after the EIA scoping and once a draft EIA report has been prepared”. The Guidelines define the “Concerned Parties” of the Public Consultation, which could also include “Local NGOs interested in environment, Local universities and research centers and other concerned parties” as well as surrounding communities.¹¹²

The project should prepare a plan indicating the methodology of the Public Consultation (for example, how the meetings will be held) and the concerned parties before the EIA scoping phase. The Plan is then discussed with the EEAA and the EIA scoping stage is triggered. The EIA scoping aims to agree on the content of the EIA study, i.e. the aspects and impacts that will be addressed in the EIA study. At this first stage, the project provides the Consultation with a description of the project, its environmental and social aspects and potential impacts, as well as a commitment by the Project’s owner to improve the environmental status in the surrounding area and to support the neighboring community. A draft technical summary in Arabic is then disclosed to all concerned parties.

During the second stage, which occurs before the submittal of the Final report to the Competent Administrative Authorities, the draft EIA Report is discussed with the Consultation. The Draft Report should include an individual chapter dedicated to the Consultation, disclosing the results of the study to the Consultation and how the project will address or mitigate the environmental and social aspects, and the process to ensure the Public Consultation throughout the life cycle of the project.

The final EIA Report should include the key issues discussed with the Public Consultation and its outcome. To ensure Public Disclosure, an Executive Summary of the Final EIA Report is published on the EEAA’s website and the final Report is stored at the EEAA’s central library or that of the RBO where the project is located.

• Constitutional principles which guarantee consultation, engagement and public participation (points (a)&(b))

According to Article 236 of the Constitution, “the State shall develop and implement a plan for the comprehensive economic and urban development of border and underprivileged areas, including Upper Egypt, Sinai, Matrouh, and Nubia. This is to be achieved by the participation of the residents of these areas in the development projects and the priority in benefiting from them, taking into account the cultural and environmental patterns of the local community, within ten years from the date that this Constitution comes into effect, in the manner organized by law.”¹¹³

And according to Article 78(2) of the Constitution, “the State shall draft a national housing plan that upholds environmental particularity, and guarantees the contribution of personal and collaborative initiatives in its implementation. The state shall also regulate the use of state lands and provide them with basic facilities, as part of a comprehensive urban planning framework for cities and villages and a population distribution strategy. This must be done in a way that serves the public interest, improves the quality of life for citizens and preserves the rights of future generations.”

However, no regulations or laws implementing these constitutional principles have yet been adopted.

c) Community grievance mechanisms

Article 63 of the Constitution provides that “all forms of arbitrary forced migration of citizens are forbidden. Violations of such are a crime without a statute of limitations.”

A grievance mechanism is available to communities and locals who were damaged by a project under the law. Law No. 10 of 1990, as amended by Law No. 24 of 2018, regulates the expropriation of real estate for public interest, and Law No. 47 of 1972 (art. 10), regulates the judicial review of a final administrative decision before the State Council.

In a landmark case, in 2011, civil society organisations introduced an action before the administrative court seeking the suspension of the construction of a chemical factory which posed a grave danger and huge harm to the health of residents located on the Mediterranean Sea. The Court upheld the Prime Minister’s decree to suspend the expansion of the factory.¹¹⁴  However, in 2013 the Supreme Administrative Court overruled the judgment and the factory was inaugurated in 2016.

_{109. Egyptian National solid Management Program, Programme Implementation (Lot A) Qena & Assiut Governorates, Environmental and Social Impact Assessment (ESIA), Dayrout Transfer Station, Assiut Governorate, June 2020, p 20.}

_{110. Article 236 of the Egyptian Constitution, 2014.}

_{111. Guidelines of Principles and Procedures for Environmental Impact Assessment, Cabinet of Ministries Ministry of State for the Environment, Egyptian Environmental Affairs Agency, 2nd Edition 2009, Section 6.4.3.}

_{112. Guidelines op cit note 113, p 31.}

_{113. https://www.constituteproject.org/constitution/Egypt_2014.}

_{114. The Administrative Court, Case No. 47319 of JY 66, 12 January 2012.}

Egypt ratified the Convention on Biological Diversity (CBD) by Presidential Decree No. 54 of 1994.  Many laws also protect biodiversity and natural habitats. For instance, Law No. 102 of 1983 on Natural Protectorates provide the legislative framework to establish and manage protected areas in Egypt. It authorises the Prime Minster to declare certain prescribed territories as protected areas and organise their administration by decree. According to Article 2 of this Law, it is prohibited to carry out any actions, activities or procedures that would destroy, damage or deteriorate the natural environment, or harm wildlife, marine or plant life or affect their aesthetic level in the protected area.

Without prejudice to a more severe sanction under another law, any act which damages wildlife, marine or plant life or affects their aesthetic level in the protected area is punishable by a fine and imprisonment, in addition to incurring the expenses for the removal or repair as determined by the competent administrative authority, as well as the confiscation of the machinery, tools, or devices that were used to commit the violation.

‍

There are no specific laws which govern this issue. However, many provisions of the Environmental Law and the Unified Construction Law safeguard the protection of land (including agricultural land) from pollution.

According to the Environmental Law, the site on which a project is established must be suitable for the project activity to ensure that the permissible levels of air pollutants are not exceeded, and that the total pollution emitted by all the establishments in one area is within the permissible levels.

Additionally, Article 33 of the Environmental law provides that those engaged in the production or circulation of hazardous materials, either in gas, liquid or solid form, must take all precautions to ensure that no environmental damage will occur. Article 39 imposes on establishments and individuals, when carrying out exploration, excavation, construction or demolition works, or when transporting the resulting waste or debris, to take the necessary precautions to secure the safe storage or transportation thereof to prevent loose particles from escaping into the air.

Pursuant to Law No. 147 of 2021 on Water Resources and Irrigation, the Ministry of Irrigation has the right to close any well if public interest considerations dictate it or if technical reports for the follow-up and inspection of wells establish the contamination of the well’s water or the deterioration of its quality. Additionally, the Ministry of Irrigation shall take the necessary precautionary measures when choosing herbicides to abate water herbs, to ensure that water channels are not polluted.

According to the Nile River and the Water Channels Protection from Pollution Law No.48 of 1982, the Water Police Department has the power to inspect water channels and will help the concerned authority to find out and report any violation of the law and stop sources of pollution.

Law No. 53 of 1966 on Agriculture punishes by imprisonment and a fine the construction of buildings or erection of facilities on agricultural lands or their division for that purpose, except when provided for by the Law.

According to Article 57 of Law No. 119 of 2008 on Unified Construction, the contractor and the supervising engineer shall jointly undertake to take all necessary measures and precautions to preserve the safety of neighboring buildings and the environment, and to protect the safety of neighbors, passers-by, property, streets, corridors, subterranean buildings, and the devices, facilities, installations, and others when conducting the licensed works.

‍

Law No. 194 of 2020 on the Egyptian Central Bank and the Monetary Sector (“the Banking Law”) provide for banking secrecy. However, banks may disclose the data without the need of a court ruling or an arbitral award in certain circumstances, if it is necessary to reveal the truth when there is serious evidence that a felony or misdemeanor has occurred. The General Attorney or at least one of the first district public attorneys whom he delegates, on his own initiative or at the request of an official body or one of the concerned parties, may request the Cairo Court of Appeal to order the inspection or to obtain any data or information related to accounts, deposits, trusts, or the like.

Certain commercial information is considered by the law as classified information which is not accessible to third parties, such as articles of associations, commercial agency records, real estate licenses or even certain judgments.

According to Law No. 95 of 1992, any company with listed securities and issued Sukuk is obliged to submit to the Financial Regulatory Authority semi-annual reports and its Statutory Auditor’s reports on its activity, provided that these reports include data that disclose its actual financial position. A fine of EGP 2,000 shall be imposed for each day of delay in submitting the financial statements in accordance with the relevant disclosure rules.

The Law also prohibits insider trading.

It is not permissible for any brokerage company working in the stock exchange to open an account for any client except after obtaining the necessary disclosure about deferred contracts risks and hazards, and the company is prohibited from guaranteeing to the client that it will not suffer losses from its future exchange dealings.¹¹⁵

The Egyptian Financial Supervisory Authority issued Resolution No. 84 of 26 July 2016 on the Egyptian Corporate Governance Guidelines, and defines 'disclosure', which concerns “all facts, financial and non-financial information and material events about the company”. The information should be disclosed to investors, relevant parties and all stakeholders “in a fair and timely manner to enable them take appropriate decisions based on accurate information”. In addition, “Members of the company board of directors may not exploit or reveal the company’s secrets they have known due to their participation in its management in a way that harms the company’s financial position and commercial activities.¹¹⁶

Transparency in terms of the 2016 Resolution is a more comprehensive concept since it aims at creating an environment that allows access to all information or data in order to facilitate decision-making.¹¹⁷

_{115. Law No. 95 of 1992, Article 26 bis 11.}

_{116. Egyptian Corporate Governance Guidelines, issued by the Egyptian Financial Supervisory Authority on Resolution No. 84 dated 26 July 2016, 3rd ed, p 51.}

_{117. Ibid.}

‍

a) Duty of compliance

Law No. 80 of 2002 on Anti-Money Laundering establishes the legal framework for combating money laundering and terrorism financing activities and stipulates severe sanctions.

The Banking Law and its Executive Regulations set out additional conditions and guidelines for financial institutions to prevent money laundering, including requirements on customers’ due diligence, transaction monitoring, and reporting suspicious activities.

The Investment Law provides that the investment must respect the principles pertaining to compliance with governance, transparency, prudent management, and the absence of conflict of interests.

Pursuant to the Environmental Law, the owner of an establishment must keep a written record of the impact of his/her establishment activities on the environment.

According to the Mineral resources Law No. 198 of 2014, a licence must include the licensee’s commitment to the provisions of the Environmental Law and its Executive Regulations, the Natural Reserves Protectorates Law, and the decisions issued in implementation of their provisions. The Competent Authority may cancel the licence if the licensee fails to comply with the environmental requirements.

The licensee must also stop the operation and inform the EMRA or the Competent Body, as the case may be, if he/she finds antiquities, fossils or rare geological phenomena.

According to Law No. 83 of 2002 on Economic Zones of a Special Nature, the company authorized to develop and promote the Zone and set up, manage and maintain the infrastructure within its boundaries must maintain the protection of the environment and implement environmental management systems to preserve rare species of flora and fauna and the use of safe methods to treat domestic and industrial sewage and hazardous waste, in coordination with the Egyptian Environmental Affairs Authority.

b) Reporting and monitoring requirements

The 2019 Amendment of the Investment Law (in article 74) grants GAFI the power to request information and data needed to calculate flows and stocks of direct and indirect foreign investments, without prejudice to considerations of national security or the right to privacy and confidentiality and the protection of third-party rights. In addition, the Prime Minister’s Decree No. 2731 of 2019 amending the Executive Regulations of the Investment Law and Decree no. 2732 of 2019 list the forms and questionnaires to be submitted to GAFI by the investors to calculate the assets of foreign direct and indirect investments.

The Environmental Law provides that the EEAA may, in order to achieve its objectives, “…regularly collect national and international information on the environmental status and their changes, in collaboration with information centres in other entities, assess and employ these information (sic) in environmental management and disseminate such information” (Article 5). Article 103 of the Law provides that every citizen and establishment concerned with the protection of the environment shall have the right to report any violation of the provisions of this Law.

The issuance of Islamic Sukuk shall be under the monitoring and supervision of the Supervisory Committee consisting of scholars of Islamic law nominated by Al-Azhar Al-Sharif as well as financial experts who shall approve the Sukuk structure, including the assets for which they are issued.

According to Law No. 10 of 2009 on the Supervision of Markets and Non-banking Financial Instruments (FRA Law), the Financial Regulatory Authority is responsible for supervising and regulating non-banking financial markets and instruments.  The FRA shall adopt the executive rules governing the licensing and exercise of activities which fall within its monitoring and supervision authority and shall set the rules for the inspection and supervision of entities and individuals subject to its authority.

c) Record keeping requirements

According to the Ministerial Decree No. 41 of 2020 amending the Executive Regulation of the Commercial Registry Law No. 34 of 1976, any person, whether natural or legal, registered with the Commercial Registry in Egypt, is required to create a special registry called “Ultimate Beneficial Owner Registry” where it must record specific data including, inter alia, data of the actual person who owns or controls the commercial establishment, even when such beneficial owner is a legal person.

d) Inspections –see point (b)

According to the Environmental Law, the owner of an establishment must keep a written record on the impact of his/her establishment activities on the environment. The EEAA is authorized to inspect the establishment’s environmental record to ensure that the registered information is accurate and may take as many samples as necessary and conduct appropriate tests to determine the impact of the establishment activities on the environment and the extent of its compliance with the criteria laid down for the protection of the environment.

Law No. 11 of 1968 on Illicit Gains, as amended by Law No. 62 of 1975, introduces the concept of illicit gain, its definition and prescribed sanctions. It also defines the group of persons who are subject to its provisions, including civil servants and persons dealing with public funds, and sets out the procedures to track their wealth to prove their legitimacy.

Law No. 144 of 1988 on the Central Auditing Agency and its amendments set out the rules ensuring the control over the state’s assets and funds and other public persons’ assets and funds. The law defines the mandate of the Agency and its scope, including most importantly, the assistance to the People's Assembly (the Parliament “upper chamber”) in performing the financial control and audit over the agencies dealing with public funds, examining and auditing the work and accounts of any party assigned by the President of the Republic, the People's Assembly or the Prime Minister.

e) Administrative enforcement

According to the Companies Law No. 159 of 1981, within 10 days from its notification of the company’s constitution, GAFI has the power to notify the company of any violation of its articles of association or the mandatory provisions of the law or that its purpose is contrary to public policy. The company must remedy the breaches within 15 days or file a complaint to the Minister of Investment. Otherwise, GAFI must strike-off the company from the registry of commerce.  

According to the Investment Law, GAFI may temporarily or permanently cancel the certification of an accreditation office if the office has issued, in violation of the law, a certificate which was relied upon by the investor to obtain the necessary licence or approval. The licence obtained by the investor in violation of the law may be revoked by GAFI after hearing the investor and providing a grace period to remedy the causes of the violation (per Article 5)

Pursuant to the Banking Law, foreign banks’ representative offices are subject to the supervision of the Central Bank, which has the power to review their records at any time and request necessary data for effective control and supervision. If the Office does not comply with these instructions, the Bank may temporarily suspend the Office’s activity or cancel its licence.

According to the Environmental Law, if the establishment does not maintain the required environmental record, or if the data is not recorded regularly, or is not accurate, the EEAA may suspend the activity of the establishment without prejudice to employees’ right to their salaries.

According to the Mineral Resources Law, the Competent Authority may cancel the licence if the licensee fails to comply with the environmental requirements.

‍

As previously mentioned, the Constitution safeguards the right to protect and preserve natural resources and fisheries, and their exploitation, and limit the right to exploit natural resources or a concession of a public utility by law to a period of 30 years (as per Articles 30 and 32 of the Constitution).

Article 33 of Law No. 198 of 2014 on Mineral Resources, as amended by Law No. 145 of 2019, provides for the payment in advance by the licensee of an annual rent for the area rented outside the licensed area for the execution of any of the required utility works, part of which is allocated to the concerned governed and the rest to the State. The applicant for a licence shall pay in advance to EMRA or the Competent Body, as the case may be, a security deposit equivalent to the annual rental amount to ensure the implementation of the licence conditions in case of exploitation. At the end of the license period, the licensee must clear and pave the land.

Article 40 provides for the removal by the licensee of the stored quantities of the mine minerals from the licensed area, as well as its equipment and machinery, within a period not exceeding three months from the date of the expiry of the licence. The licensee shall pay a compensation equivalent to double of the rental value for that period. In case the licensee does not comply with this requirement, the Law grants EMRA or the Competent Body, as the case may be, the power to move the equipment and machinery outside the licensed area at the expense of the licensee, or sell the stored equipment or material in case of fear of damage, theft, depreciation or hinderance to the use of the land area. Any unpaid royalty may be deducted from the sale value. The competent court may decide the devolution of the ownership of the remaining stored material, equipment or machinery located in the licensed area to the State. In all cases, if no royalty has been paid for the stored material, the due royalty shall be reclaimed at their transportation.

Finally, Article 15 subjects the assignment of the exploration and exploitation licences to a third party to certain conditions provided by that Law (the Mineral Resources Law) and its Executive Regulations and the payment by the assignor of double the annual rental value to EMRA or to the Competent Body, as the case may be, in return for the assignment. Such assignment is not valid unless approved by the Competent Authority.

The right to explore and exploit Oil and Gas is granted by a concession agreement between the successful bidding contractor company (the contractor), the Egyptian State represented by the Ministry of Petroleum and the Egyptian Natural Gas Holding Company (EGAS) or the EGPC (Egyptian General Petroleum Corporation). The Concession Agreement is adopted by legislation and follows the normal publication process.

Law No. 196 of 2017 “on Gas market activities” is a milestone for the liberalization of the gas market in Egypt. It allows the private sector to sell gas in the domestic market and encourages new investments in the activities of gas shipping, transmission, distribution, storage, supply, marketing, trading and LNG activities. The law established the GasReg agency which exercises all powers necessary to achieve its objectives, including, without limitation, setting development and business plans, work programs and management rules and techniques that will enable the GasReg to execute its mandate.

‍

Examples of criminal, civil and administrative enforcement sanctions have been addressed in the different sections with reference to the relevant laws. This section will address the possible limitations to recourse against these measures.

a) Justiciability

Article 97 of the Constitution guarantees the right of access to courts. It is forbidden to grant any act or administrative decision immunity from judicial review.

However, the State Council Law No. 47 of 1972 excludes acts of the State from any possible judicial review. The Supreme Constitutional Court confirmed that the unjusticiability of acts of the State is based on the State’s sovereignty at home and abroad and that acts of the State cannot, by their nature, be subject to judicial review due to political considerations that justify granting the executive authority a broader and far-reaching discretionary power to achieve the interests and safety of the nation^.118

The Environmental Law does not set out justiciability limitations. Article 103 of the Environmental Law provides that every citizen and establishment concerned with the protection of the environment shall have the right to report any violation of its provisions.

b) Ripeness

Egyptian law recognizes the ripeness doctrine in various matters. A court may declare a claim inadmissible or the Case Management department of the competent court may refuse to enroll a case under certain circumstances. For instance, according to the Arbitration Law No. 1 of 1994, a petition for the enforcement of an arbitral award shall not be admissible before the expiration of 90 days during which the action to set aside the award can be filed in the court registry.

With respect to a claim brought against an alleged administrative decision to remove waste material on the basis of the Environmental Law, the Administrative Court dismissed the challenge on the ground that there was no evidence that the plaintiff submitted any request to the defendant administrative authority regarding the transfer of the waste collection area. Hence, the Court decided that the elements that would constitute a negative administrative decision were not met, such that there was no decision that could be appealed. In the absence of an administrative decision, the claim was dismissed.¹¹⁹

Accordingly, a claim is barred for ripeness when the required elements to constitute an administrative decision are not met.

c) Exhaustion

The law requires a plaintiff to first exhaust certain measures before filing a lawsuit.

Pursuant to State Council Law No. 47 of 1972, bringing a complaint/grievance against an administrative decision to the higher hierarchal authority, as well as the lapse of sixty days after submitting the grievance with no response from the competent authority (considered as a rejection unless otherwise provided by another law) are prior conditions before filing an action to nullify the decision.

Similarly, Law No. 7 of 2000 establishing conciliation committees to settle disputes in which Ministries and public legal entities are parties, requires conciliation by the conciliation committees before resorting to the competent administrative court. Certain disputes are excluded from the scope of Law No. 7 of 2000, namely those: (i) in which the Ministry of Defense and Military Production or any of their affiliated entities is a party, (ii) relating to real estate rights, (iii)  carved out by special legislations, or (iv) which must be resolved or settled or the grievances related thereto be examined, through judicial or administrative committees, or through arbitration.

In addition, a special Dispute Settlement Committee is established under the Banking Law to decide on complaints reported by customers against banks, currency exchange offices and financial institutions. The Committee must make a reasoned final decision within sixty days, which is subject to appeal by the concerned parties before the Administrative Court within thirty days.

Concerning the crimes prescribed under the Customs Law No. 207 of 2020, the Income Tax Law No. 91 of 2005, and the Value-Added Tax Law No. 76 of 2016, except cases of flagrante delicto ('blazing offence'),¹²⁰ a petition to initiate criminal proceedings can be filed only pursuant to an inquiry to the Competent Minister as to whether the person accused of committing the crime is affiliated to any of the investment projects which are subject to the provisions of the Investment Law. The Competent Minister must provide his opinion within 7 days from the date of receiving the inquiry; if no opinion is provided, the proceedings may be initiated as prescribed by the law.

According to the Companies Law No. 159 of 1981, before resorting to the Administrative Court, the company must file a complaint to the Minister of Investment within fifteen days from the date of its notification by GAFI of the violation of the law or of its articles of association.

d) Finality

Enforcement of civil judgments is possible when the decision is final and definitive, i.e. judgments rendered by the Court of Appeal, or judgments of first-instance courts which are not subject to appeal under the law.

Conversely, criminal sanctions are immediately enforceable notwithstanding an appeal, except for misdemeanors. However, it seems that under the new Law No. 1 of 2024 amending the Criminal Procedural Law, the suspension of sanctions in case of appeal will henceforth apply to felonies as well. In any event, given that most crimes relating to environment protection are misdemeanors (given the imprisonment sentence does not exceed three years), sanctions are not enforceable until a final and definitive judgment.

There is nonetheless an exception to this rule under the Environmental Law. For the construction of any establishment within 200 meters of the Egyptian coastal lines without the permission of the competent administrative authority, or in the case of any measures that may affect the natural coastline, the court cannot stay the execution of the fine, and in all cases, the violating works must be stopped and removed by administrative means at the expense of the perpetrator. The machinery, equipment and materials used in these works shall be seized without waiting for a court sentence. This is without prejudice to the concerned administrative body’s right to apply civil sanctions, including the suspension or cancellation of the licence and the removal of the violation and its effects at the perpetrator’s expense. The decision of the authority is with immediate effect without the need of a court decision.

e) Standing

The general rule under the Civil Procedural Law is that a legal action is inadmissible if the claimant does not have legal standing or legal interest in the matter. A potential interest is sufficient if the provisional measure seeks to prevent an imminent harm or preserve a right by preserving evidentiary rights and preventing the dissipation of evidence. Legal standing is a matter of public policy which can be raised at any stage of the proceedings, including for the first time before the Court of Cassation and by the court on its own motion.  

According to Article 103 of the Environmental Law, every citizen or association concerned with the protection of the environment has standing to report any violation of the Environmental Law.

f) Political questions

Access to information remains limited in Egypt due to wider political and economic issues. Despite recent improvements, many businesses and entrepreneurs continue to cite challenges associated with accessing public information, inefficient bureaucracy, administrative complexity and low-quality public services. Media freedom has not seen an improvement, according to Reporters without Borders, with Egypt ranked 166th out of 180 countries in the World Press Freedom Index.¹²¹

Pursuant to Article 155 of the Constitution, the President, after consultation with the Cabinet, may issue a pardon or reduce a sentence. General amnesty may only be granted by virtue of a law, ratified by the majority of the members of the House of Representatives.

In principle, the sanctions prescribed by the Environmental Law (and other laws addressed in this chapter) do not by their nature raise issues that could give rise to political questions.

g) Advisory opinions

Under Egyptian Law, there is no punishment without a court judgment. The Judicial Authority is independent and neither the Parliament nor the executive authority has the power to amend or override any judicial order or judgment. However, the President after consultation with the Cabinet of Ministers may issue a pardon or reduce a sentence.

Criminal proceedings can be initiated for the crimes prescribed under the Capital Market Law only upon the FRA Chairman's request. The FRA’s Chairman may settle with respect to these crimes, at any stage of the proceedings, in exchange for the payment to the Authority of an amount which is not less than the double amount of the minimum fine.

According to the Investment Law, other than in the cases of blazing offence, a petition to initiate criminal proceedings for the crimes prescribed under the Customs Law, the Income Tax Law and the Value-Added Tax Law can be filed only after seeking the Competent Minister’s opinion as to whether the person accused of committing the crime is affiliated to any of the investment projects which are subject to the provisions of Investment law.

The application of the sanctions stipulated by the Environmental Law do not require any advisory opinions unless the violation is within the scope of Capital Market Law regulating the Stock Exchange or the Investment Law or any relevant law.

_{118. Supreme Constitutional Court, Case No. 4 of JY 12, Enforcement, 10 September 1990.}

_{119. The Administrative Court, Challenge No. 40858 of JY 74, 23 October 2021.}

_{120. Indicates that an offender has been caught in the act of committing an offence i.e. caught red handed.}

_{121. Alexa Tiemann, Bassem Kamar, Rafik Selim and Reem Jodeh, 2021, 'Egypt country diagnostic Private investment challenges and opportunities', p 30, https://www.ebrd.com/publications/country-diagnostics.}

‍

Private sector employees and manpower are regulated by the Labour Law No. 12 of 2003 and its Executive Regulations and Decrees. This law may also regulate employment relations in some state-owned companies and economic entities.

According to Article 5 of the Labour Law, any provision or agreement which deprives an employee from any of the rights determined by this Law is null and void. Conversely, agreements that are more favorable to employees are valid.

In December 2022, the Manpower Committee of the Egyptian Parliament approved a new Labour Bill which is expected to be issued in 2024.

Civil servants in ministries and public entities are governed by Law No. 81 of 2016 on the Civil Service which replaces Law No. 47 of 1978, unless a special law or decree provides otherwise. The new Law aims to set forth a comprehensive, ambitious framework to reform bureaucracy.

Law No. 148 of 2019 on Social Security and Pensions applies to both the public and private sectors.

Employment of foreigners: the employment of foreigners, whether within the public or private sector, is governed by the Labour Law provisions. According to Article 28 of the Labour Law, foreigners are not allowed to work in Egypt without a work permit granted by the Competent Manpower Authority. In addition, foreign manpower shall not exceed 10% of the total manpower of any company. An exception to this threshold may be granted by the Minister of Labour when this is necessary for the country’s economic interests and there is a need for foreign workers. According to Article 8 of the Investment Law, this 10% threshold may be increased to 20% for projects established according to the Investment Law.

Articles 11 and 12 of Law No. 213 of 2017 on Labour Unions, set the minimum number of required members to establish a union as well as the sanctions which abolish the detention provision but increase the amount of fines for establishing or managing an establishment or body which was unlawfully called a labour union and used such denomination in communication tools, or for a board director to intentionally provide incorrect information about the legal, corporate, financial or administrative status of the union.

Despite the legal reform, Egypt is listed as one of the ten worst countries in the world for workers’ rights.¹²²

_{122. 2020 ITUC Global Rights Index, The World’s Worst Countries for Workers, International Trade Union Confederation, ITUC CSI IGB, p 5.}

_‍

Law No. 87 of 2015 on Energy (the new Electricity Law) has restructured the electricity sector to increase competition. It ended the “single buyer of electricity” monopoly, thus allowing private generation companies to sell their production to end users.

Law No. 203 of 2014 on Renewable Energy aims to create a supportive environment for attracting investments in renewable energy.

In 2014, by Prime Ministerial Decree No. 1257 of 2014, the Egyptian Government announced a gradual liberalization of electricity prices over a five-year period with the aim to fully remove electricity subsidies by the end of the fiscal year 2018-2019. After the free-floating of exchange rates in November 2016 and the global outbreak of COVID-19 in 2020, the Government decided to extend the period for the full liberalization of electricity prices for a further 3 years, to be completely achieved in the fiscal year 2024/2025. Thus, the Ministry of Electricity and Renewable Energy issued Decree No. 100 of 2020 in June 2020 to fix the new electricity prices for the next 5 years (ending on 2024-2025).

The Decree also fixed the electricity prices per KWh on ultra-high, high and medium voltage for a period of 5 years according to the electricity prices determined for the fiscal year 2020/2021, with the aim of providing investors with more transparency and predictability in the electricity prices in Egypt.

Finally, Law No.2 of 2024 on incentives for projects producing green hydrogen through electrolysis of desalinated water using renewable energy is a pivotal reform for electricity generation. It codifies the production of green hydrogen and stipulates preferential incentives to boost Egypt as a green hydrogen hub.

‍

a) Annulment and cancellation of exploration or exploitation permits

The Constitution requires that the grant of a right of exploitation or of a public utility concession be by based on a law and for a period not exceeding thirty years for natural resources, or fifteen years for quarries, small mines and salt pans.

According to Law No. 182 of 2018 (on “public contracts”), the administrative authority may terminate the contract or implement it at the expense of the contractor, if he/she violates any essential condition or term. Termination or implementation shall be by a reasoned decision from the competent authority, of which the contractor shall be notified.

The contract must be terminated in the following cases:

i) If it becomes clear that the contractor, personally or through someone else, used fraud or manipulation in his dealings with the contracting authority or in obtaining the contract.

ii) If it is revealed that there is collusion, fraudulent, corrupt, or monopoly practices.

iii) If the contractor is bankrupt or insolvent.

In these cases, cancellation takes place automatically (per Article 50).

According to Article 29 of the Law on Mineral Resources as amended by Law No. 145 of 2019, pursuant to a resolution of the EMRA, the Competent Authority may temporarily suspend the validity of the exploration or exploitation license if the exploration or exploitation constitutes a serious risk to the safety and security of the work and workers, third parties, or the licensed area, or if the EMRA submits two technical reports establishing the presence of technical violations committed by the licensee.

The Competent Authority, after obtaining the approval of EMRA’s board of directors of with regard to mines, may issue a decree to cancel the licence of the exploration or exploitation in the mines, quarries or salt pans, as the case may be, in any of the circumstances set out by the Mineral Resources Law. These circumstances include the non-commencement of the works, or their stoppages for a certain period, without the permission from EMRA or the Competent Body, and the pollution of the licensed area by the licensee along with the failure to take remedial action, notwithstanding EMRA’s or the competent body’s warning.

b) Expropriation of property rights by the State

Pursuant to Articles 35 and 40 of the Constitution, general confiscation of property is prohibited. Specific confiscation is not permissible either, except by virtue of a court judgment. Private property shall be protected. It is not permissible to impose guardianship thereon except in the cases defined by Law and by virtue of a court judgment. Expropriation shall be allowed only in the public interest and for its benefit, and against a fair compensation to be paid in advance.

Law No. 10 of 1990 as amended by Law No. 24 of 2018 regulates the expropriation of real estate for public benefit and requires that the expropriation be in consideration of a compensation. Pursuant to Article 3, the compensation amount is determined by a committee formed in each governorate. The evaluation of the compensation is made according to the market prices prevailing at the time when the expropriation decision is issued, in addition to 20% of the determined value. The entity requesting expropriation shall deposit the full amount of compensation within a period not exceeding three months from the date of issuance of the decision.

c) Lawsuits brought against projects

Prior to Law No. 32 of 2014 on appeals against public contracts, lawsuits were filed by third parties against administrative contracts signed by the State or one of its bodies with the private sector, including contracts for the allocation of lands. Law No. 32 of 2014 was issued to end such practice, thus limiting litigation rights only to the parties to the contract. The Law denies the right to a third party to challenge the legality of public contracts concluded between the Egyptian government and a foreign investor before the administrative courts. On 14 January 2023, the Egyptian Constitutional Court upheld the constitutionality of this Law.¹²³ It emphasized that even though the Law denies the right of third persons to challenge the legality of public contracts before courts, third persons could nonetheless take other alternative measures provided for by the anticorruption laws.

d) Types of ADR available

Law No. 27 of 1994 on Arbitration in Civil and Commercial Matters, as amended by Law No. 9 of 1997, provides in Article 1(2) for the arbitrability of administrative contracts provided that the arbitration agreement is approved by the competent minister or the person assuming his powers. No delegation of powers shall be authorized. If such approval is not obtained, the arbitration agreement and the ensuing award shall be null and void.

The Prime Ministerial Decree No. 1062 of 2019, amended by Decrees No. 2592 of 2020 and 3218 of 2022, prohibit all governmental entities and state-owned companies from concluding any contract with a foreign investor or agreeing to arbitrate without first referring the matter to a commission called the Higher Authority for Studying and Opining on International Arbitration Cases.

Accordingly, governmental entities and companies wholly or partially owned by the State are prohibited from taking any of the following actions without referring the matter to the Commission for prior review:

– concluding or amending a contract with a foreign investor;

– agreeing to arbitrate; or

– taking any measure or action in relation to any arbitration dispute.

The legality of this Decree is questionable as it prescribes a pre-condition (additional to the Competent Minister’s approval requirement) which is not provided for by the Arbitration Law. Nonetheless, to avoid any enforcement risks, it is important for investors to verify that the necessary referrals to the Commission have been made and the necessary approvals have been obtained.

In addition, the Investment Law No. 72 of 2017 which refers to the Arbitration Law, establishes the “Ministerial Committee on Investment Dispute Resolution” to review applications, complaints, or disputes which would arise between the investors and the State or a State’s body, authority, or a State company.

Pursuant to Article 87 of the Investment Law, and without prejudice to the Investor’s right to resort to courts, the Committee’s decisions shall, upon their approval by the Cabinet of Ministers, be enforceable and binding upon the competent administrative authorities. The appeals of the Committee’s decisions do not suspend their enforcement.

Another ministerial committee, entitled the “Ministerial Committee on Investment Contracts Dispute Resolution” was established in the Cabinet of Ministers to settle the disputes arising from investment contracts whereto the State, or one of its bodies, authorities, or companies is a party. This Committee may perform the necessary settlement to handle the imbalance of such contracts, and extend the terms, periods, or grace periods provided for in such contracts. Upon being approved by the Cabinet of Ministers, such settlement shall be enforceable and binding on the competent administrative authorities and it shall have executive power (exequatur).

e) Transparency and corruption risk

Egypt’s transparency score is 122 of 143 according to the World Bank, and 31 of 39 according to the Income Group Bank.¹²⁴

According to Article 218 of the Constitution, the State shall fight corruption, and competent control agencies and organizations shall be designated by the law.

The Egyptian anti-corruption legal framework includes articles in the Penal Code promulgated by Law No. 58 of 1937; the Illicit Gains Law No. 11 of 1968, as amended by Law No. 62 of 1975; the Administrative Control Authority Re-organisation Law No. 54 of 1964, as amended by Law No. 207 of 2017; the amended Central Auditing Agency Law No. 144 of 1988; the Anti-Money Laundering Law No. 80 of 2002, as amended by Law No. 36 of 2014; the amended Central Bank and Banking System Law No. 88 of 2003; the Competition Regulation and Prevention of Monopoly Practices Law No. 3 of 2005; Law No. 10 of 2009 on the Supervision of Non-banking Financial Markets and Instruments, establishing the General Authority for Financial Control; and Law No. 106 of 2013 on prohibiting conflicts of interests of civil servants.

According to Law No. 3 of 2005, investigatory powers lie with the Egyptian Competition Authority (ECA), which has the power to bring violation claims before the Economic Court. The law stipulates a variety of fines but does not grant the ECA the power to impose them.

Egypt has a vast array of laws and several authorized agencies supporting the fight against corruption, including the Administrative Control Authority (ACA), the Central Auditing Organization, the Administrative Prosecution Authority, and the Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU). According to the Constitution, these agencies have legal personality and are administratively, financially, and technically independent.

The National Subcommittee against Corruption has completed the elementary components of the National Anti-Corruption Strategic Plan. On the 9th of December 2014, Egypt launched its first National Anti-Corruption Strategy (2014-2018), followed by its Second Strategy (2019-2022). Both included Egypt’s vision, mission, and strategic anti-corruption goals. Egypt has embarked on launching its third National Anti-Corruption Strategy, for 2023-2030.¹²⁵  

Several laws were adopted and decrees were issued to digitize and modernize public services. The necessary amendments to Law No. 182 of 2018 on public contracts were passed to ensure proper spending of public funds.

Egypt also issued Law No. 5 of 2022 Regulating the Development and Use of FinTech’s in Non-Banking Financial Activities. The Unified Finance Law No. 6 of 2022 ensures good financial planning, and the governance of special funds and accounts.

Law No. 18 of 2022 on State Public Planning stipulates that local, national, and regional planning documents shall be made available to the public.

Despite these achievements, there is a need for further reforms to support the efforts to promote transparency in different government units. Although the Constitution guarantees the citizens’ right of access to information and official documents, the access to information Law has never been adopted. the non-adoption of the Information Law hinders the effective enforcement/implementation of the Law on Prohibiting conflict of interest of state officials.

f) Incorporate TI Ranking

On Transparency International's 2022 Corruption Perceptions Index, Egypt scored 30 on a scale from 0 ("highly corrupt") to 100 ("very clean").

_{123. Egyptian Constitutional Court Case No. 120 of 2023 JY 36.}

_{124. Egypt's Corruption Forecast, https://corruptionrisk.org/country/?country=EGY. “Egypt scored 30 points out of 100 on the 2022 Corruption Perceptions Index reported by Transparency International. Corruption Index in Egypt averaged 32.21 Points from 1996 until 2022, reaching an all-time high of 37.00 Points in 2014 and a record low of 28.00 Points in 2008”, Egypt Corruption Index, https://tradingeconomics.com/egypt/corruption-index. See also, Egypt Human Development Report 2021, Development, a right for all: Egypt’s pathways and prospects, United Nations Development Programme, Ministry of Planning and Economic Development, Egypt, p 225.}

_{125. National Anti-Corruption Strategy 2023-2030, Egyptian Administrative Control Authority, p 7.}

‍

There is no specific regime governing the definition and scope of an environmental duty of care, such that such duty falls under the general duty of care to avoid causing harm to others.

However, Egypt has adopted both national and international legal frameworks defining the liability and compensation regime for the environmental protection violations.

a) Egypt's national legal framework for the liability and compensation regime for environmental duty of care

Egypt has adopted many laws and regulations related to environmental protection, such as:

1. The National Oil Spill Contingency Plan (NOSCP), adopted in 1986, aims to lay the national foundations for preparing and dealing with incidents of oil spills into the marine environment of Egypt under the umbrella of the Environmental Affairs Agency.¹²⁶ The NOSCP provides the framework for implementing Egypt's responsibilities under the Barcelona and Jeddah agreements to conserve the Mediterranean and the Red Sea environment.¹²⁷ Egypt’s response to oil pollution under the NOSCP is a three-tiered approach depending on whether the spills are small (110 cubic meters/Tier one), medium sized (between 100 and 1000 cubic meters /Tier Two) or major (more than 1000 cubic meters/Tier Three).¹²⁸

2. The Environmental Law No. 4 of 1994

Article 1(28) of the Environmental Law defines compensation as compensation of damages caused by pollution incidents resulting from violating the provisions of laws and international agreements to which Egypt is a party, or from pollution incidents with toxic substances and other harmful substances, the air, or the grounding or collision of ships during their loading and unloading. Compensation covers both traditional and environmental damages, the costs of restoring the situation to what it was or the reestablishment of the environment.

b) Egypt's international legal framework for the liability and compensation of the environmental duty of care

Egypt is party to different international legal frameworks which set out the liability and compensation regimes for oil spills including:  

– The International Convention for the Prevention of Pollution from Ships and its Protocols (MARPOL), 1973 which covers the prevention of pollution of the marine environment by ships from operational or accidental causes. The Convention on Limitation of Liability for Maritime Claim (LLMC), 1976. The convention was incorporated by Law No. 150 of 1986.

– Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, 1989.

– The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001.

– The International Oil Pollution Compensation Fund (IOPC), 1992.

– The International Convention on Civil Liability for Oil Pollution Damage (CLC).

The LLMC, 1976 provides a general cap for the limitation of liability for maritime claims. Egypt has not ratified the HNS Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea.¹²⁹

_{126. NOSCP, 2009.}

_{127. Ibid.}

_{128. Ahmed Raafat Reiad Nasreldin, Challenges and potential for Egyptian oil spill contingency plan: a comparative study for improving oil spill preparedness: case study Gulf of Suez and North Sea, dissertation, Master of Science in Maritime Affairs World Maritime University, Malmö, Sweden 2021, p 33-35.}

_{129. Whereas the LLMC convention entitles the shipowner to limit its liability, the HNS Convention aims to secure an adequate, prompt and efficient amount of compensation to the victims of the HNS incidents.}

‍

The Court of Cassation ruled that the state is the guardian of the environment's protection according to the Constitution and the Environmental Law No. 4 of 1994. According to the Court, “The state commits to protect the beaches and prohibit their encroachment, pollution, or use in ways that are inconsistent with their nature. Article 45 of the 2014 Constitution prohibits any action that would damage the natural path of the beach. Articles 73, 74, 98 of Law No. 4 of 1994 on the environment, and 59 of its executive regulations consider trespassing on beaches an illegal act that constitutes a crime that harms the environment ."¹³⁰

The Court also declared that “Ionizing Radiation” activity is prohibited without a licence issued by the Atomic Energy Commission for the purpose of handling “hazardous materials” as defined Article 1 (20) of Law 4 of 1994, and that the liability for breaching the provisions of that Law by those operating without a licence is more severe than for those who commit the same violations with a licence.¹³¹

According to the Labour Law, the employer engages his/her civil and criminal liability for chemical hazards caused by chemical materials used or leaked in the work atmosphere, such as gases, vapors, and dust which have a negative impact on employees’ health and safety.

_{130. Court of Cassation, Civil Chamber, case No. 12023 JY 89, 24 November 2020.}

_{131. Court of Cassation, Criminal Chamber, Case No. 56615 JY 73, 19/3/2006.}

‍

Egypt has adopted the monist doctrine according to which international law becomes part of the national legal system upon the ratification of the international convention by the State (or the acceptance of the international customary law by the State) and as such must be applied by the courts without the need for the adoption of national law to incorporate the treaty. Under Egyptian law, international law has primacy over national law such that the latter must not contradict the former, otherwise, the courts must refrain from applying the contradicting law. ¹³²

As explained above, recourse to international arbitration in public contracts is permitted provided that the necessary approvals and prior referrals are obtained.

In addition, Egypt is a signatory of the New York Convention on the recognition and enforcement of international awards of 1958 and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (the ICSID Convention). It is also a party to numerous bilateral (more than a hundred BITs) and multilateral treaties which provide for arbitration as a dispute settlement mechanism, such as:

– The African Continental Free Trade Area Agreement (AfCFTA),

– the Egypt-MERCOSUR Preferential Free Trade Agreement,

– the Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards of 1952,

– the Unified Agreement for Investment of Arab Capital in the Arab States (the Arab Investment Agreement),

– the Organisation of the Islamic Conference Investment Agreement of 1981 (the OIC Investment Agreement),

– the Convention establishing the Multilateral Investment Guarantee Agency (the MIGA Convention) of 1985,

– the COMESA Investment Agreement, and

– the Riyadh Arab Agreement for Judicial Cooperation.

Furthermore, Egypt has ratified several bilateral treaties on judicial cooperation that refer to mutual cooperation in the recognition and enforcement of arbitral awards, such as Egypt-: Tunisia of 1976, Italy of 1978, France of 1982, Jordan of 1987, Morocco of 1989, Bahrain of 1989, Libya of 1993, China of 1994, Hungary of 1996, Syria of 1998, UAE of 2000, Oman of 2002 and Kuwait of 2017.

_{132. Court of Cassation, Civil and Commercial Chambers, Case No. 6578 of JY 75, 18 April 2012.}

_‍

The investment environment in Egypt still faces certain challenges pertaining to the following factors.

State-owned enterprises (SOE)s’ Role

According to Law No. 203 of 1991 on the Public Sector, SOEs should not receive preferential treatment from the government, nor should they be accorded any exemption from legal requirements which are applicable to private companies. However, SOEs are present in almost every sector of the economy, and in fact control various key economic sectors such as construction, agriculture, media, transport, and banking.

Public reports indicate that there are over 300 state-owned companies, including public business sector companies (PBSC), public sector companies (PSC) and military-owned companies, and close to 645 joint ventures (JVs) and partnerships involving the State. There are also 53 economic authorities (EAs), that operate in various, often strategic, sectors including logistics, agriculture, oil and gas, electricity, and energy. According to the FY2017/18 Economic Census, PBSCs and PSCs alone amounted to around 16% of the economy in terms of production, 25% of capital investment, and 6% of employment.¹³³ This contribution has increased subsequently.

Law No. 159 of 2023 abolished the tax exemptions granted to State entities and affiliated companies in economic and investment activities. It entered into force in February 2024 with the adoption of its Executive Regulations by the Council of Ministers. However, the Executive Regulations excluded from its realm the following exemptions:

1. when an international agreement provides otherwise.

2. exemptions granted to military business and equipment, and for requirements of national security.

3. exemptions to crucial public utilities.

Corruption and Bureaucracy

Notwithstanding its large-scale legal reform since 2014, Egypt is still facing serious challenges to curb corruption and bureaucracy. The Executive power remains highly concentrated in Ministers, the Cabinet of Ministers and the Presidency.

According to the European Bank for Reconstruction and Development (EBRD) the quality of the business environment and regulatory framework in Egypt appears to be below the average of the SEMED region and the EBRD regions.¹³⁴ While Egypt is better than its regional peers on starting a business, there is room for improvement in trading across borders, paying taxes, enforcing contracts, registering properties and insolvency resolution mechanisms. In terms of the quality of competition law, its institutions and enforcement, Egypt’s performance likewise lags behind that of its regional peers, and the EBRD’s adjusted SME index score for 2019 still requires improvement.¹³⁵

Inadequate protection of intellectual property rights

Egypt is party to the main international conventions on IP rights, such as the Berne Convention on Copyright, the Paris Convention on Industrial Property and the Madrid Agreement. The government developed an IP Rights Action Plan to bring its IP system in line with the WTO’s Trade-Related aspects of Intellectual Property Rights (TRIPS) commitments. However, inadequate protection of intellectual property rights (IPR) remains a significant hurdle.

The enforcement of IP protection is inefficient and slow and struggles to meet international standards. IP rights are enforced in Egypt through a wide range of administrative and judicial bodies. Despite the creation, by virtue of Article 69 of the Constitution, of a specialized agency to protect IP rights, the concerned official bodies remain poorly equipped to enforce their protection.

Lengthy judicial process

Litigation before Egyptian courts is complex and has many flaws, both from a procedural and legal perspective. The procedure before the two branches of the judiciary (judicial and administrative) is slow and bureaucratic, with long delays and systematic extensions of time.

Court congestion in Egypt is a serious concern. It has been reported that there are around 50 million cases before civil, commercial, criminal and administrative courts, whereas, according to other press articles, the number is actually 16 million cases, which still remains a significant number.¹³⁶ The Minister of Justice in 2022 announced that courts hear about 15 million civil and criminal cases annually.¹³⁷

Admitting inadmissibility claims and procedural objections which prevent ruling on the merits of the case are quite frequent. Moreover, it is not possible for the parties in civil cases to cross-examine the court’s appointed experts, contrary to international arbitration.

The enforcement of foreign judgments in Egypt is time consuming with a hefty evidentiary and procedural process (the exequatur follows the same procedural requirements as for normal lawsuits).

Security clearance requirements

Security clearance requirements for foreign shareholders, managers, and board members is required from the General Authority for Investment and Free Zones (GAFI).

The company must apply for the security clearance when registering with GAFI, but it can commence its activities without waiting for the security clearance to be issued. GAFI’s final approval of registration includes a statement that in the event the security clearance is not obtained, the applicant shall replace said shareholder/manager/board member within a maximum period of one month from the date of receiving written notification to this end. In case of non-compliance, the company shall be considered to have refrained from completing the project without any right to claim compensation, provided that a written undertaking is made by the investor indicating his/her agreement to the foregoing.

Special requirements for the Sinai Peninsula

Investment in the Peninsula is governed by Law No. 14 of 2012 on the Development of the Sinai Peninsula and its Executive Regulations. The Law prohibits ownership of lands and real estate in the Peninsula by foreigners and any ownership contract providing for the contrary is null and void, and must be declared as such by the court on its own motion. The Law also limits the right of both Egyptians and foreigners on certain lands and real estate in the Peninsula to a right of use for not more than 50 years, extended on one or several occasions for up to 75 years in total.

An Egyptian or a foreign company, or a branch of a foreign company, which exercises an activity in the Peninsula must obtain a special approval from the Sinai Peninsula Development Authority to amend its articles of associations, or replace, elect or appoint a manager or a member of its board of directors.

Foreign ownership of land

The ownership of land by foreigners is governed by three laws: Law No. 15 of 1963, Law No. 143 of 1981, and Law No. 230 of 1996.  

Law No. 15 stipulates that no foreigners, whether natural or juristic persons, may acquire agricultural land.  

Law No. 143 of 1981 governs the acquisition and ownership of desert land and places certain limits on the number of feddans that may be owned by individuals, families, cooperatives, partnerships and corporations.

Law No. 230 of 1996 allows non-Egyptians to own real estate (vacant or built) only under certain conditions and limitations, and subjects exemptions from certain conditions to the Prime Minister’s approval. The right to re-sale is subject to temporal and material restrictions, and exemptions thereto are subject to the Prime Minister’s approval.

In July 2023, the Prime Minister announced that there will be no limitation to foreign ownership so long as they purchase in foreign currency. However, investors should be cautious about the legality of this declaration.

_{133. IMF Country Report No. 21/163, Arab Republic of Egypt, 2021, International Monetary Fund, p 18.}

_{134. Alexa Tiemann, Bassem Kamar, Rafik Selim and Reem Jodeh, Egypt - country diagnostic: Private investment challenges and opportunities 2021, p 28. https://www.ebrd.com/documents/egypt-country-diagnostic.pdf.}

_{135. Ibid.}

_{136. The scales of justice are heavy... 60 million cases in the courts, https://akhbarelyom.com/news/newdetails/2632980/1/%D9%85%D9%8A%D8%B2%D8%A7%D9%86-%D8%A7%D9%84%D8%B9%D8%AF%D9%84-%D8%AB%D9%82%D9%8A%D9%84..-60-%D9%85%D9%84%D9%8A%D9%88%D9%86-%D9%82%D8%B6%D9%8A%D8%A9-%D9%81%D9%8A-}

_{137. https://www.masrawy.com/news/news-videos/details/2022/2/8/2172156/%D9%88%D8%B2%D9%8A%D8%B1-%D8%A7%D9%84%D8%B9%D8%AF%D9%84-%D8%A7%D9%84%D9%85%D8%AD%D8%A7%D9%83%D9%85-%D8%AA%D9%86%D8%B8%D8%B1-15-%D9%85%D9%84%D9%8A%D9%88%D9%86-%D9%82%D8%B6%D9%8A%D8%A9-%D8%B3%D9%86%D9%88%D9%8A-%D8%A7-%D9%88%D8%A3%D9%86%D8%AC%D8%B2%D9%86%D8%A7-%D9%82%D8%B6%D8%A7%D9%8A%D8%A7-%D9%85%D9%86%D8%B0-%D8%B9%D8%A7%D9%85-1952-}

‍