CAIRO, Feb 24 (Reuters) - Egypt’s draft investment law contains provisions to prevent third parties from challenging contracts made between the government and an investor, a cabinet source said on Monday, a move designed to attract badly needed investment.
The clauses are intended to reassure investors unnerved by previous legal challenges to such deals, some of which have left companies sold by the government in legal limbo.
Since the uprising that toppled Hosni Mubarak in 2011, Egyptian courts have issued at least 11 rulings ordering the state to reverse deals signed by the former president’s administration.
The lawsuits have been brought by activists and lawyers who allege that companies were sold off too cheaply in deals that were representative of corrupt business practices during the Mubarak era.
Many companies bought from the Egyptian government by Gulf Arab investors are at risk of renationalisation. Gulf Arab businessmen have repeatedly cited a lack of guarantees that their money will be safe in Egypt as a reason for holding back investment.
One case includes a legal battle with Saudi investors over the renationalisation of one of Egypt’s oldest department stores, Omar Effendi.
A number of foreign firms, including Mexican cement giant CEMEX, are locked in appeals processes against renationalisation.
London-listed gold-miner Centamin has been in Egyptian courts for months over its mining licence in Egypt.
The draft must be approved by Egypt’s president before it becomes law. The government has yet to set a timeframe for this.
“Protecting investors’ rights is crucial for business in Egypt especially with long-term investors,” said Saudi-based businessman Meshal Alkadeeb, vice president for strategy and business development at Aujan Coca Cola Beverages Co. The company plans to open a fruit-juice factory in Egypt.
“We have witnessed that the authorities in Egypt are being very flexible when it comes to bringing in investors to the country. They’re trying to set up a one-stop shop for investors and introducing these new regulations does help greatly.”
Egypt’s economy has been battered by three years of political turmoil which has left the biggest Arab nation in dire need of foreign investment.