18/08/07

Two Belgian dredging companies sue Egyptian government for deceit

(Daily News Egypt) August 18, 2007 PARIS/CAIRO: In an international tribunal that has been ongoing since May 2004, two Belgian dredging companies are accusing the Suez Canal Authority and the Egyptian government of deliberately withholding and manipulating information.
The two companies, Jan de Nul N.V. and Dredging International N.V., have submitted their plea against the government of Egypt to the International Center for the Settlement of Investment Disputes (ICSID), an arbitration body attached to the World Bank. The tribunal, which has been meeting in Paris, has already gone through one round of deliberations, in which it concluded that the ICSID does, in fact, have jurisdiction over the case. The next stage, in which the tribunal will decide on the merits of the case, is set to commence in late September.
The dispute first arose over 15 years ago when the government-run Suez Canal Authority invited 23 different international dredging companies to look into investing in an expansion project of the Suez Canal. Jan de Nul and Dredging International, two of the world’s largest dredging companies, won the contract on June 30, 1992 and commenced a two-year initiative in which they widened and deepened certain parts of the southern Suez Canal. The companies claim that in this contract the Egyptian government deliberately concealed and distorted important information on the quantities of soil to be dredged and the conditions of the soil. The Suez Canal Authority and the Egyptian government both denied these charges. The project went ahead as planned and was completed during the spring of 1994, although with significantly greater expense to both dredging companies. “The details that were provided to us were totally wrong,” Tison Pierre, Jan de Nul Area Director for Europe and Africa, told Daily News Egypt. “We suffered an extreme amount during the execution of this project and we expect to be duly compensated.” On July 17, 1993 the companies took up their accusations with the Administrative Court of Port Said arguing that the contract should be rendered null and void and requesting that the Suez Canal Authority compensate them for all the expenses incurred during the project. They then filed a second suit in 1995 with the Administrative Court of Ismailia. Both courts ruled in favor of the Suez Canal Authority, with the most recent decision from Ismailia being passed down in May of 2003. The companies immediately responded with an appeal to the ICSID and the case has been under international arbitration ever since.
On June 16, 2006 the ICSID tribunal ruled that it does have jurisdiction over the dispute — despite claims by the Egyptian authorities that international arbiters have no right to decide the case. The Belgian companies had argued that because Egypt broke both domestic and international law — specifically two bilateral treaties between Belgium and Egypt — the dispute was eligible to be considered by an international body. The suit is now about to be sent into the final stage, in which the tribunal will decide whether there is merit to the dredging companies’ case, and mandate an amount to be compensated. Although neither Jan de Nul nor the Suez Canal Authority would speculate about the amount that might be mandated, it is estimated that the cost of the project was approximately $130 million. In addition, Pierre did confirm that Jan de Nul would be asking for “a significant amount —many millions in fact.” Both sides in the dispute expressed confidence that they would win a favorable ruling. Abdu Ruhad, the Managing Director of the Suez Canal Authority, told Daily News Egypt that he is “confident that we will win the arbitration. We won in Egypt and we will win again this year in Paris. All of the proceedings in 1991 were conducted legally under international law.” But Pierre had quite the opposite opinion of the trials that had taken place in Egypt. “After 12 years the judgment was not in our favor,” he said. “The local judge said that we didn’t have a case. But it wasn’t a fair ruling and they definitely didn’t take into account all the factors.” “We’ve been pressing this litigation for over 15 years,” he added. “Of course we’re confident that we’ll win.” Both men confirmed that the next round of deliberations would take place at the end of September, with Ruhad saying that the Suez Canal Authority was preparing a team of lawyers that would fly to Paris at the end of next month. The trial is expected to take at least another year before a final decision is made. Pierre said that the experience had seriously disillusioned Jan de Nul from conducting any more business in Egypt. “The Egyptian government deliberately deceived us,” he said. “Egypt is not an easy country to conduct business in.”