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Damac files international claim against Egypt

17^th May 2011 : The Chairman of Damac , one of the largest real estate development companies in the Middle East, through international law firm King & Spalding , has filed an international arbitration case against Egypt. Damac 's Chairman, Hussain Sajwani , has brought the ICSID claim against Egypt under the bilateral investment treaty between the United Arab Emirates and Egypt, which protects investments made by UAE nationals in Egypt.

Mr. Sajwani, a national of the UAE, states that Egypt's recent criminal prosecution and conviction in absentia violate the treaty on investment protection and have caused significant damage to his investments in Egypt and the wider Gulf area. Damac 's Egyptian investments include a 30 million square meter development project at Gamsha Bay, near Hurghada, as well as four major real estate projects in the greater Cairo area.

On May 10, 2011, an Egyptian court criminally convicted Mr. Sajwani, sentenced him to imprisonment, and ordered him to pay a $40.5 million fine on the basis that he acquired the Gamsha Bay property through a transaction conducted in 2006 that was approved by Mohamed Zoheir Garranah, Egypt's Minister of Tourism under the Mubarak regime. Mr. Sajwani and another businessman were prosecuted and convicted alongside Mr. Garranah in a criminal case brought by Egypt's new military regime against Mr. Garranah. Egypt's new regime has arrested and prosecuted a number of former Mubarak ministers amidst a public outcry to bring former Mubarak associates to trial.

"The criminal prosecution and conviction of Mr. Sajwani were a classic case of 'guilt by association.' No crime was committed by simply conducting business with the former regime," said Mr. Sajwani's counsel, Ken Fleuriet of King & Spalding . "While the Egyptian court held that the price paid for the Gamsha Bay property was too low, the transaction was entirely proper, and Damac was entitled to rely upon the price charged by the Government at the time. It was an arms' length transaction that was fully vetted by the appropriate Egyptian officials at the time of purchase."

This ICSID case raises serious questions about the rule of law in Egypt in the wake of Egypt's January 2011 revolution. It is expected to cast an international spotlight on the political vendettas currently being pursued by Egypt's new regime at the behest of the Egyptian public. This ICSID case may subject Egypt to international liability far greater than what it apparently hopes to recover by its ongoing legal actions against investors who conducted business with Mubarak's ministers. It will also raise serious questions among foreign investors about the safety of investing in Egypt.

The prosecution was a travesty of justice and violated the most basic tenets of due process. Egypt did not inform the accused of the case being brought against him (he learned of it through the press). Egypt's public prosecutor offered no evidence or explanation as to how he had engaged in any wrongdoing by simply concluding a business transaction with the former government. He was not kept informed of the charges or evidence against him, and he was not allowed to be represented by counsel during several important hearings. He was convicted in a "sham" criminal proceeding that was rushed through Egypt's judicial system at lightning speed. The outcome of the proceeding appears to have been a foregone conclusion from the start.

The bilateral investment treaty between the UAE and Egypt accords a number of protections to UAE investors who invest in Egypt, including requirements that Egypt's government not treat them in a manner that is unfair, inequitable, arbitrary, or discriminatory.

Egypt must afford UAE investors and their investments "full protection and security" and not subject investments to measures that impair their maintenance, use, enjoyment, or possession. Egypt's malicious and unwarranted criminal prosecution and conviction violated a number of Egypt's obligations under the treaty.

According to Ken Fleuriet of King & Spalding , which specializes in ICSID arbitration cases and has successfully brought previous ICSID arbitrations against Egypt, "the treaty and international law clearly prevent malicious criminal prosecutions and violations of due process that result in the sort of travesty of justice that occurred in this case."

-Ends-

Further information is available at www.damacproperties.com

DAMAC Properties, part of DAMAC Holdings was established in 2002, as a private residential, leisure and commercial developer in Dubai and the Middle East. Since then, DAMAC Properties has expanded rapidly into North Africa, Jordan, Lebanon, Qatar and Saudi Arabia.

2010 was labelled the 'Year of Construction' at DAMAC Properties, during which it aggressively focused on construction and contract delivery to trusted and quality contractors. DAMAC Properties have already delivered 4239 units into the market with projects at IMPZ (The Crescent), TECOM (Executive Heights), JLT (Lake View and Lake Terrace) and the Marina (Ocean Heights, The Waves and Marina Terrace) already delivered and is expected to have handed over a further 7 towers comprising 3387 units in 2011.

In June 2010, DAMAC Properties further reinforced its position as a premium developer with the launch of DAMAC Tower in Beirut, Lebanon. A 28 iconic tower, this project is in association with Italian design group, VERSACE, with all interiors being designed by Versace Home.

The company has a diverse range of expertise that allows them to have a good oversight and management of all aspects of a project right from the acquisition of land, appointment of architects and designers, construction and sales to after sales service.

The company's projects are located in the most desirable and exclusive locations and homes are built to a high quality specification that has become synonymous with the group. DAMAC Properties aims to develop projects that include residential, commercial and leisure facilities that will create an integrated community.

In addition to support services provided by the Dubai headquarters, the company's comprehensive Customer Care Program provides solutions through its vast network with offices in the UAE, Jordan, Lebanon, Egypt, KSA and Qatar.

Further information is available at www.damacproperties.com

For more information please contact:
Niall McLoughlin,
Senior Vice President - Corporate Communications, DAMAC.
Tel: 971 4 04 3732190
Fax: 00 9714 3732335
Mobile 971 50 6531824.
emaiI: niall.mcloughlin@damacgroup.com

© Press Release 2011