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Damac chairman files case against Egypt

By By Staff Case violates treaty on investment protection

Hussain Sajwani , the chairman of UAE-based Damac Properties , has filed an international arbitration case against Egypt through international law firm King & Spalding . Sajwani has brought the ICSID claim against Egypt under the bilateral investment treaty between the UAE and Egypt, which protects investments made by UAE nationals in Egypt, the company said in a statement on Tuesday.

Sajwani , a UAE national, claims his recent criminal prosecution and conviction in absentia by Egypt 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 30m sqm development project at Gamsha Bay, near Hurghada, as well as four major real estate projects in the greater Cairo area, the statement said.

On May 10, 2011, an Egyptian court criminally convicted Sajwani , sentenced him to imprisonment, and ordered him to pay a $40.5m 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.

Sajwani and another businessman were prosecuted and convicted alongside Garranah in a criminal case brought by Egypt's new military regime against 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 Sajwani were a classic case of 'guilt by association.' No crime was committed by simply conducting business with the former regime," said 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."

Sajwani claims the prosecution was a travesty of justice and violated the most basic tenets of due process. Damac maintains Egypt did not inform the accused of the case being brought against him, and that Sajwani became aware of the case and his conviction "through the press".

"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 Damac statement alleged.

According to Damac , 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," the statement urged. "Egypt's malicious and unwarranted criminal prosecution and conviction violated a number of Egypt's obligations under the treaty," it alleged.

According to Ken Fleuriet of King & Spalding , which specialises 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."

© Emirates 24|7 2011