Private-public arbitration in PPPs and BOT/BOOT agreements
Are PPPs and BOT/BOOT (Build-Operate-Transfer/Build-Own-Operate-Transfer) contracts and their various types subject to the legislative stipulation enacted in Law No. 9/1997, which requires the concerned minister’s consent before recourse to arbitration, as the minister’s consent is a safeguard to achieve public interests?
It is suggested that after the promulgation of the PPP law in Egypt, Law No. 67/ 2010, PPPs are not considered administrative contracts, whether they are purely commercial or of hybrid nature. This includes all PPP contracts as per the provision of Article 1 of the promulgation articles of the PPP law (Law No. 67/2010), which provides that PPP contracts are not subject to the state procurement law and its executive regulations, the Public Utilities’ Concession Law No. 129/1947, and the Natural Resources’ Concession Law No. 61/1958. The enactment of Egyptian PPP Law 67/ 2010 on PPPs takes such arrangements between the public sector and private actors away from administrative law in both substantive and procedural terms. The treatment of PPPs as commercial contracts has been met with controversy as one of the main consequences is their exclusion from the jurisdiction of the Conseil d’État courts system. In addition, the PPP contracts are not subject to competitive tendering, objectivity in partner selection, and transparency requirements for their awards. PPPs as a contractual pattern suggest that the private-public arbitration shall increase in the forthcoming years. In addition, considerable debate has arisen about the legal nature of BOT/BOOT agreements and whether they are commercial contracts or public contracts. One argument considers ВОТ/BOOT agreements to be
1
For instance, ICC arbitration SPP v. Egypt, which started as an ICC arbitration and ended with an ICSID award in May 1992 in the (ICSID case No. ARB/84/3).
2
For instance, Waguih Elie Siag and Clarinda Vecchi v. Arab Republic of Egypt, (ICSID case No. ARB/05/15), available at: https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/206/siag-v-egypt, last seen 2 November 2019.
3
Some Egyptian scholars consider PPP contracts as an administrative contract, see: Ragab Mahmoud, Public-Private Partnership Contracts, Dar El Nahda El Arabia 2007, in Arabic and Partnership Contracts between Public and Private Sectors Dar El Nahda El Arabia 2010, in Arabic. Some other authorities consider new types of state transactions such as BOT and PPP contracts as commercial contracts, see: Hani Sarie El Din, Legal and Contractual Arrangements for Infrastructure Projects Financed by Private Sector, Dar El Nahda El Arabia
- 2001, in Arabic, Legal and Contractual Regime for BOTtio 177 El Ahram El Eqtisadi Book
- 2002, in Arabic; Mohamed A.M. Ismail, Globalization and New International Public Works Agreements in Developing Countries, An Analytical Perspective, Routledge 2011, and for the same author see: International Infrastructure Agreements and PPPs in Developing Countries: Substantive Principles, with Special Reference to Arab and Latin American Countries, EPPPL, Lexxion 2011.
administrative contracts as they were subject to previous state procurement law No. 89 of 1998. Doctrine[1] considers BOT/BOOT contracts to be commercial transactions and not administrative or public contracts, despite the fact that both types of contracts were subject to the previous State Procurement Law No. 89 of 1998. The substantive clauses of BOT/BOOT agreements are commercial clauses and not excessive clauses that are known in administrative contracts law and practice. Thus, PPP, BOT/BOOT contracts are not administrative contracts, nor do they require the concerned minister’s consent to start arbitration proceedings. It is suggested that a legislative reform is needed to extend the requirement of the concerned minister’s consent to all state contracts whether they are administrative contracts or private law (civil or commercial) contracts. In the latter case, and if there is a legislative provision stipulating the requirement of the minister’s consent in all state contracts, PPPs and BOT/BOOT agreements’ disputes will require the concerned minister’s consent before stating private-public arbitration. The integration of public law principles with private-public arbitration to cover all state contracts is required to safeguard public interests and public funds.
The situation in other MENA coutitries
The Saudi Arbitration Act 2012
Article 10/2 of the Saudi Arbitration Act 2012 provides that arbitration is not permitted for public juristic entities without the consent of the prime minster, unless there is a legislative provision permits arbitration. This prohibition applies to all public juristic entities disputes whether contractual (public or private) or otherwise.
The Qatar Arbitration Act 2017
Article 2/2 of the Qatari Arbitration Act 2017 provides that arbitration in administrative contracts’ dispute is subject to the prime minister’s consent or any authority delegated by him. This impliedly means that civil and/or commercial law contracts’ disputes are not subject to the prime minister’s consent.
The Egyptian PPP law provides that the PPP contract shall be subject to the provisions of the Egyptian law. Any contrary' agreement shall be deemed to be null and void. This means that this legislative provision is a mandatory rule in the Egyptian legal system.
After the approval of the Supreme Committee for PPP Affairs, it may' be agreed to resolve disputes resulting from the PPP contract through arbitration, or any other non-judicial means of dispute resolution according to what was stipulated in the PPP contract.[2]
The PPP Jordanian law provides that partnership contracts shall be governed by Jordanian law. The parties to the partnership project contract may' agree to settle the disputes pertaining to the partnership project contract by' alternative disputes resolution methods.
The Moroccan PPP law does not provide for specific provisions. The parties to the contract are free to decide the applicable law. Provision is left to the liberty' of the parties who may foresee conciliation procedure, conventional mediation, arbitration or judicial settlement (Article 27).
- [1] Mohamed A.M. Ismail, Globalization and New International Public Works Agreements, Routledge, 2011, 15-19; and for the same author see: Legal Globalization and PPPs Egypt, EPPPL, Lexxion 2010, 54; International Infrastructure Agreements and PPPs in Developing Countries: Substantive Principles, with special reference to Arab and Latin American Countries, EPPPL, Lexxion 2011, 147-59; and International Construction Contracts Arbitration, Al Halabi Publishing, 2003; and see also: Hani Sarie El Din, Legal and Contractual Arrangements for Infrastructure Projects Financed by Private Sector, Dar El Nahda El Arabia 2001, in Arabic; and by the same author: Legal and Contractual Regime for ВОТ, No. 177, El Ahram El Eqtisadi Book 2002, in Arabic. 2 Hani Sarie El Din, Legal and Contractual Arrangements for Infrastructure Projects Financed by Private Sector, Dar El Nahda El Arabia 2001, in Arabic; and by the same author: Legal and Contractual Regime for ВОТ, No. 177, El Ahram El Eqtisadi Book, 2002, in Arabic.
- [2] The Egyptian 1’1’1’ law, Article 35. 2 Jordanian 1’1’1’law, Article 16. 3 Moroccan PPP law pointed out that: ‘ La loi ne prévoit pas de dispositions spécifiques. Les parties au contrat sont libres de décider du droit applicable. Disposition laissée à la liberté des parties qui peuvent prévoir une procédure de conciliation, de médiation conventionnelle, d’arbitrage ou judiciaire (L.art.27).’ 4 See ‘Amiable Composition and Ex Aequo et Bono’ in Gary B. Born, International Commercial Arbitration, 2nd edn, vol. II, International Arbitration Procedures, Kluwer Law Intl 2014,2770. 5 The same Article, with the same number 39/4, exists in the Omani Arbitration Act, 1997. 6 It is concluded from the previous legal opinions of the General Assembly for Legal Opinion and Legislation that permissibility of private-public arbitration in administrative contracts should not contradict with these contracts’ substantive theory' which implies that the national law of the contracting state should apply. (See the previously mentioned legal opinion of 10 March 1993).
