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Sunday, 8 November 2020

Egypt found in breach of investment treaty in cement arbitration case but dodges damages

DISPUTE WATCH- Egypt found in breach of investment treaty in cement arbitration case but dodges damages: The International Center for the Settlement of Investment Disputes (ICSID) has dismissed claims brought against the Egyptian government by Spanish cement group Cementos La Union despite finding Egypt in breach of a bilateral investment treaty, according to the Global Arbitration Review (GAR). Cementos, a majority shareholder in Arabian Cement Company, was seeking damages from the government for what they said was a failure to provide enough gas and electricity supplies for a cement plant it was due to open in Egypt. Cementos also claimed that the government required Arabian Cement to pay “excessive licensing and electricity fees.” The dispute over the 2008 licensing fees imposed on the plant also include court cases that remain pending before Egyptian courts.

Background: Arabian Cement was one of a number of companies to warn recently that the stresses facing the sector are intensifying as falling demand caused by the covid-19 pandemic compounds an acute oversupply crisis. The supply glut, which began in 2016 and was exacerbated in 2018 with the opening of a large state-owned factory, has caused widespread losses in the sector, resulting in several companies temporarily or permanently their operations. We took a deep dive into the problems facing the sector earlier this year.

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