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Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt (ICSID)

Why it matters

This case is a landmark for establishing that a de facto revocation of an import license can constitute expropriation under a BIT, even without formal title transfer. It also affirmed the standard of compound interest as part of 'adequate and effective' compensation in expropriation cases, following Wena v. Egypt and Metalclad v. Mexico.

Summary

Middle East Cement, a Greek company, invested in Egypt to import and distribute cement under a license. In 1989, Egypt issued Decree No. 195 banning import of grey Portland cement, effectively revoking the license. The company's ship, M/V Poseidon 8, was later attached and auctioned by Egyptian authorities for alleged debts. The company filed an ICSID claim under the Greece-Egypt BIT, alleging expropriation. The tribunal found that the decree and subsequent actions amounted to expropriation without compensation, violating BIT Article 4. It awarded lost profits from cement supply agreements (US$ 1,712,712) and compensation for the ship (US$ 477,718), plus compound interest at 6% annually from January 1, 1990. The tribunal rejected claims for other damages, including those related to a bank loan and a letter of guarantee, for lack of proof. The decision confirmed that indirect expropriation can occur through regulatory measures that deprive an investor of the use and benefit of its investment.

The detail

Parties: Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt

Case number: ICSID Case No. ARB/99/6

Outcome: Respondent breached BIT by expropriating Claimant's investment without compensation; ordered to pay US$ 2,190,430 plus compound interest.

Quantum: US$ 2,190,430 plus US$ 1,558,970 interest

Applicable law: Greece-Egypt BIT (1993); ICSID Convention; Egyptian law; international law

Issues in play: The BIT's expropriation clause (Art. 4) requiring prompt, adequate and effective compensation collided with Egypt's regulatory measures (Decree No. 195) and administrative actions (auction of ship). The tribunal applied international law standards for expropriation and compound interest.

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