Mohamed Abdel Raouf Bahgat v. Egypt (I)
PCA · Investment (ICSID and treaty) · Egypt · 23 Dec 2019
Why it matters
This award is significant for its detailed analysis of the fair and equitable treatment standard in the context of a state's treatment of a dual-national investor, and for its application of the 2004 Finland-Egypt BIT to expropriation claims. The case also illustrates the challenges of proving causation and quantum in investment arbitration, with the tribunal ultimately awarding a fraction of the claimed amount.
Summary
The case concerns a dispute between Mr. Mohamed Abdel Raouf Bahgat, a Finnish investor, and the Arab Republic of Egypt under the Finland-Egypt Bilateral Investment Treaties (BITs) of 1980 and 2004. Mr. Bahgat invested in two Egyptian companies, ADEMCO and AISCO, to develop iron ore resources near Aswan. In February 2000, he was arrested, his assets and the companies' assets were frozen, and the project site was shut down. He was incarcerated for over three years. The tribunal found that Egypt's actions amounted to an unlawful expropriation and a breach of fair and equitable treatment under the 2004 BIT, and a breach of fair and equitable treatment under the 1980 BIT. The tribunal rejected claims under the Egyptian Investment Law and for moral damages. It awarded USD 43.77 million in damages, plus interest at LIBOR + 2% compounded annually from the date of expropriation. The tribunal also ordered Egypt to pay 90% of the arbitration costs and legal costs. The award is notable for its detailed analysis of the fair and equitable treatment standard and the calculation of damages using the discounted cash flow method.
The detail
Parties: Mohamed Abdel Raouf Bahgat v. Egypt (I)
Case number: PCA Case No. 2012-07
Outcome: Tribunal found Egypt breached fair and equitable treatment and expropriation provisions of the Finland-Egypt BITs, awarding USD 43.77 million in damages plus interest and costs.
Quantum: USD 43.77 million
Applicable law: Finland-Egypt BITs (1980 and 2004), UNCITRAL Rules 1976
Issues in play: The case involved the interaction between the 1980 and 2004 Finland-Egypt BITs, with the tribunal applying the later treaty's expropriation and fair and equitable treatment standards to acts occurring after its entry into force.
Read the full decision at italaw ↗
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