Veolia Propreté v. Arab Republic of Egypt
ICSID · Investment (ICSID and treaty) · Egypt · 25 May 2018
Why it matters
This award is significant for its interpretation of the MFN clause in the France-Egypt BIT, holding that it cannot be used to import substantive protections beyond the FET standard. It also clarifies the scope of FET in the context of contractual disputes with state entities, emphasizing that a breach of contract does not automatically amount to a treaty violation. The case illustrates the high threshold for establishing indirect expropriation through regulatory measures.
Summary
Veolia Propreté, a French waste management company, invested in Egypt through its subsidiary Onyx Alexandria under a 15-year contract with the Governorate of Alexandria for public cleanliness services. The contract included a mechanism for restoring economic equilibrium if costs increased due to government measures. Disputes arose over the refusal to adjust fees, imposition of penalties, delays in licensing for medical waste collection, and non-payment for services. Veolia initiated ICSID arbitration under the France-Egypt BIT, claiming violations of fair and equitable treatment (FET) and expropriation. The Tribunal upheld jurisdiction, rejecting Egypt's objections, but dismissed all claims on the merits. It found that Egypt's actions did not breach the FET standard because the contract's dispute resolution mechanisms were available and used, and the state's conduct was not arbitrary or unreasonable. The expropriation claim failed because the measures did not deprive Veolia of the value of its investment. The award is notable for its analysis of the MFN clause, limiting its scope to FET, and for distinguishing contractual breaches from treaty violations.
The detail
Parties: Veolia Propreté v. Arab Republic of Egypt
Case number: ICSID Case No. ARB/12/15
Outcome: The Tribunal found that Egypt did not breach its obligations under the France-Egypt BIT. All claims were dismissed, and no damages were awarded. Each party bore its own costs, and Claimant paid the arbitration costs.
Applicable law: France-Egypt BIT (1974); ICSID Convention; international law; Egyptian law
Issues in play: The case involved the fair and equitable treatment (FET) standard under Article 3 of the BIT and the expropriation standard under Article 4. The MFN clause in Article 3(2) was interpreted as limited to importing more favorable FET provisions, not other standards like full protection and security or an umbrella clause.
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