Issue 95,15 August 2017

Egypt’s Government is Compensating Contractors, Suppliers and Public Service Providers

…exclusively to contractors who signed contracts with the state.

As a way to rectify the cumbersome decisions such as devaluation decisions, that adversely affected a lot of sectors in Egypt, including the construction sector, the government issued a new law 84/2017 (the “New Law”) on 9 June 2017 to compensate the aggrieved contractors for the damages that emerged from the crucial economic decisions.

Who Are The Beneficiaries?

Actually, the New Law has introduced some preliminary conditions, in order to award the compensation. These conditions include:

  • Compensations will apply only on damages raised from the economic legislations occurred during the period from 1 March 2016 to 31 December 2016.
  • These economic decisions created a financial imbalance to the construction, supplying and public service contracts.
  • Compensations will be awarded to contractors, suppliers and public service providers who signed contracts with the state, any of its owned companies or any public legal persons.
  • Financial damage occurs to aggrieved party during the executed works of the contract from 1 March 2016 until the end of the contract.
  • The damages does not result from the contractor’s acts of omission leading to delays in implementation.

Which Authority Will Determine The Guidelines?

  • A committee (the “Supreme Committee for Compensation”) is established under the prime minister decree 1677/2017.
  • The Supreme Committee for Compensation will be authorized for setting out the guidelines and required period for the entitlement of the compensation.
  • The Cabinet will have the upper hand regarding the decision on granting compensation.
  • Such guidelines may provide reference for private sectors contracts.
  • The executive regulations of the Law shall be issued within 30 days from 27 July 2017, the date of appointing the members of the Supreme Committee for Compensation.

The New Law demonstrates the government resolution of the previous hindrances, which affected investors engaged in public projects. Hopefully, this will avoid the flow of multiple disputes against the government in this context.