Introduction to Egypt’s dispute resolution: Litigation

Recent litigation challenges in Egypt

Issue 1: Heavy taxation

Recently, clients have encountered “roughly estimated tax claims” that, if not challenged within the applicable timeframes, become final tax assessments. This typically leads to litigation, where positive results may be achieved but the process takes time. In lieu of litigation, there is an option to resort to tax dispute resolution committees (TDRCs). Occasionally, the Egyptian government opens temporary portals for tax reconciliation with TDRCs. This procedure enables investors to negotiate tax assessments with the government, which in turn negotiates expedited tax collection. Hence, a win-win situation is achieved. 

The latest tax reconciliation portal was opened in 2020, where taxpayers had to submit reconciliation requests by 31 December 2020. Negotiations yielded outstanding results within an accelerated timeframe, though ratification by the Egyptian Ministry of Finance of TDRC results could still take months. 

Issue 2: EGP devaluation 

The Egyptian Pound (EGP) experienced dramatic devaluation after the Central Bank of Egypt announced the floatation of the Egyptian currency in 2016, and again in 2022. This caused the official value of EGP against USD to drop from 0.07 to 0.03, with the black-market EGP value hitting 0.016 against the USD.

As a result, international trade was adversely affected, leading to new trends that challenge our clients:

• Automobile importation: Automobile prices typically increase from the date the customer order is placed, up until the delivery date of the automobile. Consequently, resellers require customers to pay the price difference. In turn, customers typically demand to receive their automobiles at the original price. To reduce this tension, the Consumer Protection Agency (CPA) recently issued a decision granting customers an extra 18% of their down payment, in case of a refund. In practice, the courts have adopted contradictory approaches to this trend.
  
  
• Unpaid shipments: Also trending are the complaints of foreign exporters about local importers defaulting on delivered shipments. Egyptian courts are becoming quite familiar with such foreign exporter claims, whereby – with proper case filing and documentation – enforceable judgments may be achieved against defaulting customers within months of commencing litigation. This is an outstanding development for the Egyptian courts, where, typically, litigation takes at least a year to be finalised.

Modernizing the Egyptian court system

Digitalization: Egyptian courts are becoming more accessible, by gradually abandoning the “manual-handling” of court documents and implementing computerized systems (i.e. the introduction of electronic filing, remote attendance and mobile notary service). 

Remote attendance: Initially introduced during COVID-19, remote attendance remains to be implemented in criminal proceedings. Typically, the accused (imprisoned at the police station) is virtually interrogated by the judge, in the virtual presence of his/her lawyer.

Mobile notary service: Effected in late 2021, mobile notary facilitates the issuance of proxies by clients. The service provides faster support than notary offices (at a higher cost) and is available in two forms: fixed stations (found in specific locations) and hotline stations (reachable at the designated location).

Key takeaways: 2024 

Felony-trial expanded to three court levels: Law No. 1/2024 granted felony convicts the opportunity to challenge first instance rulings before courts of appeal, prior to recoursing to the supreme Egyptian Court of Cassation. Originally, felony convicts were granted two-level trials only.

Balanced taxation: Law No. 159/2023 canceled the tax exemptions for economic and investment activities performed by the Egyptian government. Similarly, Law No. 30/2023 canceled the exemption for T-bills from income tax. On the other side, Law No. 175/2023 altered the income tax brackets, thereby increasing the exemption threshold and introducing a maximum bracket of 27.5% for high-income taxpayers.

John is the founding partner of Matouk Bassiouny, and the head of the firm’s New York office, and its international dispute resolution group and hospitality sector. He is a New York-qualified attorney with over 25 years of disputes expertise in the Middle East and North Africa. 

Dr Mohamed is a partner and the head of the litigation department and telecommunications & media sector group. He has been practising dispute resolution for over 18 years and is an assistant professor and vice president of the Centre for Criminal Research at Cairo University, Faculty of Law.

Mariam is a senior associate with Matouk Bassiouny & Hennawy’s dispute resolution practice group. She has been practising dispute resolution for over nine years. Mariam is teaching assistant in Criminal Law at Cairo University.