The UK's Wena Hotelshas received its first disbursement of funds from the Egyptian government arising from the award made in the hotel firm's favour by the World Bank-affiliated International Court for the Settlement of Investment Disputes (ICSID) on 8 December 2000. The dispute relates to the early-1990s expropriation of two hotels leased to Wena in Cairo and Luxor in 1989 (MEED 2:2:01).
The tribunal awarded Wena damages, interest expenses and lawyers' costs amounting to $20.6 million. The company is pursuing a significantly larger sum relating to its rights to the two properties and to loss of earnings.
The government in early 2001 lodged an appeal for nullification against the tribunal's award, but the appeal has not been upheld.
The final decision on the appeal was rendered on 5 February 2002. Before the appeal was considered, the government was obliged to present a letter of guarantee (LG) for the damages to Wena. The LG has now been liquidated, and the proceeds remitted to the UK hotel company.
Wena based its case on the Investment Promotion & Protection Agreement (IPPA), a bilateral treaty between Egypt and the UK that came into effect in 1976. The treaty calls for 'prompt, adequate and effective compensation' in the event of expropriation. The Wena Hotels claim was registered with ICSID in 1998, and the tribunal was formed the following year. The case has been seen to have set important precedents in international dispute resolution, including the ruling that local law does not take precedence and the application of a fixed interest rate of 9 per cent on the escalating damages.
The main focus of Wena's pending claims is the two hotels - the Nile Hotel in Cairo and the Luxor Hotel in Upper Egypt. This question has been complicated by the early-2000 sale of the Nile Hotel to a group led by the local Alexandria Real Estate Investment Companyfor £E 52 million ($11.3 million).
Shearman & Sterling, which is acting for Wena Hotels, says all options are being considered in the pursuit of a final resolution.
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