Middle East Cement Shipping and Handling Co. S.A. v. Egypt

Year of the award: 2002
Forum: ICSID
Applicable law: Egypt-Greece BIT (1993), international law, Egyptian law

Arbitrator:
Prof Dr. Karl-Heinz Böckstiegel - President
Prof Piero Bernardini
Prof Don Wallace, Jr.

Executive summary

In 1982, Middle East Cement ("MEC"), a Greek corporation, established a branch in Egypt to carry out the business of importing, storing and selling cement under a 10 year License. In 1989, Egypt issued a decree prohibiting importation and sales of Grey Portland Cement thus effectively preventing MEC from continuing its business. Even though the 1989 Decree was revoked in 1992, MEC decided not to restart its business. Egypt did not grant its approval for re-exportation of MEC's on-shore installations until 1995. Finally, in 1999 MEC's ship Poseidon 8 was seized by the Red Sea Port Authority to cover MEC's debts and sold at auction.

MEC initiated ICSID arbitration under the provisions of the Egypt-Greece BIT. It claimed that Egypt's conduct amounted to expropriation of its investment and requested US$ 42 million in compensation for lost profits, the expropriated ship and expenses that it had to bear, plus interest and costs.

The Tribunal decided that the Decree amounted to expropriation of the Claimant's investment and awarded damages for lost profits calculated until the expiry of the License in 1993. The Tribunal decided not to add an additional sum for the loss of opportunity. The Tribunal further determined that Egypt's actions leading to the seizure and auction sale of the Claimant's ship also amounted to expropriation. The "market value" of the ship was determined by the Tribunal by averaging the figures submitted by the parties. All other claims for damages were rejected.

In total, the Tribunal awarded approximately US$ 2.2 million plus interest at the rate of 6% compounded annually, from the date of expropriation until the date of payment.