Wena Hotels Ltd v Arab Republic of Egypt

Year of the award: 2000
Forum: ICSID
Applicable investment treaty: Egypt - United Kingdom BIT (1975)

Arbitrators
Mr Monroe Leigh - President
Prof Ibrahim Fadlallah
Prof Don Wallace, Jr.

Executive summary

In 1989-1990, Wena, a British company, entered into two long-term agreements with the Egyptian Hotels Company ("EHC"), wholly owned by the Egyptian Government. Under the agreements, two hotels - Nile Hotel in Cairo and Luxor Hotel in Luxor - were leased to Wena.

Following the rent-related disputes that arose between the parties shortly thereafter, on 1 April 1991 EHC took possession of both hotels by force. As a result of domestic legal procedures, in 1992 both hotels were returned to Wena but in a damaged state. In addition, due to Government's interference with operating licenses, Wena was effectively prevented from operating the hotels again.

Wena attempted to cover its damages through commercial arbitrations provided for in the agreements but was actually able to obtain only EGP 1.5 million (US$435,570) for damages from the seizure of the Nile Hotel. As a side-result of these arbitrations, Wena had to surrender, and was evicted from, both hotels.

In 1998, Wena initiated ICSID arbitral proceedings against Egypt under the provisions of the Egypt-UK BIT claiming that Egypt's actions constituted an unlawful expropriation and that Egypt had failed to accord Wena's investments "fair and equitable treatment" and "full protection and security". Wena claimed damages of no less than US$ 62,820,000.

The Tribunal found merit in both substantive claims of the investor and proceeded to the award of "prompt, adequate and effective compensation" that would amount to "the market value of the investment immediately before the expropriation", as required by the BIT. The Tribunal dismissed Wena's claim for lost profits and lost opportunities as too speculative and estimated compensation on the basis of Wena's actual investments. The Tribunal was not stopped by the fact that much of the investment came from affiliates of Wena rather than from Wena and that Wena did not provide conclusive evidence of its expenses because part of Wena's financial documentation had been lost as a result of the hotels' seizure.

The Tribunal awarded interest at a rate of 9%, compounded quarterly. It also provided for post-Award interest and compensated the Claimant for its legal costs. The total award including interest and legal costs amounted to US$ 20.6 million.