Egypt chooses high-profile counsel in gas deal arbitration

Nearly a month after the Egyptian government entered arbitration proceedings with investors who own the Egypt-to-Israel gas pipeline, the case of one of the country’s most controversial business deals of the past decade remains shrouded in secrecy and complexity.

Since Ampal, an American-Israeli-held company and partial owner of Eastern Mediterranean Gas Company (EMG), announced on 9 October that EMG would be filing suit against the Egyptian Natural Gas Holding Company (EGPC/EGAS) and the Israel Electric Corporation, any progress or legal maneuvers made have been kept under wraps.

Arbitration is the practice by which two parties agree on a professional, third-party arbitration judge to rule on the merits of a dispute. In the case of Egypt’s gas deal, the International Chamber of Commerce will preside and act as the third party.

There are several arbitration proceedings surrounding the controversial gas deal. In September, EMG filed another case against the Israel Electric Corporation over a related contractual dispute.

Ampal, along with other EMG shareholders, has also prepared to begin arbitration procedures against the government of Egypt under bilateral investment treaties of several countries. Bilateral treaties guarantee foreign investors rights over their property in a foreign country.

In the latest proceedings, EMG alleges that Egypt failed to supply gas it was contractually required to supply. Since February, the pipeline has not delivered a steady supply of gas due to intermittent attacks on it.

Thanks to repairs made to the line, gas began to flow again through the pipeline during October. But after another attack on 10 November, the flow has once again ceased. Any further interruptions in flow will probably result in additional charges, complicating the arbitration proceedings.

In an attempt to protect the pipeline, the Egyptian government is organizing patrols of the pipeline by local Bedouin tribes.

The attackers remain unknown, but after the most recent sabotage they left a message expressing their anger at the politics of the deal.

“We will not allow gas to be exported to Israel,” was found written in the sand not far from the location of the explosion.

These interruptions in flow are what investors are trying to seek reparation for.

Both sides have readied their lawyers.