Egypt, our country of choice for this edition’s “Country focus”, was the top reformer worldwide according to the World Bank Doing Business Report 2008.
Facts and figures
- Capital: Cairo.
- Language: Arabic (official), English, French.
- Population: 83,082,869.
- Area: 1,010,450 sq. km.
- Currency: Egyptian Pound (EGP).
- GDP per capita (PPP): US$5,400.
- GDP real growth rate: 6.9 per cent.
- Inflation rate: 18 per cent.
- Major industries: Oil and gas, chemical and steel production, agriculture, textiles, food processing.
According to the Report, Egypt’s key economic reforms made doing business easier by:
- slashing capital requirements for limited liability companies from EGP 50,000 to EGP 1,000 and then to EGP 200;
- halving the start-up time and costs of doing business;
- reducing fees for registering property from 30 per cent of the property value to a low fixed fee;
- creating a new one-stop shop for traders at the ports and reducing the time to import and export;
- setting up its first private credit bureau making financial services easier; and
- reducing bureaucratic bottlenecks in the construction industry for builders seeking building permits.
Egypt: Legal and regulatory developments
New Building Law
Egypt passed a new building law, Law No. 119 of 2008 (Building Law) on 11 May 2008. The law organises new urban planning, sets competencies for the different governmental authorities and harmonises Egypt’s law governing civil works. Most importantly, however, the Building Law provides new rules for construction works in Egypt. Key among these are the following:
- Time limits for grant of building licences: The relevant administrative entity must either issue or refuse a building licence within 30 days after an application has been filed. Failure to communicate a decision within the set time will be viewed as an approval of the application.
- New insurance requirements: The engineer and the contractor must obtain third party civil liability insurance during execution capped at EGP 2 million per accident and EGP 100,000 per person. They must also have decennial liability insurance as stated in the Egyptian Civil Code for (i) construction works which equal or exceed EGP 1 million in value, (ii) any building composed of four or more levels and (iii) any heightening works.
The insurer must review the drawings and oversee implementation through its agencies and/or representatives.
- Suitable parking spaces: Building licence applicants must provide adequate car parking under the area parking requirements.
However, it is currently difficult to carry out and enforce many rules in the Building Law because regulations to the law have not yet been issued.
Cancellation of certain free zone licences and other tax exemptions
Law No. 114 of 2008 (Law No. 114), passed on 5 May 2008, has amended the Egyptian Investment Law (Law No. 8 of 1997). The new law bans issuing free zone licences in the fertiliser, iron and steel industries, and for petroleum production, manufacture, liquefaction and transport of natural gas. Simultaneously, the law has also repealed all existing free zones licences in the mentioned areas. Finally, Law No. 114 repeals Law No. 117 of 1991 and exempts treasury notes from taxes.
Stamp duties reduced
In Egypt, stamp duties are taxes levied on certain commercial documents (e.g. contracts, cheques, receipts, bills, letters of guarantee) and various commercial transactions. The Stamp Duty Law, Law No. 111 of 1980 (Law No. 111) has been amended several times, with the most recent and most significant amendment published in July 2006 under Law No. 143 of 2006 (Law No. 143).
The new law and its executive regulations aim to simplify the rates and procedures for implementing stamp duties. Approximately 28 stamp duties were repealed including duties on certain types of commercial papers, commercial maritime papers and corporate documents and acts. Several other documents, including insurance and banking contracts, and documents covering gambling and advertisement works, had their stamp duties reduced or simplified.
The reductions in stamp duty will make it less expensive to carry out certain contracts in Egypt, and reduce confusion inherent in applying the old law. They will also make it easier to do commercial transactions and minimise discretionary applications of the law in some areas.
Egyptian Labour Law No 12 of 2003 (Egyptian Labour Law) – highlights
- Employment contracts: An expatriate’s employment contract automatically terminates at the end of any fixed term, but may be extended by another written document. In the absence of a written employment contract, an employee can still establish the existence of an employment relationship if he proves the necessary factors existed. The period of employment in these circumstances will run indefinitely.
- Terms of employment: Both employer and employee may agree on terms of employment; however, these terms:
- must meet the minimum requirements of Egyptian Labour Law;
- must not eliminate or diminish any accrued benefits for employees; and
- must not conflict with the mandatory rules including labour law and public order in Egypt.
- Supremacy of local law: Mandatory local laws and Egyptian public order decrees override contrary provisions of any employment contract, policy, regulation, procedure or rule, even when the parties have chosen to apply a foreign law.
- Remuneration: Egyptian Labour Law strictly prohibits discrimination in remuneration based on gender, origin, language, religion or belief.
- Waiver of rights during course of contract: Any settlement, including a waiver or a detrimental variation of the employee’s rights under the employment contract during the course of the contract or within three months following its termination, is void. The law also gives the employee the right to challenge the validity of employment contracts.
- Rights of employer in dissolutions: A company’s legal obligations as employer are not brought to an end by dissolution, liquidation, closure or bankruptcy of a company. An employee may initiate court proceedings to claim any rights due to him under his employment contract under these circumstances.
- Mergers and business combinations: A merger or transfer of ownership in a company will also not result in the termination of existing employment contracts. The successor(s) will remain jointly liable with the original owner(s) of the company for all obligations resulting from their employment contracts.
- Acquired rights: Acquired rights are protected by law. Accordingly, any condition or agreement in violation of the provisions of the law (whether agreed upon prior to or following the promulgation of the new labour law) is void if it negatively affects the rights of the employee.
- Discipline: Egyptian Labour Law provides a model of work regulations and disciplinary rules, which are merely for guidance purposes and not mandatory. These must be reviewed and approved by both the concerned employee representative bodies and the labour authorities. In practice, employee representative bodies and labour authorities seldom allow major deviations from the model form.
- Health and safety: Health and Safety Executive rules have witnessed significant developments and increased use in enforcement proceedings during the last decade.
- Dismissals: Egyptian Labour Law reflects a concern to protect the local labour force against unfair dismissals by employers. Any disciplinary action must satisfy complex and lengthy requirements (usually commencing with an interview and possibly followed by the termination process). An unfair dismissal may result in the employee’s right to claim compensation from the employer. The amount of compensation is no less than two months’ salary per year of service in addition to the employee’s statutory and vested rights.
- Resignation: Employees may withdraw their resignations within a week from the date of resigning.
- Severance: Total or partial reduction of labour workforce (for economic reasons) has to be first approved by an ad hoc committee instituted by decree of the Prime Minister. The employer is obliged, in this case, to offer employees the equivalent of one full month’s salary per year for each for the first five years of service and one and a half months’ salary for each following year. In practice, obtaining this consent is a complicated and lengthy process. To avoid these risks, it is advisable for the company to first propose a favourable negotiated severance package to its employees in return for their unconditional and irrevocable resignation.
- Employee benefits: An employer with more than 50 employees will have to contribute significantly to certain funds, establish a nursery for its employees and/ or employ handicapped persons. The extent of these obligations will depend on the number of its employees. It is therefore necessary for management to consult with its advisers every time there is a change in its structure as it may affect its obligations under the labour law.
Intellectual property – a guide to registering a trademark in Egypt
What legal rules are applicable? Articles 63 to 118 of the Egyptian Intellectual Property Law No. 82 of 2002 (IP Law) and Articles 69 to 115 of the Executive Regulations of the IP Law (Regulations). The IP Law, which came into effect on 3 June 2002, replaced the old Trademark Law No. 57 of 1939. The IP Law protects trademarks, trade names and geographic indications. Egypt is a signatory to the Madrid Agreement. Therefore, trademark protection can also be obtained by international registration.
What can be registered? The IP Law states that a registrable trademark is “all that is capable of distinguishing goods or services of one undertaking from those of other undertakings”. A trademark includes, in particular, distinctive names, signatures, words, letters, figures, drawings, symbols, signboards of shops, stamps, seals, pictures, protruded engravings, and combinations of colours in a specific and distinctive form. In all cases, the trademark must be visually perceptible. Therefore, invisible trademarks or audible signs such as sounds may not be registered in Egypt.
Is there any protection for unregistered trademarks?
Unregistered trademarks can gain protection from long periods of use. The IP Law provides that the registrant of a trademark is deemed to be its owner if he/she has used the mark for at least five years following registration unless someone else can prove prior use. A person who has prior use of a trademark may bring revocation proceedings to have a trademark transferred to him/her within that five-year period. However, if the registration was obtained fraudulently, no time limit applies for bringing the revocation proceedings.
What protection is accorded well-known trademarks? The IP Law, in accordance with Article 6bis of the Paris Convention, provides that the owner of a trademark which is well known in Egypt and worldwide shall enjoy the protections prescribed in the IP Law, even if such trademark has not been registered in Egypt.
What are collective trademarks? Collective trademarks are used to distinguish a product produced by a group of persons belonging to a particular entity, even if such entity does not possess an industrial or commercial establishment. The representative of the entity shall apply for the mark on its behalf.
In cases of multiple applications for registration of the same trademark who can claim priority? An applicant (or his successor in title), who has duly filed an application (i) in one of the member states or entities of the WTO; or (ii) in one of the states or entities that treat Egypt on a reciprocal basis, can claim priority if his application was:
- the first application to be filed in one of the member states or entities of the WTO, or one of the states or entities that treat Egypt on a reciprocal basis; or
- the first application to be submitted in Egypt to register the trademark for the same product included in the previous application.
The applicant must specify the date of filing the first application and must submit his claim for priority within six months from the date of the first application.
Registration details: Applications for registration must be filed with the Administration in the standard form. Documents which must accompany the application include drawings of the proposed trademark, personal details of the applicant, description of goods and services that the mark is going to distinguish, details of the enterprise that would use the mark, and evidence of prior registration in other eligible jurisdictions (if applicable). If any of those documents is submitted in a foreign language, it must be translated into Arabic. All supporting documents must be submitted within six months of the application.
Review procedures: The Administration will examine applications and may within 30 days request applicants to make amendments to the application or publish its decision of acceptance in the Trademark, Industrial Designs and Models Journal (Journal) within 60 days. The Administration will notify applicants of its positive decision if no objections are received within 60 days of the date of publication. An appeal against a decision of refusal must be brought within 30 days of notification.
What are the grounds for refusal? The Administration may reject an application for trademark registration on the grounds that:
- it does not have a distinctive character; or
- it is identical to existing national or religious marks; or
- it may mislead the public about its source or characteristics.
What rights are granted by registration? Registration provides trademark protection for 10 years from the date of filing. The owner of the mark may apply for a renewal of this period on expiration of the prior term. What circumstances amount to trademark infringement? Infringement occurs when a person:
- uses a trademark that has been lawfully registered by someone else or counterfeits such trademark in a manner that misleads the public;
- uses in bad faith a forged or counterfeit trademark;
- affixes in bad faith on his/her products a trademark owned by third parties; and/or
- knowingly sells, offers for sale or trading or acquires for the purpose of sale or trading products that bear a forged, counterfeited or unlawfully affixed trademark.
What remedies are available in cases of infringement? Infringers may be subject to a term of imprisonment or a fine. Repeat offenders may be subject to severer sentences. In all cases, the court may also decide to confiscate products or proceeds of unlawful acts, seize the tools used in committing those unlawful acts or shut down establishments used by infringers. An injured party may also claim compensation as unfair competition under Egyptian commercial laws.
Assignment of trademarks: Contrary to the old law, a trademark may be assigned without the goodwill. However, unless otherwise agreed, the assignment of goodwill or transfer of an enterprise shall include the trademarks registered in the name of the owner, if such trademarks are closely connected with the goodwill or enterprise. The assignment of a trademark shall not be enforceable against others unless it has been recorded with the Administration and published in the Journal.
Licences: The owner of a trademark may grant a licence to use the trademark for some or all of the products for which the trademark has been registered. Unless the licence provides otherwise, the licence shall not prevent the owner of the trademark from using the trademark. The owner of the trademark may not terminate or refuse to renew the licence agreement unless for a lawful reason. Unless the parties otherwise agree, the licensee may not assign the licence agreement unless it is also assigning the goodwill or transferring the enterprise in relation to which the trademark is used to distinguish its products.
Egypt news updates
Egypt launches Public-Private Partnership initiative The Egyptian Ministry of Finance launched an ambitious Public-Private Partnership programme and has begun the tender process for several new projects, including construction of roads, water treatment plants and schools, in a variety of areas.
The New Cairo Wastewater Treatment Plant is to be built in phases with a final capacity of 1,250,000 cubic metres per day. The Cairo/Alexandria Road Project consists of a 231 km stretch of road between Cairo and Alexandria. The New Public Schools Project is for the design, construction, furnishing, maintenance, financing and provision of noneducational services for 345 new public schools tendered through seven different geographical groups in one bidding document. The Port Said/Matrouh Project consists of a 530 km road, linking the ports located on the Mediterranean coast to the new industrial cities and tourist areas along Egypt’s northern coast.
Egypt tenders the New Cairo Wastewater Treatment Plant
The New Urban Communities Authority (NUCA) is tendering the New Cairo Wastewater Treatment Plant, which will be built in phases with a final capacity of 1,250,000 cubic metres per day. The first phase of the project will be a wastewater treatment plant with a capacity of 250,000 cubic metres per day, expected to be operational in 2010. The concession period is 20 years. Tenders should have been submitted by 31 March 2009 at noon.
Egypt Nuclear Programme
The Nuclear Power Plants Authority (NPPA) has awarded Bechtel the contract for consulting services to execute a Nuclear Power Plants Programme. The scope of work includes: (i) site selection and evaluation; (ii) preparation of a construction contract; and (iii) financial assessment. This will be Egypt’s first nuclear power plant and is planned to be sited at El-Dabaa on the Mediterranean coast. It is projected to cost US$1.5-2 billion.