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Fake News, Personal Data and Internet Safety: Egyptian Parliament takes measures to secure internet users and aims to curb information technology crimes by issuing new Laws

Posted on: September 10th, 2018

Cybercrime is a fast-growing concern around the world. More and more criminals are exploiting the speed, convenience and anonymity of the Internet to commit a diverse range of criminal activities that know no borders, either physical or virtual, causing serious harm and posing very real threats to internet users.

Several discussions have taken place in the Egyptian Parliament regarding measures to police the misuse of the internet, and from those discussions, they’ve drafted the law No. 175 which indicates the penalties imposed to each crime.

Egyptian President Abdul Fattah al-Sisi ratified Law No. 175 of 2018 on Combating Information Technology Crimes, after being approved by the parliament.

With regard to the crimes of the misusage of telecommunications and information services and technology, the law provided the imprisonment penalty for a period of no less than 3 months and a fine of no less than EGP 10,000 and not more than EGP 50,000 or one of those two penalties in the case of unlawfully benefiting  by the network of the information system or any of the means of IT or a telecommunications service or an IT means of communication service or a service of audio or video broadcasting services.

For the crime of exceeding the limits of the right of entry, the law provided the imprisonment penalty for a period of no less than 6 months and a fine of not less than EGP 30,000 and does not exceeding EGP 50,000 or one of those two penalties for any person who enters on a website or a private account or information system through exceeding his authorized right to do so.

The law provided the imprisonment penalty for a period of no less than one year and a fine of no less than EGP 50,000 and no more than EGP 100,000 or one of those two penalties towards any person who intentionally entered or entered by mistake and remained unlawfully on a site or on a private account which resulted in damage, erasure, alteration, copying or reprinting of data or information on that site, private account or information system. The penalty for such a crime shall be imprisonment for a period no less than two years and a fine no less than EGP 100,000 and not exceeding EGP 200,000 or one of these penalties.

The penalties include unlawful possession to any information or data, attacks on the integrity of data, information and information systems, hacking e-mail, websites or private accounts, hacking the design of a website, hacking on the integrity of the information network and hacking on the nation’s information systems, or circulation of any designed, developed or modified, as well as hardware, software, code or other similar data without the authorization of the National Telecommunications Regulatory Authority. As a new law, it has yet to be in practice, and our firm aims to keep a close eye on its development and manners in which the Law will be enforced.

Regarding the crimes of fraud and assault on bank cards, services and electronic payment tools, the law provided the imprisonment penalty for a period of no less than 3 months and a fine of no less than EGP 30,000 and not exceeding EGP 50,000 or one of those penalties for anyone who used the information network or any of the means of information technology to improperly access numbers or data bank cards and services or other electronic payment tools, for the purpose of stealing the funds of others or the services it provides. Such an act shall be punishable by imprisonment for a term of no less than 6 months and a fine of noless than EGP50,000 and not exceeding EGP 100,000or one of these two penalties. The penalty shall be imprisonment for a period no less than one year and a fine which is no less than EGP 100,000 and does not exceed EGP 200,000or one of these two penalties if he concludes that the seizure of himself or others to those services or the money of others.

The penalties also included crimes related to the creation of websites, special accounts and e-mail, falsification of a natural or legal person, infringement of private privacy and illegal information content, whether by sending many e-mails to a specific person without his consent (spamming) or giving personal data to a system or website promoting goods or services without the persons’ consent or by publishing on the Internet or by any means of information technology, news, pictures of a person without their consent; or the violation of the privacy of any person without their consent, whether the published information is truthful or incorrect.

Anyone who intentionally uses an information or information technology program to process personal data for others to associate it with content that is contrary to public morality or improperly displays it in a way that would prejudice him or his honor will be found as violating other users rights and shall be incriminated under the Law No. 175 of 2018 on Combating Information Technology Crimes.

By Ahmed Sharabash

for Eldib Advocates

Are Capital Goods Subject to a Sale Tax in Egypt?

Posted on: September 10th, 2018

What are capital goods? In a legal capacity,capital goods have been defined as goods that are purchased and used in the production of other goods, as such they are not the end user good that consumer could purchase. In other words, these goods are tangible assets that a business uses to produce goods or services that are used as inputs for other businesses to produce consumer goods. However, many questions have recently been raised with regards to this legal term.

Our firm was recently approached with a matter regardingthe classification of capital goods and the rights in procuring/importing those said goods in order to facilitate one’s business. For instance, would a building be considered a capital good? Or is the term more confined to objects such as that of machinery? In order, to providepicture as to how the term is defined in Egypt we look at two different rulings from different ranks of the Egyptiancourt systemto answer our question.

Moreover, it should be noted that alegal principle laid under the Egyptian jurisprudenceisthat no tax is imposable without adequate laws.

The Sales Tax law No. 11/1991 defines the (industrial) goods subject to the Sales Tax asindustrial productswhether locally produced or imported.

The importer manufacturercan either bea natural person (a legal entity or natural person) ora moral person (such as a corporate entity) which imports industrial goods or services for trade.
From the above, it is clear that the importer/tax payer under the Sales Tax law is the person who imports industrial goods and services subject to the Sales Tax Law fortrade.  In case the reason behind the import of these said goods is not for trade, but rather for usagesuch as manufacturing, then the said goods should not be subjected to the Sales Tax.

Controversial Ruling:

In a case which had to do with plastic injection machinery that was imported in order to facilitate the production of plastic items in Egypt, the claimant was imposed to pay a tax of EGP 63,253.60 on the machines imported. This was found to be contradictory to the law No. 11 of 1991 regarding general sales tax.

The Administrative Court rendered the  aboveruling in Lawsuit No. 8529/75 providing for that the definition of (industrial) Goods that are subject to the Sales Tax is clear, andthat the said definition refersto all industrial products whether locally produced or imported. The court added in this respect that the generic nature of the article of the law implies subjection of all imported goods irrespective of the reason behind importing them, whether for trade or for production/manufacturing.In our view, this controversial ruling is inconsistent with the legal principles that no tax is imposable without law and that the legal provisions of the law are complementary to each other to the extent that their interpretation should avoid any inconsistencies.

Favorable Ruling:
The High Constitutional Court has furtherruled that the provisions of the Sales Tax law are complementary to each other to the extent that the  interpretation of the different provisions of the law should avoid any inconsistencies thereto (Lawsuit No. 28/72 Jud on 25th November 2013).

In the abovementioned judgment , taxes were imposed based on decree of the minister of national administration No. 239 for the year 1981 regardingthe unified fees of the local council, in whichthe constitutional court ruled as unconstitutional with respecttoabove-mentioneddecree, henceruledto refund the previouslypaid tax feesto the claimant.

Hence, since the Sales Tax law has defined the importeras a natural or moral person which imports industrial goods or services for trade, this definition clarifies the legislator’s intention  to only subject to the Sales Tax law on such goods and services imported for trade. The imported machines and equipment for usage in manufacturing rather than trade should be excluded from the subjection to the Sales Tax law.

In our view, the ruling of the High Constitutional Court is binding on all courts and authorities. Pursuant to the High Constitutional Court law, the rulings of the said court acquire prevalence.

Our litigation team is fully aware of the said rulings and we are already assisting a number of clients in obtaining tax refundsfor Sales Taxes already paid to the Tax department without just cause on goods and services imported for manufacturing rather than for trade.

By Laila Khalil

for Eldib Advocates

Shipowners Limitation of Liability For Maritime Claims under Egyptian Maritime Law

Posted on: September 10th, 2018

 

Maritime transport is important for both economic and commercial aspects of our lives today, as it is one of the main types of transportation method adopted worldwide. Despite the progress of air transport and the amount of goods transported by air, maritime transport still has the superiority in the field of transportation due to the large tonnage of ships, efficiency and the low cost of transportation as compared to transportation by air.

Ever since the Middle Ages, the shipping community have agreed on the importance of maritime transport and the principle of limitation of the ship-owners’ liability for the damages that may occur during the transportation period. With the improvement of the maritime transportation sector, increase of awareness in the field and the development of legislations and international treaties, more countries have adopted the principle of ship-owners’ limitation of liability.

The prominent limitation of shipowner’s liability is the limitation granted by law for the damages sustained to the cargo shipped according to the Marine Contract of Carriage. Whereas, there is another limitation that has been granted to the shipowners for the Maritime claims that may have taken place during the transportation period.

Consequently, we will explain hereunder the shipowner’s limits of liability for Maritime Claims pursuant to the Egyptian Maritime Law No. 8 for the year 1990 (EML 1990).

What is the Limitation of liability For Maritime Claims:

According to EML 1990 the shipowner shall be civilly liable for the acts of the master, seamen, pilot and any other person serving on the ship when such act is committed in the course, or because, of their duties. Article No. 81 of the said law allows the shipowner to limit their liability, even if the debt is in favour of the state or public sector, and if the damage arise from any of the following causes:

  • The damages caused by the ship to the Harbour’s installation, dockyards, water courses, or navigational aids.
  • Physical or material damages occurring on board the ship, or those connected directly with maritime navigation or the operation of the ship.

However, Article No. 82 of the said Maritime Law specifies six occasions, where limitation of liability shall not be applied, namely:

  • Floating a sunken or stranded or deserted ship, lifting wrecks, cargo, and objects found on it.
  • Salvaging the ship
  • Participating in General Average
  • Nuclear damage
  • The rights of the ship’s master, crew and all other subordinates to the shipowner working on the ship or whose job is related to serving the ship. Such right is also determined for the successors and heirs of the said persons
  • Damage resulting from oil pollution and contamination by other materials

Meanwhile, in the event that damages have occurred as a result of one of the aforementioned causes, the shipowner will be liable to compensate the injured party for the said damages which will be determined by the competent court without taking into consideration the shipowner’s limitation.

How to calculate the limitation according to EML 1990

The calculation of the ship-owner limitation of liability has been clarified in Article No. 83 from the aforesaid law as following:

  • EGP 600,000 for the damage resulting from physical damages, in case the total tonnage of the vessel does not exceed 500 tons. However, if the total tonnage exceeds the said figure, the liability shall be increased by EGP 350 per ton in addition to the stipulated EGP. 600,000.
  • EGP 300,000 for any other damages occurring for reasons other than physical damages, in case the total tonnage of the vessel does not exceed 500 tons. However, if the total tonnage of the vessel exceeds the said figure, the liability shall be increased by EGP 150 per ton in addition to the stipulated EGP. 300,000.

Who can benefit from the limitation

The shipowners are not the only party who has the right to limit their liability. Pursuant to the provisions of EML 1990, the limitation of liability can also be applied in respect of the ship’s operator, who is not the owner, charterer,  manager, master or seaman in addition to other subordinates of the owner, operator, charterer or manager, as regards to the performance of their duties and according to the same conditions as those applicable to the owner, provided the liability of the owner, as well as that of the foregoing persons shall not exceed the limits set down in Article 83 with regard to the same accident.

The law also grants the right to apply limitation to the master or the seaman in case the proceedings are brought against them. As the master or the seamen may insist on applying the limitation, even when the accident resulting in damages was due to their personal fault.

The liability action against the shipowners and all interests shall lapse with the expiry of two years as of the date the act establishing the liability occurred (the date of incident).

Overview on the Carrier’s Legal Liability:  

Most of the legal systems in the Middle East have adopted the concept that the carrier’s liability remains in force during the transportation period of the cargos and hence any damage that may occur in that period shall be the responsibility of the carrier without the need to prove the occurrence of damage on its part unless the carrier proves that the sustained damages has occurred as a result of a foreign reason such as the nature of the cargo,  force majeure, a sudden accident or the shipper’s / the consignee’s fault or that the damage occurred prior to the loading operations or following the discharge bearing in the mind the carrier’s granted limitation of liability according to the Marine Contract of Carriage. Moreover, the local laws grant the carriers the right to limit their liability for the damages caused by the ship unless the accident has occurred due to the carrier’s personal fault, which should be proven by the claimant.

Finally, it is worth mentioning that Egypt has ratified the London Convention on Limitation of Liability for Maritime Claims (LLMC 1976), where the said convention has come into force in Egypt as of the first day of July, 1988.

Therefore, in case a claim is brought before the Egyptian Courts and involves an of the persons defined in the LLMC 1976 as parties to the convention, then the said person shall be entitled to seek the application of the provisions of the limitation of liability stipulated in the convention.

By Karim Marouny

for Eldib Advocates