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New Data Protection Law in Egypt

Posted on: August 27th, 2020

On the 15th of July 2020, Egypt enacted the Data Protection Law No. 151 of 2020 (hereinafter  the “DPL” or the “Law”), the first of its kind for the state, to govern the activities related to personal data recipients, controllers, and processors. The DPL will come into effect three months following its publication in the official gazette, where it has been decreed that the Executive Regulations shall follow within six months after said publication. However, companies are required to comply with the DPL no later than a year after the Executive Regulations have been published.

Given the global dependency on digitalization, the DPL has been long called for, in order to ensure that users’ (the “Data Subjects”) rights, privacy and data are protected when being processed, stored and/or transferred. Under the DPL, personal data encompasses any data related to an identified natural person or identifiable, either directly or indirectly, through a connection made between this data and any other data; such as a name, voice, photo, identification number, online information identifiers, or any data identifying psychological, genetic, economic, cultural or  their social identity.

Data Subjects have a right to be informed of when their personal data will be processed, stored and/or transferred, and the purpose behind carrying out these aforementioned actions. The Law also requires prior consent for such uses, which may be withdrawn at any point by the Data Subject.

DPL’s territorial scope extends beyond the borders of the Arab Republic of Egypt with respect that it applies to anyone who commits a crime stipulated in the law, whether the perpetrator is an Egyptian inside or outside Egypt, or a non-Egyptian residing inside Egypt, or non-Egyptians outside Egypt if the act is punishable in the country in which it occurred and the Data Subject to the crime is an Egyptian or foreigners residing in Egypt.

One of the key aspects of the Law is the establishment of a data protection center (the “Center”). The Center will be the entity tasked with laying the groundwork for data protection regulations, procedures, policies and the overall national plan. The Center will have oversight on matters and breaches dealing with data protection.

Compliance with the new Law will likely be clearer after the issuance of the DPL’s Executive Regulations; however, certain compliance criteria is already evident. Entities storing, processing, collecting and/or transferring Personal Data will have to: (1) have a Data Protection Officer (the “DPO”), (2) the DPO must be licensed by the Center, (3) the DPO must provide the Center with regular reports as well as report any breaches and (4) the DPO is to remain independent of the corporate body he/she works for.

Failure to comply with the Law exposes the organization to criminal liability; this is besides the administrative penalties such as warnings, suspensions and/or withdrawal of the license. Depending on the crimes committed, penalties may range from small to substantial fines to as harsh as imprisonment.

Thus, the key takeaways from the DPL is the establishment of the Center, the appointment of a DPO, the Economic Courts being the court of competence and that criminal liability and harsh monetary fines may arise out of breaches in compliance of the Law.

How we can help

Under the DPL, companies processing, storing, controlling and/or transferring the personal data of Egyptians and Residents will need to comply.

Eldib Advocates’ dedicated a Data Protection Team comprising of IP, IT and Compliance lawyers who would be happy and are ready to assist your organization, be it a startup, SME, or large enterprise, to comply with these new requirements prior to them coming into effect. The Law imposes onerous fines and penalties for non-compliance; thus, our goal is to enable you to conduct your business in compliance with said Law with confidence, clarity and accuracy.

We can support clients in a variety of industries and sectors; i.e. Shipping/Transportation, Telecommunication and Media, Hospitality, Insurance, Retail, Real Estate, and Financial Entities such as exchanges, private money transfer companies, etc.

Please feel free to reach out to dataprotection@eldib.com.eg should you have any questions or require any assistance in this regard.

هل تسريح الموظفين فى ظل تفشي فيروس الكورونا المستجد (كوفيد 19) حق أم يعد بإنه فصل تعسفى من قبل أصحاب الأعمال؟

Posted on: May 7th, 2020

هل طلب منك أن تعمل من منزلك بسبب كوفيد-١٩؟ هل تقلق إنه يمكن تسريحك أو تخفيض راتبك بسبب الأزمة العالمية الحالية؟ نحن نعيش في أوقات مقلقة حالياً وكما تهدف الكثير من الصناعات لإتخاذ تدابير لتقليل خسائرهم ولكن لازالوا يعانوا من ضربات إقتصادية كبرى. وإحدى الطرق التي يحاول بها أصحاب الأعمال تخفيف ديونهم المتكبدة هي بتقليل عمالتهم

مما يثير تساؤل هام: هل  يحق لأصحاب الأعمال فى ظل الأحداث الراهنة  القيام بفصل موظفيهم على ذاك الأساس مثل القوة القاهرة أم يمكن إعتبار هذا الفصل بأنه فصل تعسفى؟

أثناء الأوقات المقلقة التي نواجهها في العالم أجمع بسبب فيروس كورونا المستجد، فلقد قامت الحكومة المصرية بإتخاذ بالعديد من التدابير الإحترازية، والتي تتضمن دون الحصر، إتباع إجراءات الصحة والسلامة المهنية التى حددتها منظمة الصحة العالمية. وكانت من ضمن توصيات منظمة الصحة العالمية للحد من إنتشار الفيروس هي عمل الموظفين من منازلهم بالإضافة إلى فرض حظر التجوال ولكن تطبيق تلك التوصيات أدت إلى أزمة إقتصادية على الصعيد الوطني، إن لم يكن على العالم أجمع. وكان لفيروس الكورونا وتلك التدابير تأثير سلبي على سوق العمل بمصر حيث أن العديد من أصحاب الأعمال، بالأخص هؤلاء في القطاع  الخاص، قد أعتمدوا على تخفيض العمالة أو تخفيض أجورهم من أجل تقليل خسائرهم. ولقد أستند أصحاب الأعمال في ذلك على أساس القوة القاهرة

اولاً و قبل كل شي، يجب أن نشير بأن الظروف الحالية لا يمكن إعتبارها بأنها قوة قاهرة تمنح الحق لأصحاب الأعمال فى انهاء عقود عمل عامليهم وذلك لان هذه الظروف لا تمنع العامل من تأديه عمله بشكل كامل بل يمكن اعتبارهذه الظروف بأنها ظروف إستثنائية التى تجيز لأصحاب الأعمل الحق في إتخاذ إجراءات إستثنائية حيال موظفيهم

بالإضافة إلى ذلك، يجدر بنا الإشارة إلى أنه من أجل السماح لأصحاب الأعمال بتطبيق إجراءات إستثنائية على موظفيهم متى توافرت الظروف الاستثنائيه، يجب أن يتوافر شرطان وهما أن يتم التطبيق على أساس مؤقت وألا يتم تقليل عدد الموظفين. وإذا تم السماح بهذا التطبيق، فيجوز لصاحب العمل الاتفاق مع عامليه على (1) تقليل ساعات العمل وبالتالي تخفيض الرواتب، إذا كانت مرتبات الموظفين قائمة على عدد ساعات العمل الفعليه او (2) إلزام الموظفين بإستخدام رصيد إجازاتهم السنويه او (3) الاتفاق مع الموظفين على أخذ إجازه بدون مرتب لمده محدده

ولكن إذا رفض الموظفين هذان العرضان، فيجب على صاحب العمل اللجوء الى مكتب القوى العاملة المختص للحصول على الموافقات الخاصه بغلق كلى أو جزئى أو تسريح العمال أو تخفيض ساعات العمل و الرواتب و ذلك لمواجهه الظروف الأقتصادية العسيرة. بالإضافة إلى ذلك يحق لصالحب العمل ان يطالب بتطبيق المادتان الأولى والثانية من القانون رقم 156 لسنة 2002 الخاصين بإنشاء صندوق الطوارئ للمساعدة في مواجهة الغلق الكلى أو الجزئى أو تسريح العمال التي تتكبدها الشركة في ظل الظروف الإقتصادية. وبذلك يحق للموظفين صرف إعانة مالية لهم فى ظل هذه الظروف بسبب  توقف صرف أجورهم

فمتى تم الموافقه على ذلك من قبل القوى العاملة، يقوم الصندوق بصرف مرتبات للعاملين (فى شكل إعانة مالية) من الصندوق لحين الإنتهاء من الظروف الطارئة للمنشآت أو لمدة ستة أشهر وتكون الإعانة المالية هي 100% من الأجر الأساسى بحد أدنى 200 جنيهاً مصرياً وهذا طبقاً للقانون 156 لسنة 2002 والقرار رقم 1117 لسنة 2007 الصادر عن رئاسة مجلس الوزراء

ولكن لازال التساؤل قائم إلى متى ستظل هذه الظروف؟ وهل سيظل أصحاب الأعمال في القطاع الخاص بالإلتزام بإتباع تعليمات منظمة الصحة العالمية حتى إنتهاء كوفيد-١٩؟ أو هل سيرجع الوضع إلى ما سبق وسيتم إتخاذ تدابير إحترازية إضافية؟

وعلى ضوء ما سبق ، ستعتمد أفعال أصحاب الأعمال فيما يتعلق بتسريح العاملين لديهم أو تخفيض أعدادهم على طبيعة الصناعة وتأثير اللوائح الحالية عليها

فريقنا جاهز للمساعدة في جميع إستفساراتكم سواء كنتم أصحاب أعمال أو موظفين. يرجى إخبارنا كيف يمكننا المساعدة ، ونحن نتفهم أننا نمر بأوقات عصيبة  ونأمل أن تتمكن خدماتنا من معاونتكم

Employees Dismissal During The COVID-19 Outbreak, Is It One Of The Employers’ Rights Or Would It Be Considered Unwarranted Dismissal?

Posted on: May 7th, 2020

Have you been asked to work from home due to COVID-19? Do you worry that you may be laid off or given a salary reduction due to the current global crisis? We are living in very uncertain times, and as many industries aim to take measures to mitigate their losses, they are still taking substantial economic hits to their bottom line. One way many businesses are trying to alleviate their debt being incurred is by reducing their workforce.

Which raises an important question: do employers during these difficult times have the right to lay off their employees on such grounds like force Majeure, or can this be considered unwarranted dismissal?

During the troubling times we are all currently facing globally due to COVID-19, the Egyptian government has taken a number of precautionary measures; including, but not limited to, the application of all the health and safety guidelines set forth by the World Health Organization (WHO). Some of the WHO’s recommendations to reduce the spread of coronavirus are working from home to and imposing a curfew, however the application of such recommendations has resulted in economic hardship nationwide, if not globally as well. The effects of the coronavirus and such measures have adversely effected Egypt’s labor market, given that many business owners, specifically those in the private sector, in order to mitigate losses have had to rely on reducing employee numbers or decreasing their salaries. Business owners that has taken such measures have based them on the grounds of force Majeure.

First and foremost, it must be noted that the current circumstances cannot be considered as those of force majeure that would grant employers the right to terminate employee labor contracts, due to the fact that the current circumstance do not entirely prevent an employee from performing his/her work. The current circumstances, however, may be considered as exceptional circumstances, which would grant employers the right to take extraordinary measures toward his/her employees.

Furthermore, it is worth noting, that in order for employers to be permitted to implement exceptional measures with their employees, during times of exceptional circumstances, two conditions are to be met; namely, that the measures would apply on a temporary basis and do not reduce any employee. Should the latter be permitted, employers may agree on the following with their employees: (1) reducing working hours, and hence reducing salaries if employee salaries are based on actual hours worked, or (2) obliging employees to use their balance of annual leave, or (3) agreeing with the employees to be on leave without pay for a specified period, also known as furlough.

However, should employees reject such offers, the employer must resort to the competent Workforce Office to obtain approvals for partial or total closure, layoffs, or reduction of working hours and salaries, in order to face the strenuous economic conditions. Moreover, employers do have the right to demand the application of Articles 1 and 2 of the Law No. 156 for the year 2002, regarding the establishment of an emergency fund to help face the total or partial closure or the layoffs their companies are enduring due to economic conditions. That said, employees have the right under any of the aforementioned circumstances to receive a subsidy due to the interruption of payment of their salaries.

Once approved by the Workforce Office, the fund will pay the employee salaries (in the form of a subsidy) from the fund until the exceptional circumstances are concluded or for a period of six months. The subsidy is said to be 100% of the employee’s basic salary, at a minimum of Egyptian Pounds 200 in accordance to Law No. 156/2002 and the Prime Ministerial decree No.1117/2007.

Yet, we are still wondering, how much longer will these circumstances last? Will the employers in the private sector keep following the WHO recommendations until COVID-19 dies out? Or will everything return as usual and only extra precautions shall be exerted?

That being said, employers’ actions regarding employee dismissal and/or salary reductions would depend on the nature of the industry and the effects of the current regulations in place.

Our team is equipped to assist with all your inquiries whether you are an employer or an employee. Please let us know how we could be of assistance; we appreciate that these are difficult times we are going through and we hope that our services can provide you with some semblance of relief that you may require.

Stay Safe.

هل ما يحدث في العالم الآن يعد من قبيل القوة القاهرة أم هو ظرف طارئ استثنائي ؟

Posted on: April 26th, 2020

هل ما يحدث في العالم الآن يعد من قبيل القوة القاهرة أم هو ظرف طارئ استثنائي ؟

   يشهد العالم الآن إحدى الوقائع الغير مسبوقه فى العالم مع تعطل شبه كامل في جميع المجالات اليومية و قد أثر هذا التعطل بلا أدنى شك على حياتنا العملية و الشخصية ، فبينما تتخد جميع دول العالم إجراءات احترازية للحد من تفشي الوباء المستجد (الكورونا) او كما يطلق عليه البعض الأخر (كوفيد-19)، تطرأ  ثغرة قانونيه تتعلق بكيفية التعامل مع الوضع الراهن، فهل يعد من قبيل القوة القاهرة و ما يستتبعها من رفع جميع الأعباء و الالتزامات التعاقدية على المتعاقدين، ام ان هذا الوضع يعد ظرفاً استثنائياً مؤقتاً يترتب عليه تعديل الالتزامات التعاقديه وفقاً لنظرية الظروف الطارئة [Theorie de l’imprevision]، و ما هو حكم القانون المصري حيال ذلك؟

و يمكن تعريف القوة القاهرة بأنها الحادث المفاجئ الذي لا يمكن توقعه او الإستحالة المطلقة في دفعه، لذلك يشترط  ما يلى لإعتبار الظرف من قبيل القوة القاهرة:

1- استحالة التوقع: و يشترط في عدم التوقع ان يكون هذا الحادث غير متوقع حدوثه مطلقاً اى نادر الوقوع او غير مألوف.

2- استحالة الدفع، أو بمعنى آخر ينبغي ان تكون إستحالة تلافى الحادث أو تنفيذ الالتزام استحالة مطلقة، فلا تكون استحالة بالنسبة للمدين وحده بل استحالة بالنسبة لأي شخص يكون في موقف المدين، و هذا هو وجه التمييز بين القوة القاهرة و نظرية الظروف الطارئة.

ويؤدي توافر الشروط السابقة إلي اعفاء افراد التعاقد من اية مسئولية تترتب علي عدم تنفيذ البنود المتفق عليها بالعقد وينفسخ العقد دون تحميل المدين بأي مسئولية.

ولكن يظل الأمر معلقاً فيما يخص الظروف الحالية و التكييف السليم لها حسب القانون المصرى: هل توافرت شروط إعتبارها من قبيل القوة القاهرة أم يجب عتبار هذه اظروف من قبيل الظروف الاستثنائية العابرة ؟ و هل يستحيل تنفيذ الالتزام التعاقدي بشكل كلي؟ أم يتم التنفيذ العقد ولكن بشكل جزئي فقط نظراً للقرارات التي أصدرتها وزارة القوي العاملة و رئاسة مجلس الوزراء؟

فوفقا للقانون المدنى المصرى يجب توافر الشروط الثلاثة التاليه يشترط لاعتبار واقعه الوباء المنوه عنها و التدابير الاحترازيه التى اتخذتها الدوله المصريه كقوة قاهرة يترتب عليها فسخ العقد:

1- أن تكون الواقعة المشكلة للقوة القاهرة أجنبية اى خارجة عن ارادة الطرف المتضرر من الواقعه و المتمسك بها

2- أن تكون الواقعة غير متوقعة الحدوث من قبل الطرف المتضرر من الواقعه و المتمسك بها.

3- استحالة دفع الواقعه التى تشكل القوة القاهرة و يقصد بالاستحاله هنا الاستحاله الكليه و ليس الاستحاله الجزئيه.

لذلك فاذا رغب الطرف المتضرر من واقعه الوباء و التدابير الاحترازيه التى اتخذتها الدوله اعتبارها كقوه قاهره يترتب عليها فسخ العقد، فعليه اللجوء الى القضاء يطلب بفسخ العقد تاسيسا على ان تنفيذ الالتزاماته التعاقديه اصبحت مستحيله استحاله كليه بسبب عام و خارج عن اراده اطراف التعاقد.

اما اذا رغب الطرف المتضرر من واقعه الوباء و التدابير الاحترازيه التى اتخذتها الدوله اعتبارها كظرف استثنائى يحق له معه طلب تعديل التزاماته التعاقديه ، فعليه اللجوء ابضا الى القضاء يطلب تعديل التزاماته التعاقديه، تاسيسا على ان تنفيذ التزاماته التعاقديه اصبح مرهقا او مستحيلا استحاله نسبيه بسبب عام و خارج عن اراده اطراف التعاقد.

وهنا يكون للقاضى مطلق الحرية في اعتبار هذه الظروف من قبيل الظروف الطارئه او ظرف استثنائى.

في ضوء ما سبق فاننا نرى ان انتشار وباء فيروس كورونا المستجد (كوفيد-١٩) فى جمهوريه مصر العربيه و التدابير الاحترازيه التى اتخذتها الدوله حيال ذلك الوباء و آثار التعطل فى الدولة بسبب الفيروس يعد من قبيل الحدث الطارىء مما ترتب عليه تعليق العمل فى بعض الصناعات بشكل مؤقت

وعليه فمن غير المحتمل على ضوء الظروف الحاليه (و التى يمكن أن تتغير خلال الأسابيع القليله القادمة) أنه مع تطبيق القرارات الوزاريه الحالية أن يقوم  النظام القضائى المصرى بتكييف آثار فيروس كورونا المستجد (كوفيد-١٩) كقوة قاهرة بل سينظر الليها بإعتبارها حادث طارئ يترتب عليه إمكانية تعديل الالتزامات التعاقديه.

وعلى ضوء ما سبق ، ستعتمد هذه الاعتبارات على طبيعة العقد ، بالإضافة إلى تقدير المحكمة للتفسير والتطبيقات الواقعية.

فريقنا جاهز للمساعدة في جميع الاستفسارات المتعلقة بالعقود. يرجى إخبارنا كيف يمكننا المساعدة ، ونحن نتفهم أننا نمر بأوقات عصيبة  ونأمل أن تتمكن خدماتنا من معاونتكم.

 

Are COVID-19 Consequences Considered Force Majeure Under Egyptian Law?

Posted on: April 26th, 2020

Is What’s Happening With COVID-19 Now Considered to be Force Majeure or is it Hardship?

The world is currently witnessing one of the most unprecedented events of modern times, given the almost complete disruption of our day to day lives. This disruption has undoubtedly effected everyone’s professional and private life, and while countries all over the world are taking the necessary precautionary measures to limit the outbreak of the newly emerging coronavirus pandemic (COVID-19), a legal point of contention arises with regards to how the current situation should be interpreted: should it be considered as force majeure, resulting in the parties being released of all contractual obligations? Or, should it be considered as only temporary hardship, necessitating contract amendments that would adjust the contractual obligations pursuant to the “Theory of the Unforeseen” or “Theorie de l’imprevision?” Furthermore, what is the proper interpretation of the aforementioned under Egyptian Law?

Force majeure can be defined as a sudden accident that is unforeseeable and absolutely unavoidable. As such, in order for the criteria of force majeure to be met, the following conditions should exist:

1 – Impossible foreseeability of the event: it is impossible to foresee such an event due to its rarity or unusualness.

2- It is an unavoidable event: in other words, it would have been impossible to avoid the event or carryout contractual obligations; such impossibility exists not only for the debtor, but also, for any person in his/her position, and this is the main distinction between Force majeure and the “Theory of the Unforeseen” or “Theorie de l’imprevision.”

The presence of the above conditions would relieve the contractual parties of any liability arising from failure to implement the terms agreed upon in the contract, and as such, the contract would be rescinded without the debtor having to bear any responsibility thereof.

Yet the question remains, given the current circumstances, what is the appropriate interpretation under Egyptian Law? Have the conditions of force majeure been met or should the situation be considered one of exceptional hardship? Is it impossible to implement contractual obligations entirely? Or, is execution of the contract be feasible, but only partially, in light of the decisions issued by the Ministry of Manpower and the Prime Minister’s office?

According to the Egyptian Civil Code, for a pandemic to be considered an event of force majeure, precautionary measures had have been taken by the country that would make fulfilment of contractual obligations impossible, which would result in the rescission of the contract. As such, for the latter to occur, the following three conditions must be met:

  1. The event resulting in a force majeure is foreign in nature; that is, it is beyond the control of the party aggrieved by the situation and the one who insists on it.
  2. The occurrence is unforeseeable by the party aggrieved by the incident and the one who adheres to it.
  3. It is impossible to avoid the event that constitutes the force majeure and by impossible, we mean entirely impossible, and not partially impossible.

Therefore, in the event that the party aggrieved by both the pandemic and the precautionary measures taken by the Egyptian State wishes to consider these events as an event of force majeure, and in turn wishes to rescind the contract, he/she must resort to the judiciary, and request such rescission of the contract based on the fact that the execution of contractual obligations has become totally impossible due to a reason that is beyond the contractual parties wills.

However, in the event that the party aggrieved by both the pandemic and the precautionary measures taken by the Egyptian State  wishes  to consider these as exceptional circumstances and consequently, he/she would be entitled to seek amendments his/her contractual obligations, he/she must also apply  before the court seeking such amendments, based on the fact that the execution of such obligations has become burdensome or relatively  impossible  due to a general reason that is beyond the contractual parties wills.

Under such circumstances, the judge shall have the sole discretion to consider these circumstances as emergency circumstances or exceptional circumstances.

In light of the foregoing, we are of the opinion that the spread of the novel Coronavirus (COVID-19) in Egypt, bearing in mind the precautionary measures put in place by the Egyptian State  regarding this pandemic, the effects and current state of disruption due to  COVID-19  would be  categorized as that of exceptional hardship, resulting in the temporary suspension of  certain industries.

Hence, it is unlikely, given the current state of events (which may change over the course of the next few weeks) and the current ministerial decrees in place, that Egyptian Judiciary find the effects of COVID-19 to be those of force majeure but rather that of exceptional hardship against which, the contractual obligations may be amended.

That being said, such considerations would depend on the nature of the contract, as well as the court’s discretion for interpretation and factual applications.

Our team is equipped to assist with all contract related queries. Please let us know how we could be of assistance; we appreciate that these are difficult times we are going through and we hope that our services can provide you with some semblance of relief that you may require.

Stay safe, and in good spirits.

Product Recall Under the Egyptian Consumer Protection Law

Posted on: January 31st, 2019

Were you told that your Samsung Galaxy was not allowed on a flight you were taking? Did you have to take time out of your workweek to visit a Samsung official agent in order to figure out if you were affected by a battery recall in your Samsung’s phone model? Recalling products has not been a common act within Egypt. Consumers are often kept in the dark, leaving them to be faced with harmful side effects – as in faulty phone batteries—or being told that re-purchasing the same or similar item is the only choice they have.

It’s safe to say that consumer’s complaints in Egypt have successfully pushed legislation in the right direction.

The Egyptian legislators have  enacted a new consumer protection law number 181 of the year 2018 which will supersede over the older one (law number 67 of the year 2006).

The new law ensures the existence that a good channel of communication is established between the suppliers and consumers by providing all the necessary information related to products in Arabic and an additional two other languages. Suppliers are now obliged to include all their information such as their address, contact details and trademark credentials on the product in a way that guarantee consumer’s right to have recourse against the suppliers should the consumer seeks contribution under a valid claim.

Under the Egyptian consumer protection law, mass recall of defected products is not obligatory. However, under the same law the supplier is held under legal obligation to execute the recall based on the consumer’s demand; furthermore, he has other options to exploit if the consumer allows it which will be explained below.

The supplier is obligated to contact the Consumer Protection Agency (CPA) within seven days of his discovery of any defect and report the defection that occurs in the products, and any possible damage that might result from such defection to the agency. If the defect found in the products could cause/have any negative effect on the consumer’s well-being or health, the time limit of seven days for the supplier to report to the CPA is then nullified, during which the consumer is allowed to report on the defect and its harmful/negative effect. The supplier will then have to provide a report to the agency concerning any defects as soon as he discovers them, or as soon as he gains knowledge of same.

The supplier is compelled under Article 19 of executory regulation of the Law 181/2018 to publish the defects of their products in a widely spread daily newsletter, or through direct contact with consumers in the cases where such contact is possible, with respect to the CPA’s regulation which is specified by a decree issued by the Agency. The supplier will also be obliged to warn the consumers from using the defected products and cease the manufacturing process immediately. While preserving consumers right in providing repairs of the products upon the consumer’s request, offering exchanging of the defected product for another fit and undamaged product upon the consumer’s request, recalling of the defected product upon the consumer’s request is also obligatory on the supplier.

As a general rule, under the latter law of Consumer Protection Articles 17 and 21, the consumer retains his right to exchange the product for another flawless one or request a refund, even if it is not defected during the first 14 days of the purchase or during the first 30 days of the purchase if it is defected, which is an improvement for the consumer compared to the former law, where the consumer could only return the product or exchange it for another or request a refund only if it is defected within 14 days.

The supplier will have to report the defects to the agency in order to protect himself from facing any penalties  pursuant to the Law. The report must contain the following details:

  • The reporter’s name, capacity, nationality, address, domicile of choice in Egypt, and if the report is provided by a delegate, then his name and address shall be attached alongside the official dedicated document.
  • Clarification of the defected product(s).
  • Name and address of the producer.
  • If the product is imported, then the name of the importer and his address have to be stated in the report.
  • The date of which the defection was discovered or known.
  • Technical accurate definition of the defection present in the product.
  • Possible harm that could occur as a result of the defected product, and a statement that explains the method of preventing the harm from happening or handling it, if it occurs.
  • The procedures required to be executed by the consumer in order to realize exchange, recall, or repair of the defected products with no additional charges.
  • Any other information the supplier deems worthy of being included in the report or considers important.

Therefore, in case of a defected product the supplier will be given the option, provided by the law, to recall the defected product and provide the affected consumer with  three options free of any charges :

  • Refund
  • Repair
  • Exchange for an intact similar product

Highlighting what happened with Samsung when they discovered that their new product  “Samsung Note 7” has a manufacturing defect in the phones’ batteries, which caused some of them to generate excessive heat, resulting in fires; as a result, on 2 September 2016, Samsung suspended sales of the Galaxy Note 7 and announced a recall. The President of Samsung’s mobile business Koh Dong-jin said that concerning the recall “There was a tiny problem in the manufacturing process, so it was very difficult to figure it out. It will cost us so much it makes my heart ache. Nevertheless, the reason we made this decision is because what is most important is customer safety.”

“Samsung’s Note 7” is a solid example for a company recalling a defected product, the renowned company “Samsung Electronics” discovered that their flagship new mobile phone (Note 7) had a disastrous defect that causes the phones to sometimes catch on fire and maybe even explode due to a flaw in the battery manufacturing, reportedly when charging or shortly after, in which Samsung swiftly responded by announcing the flaw and accepting the responsibility for their defected product, giving out shortly after they announced a huge recall campaign in which they gave refunds for return of the product or replacement for a new flawless one with no additional charges on the consumer. According to Los Angeles Times Samsung’s recall costed them at least 5.3 billion dollars.

How Regulations In Egypt Are Aiming At Facilitating Business for SMEs

Posted on: December 19th, 2018

Egypt has been re-assessing many regulations in order to make the Egyptian market more conducive to both local and international investment. With a growing start-up community both in the tech industry and otherwise, laws such as the New Investment Law No. 72 of 2017 and the Small and Micro Enterprise Law No. 141, 2004, aim at leveling the playing field for new comers to the Egyptian market, allowing for equality of opportunity across a list of industries, empowering the ever-so-growing youth population and enhancing good governance and transparency.

According to Egypt’s Small and Micro Enterprise Law (No. 141, 2004) Small Enterprises are defined as “all companies or facilities with productive, commercial, or service-providing economic activities, with a minimum capital of 50,000 EGP, a maximum capital of 1,000,000 EGP, and a maximum of 50 employees. While Micro Enterprises are defined as all companies or facilities with productive, commercial, or service-providing economic activities, with a capital less than 50,000 EGP.”

These establishments/ projects which are in line with the guidelines of Law No. 141, 2004 intend to support citizens in need and enhance their role in economic development. With respect to funding and finance, the Egyptian authorities have taken the initiative to put in place tailored financing systems by the Central Bank of Egypt (CBE) such as creating funds in each of Egypt’s 27 governorates to facilitate these types of enterprises.  As the mindset shifts towards supporting SME’s the CBE, in 2016, established guidelines as an initiative to increase finance for SMEs by giving the authority to national banks to pledge a minimum of 20% of their loans to SMEs.[1]

A year later in 2017 the CBE took it a step further and worked closely with the banking sector by injecting a total financing of EGP 30 billion (EUR1.4 billion) to stimulate financing for microbusinesses which over the coming years is projected to aid around 10 million customers.[2]

That same year, Misr Venture Capital Company, a private fund with a capital of EGP 150 million (EUR 7.1 million), was founded by the Ministry of Trade and Industry aiming to relive distressed but viable SME’s by facilitating short-term financing mechanism.[3]

Moreover, in 2018 the CBE launched a four-year EGP 200 billion (EUR 9.3 billion) financial scheme to fund SMEs projects, also putting in place three plans to assist such enterprises by:

  • exempting banks from the reserve requirements for specific credit facilities for SMEs financing
  • facilitating the renewable energy sectors to invest in equipment and
  • providing short term facilities for working capital. [4]

Moreover, the regulation indicates that 10% of the available property for investment will be dedicated solely for the SME’s. The price payable for the purchase of the available plots of land will be proportionate to the cost of utilities /facilities. Otherwise a usufruct is another option for possessing the land against a 5% of the estimated value of the land.

All licenses, approvals or any other formalities for the creation of these establishment will be issued in less than 30 days from the day of submitting the request, same goes for the issuance of the commercial registries and the tax cards.

The regulation also will facilitate some of the following for establishment by:

  1. Identifying the investment opportunities.
  2. Assisting in a study analysis for all the available projects.
  3. Providing advice concerning the best price and place to buy the necessary machines and equipment.
  4. Risk analysis
  5. Marketing at local and international exhibition

These establishments shall not be  administratively suspended in case of committing a contravention. In such case, the owner will be informed with such contravention and the time limit to rectify it and only in case of default will the establishment will be suspended.

The current environment is quiet accommodating to new interest and development, and our firm aims at assisting those who seek services and advise with respect to establishing and realizing their ideas and/or projects. Our firm would work closely to cater to the needs of the investor and to formulate the best plan suitable for their endeavor, taking into consideration all the benefits provided by the law.

 

 

 

[1]Oxford Business Group (30 June 2016) “SME financing ramps up Egypt,”

www.oxfordbusinessgroup.com/news/sme-financing-ramps-egypt

[2]Enterprise (24 May 2017) “CBE Microfinance to push out EGPO30bn in subsidized financing to as many as 10mn borrowers within four years,” http://enterprise.press/stories/2017/24/cbe-microfinance-to-push-out-egp-30-bn-in-subsidized-financing-to-as-many-as-10-mn-borrowers-within-four-years

[3]Egyptian Ministry of Trade and Industry (29 May 2017) “Misr Venture Capital Launched Soon,”

www.mto.gov.eg/English/MediaCenter/News/Pages/Misr-Venture-Capital-lauched-soon.aspx

[4]OECD/EU/ETF (2018), The Mediterranean Middle East and North Africa 2018: Interim Assessment of Key SME Reforms, SME Policy Index, OECD Publishing, Paris

http://doi.org/10.1787/9789264304161-en pp.97-108

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