The shipping industry has seen its fair share of market disturbances over time, from bunker setbacks and trade wars to financial crises and actual war. Yet in the words of Rose George’s book “Ninety Percent of Everything” which highlights how Shipping is “the Invisible Industry That Puts Clothes on Your Back, Gas in Your Car, And Food on Your Plate,” one cannot deny the importance of this industry and its resilience to global shifts.
The current disturbance is one that hits closer to many, affecting countless lives and changing the perspective on the impacts of our “global village.” With that being said, those in charge worldwide have taken measures to secure the health and safety of all who are in touch with the shipping world in the light of the global implications as a result of virus COVID-19 pandemic.
In view to the preventive and precautionary measures that all governments in various countries are taking to prevent the spread of any pandemic and to limit the chances of contaminations, we would like to shed some light on the regularity of the maritime workflow in the Arab Republic of Egypt and the measures taken to combat the virus through the coordination between both the Ministry of Health and Ministry of Transport by activating these measures from the executive authorities in the ports and we will further provide you with a summary of the information that we have gathered from our colleagues in various authorities and the branches of our multiple offices throughout the Republic.
With that being said, we would like to outline the following:
-The Continuity and regularity of work in all Egyptian seaports, 24 hours a day, is done under close supervision and follow-up by the Egyptian Ministry of Transport.
-The Egyptian Ministry of Transport issued a number of instructions and recommendations to ensure the regularity of Egyptian Ports operating movements and the carrying out of cargo loading and unloading operations as well as activities pertaining to exports & imports with a bloodline.
All such preventive measures are in accordance and adhere to the Health and Safety regulations and preventive measures and such regulations and procedures have been circulated to all Egyptian ports:
-All port employees whether dealing with the public, in administrative buildings or at port yards or truck drivers, are committed to wearing masks, protective gloves, and to use medical disinfectants.
– The competent authorities are carrying out the disinfection (sanitization) of marine units; whether tugs or lunches as well as all ports buildings and passengers’ arrival and departures halls.
-The competent authorities are also carrying out the disinfection (sanitization) of all outgoing and incoming shipments.
-Under the supervision of a delegate from the Egyptian Quarantine, vessels are prevented from entering and berthing alongside ports berths until the completion of the necessary checks and medical examinations to vessels’ crew in coordination with the doctor of each ship Department in order to ensure the absence of any contamination.
-Hanging safety instructions signs regarding Hygiene Awareness at ports’ entrance and exits portals and about the necessary precautionary measures to be taken to combat contamination. Moreover, the competent authorities are warning vessels ‘owners and vessels’ local agents to immediately report any suspected case discovered on board ships, in order to take the necessary measures.
The Egyptian government stressed the need for ports to operate regularly; as it excluding ports operating activity from the currently imposed curfew announced by the government to protect citizens from the spread of infection.
Also, for the operation of the port and the maritime administration not to affected by the aforementioned curfew, permits are issued for ports workers and representatives of agencies and shipping lines to move freely at ports.
Besides the commitment of all ports to the previous standards and controls, the administration of each port in turn, has drawn up plans to implement government instructions and work to optimize the regularity of operating traffic.
We must add that the Egyptian Maritime Transport Sector has circularized over the Suez Canal Authority and all the different Egyptian Ports the following guidelines published by the International Chamber of shipping which include the recommendations published by the WHO, IMO and ILO.
We are providing you with the link of these guidelines as published on the International Chamber of shipping website, namely:
However, with the continuously evolving facts concerning the COVID-19 pandemic and rapidly progressing measures and actions being imposed on an hourly basis, our teams will continue to monitor with our colleagues at the Suez Canal Authority and the various port authorities as well as with agents with the aim to promptly update you should the facts on the ground change.
Business as usual applies to Eldib’s offices in Egypt and our network of surveyors are also available 24/7. In case any assistance will be in need, please don’t hesitate to reach out to our team and we will be very pleased to assist.
Our teams send you all our thoughts during this tough time and we know that the industry will come out of this stronger.
We feel we must bring you new developments that we hope will positively entice members of the marine community to bring back/continue calling to Egyptian ports. The General Authority for the Suez Canal Economic Zone has now amended their decree No. 127/2017 by amending and issuing the decree No.121/2018 which aims at reducing the port dues for the vessels calling Port Said East and West ports for both containers and Ro-Ro vessels.
We have prepared a translation of both decrees bearing in mind that the new decree No. 121/2018 has amended the earlier decree and it has already come into force.
For any further information or assistance, please do not hesitate to contact us at firstname.lastname@example.org
Eldib Advocates is proud to announce that three prominent lawyers at the firm have been promoted to Junior Partners.
Richard Tibichrani, Hany Maamoon and Karim Marouny have all earned their new titles through their impeccable work ethic, leadership skills and dedication to the firm.
As the country continues to struggle with a foreign currency crisis, Egypt has also witnessed difficulties with imports, which have declined by 19 percent. Additionally the government has introduced a number of restrictions on imports, for instance in December 2015, the Ministry of Trade and Industry issued Decree No. 992/ 2015, which imposes a mandatory obligation on factories, looking to import their product into the Egyptian market, to be registered in a specified registry held with the General Organization for Export and Import Control (GOEIC).
According to the ministerial decree, the Customs Authority will not release imported products from the custom’s zone unless the producers of such product are registered at the aforementioned registry.
The application of this Ministerial decree has resulted in several issues; such as owners of trademarks who desire to import their products into the Egyptian market having to register their factories that deliver their products to Egypt separately with the GOEIC. In addition they must comply with a long list of ISO certificate requirements in order to complete the said registration as per international standards.
However in order to expedite the process , the Egyptian government has amended the previous law by issuing the Ministerial Decree No. 43 for the year 2016. According to the said amendment, the owners of the trademarks or factories may now register all their trademarks or factories that delivers products to Egypt in one single process without the need to register every single trademark or factory independently. Also, the number of the required documents have been minimized reducing the type of product subjects categorized for registration.
Regarding the registration process of the factory or the trademark, owners are required to complete the said process through an application to be submitted to the GOEIC supported by all the determined certificates and documents. According to the law this registration processes usually take approximately from 2 to 3 weeks. However, from our experience in dealing with such matters, the registration time can take as long as 5 to 6 weeks.
The government’s aim in issuing such a decree is to encourage reliance on local products, bolster local manufacturing and the national economy, rather than depending on the import of foreign products. Moreover the decree helps to enhance the competitiveness of locally produced products against foreign products. This decree is set to allow a fairer playing field for local companies to compete with individual importers who smuggle or evade customs by providing fraudulent bills. The companies, which are commonly harmed by this, are the Egyptian textiles factories who have to compete with cheaper Chinese imports that have been smuggled into the country. Therefore, if local textile companies are better positioned; they would be able to possibly compete with the Chinese textile imports, and even possibly begin to have a competitive edge in smaller foreign market.
However, there is no guarantee whether the result of the issued decree will positively affect the direction of the country’s economy or if it will make it more difficult for business, especially the small and medium businesses owners, to import critical raw material tools. It may also make it harder for the Egyptian companies to import from the European market. Bearing in mind a similar attempt was made previously in the 1950’s when the governments wanted to promote the first ever Egyptian-made car, and in order to do so they raised duties on imported passenger cars and the result ended up rather hurting than helping the local economy.
Since then the tax on foreign cars has only increased, creating a discrepancy of fuel efficient new vehicles coming into the country and allowing for older, recycled cars which are not environmentally friendly to become the dominate source of transport in the country.
Additionally by making it more difficult to import, the government in turn is sending mix signals to all the foreign investors who are being invited to initiate business in Egypt . For example the so-called luxury companies in Egypt like the British chocolate maker Cadbury, French cosmetics producer L’Oreal, the Dutch firm Frico Cheese and Korean electronics giant Samsung that started out as exporters to the country. When they saw that there was sufficient demand in the local market, they decided to build a factory, noting that these multinationals have also brought with them new technology and industry expertise with them. With less competition from abroad the local market will not be exposed to the know-how of various industries which are transferred to local companies and will not be able to compete in an aggressive and highly competitive marketplace.
Beside all the advantages and disadvantages gathered , global trade and investment are an essential part of any developing economy and people need to support their local industry as much as they accommodate foreign industries .The government must put an adequate system in place to ensure the quality of locally made products are up to par with the international standards to avoid shortages that might be faced if the local products cannot be replaced with the imported one.
Value Added Tax
Value Added Tax, a barbed matter that has always been surrounded by fear of the poor and anger of the wealthy. A double-edged weapon that has proven to be an efficient way in increasing the government’s income, yet, always thought to be an extra burden on the Middle and Lower income tax payers. But what is Value Added Tax.
What is V.A.T.?
V.A.T. is a consumption tax based on any value added to a product. For example, in the case of furniture production, V.A.T. is applied on the raw material such as wooden boards. This V.A.T. value is added to the total value when a manufacturer purchases the wooden boards. The manufacturer changes the wooden boards to a closet adding value to it, V.A.T. will be applied on this extra value added to the product and so on till the end user.
Origin of V.A.T.
Despite the fact that V.A.T.’s origin is not clearly known, yet it is agreed between all scholars that its concept has been introduced ages ago. While some said that V.A.T. came into force in 1973, introduced by Lord Barber, the chancellor under Sir Edward Heath of the UK, and started off as a simple 10 per cent tax on nearly all goods bought from a business. Others stated that V.A.T. was originally a French idea, started in the 1950s. The key factor of V.A.T.’s rise is several EEC’s directives requiring potential member states to apply a harmonized V.A.T. system to become a member in the EU.
Furthermore, the adoption of the V.A.T. in developing countries was emphasized by both the IMF and World Bank, who played key influences over countries to adopt V.A.T.
V.A.T. In Egypt
Differences between V.A.T. and General Sales Tax (G.S.T.) can be barely noticed except for one thing. G.S.T. is only applied at the final stage of the product and consequently only burdened by the end user. While V.A.T. is applied at every stage of the product, consequently the tax amount, although increased, yet paid by every stage and split between several individuals and finally achieving social justice.
Before the adoption of the V.A.T., two scenarios were proposed; first, adopt V.A.T. and extend tax base to what is more than EGP 30 billion increasing the state revenue by almost 14%–and inflation is calculates/expected at rate of 2.6%. Or, keep on the G.S.T. system while adopting firmer sanctions on tax evaders and no inflation is expected.
While the results of the first scenario seemed very tempting, Egypt decided to adopt V.A.T. system and puts the G.S.T. system into a deep sleep.
The application of the V.A.T. law was divided on two categories:
First category will be through imposing 13% on goods, anything that has physical existence, and services, anything that is not goods, during the 2016/2017 fiscal year and increase automatically to 14% by the beginning of 2017/2018. This 1% will be dedicated for the expenditure on the social justice programs, with no need for any further legislation.
Yet, it is essential to state that the V.A.T. law set an exception on the percentages above as the law implied that the percentage imposed on equipment and tools that are imported to be used in producing a product or performing services inside the Country is 5% (with the exception of buses and passenger cars which shall be subjected to the regular rate).
The second category will be through imposing 0% on any exported products and services produced or rendered by free zones according to the conditions and situations determined later by the executive regulations (article 3). The 0% will be imposed on the free zones projects that produce products or render services in order to be exported, also any imported raw products or services that are used in production process for exportation.
Furthermore, the V.A.T. law imposed an extra exceptional tax on certain mentioned products and services. These products and/or services are put in a table called Schedule/table tax. The schedule tax has two implementations tables:
The first table stated a group of products like raw tobacco and gas. The second table determined another group of services for example telecommunications services. Telecommunication services shall be subjected to an extra tax of 8%, the percentage may vary from one service to another, besides that of the V.A.T. For example, if a service costs EGP 100 then the applicable tax will be the extra 8% in addition to the regular 13% of the V.A.T.
Egypt is adopting V.A.T. law for several reasons:
- Simplify the legislation and facilitate the application of the law.
- Achieve tax justice without creating any implications on the basic needs.
- Consumers will pay more in return for luxury products and will pay less for essential goods and services or even no taxes in case of an exemption.
Dispute resolution system in the new V.A.T. Law
As for the dispute resolution methodology adopted by the V.A.T. Law, a dispute resolution committee shall be prepared and trained for resolving such disputes. If this committee failed to reach an amicable settlement with the taxpayer, the latter enjoys the right to submit his claim before the State’s Council.
Finally, and to wrap things up, it is still unclear, even for Egyptian officials, how is V.A.T. will be implemented in Egypt and how is it going to be calculated. These questions can only be answered when the executive regulations are issued. We aim on keeping a close eye to any further developments with the implementation of these new regulations and will make sure to update our readers promptly once more information is made available.
“It’s not that we use technology, we live technology” – Godfrey Reggio
We use technology in our everyday quick paced lives in order to facilitate our daily interactions in all fields. The ever growing and evolving technology is transferrable to give everyone access to its use. In this article we aim at tackling various points and shed light on the transfer of technology in Egypt and its effects on developing projects.
As our world grows more into a global village, one cannot deny that its universal culture was cultivated due to our ever-growing attachment and development in all fields of technology. When we compare people’s basic daily use of equipment or exposure to sources or items associated with the tech world 20 years ago to today, the leap is immeasurable. The speeds in which we have come to improve, acquire, and disperse the “know-how” and knowledge behind technology is incalculable, and only getting faster and more efficient.
The transfer of technology (TOT), is a process that is not only the transferring of skills, knowledge, licensing, trade and various methods of invention, industrialization and production of both data and products, but also a platform that gives access to an extensive range of users (both in the technological or scientific fields) allowing them to penetrate, develop and utilize the technology to either, on one hand, further their products or studies, or on the other hand, help them initiate the development of innovative applications, products or materials.
Synonymous to the transfer of information or knowledge, TOT is done through conferences or research journals. It can be transferred both vertically and horizontally, meaning it can be transferred from scientific or research centers to various research and development (R&D) departments in various industries or it can be transferred from one field or industry into another.
Egypt is becoming a growing tech hub in the Middle East and North Africa (MENA) region and it is all due to conferences such as RiseUp Summit Egypt, which is an annual conference in Cairo that acts as a platform for startup and the entrepreneurial communities worldwide to come together to network and share ideas. From gamers, lawyers, real estate developers and Facebook executives, RiseUp brings together people from various industries who are all interested in the same thing, innovation, and that is not conceivable without TOT.
Such summits become a bridge between industries and nations, allowing for countries like Egypt (classified as an emerging economy) to become exposed to the new concepts and scientific developments across the various fields associated with technology. Moreover, as the speed of innovation accelerates, so does the volume of knowledge that becomes distributed. With that being said, it is the duty of the Law to give these bright minds the legitimate right to their ideas, and the knowledge they have thirsted upon our universal culture.
Basically, technology is transferred from developed societies to other societies that need to develop themselves in various fields including the economic, social, technological and others fields. The developing countries are in need of technology, not only not only in the form of state of the art machines and equipment, but also they need the know-how that would enable them to make use of the foreign expertise, to boost their production, achieve optimum usage of its resources whether in manufacturing, consumption or other assorted fields.
Given that these are human activities and transactions, they must be organized and legitimized by law. In Egypt, on the commencement of the actual TOT activities, the relevant contracts were subject the general rules of law. However, as the need for more specific rules of law was quite manifested by acceleration of the TOT activities, the Egyptian legislator has deemed it fit, for the first time in the history of the Egyptian legislation, to introduce regulations organizing TOT, which has been provided for under articles 72 – 87 of the Commercial Law No. 17 /1999. The aim of this legislation was to match the conflicting interests of the different parties of the TOT contracts, preserving the interests of our society on the one hand without prejudice to the lawful interests of the technology providers. The aim of the legislation organizing the TOT contracts should in no way prevent the technology providers from coming into the Egyptian market, buy at the same time, it should warrant that the Egyptian importer would actually acquire and understand this technology in such a manner that it would become a tool to develop the economy and maximize its capabilities to compete in the of International Trade Markets.
For that reason, the Legislator have set a condition that the Governing Law for the TOT contracts and any dispute arising thereof would be the EGYPTIAN LAW and under the Egyptian Courts jurisdiction. In view of the trend to arbitrate commercial disputes to arbitration, the Egyptian legislator allowed the Parties to resort to arbitration provided that it would be held in Egypt. Any agreement to the contrary of the said rules shall be considered null and void, notwithstanding the contractual parties’ agreement to the contrary.
Having noted the rapid development of the technology and the price of the new tech drastically fluctuates over the time, the legislator allowed the contractual parties to freely determine the duration of the agreement, to request its termination or to improve its conditions no less than five years from the conclusion of the agreement. This may be repeated every five years bearing in mind that the parties to the contract may agree to a different period than this five years period.
Technology Transfer Projects In Egypt:
Egypt is one of the developing countries, which remains in need of technology transfer to become part of the industrial world, and the main areas where technology transfer agreements are presently concluded are the fast growing energy sector, the automotive industries as well as other heavy industries.
Given that Egypt is aiming to enhance its infrastructure in securing a clean energy resource to create more attractive business environment and provide various kind of energy for investors, recently Egypt and the Russian Federation reached an agreement on transferring technology as concerns EL-Dabaa Nuclear power plant. Egypt has decided to enter into this agreement to possess the know-how of this sort of technology from a country that owns the know-how of this kind of technology.
We hope that this kind of mega and high tech projects will be the beginning of a series of similar projects in the different fields of industry, communications, energy, gas and oil and will enable the smooth transfer of technology into Egypt and from Egypt to less developed countries.
“Wars will remain while human remains. I believe in my soul in cooperation, in arbitration but the soldier’s occupation we cannot say is gone until human nature is gone.”
Rutherford B. Hayes
Apart from the fact that shipping is a fascinating, globalised and complex industry, it still remains unique and different from other industries.
The main reason we find the shipping industry to be unique is due to its international nature, the volume of risk associated with each transported shipment and the fact that operations take place both marine and non-marine environment. The contracting parties may be exposed to significant risks and the arbitration may constitute the most convenient alternative dispute resolution method.
Both Hamburg rules and the Egyptian maritime law have recognized the peculiar nature of the marine industry and their articles were tailored to cope with the volatile nature of the market, searching for a better protection for the goods owner.
In fact, that was the reason why a notable number of countries didn’t ratify or accede to Hamburg because those countries adhere to the political exception of liability provided in The Hague Visby Rules
It is no surprise that the number of states that have ratified the convention have a small market share in the shipping industry and do not play a significant role in the maritime traffic of goods, a situation which will become prejudicial to the unification of maritime law and international trade.
The present dissimilarity between both Hamburg Rules and Hague Visby Rules concerns the arbitration agreement and the choice of both seat of arbitration and the applicable law. According to the Egyptian Maritime Law any prior arbitration agreement depriving the claimant of his right to choose the seat (venue) of arbitration or judging in inconsistency with the Egyptian Maritime Law No. 8/1990 will be null and void.
Article 246 of the Egyptian Maritime Law No 8 /1990 stipulates that “ In case the parties agreed in the sea transport contract that all claims arising under the said contract shall be referred to arbitration, then the said arbitration shall be conducted at the claimant’s choice, within the jurisdiction of the court at the port of loading or discharging, at the defendant’s country of residence or at the location where the contract has been concluded, provided that the defendant would have a head office, branch or agency at that location or at the location where it has been agreed upon to hold the arbitration in the arbitration agreement or within the court jurisdiction where the arrest on the ship has been placed. Any agreement prior to the dispute depriving the claimant from such privilege of choosing or restricting this choice shall be null and void”.
It is clear from the above mentioned article that the nullification not only denies the claimant’s right to choose the seat of arbitration but also disallows any action that may restrict the claimant’s right to choose the seat of arbitration which would be more suitable for the claimants after the dispute has arisen.
Article 247 of the Egyptian Maritime Law No 8 for the year of 1990 stipulates that “ In case it has been agreed in the sea transport contract that all claims arising under the said contract shall be referred to arbitration, then arbitrators shall be bound to rule in the dispute pursuant to the provisions of the present law (No 8 /1990). Any agreement prior to the dispute depriving the arbitrators from holding under the provisions of the said law shall be null and void”.
It may be derived from the above that the legislator has taken into account the importance of arbitration as a preferred alternative dispute resolution mode for both the carriers and cargo interests (merchants).
In this respect, the legislator has deemed it fit to set up a balance between the conflicting interests of both the carriers and cargo interests (merchants), since any disequilibrium between these interests will likely enable the stronger party to force the weaker party at the time of concluding the contract to accept an unsuitable forum which would also cost the weaker party excessive expenses, that would be ultimately prevent that party from commencing arbitration proceedings or would give to the arbitrators the power not to abide by the governing law which in our case will be the Egyptian Maritime Law No. 8/1990. In fact, the legislator has nullified any prior agreement that has been brought up before the dispute has arisen which would dispossess the plaintiff right from (1) choosing the suitable forum (provided that the conditions required for a proper forum are available in the seat of the arbitration chosen by the plaintiff), and/or (2) preventing the arbitrators from ruling under the applicable law. These rules are consistent with the provisions of articles 22 and 23 of the United Nations convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules).
In this respect, we would refer to a precedent set by the Egyptian Supreme Court (Cour de Cassation)which ruled in a case where the Bill of lading included an arbitration clause referring to the place of arbitration agreed in the charter party.
The said arbitration clause provided for that “the place of arbitration New York U.S. Law and Antwerp Rules 1974 to apply”.
The Cassation court held that “what is mentioned in the charter party (C/P) deprives the consignee of his right of choosing the place of arbitration and confines it to New York City and also does not allow the application of the provisions of the Egyptian Maritime Law No. 8 of 1990 on the dispute, providing that the applicable law is the law of USA and the York Antwerp rules. This invalidates both conditions stipulated in the relevant C/P, hence the arbitration clause becomes null and void and gives the claimant the right to resort to the courts, having the general jurisdiction over all disputes except in case a special provision is in place, given that the claimant has insisted on the nullity of the arbitration clause for having exclusively confined the location of arbitration to New York.
The Provisions of the Egyptian Maritime Law No. 8/1990 should apply on the issue of the arbitration clause subject to the present dispute and on its consequential effects and a ruling should be given nullifying this clause and given that the judgment rendered by the court below ruled differently, it is ill founded.
((Cassation No 595/63 –hearing 28/02/2006))
The above gives in brief the view of the Egyptian legislator and how it its applied in practice before the courts, in the quest to maintain the equilibrium needed between the parties. This need is manifested in not allowing any pre-written clauses in the contract of carriage to govern the disputes between the carrier and the cargo interests. Those articles were proclaimed to protect the shipper’s and receiver’s right in the B/L and to prevent the carrier from exempting his responsibility by choosing a seat of arbitration that will avert the shipper to commence arbitration because of legal fees/cost or to choose a substantive law to govern the arbitration agreement giving them an advantage not stipulated in the Egyptian Maritime Law. Hence, the arbitration clauses referring to complex, expensive and far forums will be nullified by the Egyptian judges as these would prevent the cargo interests from claiming their rights before a jurisdiction they would choose and would force them to resort to unfavorable jurisdictions; same goes for the governing law in foreign jurisdictions.
The Egyptian Competition Law was promulgated by Law 3/2005. The Law aims to ensure that economic activity does not prevent, cripple, or harm freedom of competition. Basically, the Law handles the behavior of persons doing business in the market. A person’s market share shouldn’t constitute a violation unless one of the violations mentioned in the Law is committed. This corresponds with the very name of the Law, as it aims to prevent monopolistic practices, not a monopoly.
On 12 March 2015, Presidential Decree 17/2015 was issued to introduce substantial amendments to the Investment Law 8/1997 (Investment Law). It also amended certain provisions of the Companies Law 159/1981 (Companies Law), the Sales Tax Law 11/1991 (Sales Tax Law), and the Income Tax Law 91/2005 (Income Tax Law). The amendments generally aim at attracting new investments to Egypt through increasing the chances in restoring confidence in Egypt’s investment climate, offering further incentives and guarantees, removing obstacles, streamlining the procedure taking into consideration the existing impediments for foreign and domestic investment.