Title
Agreement on the Promotion and Protection of Mutual Investments between the Government of the Arab Republic of Egypt and the Government of the Kingdom of Saudi Arabia
Preamble
The Government of the Arab Republic of Egypt and the Government of the Kingdom of Saudi Arabia (hereinafter collectively referred to as the "Contracting Parties," and individually as a Contracting Party),
Desiring to encourage and protect investment and to strengthen the economic ties and relations between them in accordance with their economic priorities; and
Determined to create favorable conditions and greater opportunities for increased investment exchange between investors of the Contracting Parties;
Recognizing the growing importance of encouraging and protecting investments and promoting investment opportunities to motivate investors to undertake further investment initiatives and achieve prosperity and growth between the Contracting Parties in a manner that fulfills the goals of sustainable development;
Recognizing that sustainable development requires the realization of the economic, social, and environmental pillars upon which that concepts based;
Recognizing that these objectives can be achieved without compromising legislation and regulations governing health, safety, environmental protection, labor rights, and the principles of corporate social responsibility - as recognized locally - well as the International Labor Organization conventions ratified by the contracting parties, consumer protection, and the fight against transnational organized crimein a manner that achieves the goals of sustainable development; and
Recognizing the importance of knowledge and technology transfer, job creation, and human resource development resulting ftom these investments; and
Whereas both Parties acknowledge that they retain the right to regulate foreign investment within their territories and to take the necessary measures to ensure that investment activities are consistent with their national laws, regulations, and development policies and strategies related to the achievement of the Sustainable Development Goals;
Affirming their commitment to the principles and purposes set forth in the Charter of the United Nations;
The Contracting Parties have agreed as follows:
Chapter I. Definitions and Scope of the Agreement
Article 1. Definitions
For the purposes of this Agreement, the following terms and expressions shall have the meanings set forth below:
1. "Legislation":
(a) With respect to the Arab Republic of Egypt: the laws, regulations, rules, instructions, and decisions currently in force and those that may be enacted from time to time.
(b) With respect to the Kingdom of Saudi Arabia: the laws, regulations, rules, orders, royal decrees, and instructions in force in the Kingdom of Saudi Arabia.
2. "Investment": Any type of asset owned by an investor, directly or indirectly, in the territory of the host Contracting Party, which is established or created in accordance with the applicable legislation of that host Contracting Party, and which has the characteristics of an investment, including its use for economic purposes or activities, a defined duration, a commitment of capital or other economic resources, an expectation of gain or profit, and an expectation of assuming risk, and that such investments contribute to economic and sustainable development. Such assets may take any of the following forms:
(a) An investment project.
(b) Shares, equity interests, and any other type of investment in companies representing 20% or more of the paid-in capital.
(c) Bonds and debt securities issued by the investment project and loans obtained by it.
(d) Intellectual property rights, in accordance with the applicable national laws and regulations of the host contracting party, and in a manner that does not conflict with the intellectual property rights set forth in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization.
(e) Rights granted under legislation or contract, such as: concessions, licenses, permits, and authorizations issued by the competent authority in accordance with applicable legislation, or construction, management, or production contracts, or revenue-sharing agreements,
(f) Movable and immovable property, as well as any other rights in rem, such as mortgages, concessions, and undertakings.
(g) Claims for money or the performance of work under a contract of economic value related to investment activities,
No change in the form in which the investment was made shall affect its characterization as an investment under this Agreement, provided that such change does not conflict with the laws of the host Contracting Party.
In any case, an investment does not include the following:
(a) Financial claims arising solely from:
1. Commercial contracts for the sale of goods or services within the territory of the Host Contracting Party.
2.The provision of credit related to commercial transactions, such as trade finance,
(b) Any judicial, administrative, or arbitral order, judgment, or decision in and of itself.
(c) Investments in portfolios, sovereign debt instruments, or guarantees and debt securities issued by the government or by a government-owned or government-controlled enterprise, or loans, grants, or subsidies provided or granted to the government or to a government-owned or government-controlled enterprise.
(d) Real estate or any other property, whether tangible or intangible, that is used, acquired, or intended to be used for personal purposes or for a non-economic or non-commercial activity.
(e) Intellectual property rights not protected under the host Contracting Party's legislation.
(f) Any pre-operational expenses related to entering, establishing, acquiring, or expanding an investment, incurred prior to the commencement of the investment's actual investment activities in the territory of the host Contracting Party, such as costs related to licenses, permits, authorizations, administrative fees, and expenses,
(g) Shares of companies listed on the capital markets of either Contracting Party.
3. "Investor": a natural person or a legal entity or affiliated with a Contracting Party who has made an investment in the territory of the Host Contracting Party in accordance with its laws; an investor is defined as follows:
(a) Natural person: Any person who holds the nationality of one of the contracting parties in accordance with its applicable laws and regulations, and who does not simultaneously hold or have previously held the nationality of the other contracting party (dual nationality). A natural person holding multiple nationalities other than that of the other contracting party shall be considered a citizen exclusively of the State of his dominant and effective nationality, and in determining the dominant and effective nationality, the investor's country of habitual residence and the center of his economic activities and social and family ties shall be taken into account, as well as the circumstances under which other nationalities were acquired.
(b) any entity formed or organized under the laws of the Contracting Party of which the investor is a national, having its principal place of business in the territory of that Contracting Party, and carrying on genuine economic activities in the territory of that Contracting Party, whether for profit or not, and whether itis a private entity or one owned or controlled by the government, including any corporation, trust, partnership, sole proprietorship, joint venture, association, or organization, and does not include branches or representative offices of a non-Contracting Party established in the territory of one of the Contracting Parties, In determining the existence of a genuine economic activity, a set of criteria shall be taken into account, to be assessed on a case-by-case basis, including the following:
(a) The legal entity's operations must be located in the territory of that Contracting Party.
(b) The number of employees residing in the territory of the Contracting Party and their qualifications.
(c) The amount of revenue generated in the territory of the Contracting Party.
(d) The existence of an office, production facility, or research laboratory in that Contracting Party.
(e) The nature of the activities carried out by the legal entity in the Contracting Party and the maturity and duration of such activities.
4. "Investment Project" means any entity owned and controlled by the investor and established or organized in accordance with the applicable laws of the host Contracting Party, including any corporation, trust, partnership, sole proprietorship, or joint venture.
The investment project shall be deemed owned by the investor if the investor holds more than fifty percent of the project's shares or equity interests, and the investment project shall be deemed controlled by the investor if the investor has the authority to appoint a majority of the project's directors and has the right to manage its operations in a lawful manner.
5. "Investment Activities": Activities related to the operation, management, maintenance, use, enjoyment, sale, or disposal of investments.
6. "Host Contracting Party": The Contracting Party in whose territory the investment is made.
7. "World Trade Organization Agreement": The Marrakesh Agreement Establishing the World Trade signed in Marrakesh on April 15, 1994.
8. "Convertible Currencies": A currency determined by the International Monetary Fund to be freely usable in accordance with the Articles of Agreement of the International Monetary Fund,
9. "Territory":
(a) With respect to the Arab Republic of Egypt: the territory and territorial waters, the exclusive economic zone(s) and the continental shelf over which the Arab Republic of Egypt exercises sovereign rights and territorial and jurisdictional authority, in accordance with its legislation and international law.
(b) With respect to the Kingdom of Saudi Arabia: The territory of the Kingdom of Saudi Arabia including its islands and airspace, internal waters and territorial sea, the seabed and subsoil beneath them and the airspace above them, and all other maritime areas over which the Kingdom exercises sovereign rights or jurisdiction in accordance with international law.
10. "Revenues": All amounts derived from investments, particularly profits, capital gains, and distributed profits, as well as fees for services.
11. "Corporate Social Responsibility": Encouraging companies to work toward creating a sustainable impact on the development of society, the economy, and the environment, and to incorporate this into their strategies for all investment activities.
12. "New York Convention": The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).
13. "Public Safety": The protection of lives, property, and the environment through the adoption of preventive measures.
14. " Small and Medium-Sized Enterprises (SMEs)":
(a) With regard to the Arab Republic of Egypt: establishments and projects subject to the provisions of legislation governing small, medium, and micro-enterprises.
(b) With regard to the Kingdom of Saudi Arabia: establishments classified according to the criteria approved by the General Authority for Small and Medium Enterprises.
Article 2. Scope of the Agreement
The provisions of this Agreement shall not apply to the following:
(a) Subsidies, grants, and subsidized loans provided by one of the contracting parties or entities owned by or under its control, granted exclusively to its affiliated investors and their investments.
(b) Government procurement and tenders.
(c) Tax matters,
(d) Activities excluded or prohibited from foreign investment under the host Contracting Party's legislation, or under international agreements to which either Contracting Party is a party.
(e) Any preferential measures relating to support for small and medium-sized enterprises,
(f) Restructuring of public debt and the debts of government institutions undertaken by either Contracting Party.
(g) Investments of the General Investment Fund and entities wholly or partially owned by it (with a share of at least 50% of their capital) (any such entity is referred to as "Fund Affiliate," whose investments are governed exclusively by the agreement concluded between the governments of the contracting parties and signed in Cairo on March 30, 2022 (the "Fund Investment Agreement"), and the implementation of this Agreement shall not affect, amend, revoke, or replace any of the rights of the Public Investment Fund or any entity affiliated with the Fund under the Fund Investment Agreement. In the event of any conflict or contradiction between the provisions of this Agreement and the provisions of the Fund's Investment Agreement, the provisions of the Fund's Investment Agreement shall prevail over the provisions of this Agreement with respect to the Fund's investments protected exclusively by the Fund's Agreement.
Chapter II. Obligations of the Contracting Parties
Article 3. Promotion, Acceptance, and Facilitation of Investment
1. Each Contracting Party shall encourage and facilitate, to the greatest extent possible, investments by investors of the other Contracting Party within its territory, and shall permit the entry of such investments, consistent with its rights to exercise its powers in accordance with its laws and applicable investment promotion policies, including laws relating to foreign ownership and control,
2. For greater certainty, the provisions of this Agreement shall not apply to the stage of establishing or setting up an investment in the host Contracting Party, nor shall they include any provisions relating to access to the host Contracting Party's market.
3. Each Contracting Party shall encourage and facilitate investments made by its investors in the territory of the other Contracting Party.
4. In order to increase investment flows, the Contracting Parties shall cooperate as follows:
(a) Exchanging investment-related information regarding laws and regulations pertaining to investment, with the aim of raising awareness of investment opportunities and supporting startups and entrepreneurship, in accordance with their respective laws and regulations in force and as they may be amended from time to time.
(b) Exchanging expertise on investment promotion activities in accordance with the relevant protocols on institutional cooperation.
(c) Encouraging and supporting investment promotion activities such as exhibitions, investment promotion missions, workshops, and seminars.
Article 4. National Treatment
1. Each Contracting Party shall grant to investors of the other Contracting Party and their investments, upon the admission of such investments in accordance with its legislation, treatment no less favorable than that which it grants, under similar circumstances, to its own investors and their investments with respect to investment activities in its territory.
2- Each Contracting Party reserves the right to adopt or maintain certain exceptions to the national treatment standard set forth in paragraph (1) of this Article, provided that such exceptions _relate wholly or partly to tax matters, or fall within the sectors of public utilities, health, and education, or relating to restrictions imposed on foreign ownership of land and real estate in specific areas or ownership shares in investment projects approved in accordance with the host contracting party's legislation, or pertaining to the most underdeveloped geographical regions and areas in need of economic and social development, and the Sinai Peninsula.
Article 5. Most- Favored-Nation Treatment
1. Each Contracting Party shall accord to investors of the other Contracting Party and their investments treatment no less favorable than that which it accords, under similar circumstances, to investors of a non-Contracting Party and their investments with respect to investment activities in its territory.
2. Notwithstanding paragraph (1) of this Article, any benefits granted by one of the Contracting Parties to this Agreement to investors and investments of a non-Contracting Party pursuant to any existing or future economic integration agreement, such as, but not limited to, a customs union, a common market, a free trade area, or a monetary union, or under an agreement to avoid double taxation or other agreements or legislation relating wholly or partly to tax matters.
3, This Article shall not apply to the treatment of investors or investments of any Contracting Party under any bilateral or multilateral international agreement in force or signed prior to the date of entry into force of this Agreement.
4. For greater certainty, treatment under this Article does notinclude procedures for resolving investment disputes between investors and States contained in other international agreements, nor does it include substantive obligations contained therein; accordingly, such provisions shall not be considered when assessing any breach of this Article.
Article 6. Compensation for Losses
The host Contracting Party shall grant investors of the other Contracting Party whose investments in its territory suffer losses or damages due to war, any other armed conflict, revolution, a national emergency, disturbances, riots, or other, with respect to restitution, compensation, or any other settlement, treatment no less favorable than that which it grants in similar circumstances to its own investors or to investors of a non-Contracting Party and their investments in respect of economic activitiesin its territory.
Article 7. Concept of Similar Circumstances In the Treatment of Investments
To ensure greater certainty in the application of the provisions of Articles 4 and Sof this Agreement, determining whether a treatment was granted under comparable circumstances requires a case-by- case examination of all circumstances surrounding the investment, including, depending on the nature of the case, whether the treatment in question discriminates between investors or investments on the basis of legitimate public policy objectives, and having regard to the regulatory process generally applied with respect to the measure in question, its purpose, and its timing, and that the case be in the same sector or activity in which the investor operates,
Article 8. Protection of Investments
1. Each Contracting Party shall grant investors of the other Contracting Party and their investments physical protection and security within its territory.
2. Each Contracting Party shall ensure that investors and investments of the other Contracting Party within its territory are not subject to any measures or procedures involving any of the following situations:
(a) Denial of justice in judicial proceedings, whether crimiral, civil, or administrative,
(b) A fundamental breach of applicable legal procedures.
(c) Manifest arbitrariness, meaning if the measure is not reasonably connected to any legitimate public policy objective, or if the measure was not taken on a legal basis but rather for other reasons based on personal judgment, preference, or bias, or if the measure was taken on the basis of ostensible grounds that are inconsistent with the actual grounds on which the measure was taken, or if there is evidence of deliberate disregard for legal procedures,
Proving manifest arbitrariness requires that the host contracting party take a measure intended to harm the investor and his investment, or that the harm caused to the investor and his investment was clearly foreseeable by the host contracting party.
For greater certainty, a violation by the host Contracting Party of a legislative provision does not in itself constitute manifest arbitrariness, nor do all instances of procedural inconsistency in themselves constitute arbitrariness,
(d) Abusive conduct, which consists of causing harm or threatening to cause harm, coercion, coercive measures, and similar conduct undertaken in bad faith, and proof of abusive treatment requires that the host Contracting Party engage in conduct constituting serious misconduct and that the abusive treatment be based on a combination of factors, including the frequency and persistence of the abusive treatment,
3. In all cases, an allegation of a violation or breach of any provision of this Agreement or any other independent international agreement does not constitute a violation or breach of this Article.
4. For greater certainty, the exercise by a Contracting Party of its regulatory authority, including the enactment of legislation or the amendment of existing legislation, or the taking of a specific measure, which adversely affects an investment or an investor's expectations, including profit expectations, does not in itself constitute a breach of any obligation under this Agreement.
Article 9. Entry, Temporary Residence, and Permanent Residence
Each Contracting Party shall facilitate entry procedures and the issuance of entry visas, in accordance with its legislation regarding the entry of foreigners, as well as its national security considerations, for natural persons who are nationals of the other Contracting Party and who wish to enter the territory of the host Contracting Party for the purpose of carrying out investment activities by the investor and key personnel employed by that investor who are associated with his investments.
Article 10. Expropriation and Compensation
1. Neither Contracting Party shall expropriate or nationalize, directly or indirectly, the investments of investors of the other Contracting Party through any measure or series of measures having the effect of expropriation or nationalization (hereinafter referred to as "expropriation"), except where such expropriation is for the public benefit or interest in accordance with legal procedures, on a non- discriminatory basis, and in exchange for the payment of fair compensation without delay.
2. The compensation referred to in paragraph (1of this Article shall be equal to the fair market value of the investment as of the date on which the expropriation took place or was announced, whichever is earlier, and the compensation shall include interest calculated at a commercially reasonable rate from the date of expropriation until the date of payment, provided thata simple, non-compound interest rate shall be applied from the date of expropriation until the expiration of two years from the submission of the written notice provided for in Article (22) of this Agreement, and that the interest shall be compound for the period exceeding the aforementioned period until the date of payment. Compensation must be tangible, collectible, and convertible into convertible currencies at the market exchange rate prevailing on the date of expropriation. The valuation criteria shall include the value of assets, including the declared tax value of tangible assets and any other criteria deemed appropriate in each case for determining the fair market value of the investment, taking into account all relevant circumstances, in particular: the current and previous use of the property, the date of acquisition, the fair market value of the property, the amount of previous profits realized by the investor through the investment, and the duration of the investment.
3. Expropriation shall be direct or indirect in accordance with the following:
(a) Expropriation shall be direct when the investment is nationalized or its ownership is directly divested through the formal transfer of title or direct seizure.
(b) Expropriation shall be indirect when a contracting party takes a measure or a series of measures having an effect equivalent to direct expropriation, resulting in the investor being permanently and substantially deprived of the essential attributes of ownership in his investmentand losing the ability to generate economic returns, without a formal transfer of title or direct seizure.
4. Determining whether a measure or a series of measures taken by a Contracting Party, in a specific case, constitutes an indirect expropriation, requires analyzing the facts surrounding each case individually, based on a range of factors, including the following:
(a) The economic impact of the measure or series of measures; a negative impact on the economic value of the investment resulting from a measure or series of measures taken by a Contracting Party is not, in and of itself sufficient grounds to conclude that there has been an indirect expropriation of property.
(b) The duration of the measure or series of measures taken by the contracting party; deprivation is not always considered to exist if it is transient, short-lived, or temporary in nature, intended to address an emergency.
(c) The nature, purpose, and substance of the measure or series of measures.
5. Without prejudice to the provisions of Chapter VI of this Agreement, investors affected by expropriation shall have the right to seek redress before the national courts or administrative bodies of the Contracting Party that carried out the expropriation to request a review of the assessment of compensation in accordance with the principles set forth in this Article.
6. Except in rare cases where the effect of a measure or series of measures is so severe as to be disproportionate to the legitimate objective sought to be protected, measures taken in good faith by a Contracting Party that are non-discriminatory and established or applied to protect the public interest - such as public health, safety, the environment, and public order - shall not be considered indirect expropriation.
7. The provisions of this Article shall not apply to measures for the protection, revocation, or restriction of intellectual property rights, or to the issuance of compulsory licenses relating thereto, provided that such measures are consistent with the TRIPS Agreement; nor shall a violation of the TRIPS Agreement in and of itself be considered sufficient grounds for a finding of expropriation.
Article 11. Remedies
1. If a Contracting Party, either directly or through one of its governmental or private affiliates, pays a sum to one of its investors pursuant to a guarantee, insurance contract, or other form of compensation against non-commercial risks entered into by that Party in connection with that investor's investments, the other Contracting Party shall acknowledge the following:
(a) The assignment of any right or claim of the investor to the Contracting Party to which the investor is affiliated, or to a governmental or private entity affiliated with it, whether under legislation or pursuant to a legal transaction conducted in the territory of that Contracting Party.
(b) The Contracting Party to which the investor or the investor's governmental or private affiliate belongs shall be entitled "pursuant to the principle of subrogation" to exercise the rights or claims held by the investor under this Agreement with respect to the investor's investment to the same extent as the original right or claim of that investor.
2. In such a case, the original investor shall not be entitled to assert the same rights administratively, judicially, or through the mechanisms provided for in Chapter VI of this Agreement, unless the Contracting Party or its governmental or private entity authorizes action on its behalf.
3. Disputes between the Contracting Party or its governmental or private entity that has replaced the investor and the host Contracting Party shall be settled in accordance with the provisions of Chapter VI of this Agreement.
Article 12. Transfers
1. Each Contracting Party shall ensure that all transfers of payments related to the investments of an investor of the other Contracting Party may be made freely to and from the Contracting Party without delay; Such transfers shall consist of the following:
a) Paid-in capital and additional amounts intendedto maintain or increase the volume of investments;
(b) All profits, capital gains, distributed profits, fees for services, and other investment returns.
(c) Amounts paid under a contract, including loan installments related to the investments,
(d) Income derived from the liquidation or sale, in whole or in part, of the investment,
(e) Earnings and salaries of the investor's employees who are not nationals of the host Contracting Party and who perform work related to the investments,
(f) Amounts paid in accordance with the provisions of Articles 10 and 11 of this Agreement,
(g) Amounts arising from the settlement of disputes in accordance with Chapter VI of this Agreement.
(h) Fees and revenues from commercial concessions and returns on investments in emerging sectors,
(i) All transfers arising from obligations under this Agreement.
2. Each Contracting Party shall also ensure that such transfers are made in convertible currencies at the exchange rate prevailing in international currency markets on the date of transfer in the host Contracting Party, and in the absence of a prevailing exchange rate as referred to, the exchange rate shall be the rate derived from the average of the rates applied by the International Monetary Fund for the conversion of the relevant currencies into Special Drawing Rights.
3, Notwithstanding the provisions of paragraphs (1) and (2) of this Article, any Contracting Party may delay or refrain from making a transfer in accordance with its legislation, in a fair and non- discriminatory manner and in good faith, in the following cases:
(a) Cases of an investor's bankruptcy, insolvency, or financial distress, or the protection of creditors' rights.
(b) The issuance, trading, or dealing in securities.
(c) Criminal offenses or penalties.
(d) Compliance with court orders or judgments.
(e) Reporting requirements related to currency transfers, and the application of financial disclosure rules or oversight of financial transfers for the purposes of law enforcement and financial supervision.
(f} Prevention of money laundering and terrorist financing.
(g) Collection of taxes and government fees.
(h) Social security, pensions, or collective savings programs.
4. In exceptional cases, if payments or capital movements related to the investment pose a threat to the balance of payments, monetary policies, or the exchange rate of the host Contracting Party, that Party may adopt or maintain measures inconsistent with its obligations under paragraph (1) of this Article; in all cases, such precautionary measures shall:
(a) They shall be non-discriminatory,
(b) They shall be temporary and shall be phased out as the situation described in this paragraph improves,
(c) They shall not exceed the extent necessary to address the circumstances described in this paragraph.