by AFTINET (edited by bilaterals.org)
Veolia had signed a contract with the Governorate of Alexandria in 2000, to provide waste management services for 15 years. In 2012 Veolia took action against Egypt under the Bilateral Investment Agreement between France and Egypt, which allows for a French investor to sue the state if they can claim that a change in law causes damage to its investment. In this case, part of the damage was alleged to arise from the increase in the minimum wage following a change in the labour law.
It took until April 2015 for the Tribunal to rule that it had jurisdiction over the case, and a further three years for the three-person panel to decide against the company in May 2018.
This is an important win for the government’s right to improve workers’ wages against a private investor’s ‘rights’. But the detailed reasons for the decision remain secret.
However, it is also another case where governments lose even if they win because the Egyptian government had to spend six years defending the case and pay millions of dollars in arbitration and legal costs. Although the costs of this particular case have not been made public, OECD studies show that average costs are US$8-10 million and can be as high as US$30 million.
Last update: May 2021