A Final Verdict To Void Madinati Contract

Wednesday, 15 September,2010

The Verdict Will Affect 23 Investment Companies
The Supreme Administrative Court Asserts
“Egypt’s Deserts And Lands Are Treasures To Be Cherished Not Wasted”

Cairo 19/9/2010
Yesterday ,18/9/2010, the third chamber of administrative supreme court ,headed by chancellor Munir Gwyfel issued its final verdict to null and void Madinati contract . Earlier the administrative court ruled to void the contract , but the Urban Communities Authority and Talaat Mustafa company challenged the verdict before the supreme administrative court . The court rejected both appeals ,upheld the first instance ruling and accepted all interveners from both parties based on the right of every citizen to defend public property and fund as the conditions of intervention of interest and capacity are fulfilled.
The court stated in the reasons of the verdict that the disputed contract and its annex is an act of direct allocation the Urban Communities Authority 8000 feddans to the Arabic Company for Projects and Urban Development for constructing residential units for sale to others, then the land acquisition process and the contract had to be subject to the law of tenders and auctions and should have not been done by a direct allocation decision .
The court explained that the selling transaction seemed very eccentric. In Madinati contract , the whole deal was closed in secrecy with only both parties aware of all details leading to selling state property for a little in return to be fulfilled on a 20 year time span that could be extended to 25 . As well, the court mentioned the unfair contract terms.
The court pointed to the big difference between the transactions of Madinati contract and other transactions in other deals that followed later. Although some of those deals were in New Cairo , the same area of Madinati project and were done a few months later , yet the difference in prices and terms is huge.
The findings of the ruling asserted that in case of Madinati , the credibility of the real estate market was shaken when the entrepreneurs learnt the details of Madinati project deal amount and terms and the method by which the state gave possession of stat property to others and specifically to a an individual entrepreneur, where in other case , entrepreneurs went through publicly announced auctions that resulted in increasing state revenue and flourishing the real estate market.
The court concluded that the disputed contract is a selling contract of a vast stretch of land that could have been suitable for constructing an entire city. The contract was concluded by direct allocation in an unashamed waste and violation of law provisions for tenders and auctions and the a breach of principles of responsible management .The contract should have been concluded through a public or closed envelope auction where competitors would submit best possible offers. The contract is an erroneous deed of the administration ad casts shadows on the financial balance and the terms of the contract rendering the contract to be void.
The court asserted that Egypt’s deserts and lands are treasures to be cherished not wasted
As for the clients who purchased residential units in Madinati project , the court stated that :
As for the contractors of residential units, shops or other for investment or trade purposes and whether they were handed those units or not yet, their legal position will not be harmed when addressing the effects of voiding the contract of the project. The court stated the clients dealt with a public seller out of their good will and none will be harmed from the verdict and the competent authorities have to make sure when implementing the court ruling , that is terminating the contract and giving the land possession to the Urban Communities Authority and restricting all administration to legal proceedings for the fair return amount of the current time.
As for the decision of the public prosecutor to conclude investigations in Madinati’s case , the court commented as follows
“It is irrelevant that the prosecution decided to conclude the investigation in the communiqué accusing Urban Communities Authority of wasting public funds. The voiding of contract is an independent issue that has no relation to this investigation which considers criminal responsibility and whether there is a waste of public funds or not”.
The Egyptian Center for Economic and Social Rights welcomes this substantial verdict which is a blow to the government policies in administering state property. This verdict implies applying the rule of law on all entrepreneurs who seized state property with a direct allocation decision without complying to the law of tenders and auctions amounting to 23 companies. Those companies managed to possess state property from Urban Communities Authority during the year 1998 (year of issuing law of tenders and auctions) to 2006 , the year that witnessed the issuance of the last direct allocation contract according to the declarations of minister of housing ,Ahmed Al Maghraby , to the presenter Gamal Enayet on ElSafwa channel.
Photos at court at verdict declaration
http://www.youm7.com/News.asp?NewsID=277651

Memoranda submitted by ECESR in Madinati’s case
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