Foreign investment and Egyptian arbitration system -- the Wena Hotels case.

LONDON--(BUSINESS WIRE)--Sept. 7, 1995--The following media statement was issued by Angela Jelcic, representative of Wena Hotels, London. -0-

British based Wena Hotels continues to face dogged resistance from the Egyptian Hotels Company (EHC), an Egyptian Government company, in Wena's attempt to implement two arbitration awards against the EHC.

Wena, along with its US investors, signed two lease agreements with the EHC for two hotel properties in Egypt: in Cairo for the Nile Hotel contract dated January 28, 1990, and in Luxor for the Luxor Hotel contract dated August 8, 1989. A dispute arose between Wena and EHC. Dramatically, the EHC decided to take the law into their own hands when they spearheaded a commando like raid simultaneously on both properties and illegally and with force took possession of the two properties, in the process illegally confiscating company and staff possessions, documents and property. After legal action, Wena was awarded repossession of the two hotels in 1992.

In 1994, two arbitrations were concluded in Wena's favour in the Wena and EHC conflict. Unfortunately for Wena, the EHC have failed to implement the arbitration awards as the awards have been handed down. In the Nile Hotel Arbitration, the Egyptian Government Company managed to obtain a court directive to implement the Nile Arbitration judgement, but the directive was in contradiction to the actual final Nile Hotel Arbitration Judgement. It appears that somehow EHC managed to implement this flawed directive despite Wena's legal action to stop EHC and their fundamentally defective directive. But, Wena did not receive its compensation money and the EHC evicted Wena under duress and illegally from the Nile Hotel.

In the Luxor Hotel issue, more bizarre and puzzling events took shape. Immediately after the Luxor Arbitration Judgement was issued the EHC quickly instituted attempts to appeal the multi million pound award in Wena's favour. According to Egyptian Arbitration law 27, an appeal does not bar implementation. When Wena went to the Cairo Courts to seek an implementation order, Wena was told that the Court's file containing the original award and other relevant documentation could not be located. This hapless state of events, left Wena unable to get an implementation order for its money. But as luck would have it, the Court eventually found the file when British Embassy officials complained to the Egyptian Minister of Justice. However, it seems that timing in Egypt is an elusive element. Wena was once more on the receiving end of enigmatic events. While Wena's file was "lost" and Wena rendered impotent to implement its Luxor judgement, the EHC took this time to obtain, from a temporary judge, an order to sequestrate the hotel from Wena on grounds of rent due. Once again Wena was faced with contradictory orders issued by Cairo courts that were not at all in sinc with the Arbitration judgements it won. This latest EHC obtained sequestration order, was in conflict and wholly differed from the binding Luxor Arbitration Judgement which specifically denied this claim from the EHC. In fact, the Luxor Arbitration Judgement ordered that it was EHC in fact, that owed Wena over LE (Egyptian pounds) 10 million!

Wena's current position is that it is owed over LE (Egyptian pounds) 11.5 million by the Egyptian Government for over one year, has been evicted under duress once again, and Government agents are trying to strip the company of its other hotel property.

Potential foreign investors would be prudent to take close note of Wena's experience in Egypt as well as the issue of arbitration proceedings in Egypt and the overall judicial system.

CONTACT: Wena Hotels, London

Angela Jelcic, 0171-486-1281