A New Commercial Code for Egypt

David Wilson*

1 INTRODUCTION

A new Commercial Code was promulgated in Egypt on 17 May 1999 and came into force on 1 October 1999,1 with the exception of Articles 472-549 dealing with cheques, which were originally scheduled to come into force on 1 October 2000.2 The use of legislative codes has a long history in Egypt. The present Civil Code was promulgated by Law No. 131 of 1948 and came into effect on 15 October 1949, replacing both the 1875 Civil Code3 applied by the Mixed Courts and the 1883 Civil Code4 applied by the National Courts. The year 1883 also saw the promulgation of Egypt's first Commercial

* Partner, Trowers � Hamlins, Cairo. My colleagues Mohamed Nour and Karim Azmi of our associate firm, Nour Law Office, kindly gave of their time in reviewing and commenting on a draft of this article, as did my colleague in Trowers � Hamlins, Sara Hinton: thanks are also due to Amal Moussa for her research support. The usual acceptance of responsibility for any remaining errors or other defects applies. 1 Law No. 17 of 1999, Art. 1. This article has been prepared on the basis of translations prepared internally for the use of Trowers � Hamlins. The 1999 Commercial Code is referred to in this article as the new Code or the Commercial Code. Unless otherwise specified, references to articles are to articles of the new Code. For a free translation of Arts. 72-87 and 166-191 by Kosheri, Rashed � Riad see Part III, pp. 429-438. 2 Law No. 17 of 1999, Art. 3. One of the changes introduced by the new Code is to prevent the use of post-dated cheques (see section 6.3 below); implementation of the new provisions relating to cheques has been delayed in recognition of the fact that post-dated chequcs arc currently very widely used. At time of writing this article, it has recently been announced that the date on which the provisions relating to cheques will come into force is to be postponed for a further year to 1 October 2001. 3 Promulgated 28 June 1875. 4 Promulgated 28 October 1883. Code,' being that replaced by the new Code.6 The purpose of this article is to provide an account of the new Code and to highlight some of the changes that it has introduced: where appropriate, reference is made to other relevant legislation, particularly the 1948 Civil Code.7 A comprehensive comparative study is beyond the scope of this article, which is primarily descriptive in nature, but it is interesting to note the extent to which the Code is similar to the Commercial Codes that have been promulgated in Bahrain, Oman and the United Arab Emirates.8 European, particularly French, influence on Egyptian law is often remarked on,9 as is the further spread of that influence from Egypt into the Gulf countries. The high degree of similarity between the new Code and the three others men- tioned suggests an interesting example of reverse legal borrowing or transplantation. 10 The 1883 Code addressed a limited number of topics: split into three books, it briefly covered commercial business and book-keeping (Book 1), forms of company, brokerage and exchanges, creation of mortgages, commis- sion agency and bills of exchange (Book 2) and bankruptcy (Book 3). Bankruptcy accounted for half of the 1883 Code's articles and bills for

5 Promulgated 13 November 1883. The 1883 Commercial Code is referred to in this article as the 1883 Code. During its 116-year history, the 1883 Code was subject only to minor amendments in terms of Law No. 23 of 1909, Law No. 12 of 1944 and Law No. 388 of 1953. 6 The 1883 Code has not been entirely repealed - Arts. 19-65, dealing with certain forms of company available under Egyptian law, remain in force. Those provisions are not summarized in this article as a consolidation of the Egyptian companies laws is known to be under way and it is to be expected that the remaining provisions of the 1883 Code will be repealed when the consolidating legislation is promulgated. 7 Although Egypt has long had distinct civil and commercial codes, it is the Civil Code that forms the more important codification of Egyptian civil law and which is sometimes said to enjoy a quasi-constitutional status among Egyptian lawyers. The Civil Code sets out a general foundation for the country's legal system and, therefore, deals with areas of law that are also relevant to those who are involved in some form of commercial activity. The best English translation of the Civil Code remains that produced by Mr W.R. Fanner and which was published in Egypt in 1952. As well as the Arabic text, an official French translation was also issued. The main change made to the Civil Code has been the replacement of Arts. 390-417 on Proof of Obligations with a separate Law of Evidence (Law No. 25 of 1968) but which did not introduce major changes; minor amendments to Arts. 88, 874 and 970 also need to be taken into account. 8 A commercial code was promulgated in Bahrain by Law No. 8 of 1987, covering four main areas: the nature of commercial activities and obligations, particular commercial contracts (including forms of security), banking transactions and commercial paper. The topic of bankruptcy was addressed in a separate code issued shortly after by Law No. 11 of 1987. The same five topics are covered in very similar terms by the commercial code that was promulgated in Oman by Royal Decree 55 of 1990 and by that promulgated in the UAE by Federal Law No. 18 of 1993. 9 See, for example, Michael H. Davies, Bzasiness Lam in Egypt, Kluwer, Deventer/ Netherlands, 1984, pp. 26-29. 10 This is particularly true in relation to those provisions of the new Code dealing with banking transactions, commercial paper and bankruptcy.