Dechert Secures Complete Dismissal of Claims Against the Arab Republic of Egypt
Dechert LLP recently secured a complete victory at the pleadings stage for the Arab Republic of Egypt in the Southern District of New York. The plaintiff, a dual Egyptian and American citizen who resides in Egypt, was formerly the majority shareholder of SIMO, a privatized Egyptian paper company that had been returned to the public sector. He sought recognition of a purported Egyptian “judgment” that he claimed provided him approximately US$16 million as compensation for his SIMO shares. The document he claimed to be a “judgment,” however, was a decree issued by Egypt’s Prime Minister that directed the country’s Minister of Finance to “provide all necessary financial credits” relating to an Egyptian court’s annulment of the original sale of SIMO shares to public shareholders.
The decree stated nothing about the sum of money owed to the plaintiff and the plaintiff never filed the appropriate action in Egypt to determine that amount. He supported his lawsuit with his own calculation of the shares’ value, in U.S. dollars, for a grossly inflated amount.
The action was initially filed against Egypt’s Minister of Finance in New York state court. Dechert successfully removed the case to the S.D.N.Y. based on the Foreign Sovereign Immunities Act (“FSIA”) on the ground that the “real party in interest” was the Arab Republic of Egypt. Dechert then filed a motion to dismiss on the ground that the Egyptian government was immune from suit under the FSIA.
The FSIA does not provide immunity in every case against a foreign sovereign, but rather limits the immunity it confers through several exceptions. The plaintiff argued that only one such exception applied: the commercial activity exception found in 28 U.S.C. § 1605(a)(2). Dechert successfully argued that the exception did not apply, since (1) the gravamen of the plaintiff’s claim was an alleged taking of his SIMO shares by the Egyptian Government, which was a sovereign, not commercial, act and (2) there was no “direct effect” in the United States for non-payment since the so-called Egyptian “judgment” did not call for payment in the United States.
Judge Rakoff quickly issued a well-reasoned opinion granting the motion to dismiss on FSIA grounds and entering judgment in favor of Dechert’s client. Consistent with the FSIA’s broad protections for sovereigns, he had previously stayed all discovery in the case.
The Dechert team was led by securities partner Linda Goldstein (New York) and included associates Tiffany Engsell (Philadelphia), Christine Carpenter (Philadelphia) and former associate Ryan Moore (Philadelphia), along with paralegal Bernard Powell (New York).
Case Caption: Hussein v. Maait, No. 1:22-cv-02592-JSR (S.D.N.Y.)
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