CAIRO: Vishnu Swaroop Baldwa is one investor who won’t be returning to Egypt any time soon.

“We see better opportunities elsewhere,” said the chief financial officer of Indorama Corp., one of eight companies seeking arbitration at the Washington-based International Centre for Settlement of Investment Disputes after an Egyptian court stripped it of its local unit, a textile producer.

As Egypt struggles to revive an economy battered by last year’s uprising against Hosni Mubarak, lawsuits attempting to overturn the sale of state assets under his rule threaten to deter foreign investment. The new government is trying to lure funds from abroad while addressing the demands of a population that is staging street protests and strikes almost weekly.

“I pity them,” said Hisham Fahmy, chief executive of the American Chamber of Commerce in Cairo, of Egypt’s new rulers.

“They’re coming on the shoulders of a popular movement and, being the government, they owe it to the public to make sure there is social justice and that’s hard to balance.”

Most of the contractual disputes relate to a privatisation program started in the 1990s, which critics of Mubarak contend is one of his most corruption-riddled legacies. While Prime Minister Hisham Qandil has said the contracts will be respected, “this remains to be seen in real life,” Mona Zulficar, chairwoman of EFG-Hermes Holding, said at an investor conference last week.

Khalid Ali, an Egyptian lawyer who ran for the presidency this year, says he compiled hundreds of documents to convince courts to overturn the investments of Indorama and others. Last month, he persuaded a Cairo court to strip Mexico’s Cemex of its ownership of Assiut Cement, its most profitable unit outside Latin America.

”Privatisation meant workers’ rights were undercut, companies were sold under value and Egyptian production was destroyed,” Ali said, citing El Nasr Steam Boilers Co. as one example.

The company was privatised in 1994 as part of an International Monetary Fund-backed economic program. It remained a loss-maker after the sale and was handed back to the state by Orascom Construction Industries, Egypt’s largest publicly-traded company, after Ali won his case.

”We bought the asset in 2008 in anticipation of specific contracts,” said Omar Darwazeh, OCI’s investor relations manager. “These contracts never materialised.”

In all, 382 companies were sold for 57.4 billion pounds ($9.4 billion) from 1991 to 2009, according to a December 2011 report by the Egyptian Centre for Economic and Social Rights. Critics including Ali say they were often sweetheart deals to Mubarak supporters who were not charged market value.

Some of the most prominent disputes surround land sales related to the planned communities that have sprung up around Greater Cairo. Talaat Mustafa Group’s Madinaty project, Egypt’s biggest property development with 120,000 homes, is threatened after a panel of judges recommended in July the annulment of a contract allowing the Mubarak government to sell the land.

Qandil’s government, sworn in by President Mohamed Mursi in August, is seeking to reverse a capital flight that drained more than half of Egypt’s foreign reserves and left it with the Middle East’s biggest budget deficit. Officials say they target 276 billion pounds in investments this fiscal year, with the private sector called on to provide 176 billion pounds.

After the 1952 military coup that toppled the monarchy, the government “subdued the workers’ movement to attract investors,” said Fatma Ramadan, the head of the strikes committee at the Egyptian Federation of Independent Trade Unions, who sees the current government attempting similar strong-arm tactics. That won’t succeed after Mubarak’s fall, she said. “We now have a popular revolution, and they can’t do the same thing,” she said.

Workers’ strikes and protests have persisted over the past year and a half with demands for higher wages and improved working conditions. “The labour issue is the biggest challenge to foreign investment,” Investment Minister Osama Saleh said at an investors’ conference last week.

Apart from the eight cases in arbitration at ICSID, other disputes are still before Egyptian courts. Ali, who says they have won seven suits since the 2011 uprising, promises “there’s more to come.”

While Assiut Cement remains committed to Egypt, “we’re worried because of the signal that this sends to the investment community,” Chief Executive Officer Sergio Menendez said by phone. “It generates a climate of uncertainty.”

Damac Properties, a Dubai-based developer, filed its case at ICSID in June last year after Egypt seized land the company purchased in 2006 and sentenced its chairman to five years in prison with hard labour.

The government has been trying to reach an out-of-court settlement with Damac, asking it to pay financial compensation for changing the agreed use of the land. The company hasn’t accepted.

Indorama, which was stripped of Misr Shebin El Kom Spinning and Weaving in September last year, filed its ICSID case in December.

”We’ve not been approached by the government for dispute settlement,” Baldwa said.

The cases may be a costly gamble for Egypt, which, with between five to six international arbitrations per year, is well above the average for emerging-market nations, said Aly Shalakany, a partner at Shalakany Law Office, which works on such cases.The claims are rarely below $50 million to $60 million, he said, and “Egypt loses the majority of ICSID cases.” —Washington Post/Bloomberg News Service