Legal Brief: The Impact of the COVID-19 Pandemic on Contractual Obligations – Advice for Individual, Institutional, and Corporate Clients

The World Health Organization (WHO) announced on March 11, 2020, that the coronavirus (COVID-19) had become a pandemic, meaning it had evolved into a global epidemic. Since that date—and even prior to it—most nations instituted precautionary measures and actions to combat the virus and curb its spread. These measures included unprecedented restrictions on freedom of movement and transit, which in some countries reached the level of partial curfews, the closure of airports, and the shutdown of international borders. They also included the suspension or reduction of operations in public facilities and private companies as part of implementing recommendations to stem the spread of the virus through social distancing strategies, in the hope of buying time to discover an effective vaccine for the virus or to acquire herd immunity so that it would eventually transform into a regular influenza virus.

Egypt was not far removed from these measures; the Egyptian government implemented a number of precautionary and societal steps aimed at preventing the spread of the coronavirus. These measures included suspending studies in schools and universities and all services provided by ministries and governorates to citizens—with the exception of services provided by health offices—as well as imposing a partial curfew, closing airports, sports clubs, cafés, and restaurants (excluding home delivery services), setting operating hours for commercial shops, and issuing economic decisions aimed at mitigating the severity of the consequences of these measures, particularly on sectors affected by the new restrictions.

Just as the World Health Organization described the virus as a global epidemic—a pandemic—economic losses also bear a global character. These direct losses encompassed sectors such as tourism, aviation, and others affected by the imposition of travel and transit restrictions, while also indirectly impacting numerous other sectors.

These losses caused many companies, institutions, and individuals to default on fulfilling their contractual obligations—entered into prior to the emergence of the virus and its evolution into a global pandemic—either because performance became impossible or because performance would be excessively burdensome. Consequently, contractual justice, which existed at the moment of concluding those contracts, was disrupted by the shifting economic conditions during their execution period. Therefore, it is expected that many individuals, companies, and institutions will struggle to continue fulfilling their undertaken obligations, potentially leading to practical and legal problems and dilemmas both in the current period—during the currency of the restrictions and precautionary measures against the virus—and after the virus is reined in and normal life resumes.

This paper aims to provide simplified and general legal consultations/advice to individuals and companies—both clients of the Ahmed Ragheb Law Firm and Legal Consultations and others—on how to deal with current contractual obligations in light of the expected default in their execution following the spread of the coronavirus. This is achieved through:

1. Presenting the legal characterization of this crisis as either force majeure or exceptional/emergency circumstances in Section One.

2. Exploring the legal means to restore balance to contractual relationships amid the shifting economic conditions of the contracting parties—whether through the contracting parties themselves, the executive administration/authority, or the judiciary—in Section Two.

3. Providing general advice to individuals and companies in the final section on how to deal with the fallout of this crisis, while taking into account differences between contracts and the legal positions of contracting parties, which is why we always advise contacting us to study each case individually.

Section One: Legal Characterization of the Coronavirus Crisis—Force Majeure or Exceptional Emergency Circumstances?

It is established that the spread of the coronavirus caused a change in the economic conditions of contractors, resulting in a default in fulfilling contractual obligations. However, what is the legal ruling regarding this situation? Can we say that we are facing a case of force majeure resulting in the extinguishment of the obligation, or are we dealing with general exceptional circumstances?

To answer this question, it is helpful to briefly point out the difference between force majeure and exceptional or emergency circumstances as a basis for non-performance of contractual obligations.

Force Majeure

This refers to sudden and unforeseeable events that are impossible to prevent or ward off, which occur after the contract is drawn up, resulting in the impossibility of performing obligations. The presence of force majeure results in the extinguishment of the obligation and the release of the parties from their duties. Assessing whether a claimed event constitutes force majeure or not is a matter falling within the jurisdiction of the trial court, provided it adheres to these legal principles and bases its judgment on sound reasoning sufficient to support it.

It is important to note here that cases of force majeure may be general—such as wars, natural disasters, or the spread of epidemics—or they may be related to the contract itself, such as an employee being called up for military service, which makes the performance of obligations under the employment contract between the employee and employer impossible.

Exceptional/Emergency Circumstances

The intended meaning of exceptional circumstances as a basis for non-performance of obligations under contracts is that if general exceptional incidents occur that could not have been foreseen, and their occurrence renders the performance of the contractual obligation burdensome to the debtor, threatening them with heavy losses, then the judge may—depending on the circumstances and after balancing the interests of both parties—reduce the burdensome obligation to a reasonable limit.

It is clear from this that the conditions for applying exceptional circumstances are:

• The existence of general exceptional incidents.

• That these incidents occurred after the conclusion of the contract.

• That these incidents could not have been foreseen.

• That the performance of the contractual obligation has become burdensome for the contractor.

The scope of the theory of emergency incidents extends to apply to all deferred-performance contracts as well as continuous (temporal) contracts. It also extends to all contracts characterized by a time gap between their conclusion and execution during which an unexpected exceptional incident occurs that renders performance burdensome for the debtor. This is because its objective is to repair the disruption in contractual balance resulting from exceptional emergency circumstances, which applies equally to deferred obligations and obligations executed periodically.

From the above, it is clear that force majeure and exceptional circumstances share the concept of surprise and the unexpected event, but they differ in the effect of that event on the performance of obligations. Herein lies the main criterion for distinguishing between them: if the unexpected event leads to an impossibility of performance, we are dealing with a case of force majeure; whereas if the effect of the event is that the obligation has merely become burdensome to the debtor, we are facing the application of the theory of exceptional or emergency circumstances.

Applying the foregoing to the economic and social repercussions resulting from the coronavirus epidemic, it cannot be said globally that either theory (force majeure or exceptional circumstances) applies to all contracts indiscriminately. This is because the impact of the crisis is not uniform across all contracts:

• Force Majeure: For some contracts, performance became impossible—such as international passenger transport contracts and tourism sector contracts—due to the suspension of air traffic worldwide and the halt of tourist trips. In these contracts, we face a case of force majeure resulting in the extinguishment of obligations due to the impossibility of performance.

• Exceptional Circumstances: On the other hand, for contracts such as supply contracts (where a supplier is obligated to transport materials or items in specified quantities over a time span), during the contract's term the government announced a curfew to combat the coronavirus. This made the supplier's obligation to deliver goods burdensome because it would require more transport vehicles and drivers to fulfill obligations under the supply contract, thereby raising costs oppressively. The same applies to employment contracts obligating workers to be present at specific times—an obligation that imposes a hardship on workers who must take costly precautions to maintain their safety under announced restrictions and procedures, forcing them to use high-cost technological means to work remotely or secure safe private transport. In such cases, we are discussing the application of the theory of exceptional or emergency circumstances because the worker's or supplier's obligation is not impossible, but rather has become burdensome.

In summary: The impact of the coronavirus on contracts varies depending on the subject matter and circumstances of each contract and the extent to which the parties are affected in performing their obligations. If the performance of obligations has become impossible, we face force majeure and obligations are extinguished; whereas if performance has become burdensome for one of the parties, we face an exceptional circumstance.

Section Two: Legal Means to Address the Disruption of Contractual Justice Caused by Shifting Economic Conditions During Performance (The Concept of Adapting Contracts)

Generally speaking, when discussing the disruption of contractual justice due to economic conditions, the law has specified several means to restore that justice to contracts. These forms fall under the concept of adapting contracts, whereby flaws in contracts during times of general disasters and crises are corrected.

These means include:

1. Contracting Parties Themselves: Implementing an agreed-upon contractual amendment that takes into account emerging circumstances during performance, or even reaching a settlement or conciliation in the event that performance of the obligation is impossible.

2. Executive Authority/Administration: Intervention by the executive authority to restore balance in certain contracts where failure to fulfill obligations harms the public interest.

3. The Judiciary: The judiciary plays an important and primary role in adapting such contracts through its role in interpreting contracts or creating new legal rules.

Thus, legal means to restore contractual justice—which existed at the moment of contract formation—can be divided into three paths: the contracting parties themselves, the executive authority, and the judiciary upon presentation of the dispute.

1. Adapting Contracts Through the Parties Themselves

In the event that one or both parties are affected by the spread of the coronavirus and the resulting measures and restrictions causing losses, the parties to any contract have the right to negotiate to amend the contract or even reach a settlement satisfactory to both parties if contract performance has become impossible.

This right is fundamentally based on the principle that "the contract is the law of the parties"; whoever has the right to conclude a contract has the right to amend it. Amending a contract is subject to the same requirements as its conclusion, such as legal capacity, and that the amendment does not violate public order or public morals, among other conditions.

It is worth noting that it is conceivable that contracting parties may have anticipated these conditions and established a mechanism to address them. In such cases, this mechanism must be activated immediately unless it causes losses to one of the parties. In the event of ambiguity or disagreement regarding the mechanism, such contracts are governed by general rules.

A. Contractual Amendment (Consensual Modification of the Contract)

Consensual contract modification means that the contracting parties agree to amend the contract to render it suitable to the new economic conditions affecting their original agreement, thereby restoring justice between the parties after it was disrupted by economic conditions.

Consensual amendment requires the same conditions as a contract—capacity, intent, and non-violation of public order and morals—alongside the addition of terms concerning the economic circumstances newly emerging upon the original agreement. Contractual modification may take several forms to accommodate new economic conditions. We discuss two forms here:

• Mutual Partial Waiver: This refers to contract modifications focused on a mutual reduction of the parties' obligations aimed at addressing economic circumstances faced by one or both contractors.

  • Example: An employer modifies a contract concluded with a contractor, whereby the employer agrees to a lower-cost plan for the contractor in exchange for the latter accepting a lower fee than agreed upon in the original contract.

  • Example in Employment Contracts: An employer agrees that an employee need not attend the company headquarters daily, provided the employee performs routine tasks from home while waiving travel allowances or the private car allocated by the company for commuting.

• Performance in Lieu (Alternative Performance): This involves contract modifications focused on the subject matter of the obligation itself, where the parties agree to alter the nature of the mutual obligations.

  • Example: If a factory owner agreed to supply solid iron to several companies, but due to a natural disaster or war was forced to convert production to foodstuffs, and the parties agree to substitute solid iron with foodstuffs and amend the contract accordingly, we are facing performance in lieu or reciprocal performance.

  • Example in Employment Contracts: If an employer agrees with a worker to be employed as a company security guard, but due to the spread of the coronavirus pandemic, they agree to replace the security guard position with a delivery service role, we are similarly facing consensual contract modification via alternative performance.

B. Settlement or Compromise

Settlement or compromise is a legal act whereby the parties modify certain elements of their legal relationship, with each party waiving a portion of their claims in exchange for the other party waiving a portion of theirs. This concept finds its legal basis in Article 549 of the Civil Code.

Contractors may resort in certain contracts to settling an existing or potential dispute by drawing up a compromise where each party waives some of their rights under the contract. This path is usually resorted to in cases where continued performance of the contract has become impossible.

2. The Role of the Administration in Adapting Civil Contracts

"Administration" here refers to the executive authority. A distinction must be made between administrative contracts—where the administration possesses broad authority to modify them unilaterally when required by the public interest—and civil contracts, which are governed by the principle that the contract is the law of the parties and to which the administration is not a party.

In principle, the administration has the right to intervene to confront disasters and exceptional circumstances, provided this intervention targets the public interest. This intervention is clearly demonstrated by the broad powers granted to the executive authority by the declaration of a state of emergency.

However, regarding the administration's role in restoring balance to contractual relationships due to economic conditions, the administration has the right to intervene to protect a public interest or as part of confronting public disasters or exceptional situations. One manifestation of this is refusing to assist in executing judicial rulings if such execution would disrupt a public utility or lead to social unrest.

Although this intervention by withholding assistance in executing judicial rulings remains a subject of legal debate and lacks unanimous scholarly consensus, there are legal precedents. Among them is a ruling by the Supreme Administrative Board (Supreme Administrative Court) upholding a ruling by the Administrative Judicial Court rejecting a lawsuit filed by a landlord of a building used as a school whose tenant breached lease conditions. The landlord obtained an eviction judgment. To evade this eviction, the Minister of Education issued a decree seizing the property based on a provision allowing the Minister of Education to seize properties necessary for education.

The landlord appealed the seizure decree on the grounds that it was issued to disrupt the execution of a final eviction judgment having the force of res judicata. When the Supreme Administrative Court reviewed this appeal, it upheld the judgment rejecting the lawsuit, concluding that:

"While an administrative decision may not, in principle, disrupt the execution of a judicial ruling—otherwise it would violate the law—this rule does not apply if immediate execution would result in a grave breach of public interest that is irreparable, such as the outbreak of civil strife or the disruption of a public utility. In such cases, public interest outweighs private individual interest."

In all cases, however, the executive authority's withholding of execution of judicial rulings to protect a public interest must likewise be grounded in a legal provision.

The second image of administrative intervention to restore the balance of contractual justice is direct state intervention in certain contracts, most notably employment contracts and previously tenancy contracts for premises.

Examples of intervention during the coronavirus crisis include decisions by the Central Bank of Egypt regarding the postponement of credit obligations for clients for 6 months without applying additional returns or penalties on delayed payments, issued pursuant to the Circular Letter dated March 15, 2020.

3. The Role of the Judiciary in Adapting Contracts

When a dispute regarding a contract is brought before them, the judiciary and judges possess two main tools to adapt contracts to suit economic variables and circumstances caused by general disasters, emergency events, and exceptional circumstances: adaptation through interpretation and the creation of legal rules.

A. Adapting Contracts via Interpretation of Contracts and Governing Rules

The judiciary possesses the authority to interpret contracts when contract terms are ambiguous, in accordance with Article 150 of the Civil Code. Under this authority, a judge may adapt contracts to make them suitable for restoring balance to a contractual relationship disrupted by new economic conditions.

In this instance, the judge wields broad interpretive power extending to reliance on custom or principles of justice, as set forth in Article 1 of the Civil Code and Article 148 of the same code, which grant judges sweeping discretionary power to interpret contracts in accordance with the requirements of justice.

The judge's interpretive power covers both contract clauses and governing legal provisions. A judge may rely on the legislative intent of the lawmaker based on explanatory memoranda and parliamentary debates—a broad, flexible power enabling the judiciary to play a role in aligning contracts with emerging economic circumstances.

B. Adapting Contracts via the Creation of Legal Rules

The judiciary's stance was previously highly conservative regarding the creation of new legal rules in the absence of governing legal provisions for disputes, based on the principle of separation of powers on the premise that creating new legal rules is a function of the legislature, not the judiciary.

However, this conservative stance has shifted—more visibly apparent in administrative judiciary rulings than in ordinary judiciary rulings. In a famous ruling regarding the creation of legal rules to address changing economic circumstances, the French Council of State in the "Gaz de Bordeaux" case on March 30, 1916, ruled in favor of the Bordeaux Lighting Company to review contract terms and increase prices due to increases in coal prices resulting from war and German occupation of coal regions.

This position is similar to what the Egyptian Court of Cassation decided in a session on June 4, 1977:

"If the appealed judgment proceeded in its ruling to establish the worker's right to equality with colleagues who share equal working conditions and to claim the Aswan allowance in full, and did not base this on the provision of Article 53 of Labor Law No. 91 of 1959, but rather relied on the rule of equality among workers of a single employer—a fundamental rule even in the absence of a special statutory provision, which the rules of justice compel to be applied if an employer resorts to discrimination among workers—such ruling is not subject to appeal on grounds of violating the law."

In summary: The judiciary possesses the authority and right to intervene in contracts to adapt them to better suit emerging economic circumstances with the aim of re-establishing balance between parties to the contractual relationship, through two primary tools: interpreting contracts and their governing provisions, and creating new legal rules.

Section Three: General Advice for Individuals, Institutions, Bodies, and Companies Regarding Their Contracts in Light of Coronavirus Precautionary Measures

Following the preceding legal presentation, the Ahmed Ragheb Law Firm and Legal Consultations offers the following advice for dealing with contracts under the repercussions of the coronavirus and its accompanying measures and procedures affecting economic conditions:

• Review Contracts, Clauses, and Tally Losses: The first step is to review ongoing contracts to examine whether they include provisions regulating default or impossibility of performance, and whether negotiation or dispute resolution mechanisms exist. Initially, one must determine whether there is an absolute impossibility to continue performing the contract or if continued performance entails heavy losses.

• Initiate Negotiations Toward Settlement/Conciliation or Contract Amendment: If the contract review concludes that performance is impossible, we advise settling and reconciling via the extinguishment of obligations due to the presence of force majeure, and agreeing on compensation if warranted or justified. If the study concludes that performance remains possible but burdensome (meaning continued performance leads to heavy economic losses), we advise initiating negotiations to amend contracts with the aim of re-establishing balance in the contractual relationship and avoiding losses for both parties, either via mutual partial waiver or performance in lieu.

• Resort to the Administration: In certain contracts, parties may resort to the administration to intervene to protect a public interest. The administration may also resort on its own accord to issuing decisions protecting contractors against circumstances like current conditions, as seen in the decisions issued by the Central Bank of Egypt.

• Resort to the Judiciary: This is the final step that can be taken, by presenting the dispute to the judiciary so it may rule thereon in accordance with powers granted by law regarding the interpretation of contracts or governing provisions, or even via the creation of new legal rules.

The Ahmed Ragheb Law Firm and Legal Consultations welcomes inquiries and legal consultations through the following communication channels:

• Telephone: 0228362686

• Mobile: 01011908976

• Email: Ragheblegal@gmail.com

• Website: http://ahmedragheb.org/

Crime of Using Personal Content of Others
To link it to content contrary to public morals or to undermine honor and reputation

If someone uses a program or application to use another person's personal items (such as photos or videos) and links them to content contrary to public morals, or even to present the owner of the photos or videos in a way that undermines their honor or reputation, they have committed the crime of using someone else's personal content to link it to content contrary to public morals or to undermine honor and reputation.

In this case, the penalty for the perpetrator is imprisonment for a term of not less than two years and not exceeding five years, and a fine of not less than 100,000 Egyptian pounds and not exceeding 300,000 Egyptian pounds.
(Article 25 of the Information Technology Crimes Law)

The Crime of Bullying
Bullying is any speech, display of power, dominance by the perpetrator, exploitation of the victim's weakness, or exploitation of a perceived flaw of the victim—such as gender, race, religion, body shape, health or mental condition, or social status—with the intent by the perpetrator to frighten, mock, or belittle the victim.

The penalty for bullying is imprisonment for a period of not less than 6 months and a fine ranging from 10,000 Egyptian pounds to 30,000 Egyptian pounds, or one of these two penalties. If the bullying is committed by more than one person, or by individuals who have authority over the victim, the penalty is imprisonment for a period of not less than one year and a fine of not less than 20,000 Egyptian pounds and not exceeding 100,000 Egyptian pounds, or one of these two penalties.
(Article 309 bis (b) of the Penal Code)

The Crime of Sexual Harassment
Sexual harassment has two forms: the first is harassment only, and the second is sexual harassment. The crime differs according to the actions committed by the harasser and their intent behind those actions.

Harassment is when a harasser accosts a victim by performing sexual or pornographic acts, words, hints, or gestures, using any means whether in ordinary life, on the internet, or by phone.

The accosting here does not have to involve physical touching of the victim; it can happen without any friction or even meeting between the harasser and the victim.

In this case, it is considered the crime of harassment, and the penalty is imprisonment for a period of not less than six months and a fine of not less than 3,000 Egyptian pounds and not exceeding 5,000 Egyptian pounds, or one of these two penalties. In the event of repetition by the harasser through stalking and tracking, the penalty is imprisonment for a period of not less than one year and a fine of not less than 5,000 Egyptian pounds and not exceeding 10,000 Egyptian pounds, or one of these two penalties.
(Article 306 bis (a) of the Penal Code)

When Do We Say This Is a Sexual Harassment Crime?
When the harasser's intent behind their actions is to obtain a benefit of a sexual nature, they have committed the crime of sexual harassment, which is punishable by imprisonment for a period of not less than one year and a fine of not less than 10,000 Egyptian pounds and not exceeding 20,000 Egyptian pounds, or one of these two penalties.

"Sexual benefit" here means any requests or desires of a sexual nature, such as the harasser asking the victim to engage in sexual intercourse with them.
(Article 306 bis (b) of the Penal Code)

Crimes of Indecent Public Exposure (Non-Public Indecent Act)
The crime of a non-public indecent act is defined as committing an act offensive to modesty with a female without her consent. It is not required for the indecent act to be public; it is sufficient for it to be between the perpetrator and the victim alone. This crime is punishable by imprisonment for a term not exceeding one year or a fine not exceeding 300 pounds.
(Article 279 of the Penal Code)

The Crime of Defamation and Violation of Privacy
Defamation is defined as publishing information or personal photos on the internet related to the private life of the victim. Whoever does this is punished with imprisonment for a period of not less than 6 months and a fine, even if the information or photos published are true and even if the perpetrator obtained them legally, as long as the publication occurred without the victim's consent.
(Article 25 of the Information Technology Crimes Law)

As for the crime of violating privacy, it refers to anyone who unlawfully spies on, records, or transmits a conversation or photos of a person or persons in a private place by any means, without the victim's consent. In this case, the penalty is imprisonment for a period not exceeding one year, and the court shall also order the destruction and erasure of recordings and photos.

However, if the photos or recording were taken while the victim was aware of being recorded, consent is presumed, and therefore there is neither crime nor punishment for the act.
(Article 309 bis of the Penal Code)

If someone uses recordings or photos that violate the sanctity of private life (discussed previously) even in a non-public manner and without the victim's consent, they are punished with imprisonment (from 24 hours up to 3 years). If someone threatens to disclose these recordings or photos in order to compel a person to perform an act or refrain from doing one, they are punished with imprisonment for a term not exceeding five years.
(Article 309 bis (a) of the Penal Code)

The Crime of Insult and Slander (Sab and Qadh)
Insult (Sab) is defined as abstract profanity that does not involve a specific incident, but it is required to represent an affront to honor or reputation. The penalty for the crime of insult is a fine of not less than 2,000 Egyptian pounds and not exceeding 10,000 Egyptian pounds.
(Article 306 of the Penal Code)

Slander (Qadh) is when someone says something about a person that, if true, would legally subject them to punishment or render them despicable in the eyes of society. Therefore, the information in slander must be of a nature that would warrant punishment or bring disgrace if true—such as accusing someone of being a thief—and the perpetrator must have stated this publicly.

The penalty for slander is a fine of not less than 5,000 Egyptian pounds and not exceeding 15,000 Egyptian pounds.
(Article 303 of the Penal Code)

Who Has the Right to Report a Crime?
Generally, anyone can report any crime, whether sexual assault crimes or others. This is a right stipulated in the Criminal Procedure Law for anyone who learns that a crime has occurred. However, we do not advise people to report crimes without the victim's consent because legally this might compromise her rights. The law exempts the crimes of insult, slander, and non-public indecent acts from this rule, stipulating that only the victim herself or her special attorney-in-fact have the right to file a complaint for these crimes.

Reports submitted by persons other than the victim or without her consent are called "Hisba reports" (reports submitted by individuals claiming to protect public morals and society).
(Article 25 of the Criminal Procedure Law)

Is There Legal Liability If I Report a Sexual Assault Crime?
Generally, we always advise consulting a lawyer before taking legal action so that lawyers can determine the wording of the complaint, discuss all scenarios with the victim, and identify strengths, weaknesses, and evidence of the crime, among other things.

Generally speaking, there is no legal liability on the victim if she files a report, as she is considered a witness in the case and faces no danger at this stage. However, it is important to know that the prosecution and investigative authorities have the right to investigate facts related to the main complaint, and if the complainant is also considered an accused party, they will be investigated as a defendant. For example, if someone goes to the prosecution and says someone stole their phone, but it is later discovered that the stolen phone contains published personal photos, in this case, the complainant will be considered a victim of the crime of defamation and privacy violation, but also a defendant in the crime of theft. Therefore, consulting a lawyer is important.

Is There Confidentiality for Victims' Data?
The law guarantees in all cases the non-publication of investigations and punishes the leakage of investigative information. However, it is important to know that in all cases, the defendant always has the right to know the victims and witnesses in order to respond to their accusations.

Is There a Specific Time Limit After Which I Cannot Report?
Generally, misdemeanor crimes (any crime carrying a penalty of less than three years) cannot be investigated after 3 years. As for felonies (any crime carrying a penalty of more than three years), the period during which we can report the crime is 10 years. Naturally, we can refer to the specific crimes to see their penalties and then determine accordingly.
(Article 15 of the Criminal Procedure Law)

However, two things must be kept in mind:

For certain crimes, the right to report crimes representing an assault on rights and freedoms stipulated in the Constitution does not expire—including crimes attacking private life or women's rights. (Article 99 of the Constitution)

For the crimes of insult, slander, and indecent acts, it is required that the report be filed within 3 months from the time the victim learns of the crime and its perpetrator, otherwise the right to report expires. (Article 3 of the Criminal Procedure Law)

What Are the Legal Procedures to Take My Rights?
Naturally, we always advise consulting a lawyer before resorting to legal procedures to determine our legal standing, identify which crime or crimes to report, and gather our evidence.

Generally, legal procedures consist of 3 stages:

The Reporting Stage: In this stage, the victim—either personally or through a lawyer—files a report with the Public Prosecution or the police. It is important to know that if the victim is under 21 years of age, her father must issue the power of attorney (Tawkeel) to the lawyers. At this stage, the victim or her lawyer determines where to report. If reporting to the Public Prosecution, it is done via a complaint to the competent prosecutor or the Prosecutor General. If reporting to the police, it is done through a report at the competent authority. For internet-related crimes, the police have designated specific locations to receive and investigate complaints, such as the Internet Police, headquartered in Abbasia at the Police Academy. Complaints can be made via phone at 108 or landline 24065051, or by filing in person.

The Investigation Stage: This is the stage where the prosecution investigates the complaint, starting by hearing the statements of the victim, then the witnesses, and finally investigating the defendant. At this stage, the prosecution may decide to refer the victim to the Forensic Medicine Authority depending on the subject of the case; therefore, the presence of lawyers with the victim during investigations is essential and crucial.

The Criminal Trial Stage: This takes place if the prosecution decides to refer the defendant to trial. At this stage, the victim has the right to be present at the trial and request compensation, and is referred to as a "civil claimant" (Madda'iya bil-Huquq al-Madaniyya). She joins the prosecution's requests to impose punishment on the defendant, as the prosecution acts as the opponent of the defendant at this stage.

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Constitutional Challenge to the Constitutionality of Paragraph (4) of the First Clause of Article 134 of the Egyptian Code of Criminal Procedure, as Amended by Law No. 145 of 2006, for Its Conflict with Article 54 of the Constitution of the Arab Republic of Egypt

Submitted by Counsel for the Defendant:
.............................................

In Case No.:
.............................................

Submitted at the Hearing for the Renewal of the Defendant's Pretrial Detention on: .... / .... / 2019

The undersigned counsel for the defendant submits this memorandum to set forth the constitutional challenge to Paragraph (4) of the first clause of Article 134 of the Egyptian Code of Criminal Procedure, on the grounds that it conflicts with Article 54 of the Constitution of the Arab Republic of Egypt.

Defense

Many legal scholars and jurists rightly regard pretrial detention as a harsh and exceptional measure that is inconsistent with justice. On one hand, it conflicts with the presumption of innocence afforded to every accused person; on the other, it undermines the principle of equality by treating a defendant held in pretrial detention differently from one who has been released pending trial.

Despite the severity of this measure, it has a legitimate legal basis rooted in the State's interest in preserving the integrity of criminal investigations and safeguarding the proper administration of justice. Accordingly, legislation has established rules governing the use of pretrial detention so that it remains confined to its proper purpose: protecting the integrity of investigations by ensuring that the accused remains available to the investigating authority for questioning and confrontation whenever necessary, while at the same time preserving the defendant's constitutional presumption of innocence.

Legislative and Historical Development of the Grounds for Pretrial Detention

Historically, pretrial detention was primarily used against persons who had no fixed residence or employment, since such circumstances increased the risk of flight. Consequently, the legislative policy in many jurisdictions—including Egypt—limited the use of pretrial detention to persons without a known place of residence or where there was a genuine risk of absconding, provided that sufficient evidence existed against the accused and that the alleged offense constituted either a felony or a misdemeanor punishable by imprisonment for more than three months.

Accordingly, Article 134 of the Code of Criminal Procedure, prior to its amendment, provided:

"If, after questioning the accused—or in the event of the accused's flight—the evidence appears sufficient, and the offense constitutes either a felony or a misdemeanor punishable by imprisonment for more than three months, the investigating judge may order the accused to be held in pretrial detention.

The accused may also be held in pretrial detention where he has no fixed or known residence in Egypt and the offense is a misdemeanor punishable by imprisonment."

Subsequently, a legislative trend emerged whereby pretrial detention came to be used as a general preventive measure intended to preserve public order. This approach was adopted by the Egyptian constitutional legislator in the 1971 Constitution, Article 41 of which provided:

"Personal liberty is a natural right and shall be safeguarded and may not be infringed. Except in cases of flagrante delicto, no person may be arrested, searched, detained, have his liberty restricted in any manner, or be prevented from moving except by an order required by the necessity of the investigation and the protection of the security of society. Such order shall be issued by the competent judge or the Public Prosecution in accordance with the law. The law shall determine the duration of pretrial detention."

Pursuant to this constitutional provision, Article 134 of the Code of Criminal Procedure was amended to include additional grounds for pretrial detention, including Paragraph (4) of the first clause, concerning the prevention of serious disturbances to public security and public order resulting from the gravity of the offense.

Following the 2006 amendment, Article 134 provided:

"After questioning the accused—or in the event of the accused's flight—where the offense constitutes a felony or a misdemeanor punishable by imprisonment for not less than one year, and sufficient evidence exists, the investigating judge may order the accused to be held in pretrial detention if one of the following circumstances or grounds exists:

1. The offense was committed in flagrante delicto and any resulting judgment must be executed immediately.

2. There is a risk that the accused may flee.

3. There is a risk of prejudice to the investigation, whether by influencing the victim or witnesses, tampering with physical evidence or other indicia, or reaching agreements with co-defendants to alter or conceal the truth.

4. To prevent serious disruption of public security and public order that may result from the gravity of the offense.

Nevertheless, the accused may be held in pretrial detention if he has no fixed or known residence in Egypt and the offense is a felony or a misdemeanor punishable by imprisonment."

This legislative approach was subsequently subjected to considerable criticism on the ground that, in this form, pretrial detention effectively assumed the character of a punishment, contrary to its preventive nature. As a result, a new legislative trend emerged, restoring pretrial detention to its original purpose: safeguarding the investigation rather than protecting public order. Accordingly, French law adopted the system of judicial supervision as an alternative.

In line with this legislative development, the constitutional framers of the 2014 Egyptian Constitution embraced the same principle, limiting the legitimacy of pretrial detention solely to the needs of the investigation, abandoning the broader justification contained in the 1971 Constitution that extended to the protection of society's security.

Accordingly, Article 54 of the current Egyptian Constitution provides:

"Personal freedom is a natural right, safeguarded and inviolable. Except in cases of flagrante delicto, no person may be arrested, searched, detained, or have his freedom restricted in any way except by a reasoned judicial order required by the investigation.

Every person whose freedom is restricted shall immediately be informed of the reasons, notified in writing of his rights, enabled to contact his family and lawyer without delay, and brought before the investigating authority within twenty-four hours from the time his freedom was restricted.

No investigation may commence except in the presence of the accused's lawyer. If the accused has no lawyer, one shall be appointed for him, with appropriate assistance provided for persons with disabilities in accordance with the procedures prescribed by law.

Every person whose freedom is restricted, and any other interested person, has the right to challenge such measure before the judiciary, which must decide the challenge within one week; otherwise, the detainee shall be released immediately.

The law shall regulate the rules, duration, and grounds for pretrial detention, as well as cases in which compensation shall be payable by the State for pretrial detention or for the execution of a sentence subsequently overturned by a final judgment.

In all cases, no defendant in an offense for which detention is permissible may be tried except in the presence of retained or court-appointed counsel."

Having briefly outlined the legislative and historical evolution of pretrial detention, particularly within Egyptian legislation, it remains necessary to demonstrate the conflict between Paragraph (4) of the first clause of Article 134 of the Code of Criminal Procedure and Article 54 of the Egyptian Constitution.

This conflict is evident in the first paragraph of Article 54, which states:

"Personal freedom is a natural right, safeguarded and inviolable. Except in cases of flagrante delicto, no person may be arrested, searched, detained, or have his freedom restricted in any way except by a reasoned judicial order required by the investigation."

Thus, the constitutional legislator has prohibited any restriction on personal liberty—except in cases of flagrante delicto—unless three cumulative conditions are met:

1. A judicial order exists;

2. The judicial order is reasoned; and

3. The reasoned judicial order is required by the investigation.

However, Paragraph (4) of the first clause of Article 134 authorizes pretrial detention for an entirely different reason—namely, to prevent serious disruption of public security and public order that may result from the gravity of the offense. This directly conflicts with Article 54 of the Constitution.

Nor may it be argued that the fifth paragraph of Article 54 authorizes the legislature to regulate the grounds for pretrial detention, since such legislation must remain consistent with the limitations imposed by the first paragraph of Article 54. This conclusion follows from the constitutional principle that constitutional provisions must be interpreted harmoniously and as an integrated whole.

Furthermore, Article 29 of the Supreme Constitutional Court Law No. 48 of 1979 provides:

(a) If, during the hearing of a case, a court or judicial body finds that a statutory provision or regulation whose constitutionality is necessary for deciding the dispute may be unconstitutional, it shall stay the proceedings and refer the matter to the Supreme Constitutional Court without fees.

(b) If one of the parties raises a constitutional challenge during the proceedings and the court considers the challenge to be serious, it shall adjourn the case and grant the party raising the challenge a period not exceeding three months to institute constitutional proceedings before the Supreme Constitutional Court. If such proceedings are not instituted within that period, the constitutional challenge shall be deemed abandoned.

Accordingly, the defense respectfully submits that Paragraph (4) of the first clause of Article 134 of the Code of Criminal Procedure is unconstitutional because it conflicts with Article 54 of the Constitution, for the reasons set forth above.

Accordingly

The defense respectfully requests that the Court:

1. Refer Paragraph (4) of the first clause of Article 134 of the Code of Criminal Procedure—which authorizes pretrial detention "to prevent serious disruption of public security and public order that may result from the gravity of the offense"—to the Supreme Constitutional Court on the grounds that it conflicts with Article 54 of the Constitution;

Or, alternatively:

2. Grant the defense leave to institute proceedings before the Supreme Constitutional Court challenging the constitutionality of Paragraph (4) of the first clause of Article 134 of the Code of Criminal Procedure, insofar as it authorizes pretrial detention "to prevent serious disruption of public security and public order that may result from the gravity of the offense," for its conflict with Article 54 of the Constitution.

Counsel for the Defendant

Ahmed Ragheb
Attorney-at-Law

إليك ترجمة النص إلى اللغة الإنجليزية:

Under the widespread use of freezing the assets of defendants in public funds and terrorism cases, preventing them from disposing of such assets, and freezing them by investigative authorities, Ahmed Ragheb Law Firm and Legal Consultations provides a legal overview for interested parties, lawyers, and stakeholders. This overview includes an insight into these procedures, whether in terms of the cases in which investigative authorities may freeze assets—by preventing their disposal or administration—the difference between these procedures, the individuals whose assets may be frozen, as well as the fate of the frozen assets and the grievance procedures against such measures, as follows:

How did the Egyptian legislator regulate the freezing of assets as a precautionary measure?

The Egyptian legislator regulated the freezing of assets—whether by preventing their disposal or their administration—as part of precautionary measures and to guarantee the satisfaction of the state's financial rights, which consist of whatever the defendant may be ordered to pay in terms of restitution or compensation. Thus, Article 208 bis (A) allows for precautionary measures to be taken against the defendant’s assets. This approach was also taken by the legislator in Article 10 of Law No. 62 of 1975 regarding Illicit Gain, Law No. 8 of 2015 regarding Terrorist Entities, and Law No. 94 of 2015 on Anti-Terrorism.

To understand the legislative framework governing precautionary measures, it must be noted that these procedures—which are temporary by nature—serve as an exception to the general rule, general rights, and established judicial principles, particularly those relating to the presumption of innocence (Article 96 of the Constitution) as well as the constitutional protection of private property (Article 35 of the Constitution). Therefore, they must always be viewed and interpreted in the narrowest sense and within the legislative purpose sought by the legislator, which is the satisfaction of the state's financial rights in the event a judgment ordering restitution or compensation is issued against the defendant; any argument to the contrary would turn these measures from precautionary and temporary procedures into a punishment.

Given the nature of these precautionary measures, the legislator was keen—when regulating them in Articles 208 bis (A) and 208 bis (B) and the amendments made to them pursuant to Article 1 of Law No. 174 of 1998 regarding the amendment of certain provisions of the Code of Criminal Procedure and the Penal Code—to observe these principles.

This was especially emphasized after the Supreme Constitutional Court, in its session on 5/10/1996, ruled the first paragraph of Article 208 bis (A) of the Code of Criminal Procedure issued by Law No. 150 of 1950 to be unconstitutional, and declared the invalidity of its second and third paragraphs as well as Article 208 bis (B) of said law, in Appeal No. 26 of Judicial Year 12.

What are the crimes specified by law in which freezing measures may be taken against defendants?

Codifying the issue of preventing the disposal and administration of defendants' assets—as a departure from the fundamental rules regarding the presumption of innocence and the necessary protection of private property, as explained above—required the legislator to limit this exception to specific crimes to the exclusion of others. Article 208 bis (A) came to specify these crimes exhaustively, which are:

• Crimes provided for in Chapter Four of Book Two of the Penal Code, entitled "Embezzlement of Public Funds, Aggression Against Them, and Treachory," which includes Articles 112 to 119 of the Penal Code.
• Crimes committed against funds owned by the state, public authorities or institutions, their affiliated units, or other public legal entities.
• Crimes in which the law requires the court to rule, on its own motion, for the restitution of the amounts or the value of the items subject to the crime, or to compensate the aggrieved entity.
• Drug-related crimes and illicit gain crimes.
• Terrorist offenses provided for in the Anti-Terrorism Law No. 94 of 2015, or inclusion on terrorist lists pursuant to Law No. 8 of 2015.

Who are the individuals whose assets are frozen as a temporary and precautionary measure?

The persons addressed by the legal regulation governing the freezing of assets are, as a general rule, defendants in the crimes specified by law in which judicial authorities are permitted to issue asset-freezing decisions. However, as an exception to this rule, the assets of the spouses and minor children of these defendants may also be frozen, provided that sufficient evidence is available showing that their funds were derived from the crime subject to investigation and devolved to them from the defendant. In this case, they must be included in the Public Prosecution's request or the Prosecutor General's order—as the case may be—and the matter is submitted to the competent criminal court.

Who holds the authority to issue an asset-freezing decision?

The general rule is that freezing assets is a decision held by competent criminal courts upon request from the Public Prosecution. As an exception to this rule, in urgent cases, the Prosecutor General has the authority to order the freezing of assets, provided that this order is submitted within a time frame specified by law to the competent criminal court to confirm, cancel, or modify the Prosecutor General's decision.

This is the approach taken by the legislator in the Code of Criminal Procedure: under Article 208 bis (A) thereof, the freezing of assets is done upon a request from the Public Prosecution submitted to the competent criminal court, and in urgent cases, the Prosecutor General issues a temporary order to freeze, provided it is presented to the court within a maximum of seven days from the date the order is issued; otherwise, the order shall be considered null and void.

This was also followed by the Egyptian legislator in the Terrorist Entities Law No. 8 of 2015, which required that the Prosecutor General's freezing order be submitted to the competent criminal court, though it granted a longer period for submission to the court, amounting to one month from the date the order was issued.

The legislator confirmed in Anti-Terrorism Law No. 94 of 2015 the applicability of the Code of Criminal Procedure's provisions relating to asset freezing to the procedures followed in terrorist crimes, as well as the authorities' commitment to those rules.

It should be noted here that Terrorist Entities Law No. 8 of 2015 established a legal framework to confront terrorist entities by giving competent criminal courts the authority to list individuals or entities on terrorism lists, which results in freezing their assets and preventing them from disposing of them.

How can one appeal or contest asset-freezing rulings?

The legislator established a specific path to contest asset-freezing and anti-disposal rulings under Article 208 bis (B), by allowing anyone against whom a ruling was issued to file a grievance against that ruling before the competent criminal court after three months have passed from the date of the ruling prohibiting disposal or administration. The grievance is filed via a statement at the clerk's office of the competent criminal court, and the court president must schedule a hearing to consider this grievance, serving notice thereof to the aggrieved party and all interested parties. Finally, the legislator obligated the competent criminal court to decide on the grievance within a period not exceeding fifteen days from the date of its filing.

Dr. Ahmed Fathi Sorour states in his book "Al-Waseet in the Code of Criminal Procedure" regarding the nature of this grievance:

"...Furthermore, despite being called a 'grievance' (Tazallum), it does not address an administrative decision aimed at withdrawing or canceling it; rather, it is a special form of appeal against a judicial ruling aimed at reviewing it, subject to special rules that deviate from the general rules of appealing judicial rulings. The court considers it in its capacity as a second instance of the investigative judiciary. This requires that the circuit considering the grievance be different from the circuit that confirmed the freeze or previously considered the grievance, in application of the general rules regarding judicial impartiality guarantees concerning recusal and disqualification." (Al-Waseet in the Code of Criminal Procedure – Book One – Tenth Edition 2016 – Dar Al-Nahda Al-Arabiya – p. 1133)

What is meant by freezing, and what is the difference between prohibiting the disposal of assets and prohibiting their administration?

Freezing assets (al-tahaffuz 'ala al-amwal) is a general legal term that means temporarily disabling the controller's ability to deal with those assets, whether by disposing of them or administering them. Thus, freezing as a term includes prohibiting the disposal of assets and the exercise of ownership rights over them—whether through disposal, assignment, or other rights—as well as prohibiting the administration of those assets.

The essential difference between prohibiting the disposal of assets and prohibiting their administration lies in the nature of those assets. Generally speaking, as a result, under a prohibition of disposal, the frozen assets usually remain in the possession of their owner, but they are temporarily deprived of disposing of them. Under a prohibition of administration, however, control over the frozen assets shifts to an entity that manages them according to specified conditions.

What is the fate of assets subject to a freezing ruling?

The core idea behind freezing assets as a temporary and precautionary measure is to preserve the rights of others and guarantee the satisfaction of their claims should a final and unappealable ruling ordering compensation or restitution be rendered—as previously explained. Therefore, frozen assets are not confiscated, nor is the owner expropriated of them; rather, they are preserved for a specific, temporary period until the legal dispute concerning them is resolved.

To understand the fate of these frozen assets, a distinction must be made between a decision prohibiting disposal and a decision prohibiting administration:

• In the first case—prohibition of disposal—the assets generally remain in the owner's possession, as mentioned.
• In the second case—prohibition of administration—control over those assets transfers to an entity designated by the court that issued the prohibition of administration. That entity receives the assets, inventories them, and manages them, and it is obligated—upon the conclusion of the asset-freezing measures—to return those assets along with any profits they may have generated, pursuant to Article 208 bis (A) of the Code of Criminal Procedure and Article 8 of Terrorist Entities Law No. 8 of 2015.

However, it should be noted that with the issuance of Law No. 22 of 2018, the Committee for the Procedures of Freezing, Administering, and Disposing of Assets of Terrorist Groups and Terrorists became the body competent to execute judicial rulings and perform the inventory of private funds related to all such rulings issued by the Summary Court (Mahkamat al-Umur al-Musta'jala) concerning terrorist groups and terrorists. Pursuant to Article 11 of the aforementioned law, that Committee may request the court to dispose of the assets and transfer their ownership to the Public Treasury, and the Summary Court issues its ruling upon the Committee's request.