Case Study: International Airline vs. Major Sports Club (1982–Present)

In the Egyptian market, the most complex disputes are not always about breach of contract. They are about the evolution of the law itself.

A contract signed in 1982 does not exist in a vacuum. It survives through changing regimes, shifting civil codes, and ground-breaking Constitutional Court rulings. When these tectonic plates shift, a stable asset can instantly transform into a massive financial liability.

This case study examines a four-decade dispute involving a major International Airline. It illustrates how Consortio Law Firm navigated a “Legislative Earthquake” to protect the client from a 12 Million EGP retroactive claim.

The Origin: A Contract Built on “Legal Fiction”

The story begins in 1982. Our client (the Airline) leased a prime location from one of Egypt’s largest Sports Clubs.

At the time, Law No. 136 of 1981 (Rent Control Law) was in full force, granting tenants the right of permanent extension. To bypass this, the Landlord drafted the contract with a deliberate legal fiction:

  • The Fiction: They labeled the lease as “Vacant Land.”

  • The Reality: It was a built structure.

  • The Motive: “Vacant Land” leases were exempt from the permanent extension rules of Law 136.

Phase 1: The Reclassification The first legal battle was to destroy this fiction. We filed a lawsuit proving that the subject matter was, in fact, a building. The court ruled in our favor, dismantling the landlord’s attempt to evade the law and securing the client’s right to extend the lease indefinitely under the old law.

The Earthquake: The 2018 Constitutional Ruling

The client’s position was secure for decades—until May 2018.

The Supreme Constitutional Court (SCC) issued a historic ruling (Case No. 11/23 Judicial Year), declaring the “indefinite extension” of commercial leases for legal entities unconstitutional.

The Impact: Overnight, the legal ground shifted. The “forever lease” was dead. The relationship was no longer governed by the special Rent Control Law, but reverted to the Civil Code (Article 563). This meant the lease was now valid only for the period of rent payment (e.g., month-to-month) and could be terminated by the landlord.

The Attack: The 12 Million EGP Claim

Empowered by the Constitutional ruling, the Landlord didn’t just ask the Airline to leave. They sued for “Fair Market Rent” (Agret Methl) dating back decades.

The Claim: 12 Million EGP. The Argument: The landlord argued that the Airline had been “usurping” the land since the contract’s original term ended, and demanded market-rate compensation for the entire period.

The Defense: Strategic Time Segmentation

The danger here was conflating the timelines. The landlord tried to apply the 2018 ruling retroactively to 1982.

Consortio’s defense strategy relied on Temporal Segmentation. We argued that the nature of the “Occupation” changed the moment the SCC ruling was published.

1. Pre-2018: The Era of Legality

We argued that from 1982 until the publication of the SCC ruling, the Airline’s possession was Legally Fortified by the statutes valid at the time. You cannot demand “Compensation for Usurpation” (Ghassb) from a tenant who is protected by the law of the land.

  • Result: The court accepted that no extra compensation was due for this period.

2. Post-2018: The Era of Civil Code

Only after the SCC ruling could the possession be challenged. Even then, the calculation must be based on specific criteria, not arbitrary numbers.

The Victory: Liability Reduced by 83%

The Court of Appeal accepted our segmentation defense.

  • The Claim: 12,000,000 EGP.

  • The Judgment: Reduced to approximately 2,000,000 EGP.

By successfully arguing that the “Usurpation” (if any) could only exist after the Constitutional ruling, we wiped out 36 years of retroactive liability.

The Final Frontier: While we succeeded in slashing the claim, the Appeal Court’s calculation of the remaining 2 Million lacked a clear technical basis. To protect our client’s financial precision, we have escalated the matter to the Court of Cassation, challenging the methodology of the valuation.

Why This Matters for Foreign Investors

This case proves that in Egypt, “Statutory Risk” is just as real as “Commercial Risk.”

  1. Constitutional Awareness: Your lawyer must understand how SCC rulings affect your historical contracts immediately—not years later.

  2. The “Usurpation” Trap: Landlords often confuse “Expiration of Lease” with “Illegal Seizure” to inflate claims. You need a defense team that knows the difference.

  3. Financial Defense: Litigation isn’t just about winning/losing; it’s about Damage Control. Turning a 12M loss into a 2M loss is a strategic victory.

Are you sitting on “Legacy Contracts”? Old leases and agreements may carry hidden risks due to new laws. Contact our Litigation Team for a Contractual Health Check.

📧 Info@consortiolawfirm.com