IFC is stepping up its efforts to help firms in Egypt avoid long court procedures by training judges in mediation skills, and helping resolve commercial disputes quickly and cost-effectively.
In Egypt, it takes the courts a minimum of three years to enforce a contract, which is a major bottleneck for businesses and investors.
“Every time I accept a new brief I can only trust that the contract will be honored,” said Sayed, who owns a small graphic design company in Cairo.
“The court system is so torturous and expensive that for small companies like mine it is often easier to accept a loss when customers don’t pay up.”
As an alternative to a full-scale court process, mediation can resolve disputes in just 90 days and free up vital company funds. Such a rapid process fosters a better business environment for investors and entrepreneurs alike.
To encourage mediation, IFC has been helping key stakeholders like the Ministry of Justice and the General Authority for Investment and Free Zones, to build capacity and train judges.
Since the beginning of the project, IFC’s has helped bring 312 mediation cases to settlement, releasing over $131 million back into the flagging economy. The next step is to introduce a mediation law, which IFC has helped draft, encouraging businesses to use mediation, reduce the load on courts and protect investor rights by using accredited mediators.
“A mediation law in Egypt would be a great relief to me and my business,” said Sayed. “It would give me more confidence in dealing with stubborn clients, and make doing business in this country much easier.”
“Mediated solutions are more likely to be adhered to because the parties resolved the dispute themselves. Poor contract enforcement is a major impediment to improving Egypt’s investment climate. Aside from being faster and less costly than going to court, mediation preserves business relationships whereas adversarial court cases often ruin those valuable relationships.”
Mediation is part of IFC’s wider efforts to speed up commercial justice and improve the investment climate across the Middle East and North Africa. IFC has also rolled out mediation efforts in Lebanon, Morocco, and Pakistan to promote and improve the practice of judicial mediation across the region.