(1499 words)
Mixed Courts of Egypt
A nineteenth century judicial institution (1876-1948) designed to bring European-based legal order to foreign investment in Egypt. The Mixed Courts employed a modified version of the French Code Civile to regularize the complex capitulatory regime then existing in Egypt, placing foreign legal interests within a single code generally acceptable to European powers. The establishment of a mixed jurisprudence served European commercial interests in two main ways: first, by providing a formal venue for liquidating private debt; second, by providing a legally secure environment for the continuing expansion of European investment in Egypt. The courts additionally advanced the agenda of a nascent local intelligentsia focused upon westernization, led by the Ottoman official Nubar Pasha (1825-1899). The courts served as a forum for judicial intervention between Europeans concerned with investment security, and local debtors. The dismantling of the courts in 1948 resulted from changes in investment patterns beginning in the 1920s, and the global economic crisis of the 1930s.
Formation of the Mixed Courts
The formation of the Mixed Courts has been characterized as the official Egyptian effort at capitulatory reform. Under the capitulatory regime, which originated in the Ottoman Empire in the sixteenth century, foreign powers, such as France, entered into unequal treaties with the Ottomans in order to secure commercial and investment advantages for their resident nationals. By the nineteenth century numerous European powers had attained a capitulatory status, whereby their nationals were exempted from Ottoman law and taxation, while concurrently empowered to bring suit against Ottoman subjects before their respective consulates. As the number of foreigners conducting business and investment in Egypt grew in the nineteenth century, the need for commercial legal reform became obvious. Financial and commercial transactions fell into three categories of debt: private debt generally; bonded public debt; and private loans to the semiautonomous Ottoman Khedive (Viceroy) Isma<ayn>il (r. 1863-1879). As debt-related disputes inevitably arose, foreigners whose countries participated in the capitulatory system sued before their respective consulates for resolution. This left native Egyptians, and those foreigners having no capitulatory protection, without an impartial legal forum. Under Isma<ayn>il’s predecessor, Sa<ayn>id Pasha (r. 1854-1863), an attempt was made to remedy the increasing jurisdictional and jurisprudential confusion by adapting the 1850 Ottoman Commercial Code to Egypt’s situation. However, the creation of private land ownership in Egypt in 1858, and similar measures, increased the complexity of commercial transactions by opening the way to mortgage lending along European lines, a topic the 1850 Code was not equipped to address.
In August 1867, Nubar Pasha, then minister to Isma<ayn>il, suggested the establishment of a “competent” (i.e., European) judicial institution in Egypt for the purpose of “training” native courts. Nubar advocated a comprehensive judicial, as compared to capitulatory, reform, in part to remedy creditor insecurity connected to the lack of uniform laws and courts. He envisioned a multinational judicial institution that supervised a variety of lower courts within Egypt. Nubar’s efforts led to the eventual establishment of the Mixed Courts.
Mixed Jurisprudence
The term “mixed” refers not only to the court’s French/Egyptian hybrid legal code, but also to its mandated mixture of foreign and native judges, to the mixture of foreign and native court staff, and to a mixed bar consisting of foreign and native lawyers. Most importantly, the court invented a new concept of “mixed” jurisdiction. Rather than focusing on the mixed nationality of the parties involved, as the capitulations did, the court invented a rule of subject-matter jurisdiction, called “mixed interest.” Under this theory, the court could take on a case if, for example, as little as one share of corporate stock were owned by a foreign national, in an otherwise entirely native Egyptian company. The court thus favored the protection of foreign commercial interests generally, without respect to the particular nationalities of the parties to the suit. As a result, the Mixed Courts rendered the capitulations practically irrelevant.
The near-bankruptcy of 1875/6
The court’s earliest decisions must be understood within the context of Egypt’s near-bankruptcy of 1875/6. During the preceding decade, the Khedive’s expensive dynastic plans and extravagant lifestyle lead to an alarming increase in Egypt’s bonded debt, much of which was in the hands of British and French nationals. Fearing imminent insolvency, Britain commissioned Stephen Cave to investigate the country’s liquidity. Cave published his report in April 1876, concluding that Egypt had the ability to meet its public debt obligations, but only if repayment was managed by foreign powers, leading to the creation of the foreign-controlled Caisse de la Dette Publique, in May 1876. Anticipating the creation of the Caisse, Isma<ayn>il issued a decree in April, unilaterally consolidating his private debt with Egypt’s bonded debt. The decree brought unanticipated litigation before the new Mixed Courts. Signor Cesar Carpi, a private creditor of Khedive Isma<ayn>il, sued in the Mixed Courts in May 1876 to recover delinquent payments. When Carpi prevailed, enforcement of the court’s judgment threatened to interfere with the public debt repayment efforts of the Caisse, a situation Britain and France could not tolerate. Although the Mixed Courts delayed enforcement of Carpi’s judgment, and numerous others like it, the two nations intervened in 1878, reorganizing Egypt’s cabinet and creating the Dual Control. Nubar Pasha headed the new cabinet, which included one British and one French minister who exercised joint supervision of state revenues and expenditures. The “dual” foreign control over the nation’s budget thus came from within the cabinet itself. This arrangement averted potential bankruptcy, avoiding a conflict between private creditors collecting debt via Mixed Court judgments and bonded creditors seeking repayment through the Caisse, effectively nullifying the Khedive’s consolidation decree.
Private Credit and Mortgage Foreclosures
In the area of private credit generally, the Mixed Courts’ ability to strengthen foreign creditor confidence was demonstrated through the establishment of the Crédit Foncier Egyptien (CFE), a joint-stock mortgage bank funded primarily by investors in London and Paris. The CFE’s 1880 capitalization of £E 1.3Million grew to nearly £E 4Million in 1898, establishing the bank among the largest foreign investment firms in Egypt. The prior 1858 private land ownership laws decreed by Said, coupled with French-based mortgage law (the Napoleonic hypothèque judiciaire) contained in the Mixed Civil Code, opened the way to foreign mortgage lending on agricultural lands to local elites in 1880. Three subsequent events made foreign mortgage lending on cotton-producing land even more secure. First, completion of the dam at Aswan in 1902 ended the annual flooding of the Nile, making physical land boundaries more stable. Second, completion of the Cadastral Survey, between 1899 and 1905, defined legal land boundaries within a European system of description, classification, and measurement. Third, registration of mortgages in the Mixed Courts addressed concerns regarding fraudulent, or multiple, mortgage loans. The convergence of these confidence boosters in about 1900, led to increased foreign mortgage lending in Egypt, which was managed via the Mixed Courts. Between 1899 and 1914, capitalization grew to nearly £E 56Million, through the establishment of new mortgage banks intent upon profiting from the emerging purchase-money mortgage market for agricultural land. The courts duties were increasingly dedicated to mortgage related litigation, particularly foreclosure, since most land sales thus involved a mixed interest.
Changes in mortgage lending during the global depression of the 1930s eliminated most mortgage contracts having a “mixed interest.” This effectively ended the court’s involvement in mortgage foreclosures. Predictably, the number of foreclosures litigated in the Mixed Courts rose dramatically in 1931, as the depression took hold in Egypt. Foreign mortgage banks therefore experienced cash flow deficiencies as loan repayment rates decreased. In turn, banks struggled make interest and principal payments to their own bondholders, whose demands grew more pressing as the depression worsened. In these tight circumstances, mortgage banks sought ways to liquidate assets rapidly, in order to meet their own debt obligations to bondholders. Beginning under Isma<ayn>il Sidqi (Prime Minister 1930-1933), and continuing through 1937, the Egyptian government purchased the loans of the Land Bank of Egypt, the Mortgage Company of Egypt, and a substantial number of CFE loans, removing the bulk of mortgages in Egypt from under Mixed Court jurisdiction, reducing its foreclosure workload markedly.
Assessment
The original justifications for creation of the Mixed Courts in the 1870s centered upon resolving foreign creditor insecurity, and upon providing for debt collection by foreigners. Those justifications were no longer urgent by the mid-1930s. The 1936 Convention of Montreux, and the resultant Anglo-Egyptian Treaty, formalized the dismantling of the Mixed Courts in 1948.
David D. Peck, J.D., Ph.D.
Brigham Young University-Idaho
Bibliography:
Cannon, Byron. Politics of Law and the Courts in Nineteenth Century Egypt. Salt Lake City, 1988. This indispensable work places the Mixed Courts within the context of Eastern Question politics and economics.
Hoyle, Mark S. W. Mixed Courts of Egypt. Leiden, 1991. Hoyle gives a legal history of the court, its personnel, and important decisions.
Brown, Nathan J. The Rule of Law in the Arab World: Courts in Egypt and the Gulf. Cambridge, 1997. This book places the Mixed courts in the context of the evolution of the Egyptian justice system.