x Abu Dhabi, UAESaturday 22 July 2017

Egyptian banks' plea for damages could set precedent

A petition by two banks claiming Israel stole their stock in a Jerusalem hotel may have wide-reaching implications for Egyptians who lost their property in Israel decades ago.

TEL AVIV // A petition by two Egyptian banks claiming Israel stole their stock in Jerusalem's most prestigious hotel may have wide-reaching implications for Egyptians who lost their property in Israel decades ago. The Egyptian Arab Land Bank and the National Bank of Egypt this month petitioned Israel's Supreme Court seeking about US$78 million (Dh286.5m) in damages over their claims for equity that they had purchased in Jerusalem's five-star King David Hotel during the 1930s, before the creation of Israel.

Ashraf Jassar, the Israeli Palestinian lawyer representing the banks, said the case marked the first time that Egyptians had petitioned to be compensated for assets in Israel. But the scope of the case is also wider than a property ownership dispute, claiming Israel has not met some of its obligations under the historic peace agreement the country signed with Egypt in 1979. According to Mr Jassar, Israel failed to abide by the pact by never forming a joint committee with Egypt to explore the claims for assets by civilians or companies in both countries.

Egypt is one of only two Arab countries - the other is Jordan - with which Israel has a peace accord. The banks' petition may also affect demands by Israel's prime minister, Benjamin Netanyahu, that Jews who had emigrated to Israel during the past six decades from surrounding Arab countries should be reimbursed by those states for their lost properties. Mr Jassar said: "This is a simple test for Netanyahu. Assets that belong to Egyptians, who come from the Arab country that has the strongest ties to Israel, need to be returned. He cannot say no to this, and then expect to get compensation for Jewish assets in Arab states."

The petition is rooted in a decision in 1929 by Albert Mosseri, who was an affluent Egyptian Jewish banker and the director of the National Bank of Egypt, to privately fund half of the costs for the construction of a hotel in Jerusalem that eventually became known as the King David. Other wealthy Jews from Cairo paid for much of the rest while the state-owned National Bank of Egypt itself also invested in the property's establishment, purchasing 693 shares of Palestine Hotels, the company that had built the hotel, between 1934 and 1943.

Mr Mosseri sold all his shares in the hotel company following the 1948 war that created Israel. The National Bank of Egypt's stock was seized a decade later by Israel's so-called absentee property custodian, a body responsible with safeguarding such possessions until an agreement was reached on the assets' ownership, which declared the bank an "absentee" party. According to the petition, Israeli law says that the custodian is not allowed to transfer the property to private hands. However, according to Mr Jassar, the shares were sold to private Israeli companies in 2000.

Officials for Israel's finance ministry and for the Dan Hotels group that runs the King David hotel have declined to comment on the case. Some analysts say the petition is a development in the frequently cool ties between Israel and Egypt. Emad Gad, the director of the Israel research unit at the Al-Ahram Centre for Political and Strategic Studies in Cairo, said the banks' decision to turn to the Israeli legal system to settle their claims indicated a further normalisation in relations between the two countries.

While the chances of the Supreme Court to ruling in favour of the Egyptian banks appear uncertain, the court's decision could have implications on the claims of thousands of people on both sides - especially for Egyptians - for the return of property. Since the 1979 peace agreement with Egypt, Israel has mainly ignored demands for the return of property within its territory from Egyptian nationals or companies.

Very little is known about Egyptian property in Israel, partly because such documentation has not been pursued by Egypt. In contrast, Israel, helped by funding from Jewish organisations abroad, has created extensive databases showing the possessions of Egyptian Jews in their former country. Egypt has also proven more responsive than Israel to such petitions. Mr Jassar estimates that the assets of tens of thousands of Jews who left Egypt after the country joined the war against Israel in 1948 are valued at about $5 billion.

According to Mr Jassar, over the years there were at least 12 legal cases in Egypt in which the courts ruled that the government was obligated to compensate former Jewish nationals for their lost possessions. In 1959, Egypt also signed an agreement with the government of Britain, where many Egyptian Jews emigrated, for the compensation of property for those who could prove ownership. In one prominent case in 2007 that helped spur the current petition by the Egyptian banks against Israel, the Egyptian government returned the Cecil Hotel in the city of Alexandria to its Jewish owners more than five decades after seizing it following a lengthy court battle.

foreign.desk@thenational.ae