Gamal Abdel Nasser on the Nationalization of the Suez Canal

Explanation and Analysis of the Document

The Order concerning the Issuance of Law No. 285 of 1956 on the Nationalization of the Universal Company of the Suez Maritime Canal is a brief document that announces that “in the name of the nation” the president (Nasser) is seizing control of the ownership and operation of the Suez Canal. The document begins with a preamble that makes reference to various laws over the years that had vested control of the canal in the hands of private stockholders. The document uses the word firmans, which means “royal decrees” and refers to laws that were promulgated when Egypt was a monarchy. At the time construction of the canal began in 1859, the Egyptian viceroy was Sa'id Pasha, who ruled from 1854 to 1863; his successor, Ismail Pasha, presided over the opening of the canal, and it was his policy of westernizing Egypt that nearly bankrupted the nation, forcing him to sell his shares to the British. The preamble also makes reference to later laws having to do with the ownership of the canal company. It refers to three types of ownership: joint-stock companies, limited partnerships, and limited-liability companies. Joint-stock companies issue transferable shares, much like a corporation, but owners of these shares face personal liability for the company's obligations. Limited partnerships are similar in that share owners retain personal liability for the company's obligations; however, their shares are not freely transferable. A limited-liability company issues transferable shares, and its shareholders have no personal liability for the company's obligations.

Article I is the core of the document. It states simply that the Universal Company of the Suez Maritime Canal has been nationalized, meaning that the state of Egypt has seized control of the canal's ownership and operation. The assets, rights, and obligations of the previous company have been dissolved. Article I also stipulates that shareholders would be reimbursed based on the value of their shares on the Paris Stock Exchange the previous day and that payment would be made once the assets of the company had been transferred to Egypt.

Article II turns to the new administration of the canal. It states that a new organization “endowed with juristic personality” was to take over operation of the canal. “Juristic personality,” or “juristic person,” is a term used in law to refer to a “legal person”—that is, an entity (such as a corporation or government agency) that has status as a separate person for certain defined legal purposes. This organization was to be under the authority of the Ministry of Commerce. The Suez Canal Transit Service, which had been operating the canal, would continue to operate as an independent agency not subject to any rules and regulations imposed by the Egyptian government. Article II also gave the transit service broad authority to appoint officials and conduct research studies.

Article III announces that the assets of the canal company had been frozen. This meant that banks, organizations, and individuals could not sell their assets or engage in any financial transactions that involved the assets or shares of the company. The freezing of assets can be a source of great stress to owners of overseas enterprises. According to Article I, holders of shares in the Suez Canal were to be reimbursed eventually, but in the meantime those shares could not be liquidated or transferred.

The remainder of the document consists of legalities. According to Article IV, employees of the canal company were required to continue at their jobs; this article thus ensured the smooth operation of the canal during the transition to national ownership. Article V imposed penalties for violations of Articles III and IV. Finally, Article VI states that the act will be published in “the Official Gazette.” The Egyptian Official Gazette (Al-waqa'ie al-misriyya) is the oldest newspaper in Egypt; its first issue was published in 1828. It has since been considered the newspaper of record in Egypt, in which laws, legal judgments, and presidential decrees have been published. The date of the proclamation is cited as “1375 A.H.” A.H. is an abbreviation meaning Anno Hegirae, which is the Latinized form of H, or Hijri, both of which refer to the Islamic prophet Muhammad's emigration from Mecca to Medina in Saudi Arabia in the year 622. In the Islamic calendar, dates are computed using this year as a base; A.H. is thus similar to the notation of ad or ce in Western dates. “Zull Heggah,” usually spelled Dhul-Hijjah or Thul-Hijjah, is a reference to the twelfth month in the Islamic lunar year.