Marwan Mabrouk (left) and Thierry Marigny, general manager of Orange Tunisie, at a press conference last year

When France Telecom announced the launch of Orange Tunisie last year, it said it was “proud to associate itself with Marwan Mabrouk” to build Tunisia’s first convergent telecoms operator, whereby different services are channelled into one network.

Sixteen months later, Mr Mabrouk, the son-in-law of ousted leader Zein al-Abidine Ben Ali, has had his 51 per cent stake in Orange Tunisia confiscated by Tunisia’s interim authorities, which are investigating the circumstances in which Mr Mabrouk’s stake in Orange Tunisie was acquired.

It is a position many international companies have unwittingly found themselves in, as transitional governments in Tunisia, Egypt and Libya review myriad foreign investments with links to former members of deposed corrupt and autocratic regimes.

Until a decision is made on Mr Mabrouk’s stake, it is business as usual for France Telecom, which has gone out of its way to emphasise its commitment to the country, including plans to create 150 jobs in the near future.

“France Telecom has confirmed its strong commitment both to Tunisia and to the significant investment made in Orange Tunisie,” says the company.

On the face of it, France Telecom has little to worry about. Under international law, any contracts or concessions entered into by a state under one regime remain in force under subsequent governments, however fundamental the change.

“The replacement of a chief executive of a company does not affect the legal identity and contractual obligations of a company and it is that doctrine that applies to countries undergoing changes from one form of government to another,” explains Shai Wade, a partner at Reed Smith, an international law firm.

However, Mr Mabrouk’s investment vehicle had four directors on the board of Orange Tunisie and, under the shareholder agreement, any change to this needs to be put to a vote at a general meeting of shareholders.

For some foreign investors, the Tunisian state’s confiscation of certain assets could prove to be a boon.

Qatar Telecom, for instance, owns a 75 per cent stake in Tunisiana, a mobile operator. The interim authorities have seized the remaining 25 per cent, which is owned by two minority shareholders, including another son-in-law of Mr Ben Ali.

Now, Qatar Telecom has said it is considering buying this stake, allowing it to increase its presence in the highly competitive Arab market.

But other Gulf investors have not had such smooth outcomes from recent regime changes.

In Egypt, for instance, the interim government in May annulled a deal to sell Omar Effendi, a leading department store chain, to Anwal, a Saudi company, after critics accused ousted president Hosni Mubarak of selling it too cheaply five years ago. Authorities also challenged the legality of the sale of land to Saudi Prince Alwaleed bin Talal, which had been bought during Mr Mubarak’s rule as far back as 1998.

The prince, who had initially considered international arbitration against the Egyptian government, finally reached a preliminary deal, which involved returning 75,000 out of a 100,000-acre agricultural property.

Arbitration remains for foreign companies. Increasingly, when such companies cannot resolve their disputes with transitional governments amicably, they are turning to the Washington-based International Centre for Settlement of Investment Disputes to protect their holdings.

In May, Damac Properties, a Dubai-based property developer, filed an international arbitration case at the ICSID against the Egyptian government over a land row and the conviction of its chairman. At the time, Damac said the ruling was “politically motivated” and characterised it as a campaign against any businessman who had dealt with the former regime.

Elsewhere in Egypt, the United Arab Emirate’s Al-Futtaim Group, which is developing Cairo Festival City in New Cairo, has been accused of buying land below market price and is considering litigation to recover $3.5bn in compensation for land it owned in the country.

Lawyers and consultants say that if foreign investors believe they have been treated unfairly, or are required to give up contractual rights without adequate compensation, they can turn to bilateral investment treaties (BITs), which can provide some protection.

Yet while these new governments will be keen to show they are taking a tough stance on corruption by making an example of a few cases, industry experts say they are also likely to settle many allegations behind closed doors.

“Out-of-court cases have been seen, too, and this is both to save the government from embarrassment and to keep corrupt businessmen out of the spotlight so as to facilitate further deals and not knock investor confidence,” says Jonathan Terry at Maplecroft, a consultancy that assesses environmental, social and governance risk.

Commercial considerations are also likely to play a part. Foreign investors, deprived of revenues in saturated home markets, need to be able to expand in new markets such as Egypt, Tunisia and Libya to generate growth and they need to keep the authorities on their side.

However, whatever deals foreign companies strike with caretaker authorities now, it may all change in a few months when new governments are elected.

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