Egypt's government said on Tuesday it would seek to amend a public auctions law to resolve a legal wrangle that has threatened the country's biggest listed property developer's flagship project.

The government had said it planned to change the laws to end ambiguity about land sales after parliamentary elections due to conclude on December 5 which were expected to hand the ruling National Democratic Party a crushing victory.   

The dispute centres upon the 2005 sale of public land to Talaat Moustafa Group (TMG) for its $3 billion Madinaty residential and commercial project on Cairo's outskirts.
   
'The cabinet agreed to make an amendment to the public auctions law to solve the problem over the Madinaty project,' cabinet spokesman Magdy Rady told reporters.
   
An administrative court ruled in June the deal was illegal because the land was not put up for public auction as mandated by a 1998 law, and a higher court upheld the decision in September. The state said it was following earlier legislation.   

Egypt's independent media have followed the case closely, portraying it as a battle between a judiciary protecting the rights of ordinary citizens and a business elite pampered by the government.

Shares in Talaat Moustafa tumbled after the September ruling, which spawned several copycat cases against other developers, but recovered when the government said it would reallocate the land to the developer under the same terms.

An administrative court prolonged the row last week when it said the state must auction the Madinaty land.

The statement from the cabinet on Tuesday said the government would seek to exempt certain state bodies or individuals from the public auctions law.   

An amendment to that law clarifying the exceptions will be the first item filed by the government for approval by the new parliament when it sits next month, Rady said.
   
'Public institutions and persons could be exempted (from the law requiring auctions) if they have a set of rules and regulations that govern their own affairs,' the statement said.
 
It said the prime minister's office already had the right to allocate state land directly to a chosen buyer. - Reuters