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The Middle Eastern and African Arbitration Review 2019

CRCICA Overview

Cairo Regional Centre for International Commercial Arbitration

Introduction

The Cairo Regional Centre for International Commercial Arbitration (CRCICA) was established in 1979 by an international agreement signed between the Egyptian government and the Asian-African Legal Consultative Organisation (AALCO). CRCICA is an independent non-profit international organisation enjoying all the privileges and immunities of an international organisation fully independent from its host state. It provides a system of dispute settlement for parties engaged in trade, commerce and investment. It provides case management services and administers international and domestic arbitrations and other alternative dispute resolution (ADR) mechanisms according to the CRCICA Rules, which include both arbitration and mediation rules. CRCICA also provides administrative and technical assistance to parties involved in ad hoc arbitrations as well as high-tech hearings rooms to parties involved in other institutional proceedings under various rules such as International Chamber of Commerce, International Centre for Settlement of Investment Disputes, Permanent Court of Arbitration and Court of Arbitration for Sport rules, against or without a fee depending of the arrangement with the relevant institution.

In the Doha session of 1978, as well as in the exchange of letters between AALCO’s secretary general and the Egyptian Minister of Justice on 21 January 1979 establishing CRCICA, AALCO expressed its argument on the necessity of establishing institutions in Africa and Asia, including, inter alia:

  • providing a familiar forum for disputes arising from international transactions related to the two continents;
  • through institutions that will apply the UNCITRAL Rules;
  • enhancing cooperation between regional and international institutions; and
  • promoting international commercial arbitration in the Asian and African regions.

According to AALCO’s exchange of letters, CRCICA adopted the UNCITRAL Rules with some amendments to adapt them to institutional arbitration. The CRCICA Rules, available in Arabic, English and French, reflect the best practices in the field of international institutional arbitration. They were amended in 1998, 2000, 2002, 2007 and 2011 with the aim of ensuring that they continue to meet the needs of their users. The 2011 amendments, in force since 1 March 2011, are based on the new UNCITRAL Arbitration Rules, as revised in 2010, with minor modifications to fit CRCICA’s role as an arbitral institution and an appointing authority. These amendments modernised the CRCICA Rules, promoting efficiency of the arbitral proceedings through many provisions, including, inter alia,

  • introducing a mechanism to form tribunals in multiparty arbitrations;
  • regulating joinder of third parties to the proceedings; and
  • adjusting the original tables of costs to ensure more transparency and flexibility in the determination of the administrative and arbitrators’ fees.

In 2016, CRCICA also issued the French version of the CRCICA Rules, in order to accommodate Sub-Saharan and North African users.

The institutional composition of CRCICA reflects its nature as an international and regional organisation, and its scope encompassing Asia and Africa as well as the rest of the world. The Board of Trustees, which meets once a year and oversees the centre’s caseload, financial statements and general policy, is chaired by Dr Nabil Elaraby and is also composed of two vice-chairmen from Egypt and Saudi Arabia and 21 other eminent members from Bahrain, Cameroon, Chile, China, Egypt, France, Germany, Lebanon, Nigeria, Saudi Arabia, Somalia, Spain and Sweden. CRCICA’s Advisory Committee (AC), includes African, Asian and European specialists and experts. At present, it is composed of 15 eminent members including arbitration specialists from Chile, France, Lebanon, Nigeria, the United States, the United Kingdom, Switzerland and Iraq in addition to Egypt. The AC is entrusted to opine on the requests not to proceed provided for in article 6 of the CRCICA Rules, on:

  • rejection of arbitrators’ appointments;
  • the reduction or increase of the arbitrators’ fees; and
  • depriving a party of its right to appoint an arbitrator.

Tripartite committees formed to decide on arbitrators’ challenges and removal are formed from among members of the AC. The day-to-day work and activities of CRCICA are entrusted with the director, the deputy director, legal advisers, counsels and the following CRCICA departments headed by associate directors and reporting to the director:

  • the Dispute Management Department;
  • the Conferences, Training and External Relations Department; and
  • the Financial and Administrative Department.

CRCICA was recognised in 2014 by an assessment report mandated by the African Development Bank (AFDB) as one of the best arbitration centres in the African continent. The report stated that CRCICA fulfilled the AFDB’s requirement of neutrality and independence. CRCICA has also featured on GAR’s White List of Regional Centres since November 2016.

The costs of arbitration in CRCICA, which include the centre’s administrative fees and the arbitrators’ fees, are reasonable and cost effective. According to a GAR report titled ‘Arbitration costs compared’ published on 25 January 2018, the centre ranks as the cheapest institution in case of one arbitrator and among the top three cheapest in case of three arbitrators in cases whose amount of dispute is US$1 million. For cases worth US$500,000, CRCICA is the cheapest institution irrespective of the size of the tribunal. For disputes worth US$5 millions, CRCICA sits at the middle of the table for three-member tribunals. For disputes worth US$10 million, CRCICA costs continue increasing in comparison to its position in disputes of lesser amounts. For the US$100 million disputes, CRCICA nearly occupies the middle ground for three-member tribunals. The curve then retreats with CRCICA featuring among the most affordable for sole arbitrator disputes worth US$500 million. For sums in dispute exceeding US$3 million the arbitrators’ fees are determined based on Table 3 annexed to the CRCICA Rules and comprise a minimum and a maximum scale of fees. Such spectrum fits different profiles of arbitrators and suits the users’ needs. It is worth mentioning that hearings rooms are included in the administrative fees.

Arbitration before CRCICA is provided for in many bilateral investment treaties (BITs) concluded between Egypt and European parties (including, for instance, the 2001 Egyptian–Austrian BIT) or concluded between countries from the Middle East and Africa (including, for instance, BITs between Egypt and the UAE, Oman, Kuwait, Syria and Lebanon). It is also provided for in BITs where Egypt is not a party, such as the BIT between Libya and Morocco.

CRCICA has made important steps to enhance international and regional cooperation, in light of its original mission, as stated by AALCO, to promote arbitration and disputes settlements in Asia and Africa. Accordingly, CRCICA has adopted since 2016 a policy of cooperation with African and Asian parties, institutions and scholars. This was reflected, as mentioned prior, by the appointment of eminent African and Chinese experts in CRCICA’s Board of Trustees and the AC.

More recently, in light of the ‘One Belt, One Road’ Initiative, CRCIA signed in 2017 the Belt and Road Arbitration Initiative Cooperation Agreement with the Beijing Arbitration Commission/Beijing International Arbitration Center and the Kuala Lumpur Regional Centre for Arbitration.

CRCICA’s policy is to enhance regional, gender and age diversity as well as enhance transparency and neutrality. Not only is this policy reflected in the appointment of arbitrators, it has also been internally applied through the promotion of three female employees among six promoted, one of whom were promoted to Deputy Director of CRCICA.

Caseload

To date, CRCICA has administered 1,312 cases related to disputes arising of almost all type of commercial and economic activities, including the nine cases filed since the beginning of 2019. In 2018, 77 new cases were filed, compared to 65 in 2017.

CRCICA has also administered a few treaty-based investment cases, including mediation cases, as well as cases involving small, medium and large amounts in disputes. It has administered cases where all the parties are Egyptian and their transaction relates to Egypt, international cases including one or more non-Egyptian parties, as well as purely international cases where all the parties were non-Egyptian and the contract in dispute performed outside Egypt.

Based on CRCICA’s statistics, cases arising out of construction and contracts for works ranked at the top of the types of disputes for a number of years. CRCICA has also administrated cases in multibillion oil and gas and waste management industries, as well as telecommunications. The latter cases, despite being limited in number, involved all the GSM mobile and fixed lines operators in Egypt, and involved sums in dispute amounting to hundreds of millions, or even billions, of US dollars. The parties to CRCICA cases are based across the globe in five continents.

Media and entertainment: A rising industry?

Since 2008, and following the 2011 uprisings in Egypt and the Arab world, an increasing number of cases originated in contracts related to the media and entertainment industry. Starting from 2008, and over the past 10 years, CRCICA has administered 55 cases related to media and entertainment.

Historically, Egypt was the region’s leader in media and various arts production, including, theatre, cinema and television. Following the launch of the Arab Satellite Communications Organization (Arabsat) as a satellite service provider, Egypt started satellite broadcasting, being the first Arab state to use the organisation when it launched the Egyptian satellite channel in 1990. In 1998, Egypt launched the NileSat, the second Arab satellite service provider, becoming the first country in the region to have its own satellite. The NileSat carries over 450 digital TV channels. The launching of the NileSat encouraged the establishment of private Egyptian satellite channels, a phenomenon that increased significantly following the 2011 uprisings in Egypt and the region.

The media and entertainment industry operated without a clear regulatory framework before 2016. A media law was issued on 26 December 2016 (the 2016 Media Law), establishing three public entities concerned with different media providers.

Before the 2016 Media Law, there was no regulatory system for broadcasting in Egypt. Public broadcasters were subject to the Egyptian Radio and Television Union (ERTU) Law No. 13 of 1979 modified by Law No. 223 of 1989. ERTU worked under the supervision of the Ministry of Information. This system led to TV channels operating under a total state supervision. No private terrestrial broadcasters operated in Egypt, except a number of FM radio stations, while private satellite television stations were established according to the investment law. Private TV channels operated through satellite from the Egyptian Media Production City, a sort of offshore area. Accordingly, private TV channels obtained their licences from the General Authority for Investment. There was no specific law detailing the conditions or the rules of broadcasting or for the obtaining of a broadcasting licence.

The 2016 Media Law established a Supreme Council for Media Regulation and National Entity for Media, responsible for the operation of state-owned media entities providing services of broadcasting and TV, radio and digital production.

The 2016 Media Law was replaced by Law No. 180 of 2018, issued on 27 August 2018. The new law regulates all aspects of media and journalism. It established, among other institutions, a Supreme Council for Media Regulation (article 67 and 68 of the 2018 Law) responsible for the regulation of audio, visual, print and digital media and the granting of licences for their establishment.

It is under in this legal framework that many disputes were brought before CRCICA related to various private TV channel and satellite service providers as well as daily newspapers editors. Over the past 10 years, CRCICA has administered 55 cases related to media and entertainment, five cases being filed during 2018.

The majority of the cases provided for the application of Egyptian law, with the exception of one case applying English law chosen by the parties in the contract. The type of contracts that have been the basis of the disputes can be summarised into six major categories:

  • contracts between producers and performers (actors or TV show presenters);
  • contracts related to the granting of exclusive broadcasting rights of TV series and shows;
  • contracts between satellite service providers and TV satellite channels;
  • contracts related to the coverage of sports events, concluded between sport federations and broadcasters;
  • contracts between advertising companies and newspapers; and
  • contracts for the management of TV channels.

Other disputes of the past few years have related to the media industry, but did not arise from a media related contracts. For instance, in the first quarter of 2018, a case was filed arising out of a contract for civil works in a well-known cinema complex located in Cairo.

Four cases will be briefly studied below, as an illustration for these different types of contracts and disputes.

The first, filed in 2012, was administered by CRCICA while being an ad hoc case. This case involved a contract between a production company and an actor for the performance of the main role in a TV series. The contract provided for arbitration according to the Egyptian Arbitration Act, to be administered by the CRCICA. The contract gave the company the right to terminate it unilaterally. The actor obtained the down payment, but the producing company (claimant) was not satisfied by the series’s scenarios and scripts. The producer cancelled the production of the TV series, terminated the contract with the actor unilaterally and requested the actor to reimburse the amounts he received. The actor (respondent) refused to reimburse the producer; the latter thus filed a case against him requesting the tribunal to order the actor to reimburse the amount paid to him, in addition to a compensation of a similar amount due to his delay in repaying the down payment he received. The actor argued that he was not responsible for the cancellation of the production and should not be liable for a third party’s non-performance. The claimant company asserted that it had the right to terminate unilaterally the contract according to the contract’s provisions and that the exercise of its right to terminate was not abusive. The tribunal interpreted the clear wording of the contract and the clause it included as conferring the right of unilateral termination upon the producer. Therefore, the tribunal rejected the claim for compensation, while awarding the producing company the amount of the down payment.

The second case was filed in 2014. It related to a contract made between an Egyptian sport federation and a private company, granting the latter the exclusive rights to broadcast various competitions and sports events held by the federation. However, due to some security issues, which occurred during 2012, the competitions were cancelled by a governmental decree. The company was not able to pay the amounts due under the contract. To remedy to this situation, the parties concluded an amendment annexed to the contract reducing the amount of the payments and extending the contract’s duration to another year. Despite the amendment, the company defaulted and the federation brought arbitration proceedings against it before CRCICA, in accordance with the arbitration clause included in the contract. Before the tribunal, the parties discussed many legal issues. An important issue related to whether the cancellation of the competition amounted to a force majeure event discharging the company from its obligations under the contract and whether the federation had the right to terminate the contract for non-performance. The company also claimed to set off some of the amounts due to the federation with other debts that the federation owed to it. The arbitral tribunal granted the respondent its request to set off a part of its dues and obliged it to pay the remaining amount to the federation. The tribunal rejected the application of the force majeure theory because the parties had remedied its consequences through the contract’s amendment by reducing the amount of the payments.

The third case, filed also in 2014, was brought by a satellite provider against an Arab TV channel, with respect to a contract for broadcasting. The satellite provider had first filed a case against the company that owns the TV channel for non-payment of amounts due under the contract. However, the case was terminated following the conclusion of a settlement agreement between both of them, which also provided for arbitration before CRCICA in case of dispute. Following the non-payment by the TV channel of the amounts rescheduled in the settlement agreement, the satellite provider filed a case against it for the payment of the amounts due according to the settlement agreement. The tribunal obliged the respondent jointly with its CEO to pay the amounts due under the settlement agreement.

The fourth case was filed in 2016 by a company owning and operating a number of TV satellite channels against a company for media production and advertisement. The case was based on two contracts made between the two companies and including identical arbitration clauses. Both contracts (a contract was made for each TV channel) granted the media production company exclusive rights for marketing and advertising, and included the implementation by the latter of an advertisement campaign to promote the two TV satellite channels. The claimant company undertook the task of developing the TV channels and obtaining broadcasting rights for TV series and movies. The profits generated by these activities would be divided between the two parties according to a formula provided for in the contracts. The claimant filed the arbitration proceedings requesting compensation for breach of contract. The respondent made a number of counterclaims, including ordering the claimant to pay amounts due under the two contracts.

The identical arbitration clauses provided that disputes that were not settled amicably between the parties within a period of 60 days from the date on which they arose would be settled by arbitration in accordance with the CRCICA Rules.

This case raised many important issues. This article will only focus on two of them, the first being the consequences of the multiple contracts and the effect of the multi-tier arbitration clause.

The first issue relates to the existence of multiple contracts. The respondent argued that it concluded with the claimant two separate independent contracts that did not make references to each other and included two separate arbitration agreements. Accordingly, in the respondent’s view, the claimant should have filed two separate cases and then the parties should have been given the opportunity to agree on the consolidation of the proceedings. In its award rendered in 2018, the tribunal rejected this claim and decided that filing a single arbitration case based on two contracts, whether connected or not, is neither a consolidation of two separate cases nor an extension of the arbitration agreement. According to the tribunal, the claimant filed a single case based on the two contracts, which was valid under the CRCICA Rules since the contracts included identical arbitration agreements.

The respondent also requested the tribunal to declare the case inadmissible because it was filed before the expiry of the 60-day period provided for amicable settlement. Interestingly, the claimant also objected to the respondent’s counterclaims because they were filed before the expiry of the 60-day period.

The tribunal rejected both claims. It decided that the date of the claimant’s notice to the respondent requesting the payment of amounts due under the contracts was the date of the dispute. The tribunal considered that the requirement of the expiry of the 60-days period was fulfilled since the notice of arbitration was filed more than 60 days following the date of the notice requesting the payment, that is, following the date of the dispute that the parties failed to settle amicably.

The media, entertainment, broadcasting and advertising sectors are becoming increasingly important in Egypt’s economy, especially after the issuance of the new investment law in 2017, which kept many of the advantages of free zones and granted investors more rights, guarantees and incentives and the new 2018 media law. The interaction between the new 2018 media law and the new investment law and their impact on investments in the media sector is yet to be observed.