International arbitration in Egypt has continued to grow during the past year. Since the Arab Spring in Egypt, investment treaty claims against Egypt have increased. However, Egypt has also been active in trying to settle these dispute and was successful in settling some of them.
Egypt is a party to 115 bilateral investment treaties (BITs), 28 of which are not yet in force and 15 have been terminated.1 Egypt is also a contracting state to the International Centre for the Settlement of Investment Disputes (ICSID). In 2017, one new investment treaty case was registered with ICSID against Egypt. To date a total of 30 cases against Egypt have been registered with ICSID. Of these 30 cases, eight are currently pending.2
Additionally, in 2017 a new investment law was issued. The new investment law established a new arbitration and mediation centre, new committees to settle investment disputes and investment contract disputes, and provided for the ability of arbitral tribunal to decide the existence of corruption in investment. Also, a new sports law providing for arbitration in sports cases was issued in 2017.
The Egyptian Arbitration Act
The Egyptian Arbitration Act No. 27/1994 (the Arbitration Act) was enacted based on the UNCITRAL Model Law on International Commercial Arbitration (1985). The Arbitration Act applies to arbitrations conducted in Egypt or in cases where the parties to an international commercial arbitration conducted abroad agree to subject the arbitration to the Arbitration Act.3
An arbitration is considered to be international if the subject matter thereof relates to international trade and, inter alia, if the parties to arbitration agree to resort to a permanent arbitral organisation or centre having its headquarters in Egypt or abroad.4 The Arbitration Act is applicable without prejudice to the international conventions to which Egypt is party,5 and applies to all arbitrations between public or private law persons, irrespective of the nature of the legal relationship around which the dispute revolves.6
The arbitration agreement
The Arbitration Act defines an arbitration agreement as an agreement by which the parties agree to resolve by arbitration all or part of the dispute which arose or may arise between them in connection with a specific legal relationship, contractual or otherwise.7In 2005, the Cairo Court of Appeal held that the arbitration agreement is considered to be the legal basis for arbitration and its constitution and determines its scope, extent and the subject of the dispute. Where there is an arbitration agreement, the arbitrators derive their powers from it and the dispute will be outside the jurisdiction of the courts.8
An agreement to arbitrate may take three different forms:
- the arbitration agreement may be embodied as a clause or as an annex to the agreement between the parties before a dispute arises between them;
- the parties may enter into an arbitration agreement after a dispute has arisen. If so, the parties must determine in the arbitration agreement the matters or disputes subject to arbitration, otherwise, the agreement shall be null and void.9 This form of arbitration agreement is referred to as a ‘submission agreement’; or
- the arbitration agreement may be incorporated by reference.
However, the validation of this incorporation requires an explicit reference to an existing document with a valid arbitration agreement therein.10 Pursuant to article 10(3) of the Arbitration Act and Egyptian jurisprudence, the following conditions must be satisfied:
- the reference should be made to an existing document or contract that includes an arbitration clause;
- the document or contract to which the reference is made should be known to all the parties against whom such document or contract and the included arbitration clause will be invoked; and
- the reference should be explicitly made to the arbitration clause itself and to the fact that is an integral part of the contract (a general reference to the existing document or its terms is not sufficient).11
Conditions of validity of the arbitration agreement
In addition to contractual requirements such as consent, capacity and the existence of a legal relationship, the following requirements must be satisfied for there to be a valid arbitration agreement:
- the arbitration agreement must relate to matters that are amenable to compromise;12
- the arbitration agreement must be in writing; otherwise, it shall be null and void.13 It will be deemed written if it is included in written communication exchanged between the parties. This requirement is widely interpreted to include an arbitration agreement concluded by electronic means and including offer and acceptance.14 The silence of an agreement in this regard may be considered as acceptance of the arbitration agreement if there are continued transactions between the parties where the arbitration agreement is included;15 and
- in accordance with article 702 of the Egyptian Civil Code and article 76 of Civil and Commercial Procedures Law, the arbitration agreement may not be concluded by an agent except by virtue of private and specific written delegation;16 otherwise, the arbitration clause will not be effective in relation to the principal.
Arbitration with respect to administrative contracts was a matter much debated before finally being settled by an amendment to the Arbitration Act in 1997.17
Arbitration in relation to administrative contracts is permissible provided the arbitration agreement is approved by the competent minister or by whomever assumes his or her authority with respect to public entities.18 The power to approve the arbitration agreement may not be delegated. Approval may be rendered subsequent to the conclusion of the administrative contract and does not need to be written or expressed in a specific form.19 The approval of the competent minister for the validity of an arbitration agreement is a matter of public policy.20A recent Cairo Regional Centre for International Commercial Arbitration (CRCICA) award held that approval may be implicit, inferred from the circumstances of the case.21
Egyptian courts had held that the absence of ministerial approval invalidates the arbitration agreement.22 In 2010, the Cairo Court of Appeal held that ministerial approval is a legislative requirement for the validity of the arbitration clause and is addressed to both parties.23 Similarly, in 2011, the Administrative Supreme Court upheld the principle that ministerial approval of the arbitration clause is addressed to both parties.24 While some CRCICA tribunals have applied this principle, others have not. Some tribunals have held that the arbitration agreement is not invalidated due to the absence of ministerial approval because this requirement should not be applicable to international commercial arbitrations conducted with foreign investors,25 the Arbitration Act does not provide for an annulment sanction for violation of article 1, and this requirement needs to be fulfilled by the administrative entity and not the other party (ie, it is the sole responsibility of the administrative entity and it should bear the liability for not obtaining ministerial approval).26 Other tribunals have, as recently as 2011, taken the view that the arbitration agreement is void in the absence of ministerial approval.27 The state of case law settled for a while on the position pursuant to which it is sufficient for the validity of arbitration clauses in administrative contracts that the relevant public entity expressly admits in the contract that it has ministerial approval of the arbitration agreement.28
Finally, on 5 March 2016, the Unification of Principles Circuit of the Supreme Administrative Court contributed to this matter in a case related to an arbitration agreement between an administrative authority and a private entity. The Court held that in order for the arbitration agreement in a dispute under an administrative contracts to be valid, the competent minister must approve and sign the arbitration agreement itself. The initial approval to resort to arbitration to resolve the existing dispute does not suffice alone nor does the delegation in signing the arbitration agreement. In any of these two cases, the arbitration agreement shall be null.29
Competent court with regards to administrative contracts
Under article 54(2) of the Arbitration Act, the competent court for the annulment of an arbitral award is the higher court which hears the appeals from the court which would have subject matter jurisdiction over the case in the first place if there was no arbitration. An arbitral dispute arising out of administrative matters, for example, would be subject to the jurisdiction of the Supreme Administrative Court.30 Yet, if the arbitral dispute related to international commercial matters, the award would be subject to the jurisdiction of the Cairo Court of Appeal under article 54(2), except if the parties agree to the jurisdiction of another Egyptian court of appeal.31 It was held by the Supreme Constitutional Court that even in the event where the dispute arises out of an administrative contract, if the subject matter of the contract contains elements which are international or commercial in nature, the Cairo Court of Appeal will be the competent court.32
In line with the foregoing, the Cairo Court of Appeal recently decided that if an arbitral award is rendered based upon an administrative contract, according to article 1 of the Arbitration Act, the second degree of the originally competent court, in this case the Supreme Administrative Court, shall be the competent court for an annulment lawsuit. However, if the dispute is based on an administrative contract, and is an international commercial dispute, then the Cairo Court of Appeal shall be the competent court according to article 1 of the Arbitration Act and not the Supreme Administrative Court.33
Furthermore, the Cairo Court of Appeal held that if the parties agreed in the arbitration clause that the arbitral award is final and no party may challenge it, this cannot prevent either party to file a nullity suit. However, waiver of an annulment suit after the arbitral award is rendered is allowed under Egyptian law.34
Number of arbitrators
Parties are free to choose the number of arbitrators, provided that the number is odd; otherwise, the arbitration shall be null and void. The arbitral tribunal is to be formed of three arbitrators if the parties fail to reach an agreement.35 The same principle applies in the CRCICA Rules whereby the parties are free to choose the number of arbitrators. In case the parties fail to agree on the number of arbitrators, the arbitral tribunal shall be formed of three arbitrators.36
Substituting an arbitrator
The Cairo Court of Appeal held that substitution of the presiding arbitrator or the arbitral tribunal shall not necessitate a repeat of the arbitral proceedings before the newly constituted tribunal. Rather, the new tribunal shall continue the proceedings which took place before its appointment. The foregoing is on the condition that the parties shall have the opportunity to participate in the proceedings (respecting principle of confrontation), and the members of arbitral tribunal shall have the opportunity to deliberate with before rendering the award.37
The possibility of challenging a court decision appointing an arbitrator
Pursuant to article 17(3) of the Egyptian Arbitration Act, an appointment by the competent court to appoint an arbitrator in the case where either party fails to appoint an arbitrator and the two arbitrators fail to appoint a third arbitrator is unchallengeable. However, the Court of Cassation accepted a challenge of this decision and cancelled a judgment from the first instance court, which was confirmed by the Court of Appeal, because it considered that if this decision was rendered in contradiction with law, the parties’ agreement, or jurisdiction rules (which are of public policy), this decision became subject to challenge.38
In situations where a tribunal conducts arbitration proceedings with only two arbitrators, the tribunal is referred to as a ‘truncated tribunal’. This situation typically takes place when one of the co-arbitrators refuses to participate in the deliberations or resigns in the very late stages of the arbitral proceedings.39
According to the general rules of substitution of arbitrators, a substitute arbitrator shall be appointed by the same mechanism used to appoint his predecessor.40 However, the party that appointed the resigning arbitrator may take this opportunity to delay the proceedings.
In an attempt to overcome this, the CRCICA Rules expressly provide that if, and at the request of a party, CRCICA determines that, in view of the exceptional circumstances of the case, it would be justified for a party to be deprived of its right to appoint a substitute arbitrator, CRCICA may, after giving an opportunity to the parties and the remaining arbitrators to express their views, and upon the approval of the advisory committee, either appoint a substitute arbitrator or, after the closure of the hearings, authorise the other arbitrators to proceed with the arbitration and make a decision or award.41
In 2011, the Cairo Court of Appeal held that in certain situations where the behaviour of an arbitrator is unjustified or in bad faith, and provided that the arbitrator has resigned or failed to undertake his mission after the conclusion of all hearings and pleadings, an award rendered by a truncated tribunal shall not be annulled.42 More recently, in 2013, the Cairo Court of Appeal held that there is nothing in Egyptian Law that would prevent the adoption of the CRCICA Rules in this regard and the arbitrator’s refusal to participate in the deliberations with no acceptable reason and his consequential refusal to sign the award are not sufficient reasons to annul the award as provided for by article 43 of Arbitration Act No. 27/1994.43
Recently, the Court of Cassation held in 2015 that awards rendered by a truncated tribunal can be annulled. The court stressed the importance, pursuant to the Arbitration Act of the fact that a tribunal needs to be composed of an odd number of arbitrators and that there must be deliberations between the arbitrators before issuing the award. When those requirements are not met due to the fact that the third arbitrator did not participate in the deliberations, the award becomes subject to annulment.44
Impartiality and independence of arbitrators
The Arbitration Act provides that an arbitrator may not be challenged unless there are serious doubts as to his or her neutrality or independence. The request to challenge shall be submitted in writing to the tribunal, including the reasons for challenge, within 15 days of the party becoming aware of the composition of the tribunal or the circumstances justifying the challenge.45 The CRCICA Rules provide that an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence.46 CRCICA may, with the approval of its advisory committee, reject the appointment of an arbitrator due to the lack of legal or contractual requirements or his or her past failure to comply with certain duties under the rules. The arbitral tribunal is obliged to refer the dispute of recusal to the competent court;47 however, under the CRCICA Rules, this request for recusal shall be adjudicated by a decision of a tripartite special impartial and independent committee to be formed by CRCICA from members of the advisory committee.48 If an arbitrator’s mission is terminated by recusal, discharge, abstention or for any other reason, a substitute shall be appointed according to the same procedures of choosing the arbitrator whose jurisdiction had been terminated.49
The possibility for an Egyptian minister to serve as an arbitrator
According to article 10 of the Presidential Decree No. 106 of 2013, governmental officials, as soon as appointed, are obliged to stop or liquidate any ongoing professional practice they may have and may not present any consultancy services whether paid or unpaid. The Cairo Court of Appeal considered that the minister who serves as an arbitrator does not fall within the said prohibition established by the aforementioned Presidential Decree. This is because serving as an arbitrator does not entail providing consultancy services, and the arbitrator is not considered as an agent or a provider of service. This exclusion from the prohibition applies as long as the minister’s mission as arbitrator does not cause harm to the public interest or the ministers’ governmental position.50
The Arbitration Act grants parties the freedom to choose the applicable procedural law that will be applied by the arbitral tribunal, including their right to subject such arbitration to the applicable rules of any institution or arbitration centre in Egypt or outside. However, if the parties fail to agree on this matter, the arbitral tribunal will be granted the freedom to select the applicable procedural law.51
It is established through judgments of the Egyptian courts that, except for rules related to public policy, arbitral tribunals are not bound by norms considered mandatory in domestic litigations.52
Pursuant to article 46 of the Arbitration Act, the tribunal has the right to suspend the arbitral proceedings if, in the course of the proceedings, a matter falling outside the scope of the arbitral tribunal’s jurisdiction is raised, or if a document submitted to it is challenged for forgery, or if criminal proceedings are undertaken regarding the alleged forgery or for any other criminal act provided that such preliminary matter is essential or necessary for the tribunal to be able to review the arbitral dispute.53 In this case, the arbitral tribunal shall suspend the proceedings until a final judgment is rendered in this respect by the competent authority.54 This will include suspension of the time limit for the making of the arbitral award.55
The role of Egyptian courts in arbitral proceedings
The Arbitration Act provides for certain instances whereby the local courts may intervene in the arbitral proceedings subject to the request of either party to the dispute. For example, the local court may order that provisional or conservatory measures be taken, whether before the commencement of arbitral proceedings or during the procedure on the basis of an application from one of the parties;56 the president of the court referred to in article 9 of this law shall, upon request from the arbitral tribunal, be competent to:
- pass judgment against defaulting or intransigent witnesses imposing the penalties prescribed in articles 78 and 80 of the Law of Evidence in Civil and Commercial Matters; and
- order a judicial delegation.57
The arbitral award
The Arbitration Act grants parties the right to agree upon the time limit of arbitration proceedings. In case of absence of the parties’ agreement, arbitration proceedings are limited to 12 months from the date of commencement of the proceedings. This term may be extended by an additional six months by the tribunal, unless the parties agree otherwise.58 In this regard, if the parties agree to certain arbitration rules to be applied that provide for a different time limit or give the tribunal the authority to extend the time limit according to its discretion, such rules shall be applied. For example, if the parties agree to subject the dispute to the CRCICA Rules, which do not include any time limits for arbitration proceedings, such proceedings shall not be subject to the time limit set forth in the Arbitration Act and shall not be limited to a certain time limit unless otherwise by the agreement of the parties.59 In all cases, if the proceedings exceed the determined time limit, either of the parties may have recourse to the competent court for the purpose of terminating the proceedings or determining a new time limit.60 If the arbitration proceedings exceed the determined time limit, the arbitration agreement shall be considered terminated and the arbitral tribunal shall have no jurisdiction to proceed further.61 However, the parties’ continuance in the proceedings is considered as an implied extension to the time limit.62
Mandatory information to be featured in an award
The Cairo Court of Appeal refused the challenge of an arbitral award on the basis that the arbitral award did not mention the place of issuance of the award, or the nationality of the members of the arbitral tribunal and did not attach or include a copy of the arbitration agreement in the award in violation of article 43(3) of the Arbitration Act. The court held that although the Arbitration Act does require that this information be provided in arbitral awards, this information may be supplemented by another document as long as this document is prior or contemporary to the arbitral award and the latter explicitly refers thereto. The court further applied the procedural rule that as long as the objective of the procedure has been fulfilled, there is no harm suffered and consequently no annulment. On such basis, the omission of information that may lead to annulment of an arbitral award is the omission of information that in the absence of, the objective of providing this information cannot be fulfilled. The court considered in this case, that the place where the award has been rendered is known according to the place of arbitration in the arbitration agreement. The nationality of members of arbitral tribunal is known by their disclosures and CVs submitted upon accepting appointment. Also, the arbitration agreement may be derived from the parties’ claims and defence in the proceedings. In a nutshell, the court considered that no party had suffered any harm by the omission of this information and therefore that the challenge must fail.63
Setting aside of arbitral awards
Pursuant to article 53 of the Arbitration Act, arbitral awards may be annulled for several reasons including, inter alia, absence of a valid arbitration agreement, or the violation to the right of defence of one of the parties. In a recent and heavily publicised case, the Court of Appeal clarified equally its stance regarding article 53, by annulling an arbitral award rendered against a famous Egyptian television personality. The court stated that the correctness of the reasoning of an arbitral award is not subject to its supervision pursuant to article 53. Yet, the courts may annul an arbitral award if the reasoning is completely ambiguous, illogical, based on unfounded facts and assumptions, and full of flagrant discrepancies and unsubstantiated statements to the extent that renders the award without reasoning.64
Article 53 further provides that the court adjudicating the nullity action should decide ipso jure the nullity if it is in conflict with Egyptian public policy. The Egyptian courts have refrained from defining public policy and this has resulted in some uncertainty.
In a very recent case,65 after the arbitral award was issued and annulment was refused by the Court of Appeal, the losing party petitioned for review based on the article 241(1) of the Civil and Commercial Procedures Law, which provides that the parties may, even after a final judgment is rendered, petition for review of the final judgment, if fraudulent conduct of one of the parties is established and the judgment relied unknowingly on the fraudulent conduct to reach its final decision. The losing party claimed that the existence of fraudulent conduct committed by the other party that influenced the outcome of the dispute. The Court of Appeal found in favour of the plaintiff and annulled the award in question based on that procedure for the first time.
Competent court for annulment
According to article 9(1) of the Arbitration Act, if the arbitration is international and commercial in nature, the Cairo Court of Appeal is the competent court to rule on the annulment of award. Article 2 of the said law defines the criterion of ‘commercial arbitration’. It provides that arbitration is commercial if it is raised based upon a legal relationship of economic nature. The article further provides examples of this legal relationship. In this regard, the Court of Cassation held that it is within the judge’s authority to determine whether the relationship is ‘of economic nature’ as per article 2 of the Arbitration Act as long as his determination is based upon reasonable grounds. The court further provides that the judge may rely on the parties’ intent in the contract to reach his determination.66 The court further decided that the public prosecution may bring a suit for nullity of an arbitral award, when the award violates public policy provisions, without the need to comply with time limits for nullity suits provided for in article 54(1) of the Egyptian Arbitration Act.
The possibility of annulment directly by the Court of Cassation
The Egyptian Court of Cassation recently held that the parties and the public prosecution alike may raise grounds of annulment that are of public policy before the Court of Cassation, even if such grounds were not raised before the Court of Appeal, as long as adjudication on theses grounds are based upon the case file that has been presented to the Court of Appeal. In this regard, the Court of Cassation reaffirmed the principles of article 109 of the Civil and Commercial Proceedings Law pursuant to which the jurisdiction of the courts are of public policy.67
Enforcement of arbitral awards
Pursuant to article 55 of the Arbitration Act, all arbitral awards rendered in accordance with the provisions of this law have the authority of res judicata and shall be enforceable in conformity with its provisions.68 The enforcement of domestic arbitral awards is governed by article 56 of the Arbitration Act, which requires a request for enforcement to be submitted to the president of the competent court, along with the required documents.69 The enforcement order shall be submitted after the lapse of the 90-day period prescribed for filing the nullity action and this order will be issued after verifying that certain conditions have been met.70 The enforcement of foreign arbitral awards in Egypt is governed by the New York Convention on the Enforcement of Foreign Arbitral Awards.71 The New York Convention was signed by Egypt on 2 February 1959 and entered into force on 8 June 1959.
Moreover, the Egyptian Court of Cassation recently held that if the provisions of the New York Convention on the Enforcement of Foreign Arbitral Awards were in contradiction with the provisions of domestic Egyptian law, the provisions of the New York Convention would prevail.72
Under article 54(2) of the ICSID Convention, the recognition and enforcement of an award may be obtained from the competent court or other authority designated by a contracting state on presentation of a copy of the award certified by the secretary general of the ICSID. The Ministry of Justice has been designated by Egypt as the competent authority for the recognition and enforcement in Egypt of arbitral awards rendered pursuant to the ICSID Convention. Execution of the award is, in accordance with article 54(3) of the ICSID Convention, governed by the law on the execution of judgments in force in the country where execution is sought, which in Egypt is the procedures law. ICSID awards should be enforced in Egypt without prejudice to the Egyptian law provisions regarding the immunity of Egypt or any foreign state from execution (article 55 of the ICSID Convention). Article 87 of the Egyptian Civil Code provides that public assets of the Egyptian state are immune from enforcement and attachment procedures.
In a recent ruling,the Court of Cassation held that after the Constitutional Court ruled that article 58(3)of the Arbitration Act which allows for the challenge of the judge’s order to refuse enforcement of an arbitral award whilst prohibiting challenge of the judge’s order to execute the arbitral award, is unconstitutional, the courts must comply with the Constitutional Court’s award, and that this principle is of public policy.73
Seat and venue of arbitration in feed-in tariff programme contracts
An issue that has recently attracted a lot of media attention and that has become of relevance is the acceptance of international arbitration in contracts relating to the Egyptian Feed-In Tariff (FIT) programme.
The Egyptian Minister of Electricity and Renewable Energy (MOERE) announced in a press conference held on 6 September 2016 the launch of a second round of the FIT programme with the aim of attracting more foreign investment in Egypt.74 The MOERE agreed in this round of the FIT programme that arbitration will be governed by the Rules of CRCICA, and the seat of the arbitration would be held offshore whilst the venue of the arbitration would be in Cairo at CRCICA.
This step stemmed from several investors refusing to invest in Egypt if international arbitration was not agreed to in the contracts, nearly leading to the collapse of the first round of the FIT programme.75 The insistence of the foreign investors on having an offshore seat of arbitration was at odds with the position of the MOERE which insisted upon arbitration seated in Egypt. This was resolved in the second round by providing for an offshore seat of arbitration whilst the venue of arbitration remained in Cairo.
The acceptance of the MOERE to hold arbitration in an offshore seat yet keeping the venue in Egypt is a creative way of counteracting the requirement that contracts made with the MOERE may only be submitted to arbitration whose seat is in Egypt.
Establishing a new arbitration and mediation centre by virtue of the new Egyptian Investment Law No. 72 of 2017
The new Investment Law No. 72 of 2017 was ratified and promulgated on 31 May 2017. The main aim of enacting this law is to attract new investments to Egypt via offering additional incentives and guarantees along with reducing governmental red tape.
The law established a new arbitration and mediation centre under the name of the ‘Egyptian Centre for Arbitration and Mediation’. This centre will be an independent entity and has its own rules and regulations. The law permitted this centre to decide investment disputes that arise out of investors and state authorities if the parties agree to refer the dispute to the centre.
The board of the centre consists of five members. They must have experience and good reputation. Those members are appointed by a decree issued by the prime minister. The board is responsible for issuing the articles of association of the centre in addition to its arbitration and mediation rules.
Two different committees established under Law No. 27 of 2017 for settling the investment disputes
The new investment law established two different committees to resolve disputes and complaints with investors.
The first committee is ‘The Ministerial Committee for Settling of Investment Disputes’. Its constitution was issued by Decree No. 2094/2017 and replaced the committee established by the Prime Minister Decree No. 1272/2015.
This committee will consider the requests, complaints and disputes arising between the investors on one hand and the state or one of its affiliated entities on the other. The committee shall issue a reasoned decision within 30 days from the date of hearing all the parties. The committee’s decision shall, upon the cabinet approval, be enforceable, binding over the governmental entities and having the power of the executive bond, without prejudice to the investor’s right to resort to litigation.76
The second committee is ‘The Ministerial Committee for Settlement of Investment Contract Disputes’. Its constitution was issued by the Prime Minister Decree No. 2376/2017.
This committee is established to settle the disputes arising out of investment contracts in which the state or one of its affiliated entities, authorities or companies is party. This committee seeks to reach a settlement between the parties including to agreeing to reschedule financial dues, rectify inaccurate pre-contractual procedures and extending limitation periods provided in these contracts. Such settlement, after being approved by the cabinet, is binding and enforceable to all administrative authorities and having the power of the executive bond.77
The possibility of establishing corruption by virtue of an arbitral award
The new investment law extends its protection to all investments in Egypt. However, it does not extend this protection to investments established upon corruption, fraud or deception. This corruption can only be established by a final judgment issued by the competent court or by an arbitral award.
To that effect, the new investment law has permitted arbitral tribunals to decide whether investment was based on corruption.78 This ends the debate under Egyptian law of whether corruption can be established by arbitration or it is an exclusive jurisdiction of criminal courts.
Arbitration in Sports Law No. 71 of the year 2017
The Sports Law No. 71/2017 was enacted to regulate sports matters in Egypt (the Sports Law). This is considered the first comprehensive sports law in Egypt replacing the history of regulating sports matters under different laws. The Sports Law established the Egyptian Sports Arbitration Centre (the Sports Centre) as an independent entity for settlement of any dispute arising from the application of Sports Law, where one of the parties to this dispute is deemed an entity governed by it.
Article 66 of the Sports Law provides the mechanisms to settle any dispute arising in relation to the sports field. It includes mediation, conciliation and arbitration in case an arbitration clause is included in any contract or regulation binding on the parties of the dispute.79
The board of directors of the Sports Centre is headed by the president of the Egyptian Olympics Committee. The members of the centre are: a representative of individual sports, a representative of team sports, a representative of the ministry of sports and three legal and technical experts. The duration of the board of directors is four years renewable for one additional term.
It is worth noting that the Sports Law provides that the Sports Centre shall consider the Olympic Charter and the international criteria of the relevant sports’ associations. Furthermore, the centre shall consider the fundamental guarantees and principles of the Civil and Commercial Procedures Law. In absence of any specific provision, the provisions of the Egyptian Arbitration Law No. 27/1994 shall apply, which are based on the UNCITRAL Model Law.80
Law No. 84 of 2017 regarding compensations arising out from some public contracts
In light of the economic decisions issued by the Egyptian government including flotation of the Egyptian pound, the cabinet enacted Law No. 84 of 2017 and issued the Decree No. 13 of 2017 determining the additional amounts to be paid by governmental entities to private parties of public construction, supply and services contracts.
The Decree sets out the bases and percentages for compensating private parties for the damage sustained by them due to the economic decisions issued by the government in the period between 1 March 2016 until 31 December 2016.81 According to the law, these decisions influenced the financial balance of the public construction, supply and services contracts.
To be entitled to benefit from this law, the performance of the contract must be in the period between 1 March 2016 until 31 December 2016 or till the date of final performance even if this date is subsequent to 31 December 2016.
According to the Decree, if the contract is subject to any judicial or arbitral proceedings, it cannot be reviewed until the end of such proceedings.
Principles from Cairo Court of Appeal and Court of Cassation issued in 2017
Court of Cassation’s view of petition for annulment of arbitral awards based upon article 241 (1) of the Civil and Commercial Procedures Law
In 2016, after the Cairo Court of Appeal had refused the annulment of an arbitral award, the losing party petitioned for review of the judgment refusing to annul an arbitral award based upon article 241 (1) of the Civil and Commercial Procedures Law (CCPL). The said article allows the parties, even after a final judgment is rendered, to petition for review of the final judgment, if fraudulent conduct of one of the parties is established, and the judgment relied unknowingly on the fraudulent conduct to reach its final decision. In that case, based on a fraud conducted by the other party before the arbitral tribunal, the Court of Appeal found in favour of the plaintiff and annulled the award reversing its prior judgment of refusing to annul the award based on this article for the first time.
However, in 2017 the Court of Cassation had the opportunity to review the Court of Appeals’ judgment. The court found that the alleged fraud of one of the parties was known to the petitioner during the arbitration proceedings and was not raised at the time. Thus, the Court of Cassation overturned the judgment and sustained the validity of the arbitral award. Yet, it is important to note that the Court of Cassation implicitly upheld the validity of petition of reconsideration of the Appellate Court Judgment in annulment of arbitral award cases based upon article 241 of the CCPL.82
Challenge of arbitrators according to article 19(1) of the Egyptian Arbitration Law must be after the composition of the arbitral tribunal
Article 19 (1) of the Egyptian Arbitration Law No. 27 of 1994 provides that the challenge for an arbitrator shall be submitted in writing to the arbitral tribunal within 15 days from the date of the applicant’s knowledge of the composition of such tribunal, or of the conditions justifying the challenge. The article further provides that if the challenged arbitrator did not step down within 15 days, the request for challenge shall be referred to the competent court to adjudicate by a judgment subject to no appeal.83
The Court of Cassation has clarified that challenging arbitrators according to article 19(1) must be submitted after the complete composition of the arbitral tribunal based upon the wording of article 19 (1).
Since the arbitral proceedings were under the auspices of CRCICA, CRCICA Committee accepted the challenge under CRCICA Rules and the petitioner appointed another arbitrator; there was no room to refer the challenge to the courts.84
The arbitral award or any other procedure may not be took place in the seat of arbitration
The Court of Cassation upheld the difference between seat and place of arbitration. The court clarified that the arbitral tribunal does not have to sign the arbitral award, or take any other procedure, physically in the seat of arbitration. The procedures of the arbitration may take place in different places, but the seat, as a legal phenomenon, is still to be considered the same. The court confirmed that this should not affect the validity of the arbitral award unless any of the parties prove that taking the procedure out of the seat has caused imbalance between the parties or inability to submit its defence.85
The arbitral tribunal is not required to sign each and every page of the arbitral award
The Court of Cassation emphasised that members of the tribunal may sign only the last page of the arbitral award and that there is no need to sign each page. The court illustrated that there is no obligation upon the tribunal to sign each and every page of the arbitral award. The court further referred to article 20 of the Evidence Law, which set out the procedural rule that as long as the objective of the procedure has been fulfilled, and there is no harm suffered, annulment shall not be sustained.86
In case the parties agreed on more than one set of rules the tribunal has discretionary power to apply only one set of rules
In a case where the parties agreed to apply more than one set of rules on the arbitral proceedings, the arbitral tribunal has excluded one of those rules and applied the other set of rules only. The Court of Appeal upheld this practice considering that the arbitral tribunal has applied its discretionary power in interpreting the arbitration agreement.87
The criminal penalties in the competition law does not affect arbitral tribunals’ jurisdiction
The Cairo Court of Appeal refused an argument that the arbitral dispute falls within the Competition Law, and therefore the Economic Court has an exclusive jurisdiction thereon. The court stated that criminal or administrative penalties set out in the Competition Law do not exclude the parties to an arbitral case to claim damages arising from the Competition Law violation and does not exclude the jurisdiction of the arbitral tribunal to rule on this dispute.88
The parties are free to agree on any evidence rules and arbitral tribunal must follow the agreed upon rules
The Cairo Court of Appeal has annulled an arbitral award because the tribunal did not apply the evidence rules agreed upon between the parties. In this case, the parties agreed that they accept any copies (instead of originals) submitted by either parties. One of the parties asked the tribunal not to accept the copies submitted by the other party under article 12 of the Evidence Law. The tribunal upheld this request and reject the copies in contradiction with the parties’ agreement.
The court has emphasised that arbitration is established upon the free will of the parties to agree on whatever procedures they wish, as long as they do not contradict the public policy, equality between the parties, confrontation principle and guarantee of the defence rights. The court asserted that those are the most comprehensive and long-standing procedural principles that shall not be deviated in any dispute. The court annulled the arbitral award as it failed to apply the agreed upon rule under article 53/4 of the Egyptian Arbitration Law.89
The Cairo Regional Centre for international commercial arbitration in 2017
The Cairo Regional Centre for International Commercial Arbitration (CRCICA) is the main arbitral centre in Egypt. It was established in January 1978 by a decision of the 19th Session of the Asian African Legal Consultative Committee. It is an independent, non-profit international organisation.
The total number of cases filed before CRCICA until 30 June 2017 reached 1,192 cases. In the second quarter of 2017, 12 new cases were filed, in comparison with 23 new cases filed in second quarter of 2016.90
CRCICA’s caseload in the second quarter of 2017 involved disputes related to lease agreements, contracts for works, supply, agency, shareholders’ agreement, hotel management, technical assistance and loan facilities. Moreover, three of these cases were construction cases, two supply cases and two merger and acquisition cases.
Since it was established, CRCICA has adopted, with minor modifications, the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL). CRCICA amended its arbitration rules in 1998, 2000, 2002, 2007 and 2011. The amendments of 2011 are based on the UNCITRAL Arbitration Rules as revised in 2010, with minor modifications, and apply to arbitral proceedings commenced after 1 March 2011.
The authors would like to thank Mr Mohamed Sallam, as well as Mr Eslam Abdeldayem and Ms Salma Sofy, associates at Matouk Bassiouny, for their support and research in preparation for this article.
3 Article 1 of Arbitration Act No. 27/1994.
4 Article 3 of Arbitration Act No. 27/1994.
5 Article 1 of Arbitration Act No. 27/1994. See also Court of Cassation Judgment, Challenge No. 966/73 JY, hearing dated 10 January 2005; Court of Cassation Judgment, Challenge No. 10350/65 JY, hearing dated 1 March 1999; and CRCICA Arbitration Case No. 495/2006, award dated 17 May 2007, published in Journal of Arab Arbitration, Issue No. 12, pp. 121–123.
6 Article 1 of Arbitration Act No. 27/1994.
7 Article 10(1) of Arbitration Act No. 27/1994.
8 Cairo Court of Appeal Judgment, Circuit 91 – Commercial, Case No. 95/ 120 JY, session dated 27/4/2005.
9 Article 10(2) of Arbitration Act No. 27/1994.
10 Article 10(3) of Arbitration Act No. 27/1994.
11 Court of Cassation Judgment, Challenge No. 495/72 J, session dated 13 January 2004.
12 Article 11 of Arbitration Act No. 27/1994. Public policy matters are not subject to compromise and are therefore non-arbitrable (see Article 551 of the Egyptian Civil Code). Non-arbitrable matters include, inter alia, the personal status of individuals, criminal matters, bankruptcy claims, public assets and for the sole purpose of requesting interim measures (see Cairo Court of Appeal Judgment, case No. 29/117 JY, session dated 25/02/2002).
13 Article 12 of Arbitration Act No. 27/1994.
14 Fathy Waly, Arbitration Act in Theory and Practice, 2014, p. 162.
15 Professor Mahmoud El Briery, International Commercial Arbitration, Fourth Edition 2010, Dar El Nahda El Arabi’a, p. 59.
16Cairo Court of Appeal Judgment, case No. 31/128 JY, session dated 26/06/2012, referred to in the Journal of Arab Arbitration, Issue No. 19, p. 190; and CRCICA Arbitration Case No. 795/2012.
17 Article 1 of Law No. 9/1997, which amended some provisions of the Arbitration Act No. 27/1994 including the permissibility to arbitration in relation to administrative contracts after the approval of the competent minister.
18 Article 1 of the Arbitration Act as amended by Law No. 9/1997.
19 CRCICA ad hoc Arbitration Case No. 793/2012, award Sharkawy, International Commercial Arbitration – Legal Comparative Study, 2011, Dal El Nahda Al Arabia, p. 81; Abdel Aziz Abdel Mena’em Khalifa, Arbitration in Contractual and Non-Contractual Administrative Disputes, 2011, Monsha’at El Ma’aref, p. 127.
20 Administrative Judiciary Court, Investment and Economics Disputes Section, 7th Section, Lawsuit No. 11492/65 JY, session dated 7 May 2011.
21 CRCICA Arbitration Case No. 676/2010, award dated 21/08/2011, Journal of Arab Arbitration, Issue No. 17, pp. 263-264.
22 Id and also see Administrative Court judgment No. 18628/59 JY, session dated 19 February 2006; Administrative Supreme Court Judgment No. 6268/46 JY, session dated 31 May 2005; Cairo Court of Appeal Judgment No. 76/177 JY, session dated 08 May 2002 referred to in Walid Mohamed Abbas, Arbitration in Administrative Disputes of Contractual Nature, 2010, Dar El Gama’a El Gadida, pp. 217-219.
23 Id and also see Cairo Court of Appeal Judgment No. 111/126 JY, hearing dated 30 March 2010 referred to in Mohamed Amin El Mahdy, ‘Return to the Problematic Arbitration in Administrative Contracts Disputes’, Journal of Arab Arbitration, Issue No. 19, p. 26.
24 Id and also see Administrative Court Judgment No. 11492/65 JY, session dated 7 May 2011.
25 Id and also see CRCICA Arbitration Case No. 382/2004, session dated 7 March 2006 referred to in Walid Mohamed Abbas, Arbitration in Administrative Disputes of Contractual Nature, 2010, Dar El Gama’a El Gadida, p, pp. 221–222.
26 Id and also see CRCICA Arbitration Case No. 464/2006, session dated 2 July 2006; CRCICA Arbitration Case No. 553/2007, session dated 5 November 2009 referred to in Journal of Arab Arbitration, Issue No. 13, December 2009, p. 237; CRCICA Arbitration Case No. 567/2008, session dated 12 September 2009 referred to in Journal of Arab Arbitration, Issue No. 13, December 2009, p. 237; CRCICA Arbitration Case No. 495/2006, award dated 17 May 2007, referred to in Journal of Arab Arbitration, Issue No. 12, pp. 121–123.
27 Id and also see CRCICA Arbitration Case No. 292/2002, session dated 29 May 2003 and CRCICA Arbitration Case No. 390/2004, session dated 12 March 2005 referred to in Walid Mohamed Abbas, Arbitration in Administrative Disputes of Contractual Nature, 2010, Dar El Gama’a El Gadida, pp222–223; CRCICA Case No. 676/2010, award dated 21 August 2011, Journal of Arab Arbitration, Issue No. 17, p. 262.
28Id and also see CRCICA Arbitration Case No. 793/1201 (Ad Hoc) Award dated 18 July 2012, published in the Journal of Arab Arbitration, December 2012, Issue 19, p. 193, referred to in Fathy Waly, Arbitration Act in Theory and Practice, 2014, p. 138.
29Supreme Administrative Court-Unification of Principles Circuit, Challenge no. 8256 JY 56 dated March 5, 2016.
30 Fathy Waly, Arbitration Act in Theory and Practice, 2014, p.775.
31 Fathy Waly, Arbitration Act in Theory and Practice, 2014, p.775.
32 Supreme Constitutional Court, Judgment dated 15 January 2012, the Malicorp decision, referred to in Fathy Waly, Arbitration Act in Theory and Practice , p.775.
33 Cairo Court of Appeal, Challenge no.78 of 131 JY, dated 4 May 2015
34 Cairo Court of Appeal, Challenge no.78 of 131 JY, dated 4 May 2015
35 Article 15 of the Arbitration Act No. 27/1994.
36Article 7(1) of CRCICA Rules.
37Cairo Court of Appeal, Challenge no.71 of 131 JY, dated 4 March 2015.
38 Court of Cassation, Challenge no. 12459 of 85 JY, dated 1 June 2016.
39Gary B Born, International Arbitration: Law and Practice, 2012, p. 142.
40 Article 21 of Arbitration Act No. 27/1994.
41 Article 14(2) of CRCICA Rules.
42 Cairo Court of Appeal, Circuit 7 Commercial, Case No. 64/127 JY, session dated 7 September 2011, referred to in International Arbitration Journal, issue 16, October 2012, p. 585.
43 Cairo Court of Appeal, Circuit 7 Commercial, Case No. 32/129 JY, session dated 5/3/2013, referred to in Professor Fathy Waly, Arbitration Act in Theory and Practice, 2014, p. 359.
44 Cairo Court of Cassation, Case No. 2047/83 JY Session dated 26/05/2015.
45 Articles 18 and 19 of the Arbitration Act No. 27/1994.
46Article 13 of the CRCICA Rules.
47 Article 19(1) of the Arbitration Act No. 27/1994; Court of Cassation, Challenge No. 9568/79 JY, session dated 14 March 2011.
48 Article 13(6) of CRCICA Rules.
49 Article 21 of the Arbitration Act No. 27/1994; Article 14(1) of CRCICA Rules.
50 Cairo Court of Appeal, Challenge no.37 of 131 JY, dated 4 March 2015.
51 Article 25 of the Arbitration Act No. 27/1994.
52 Court of Cassation, Challenge No. 547/51 JY, session dated 23 December 1991; Court of Cassation, Challenge No. 1259/49 JY, session dated 13 June 1983.
53 Prof Fathi Wali, Arbitration in the Domestic and International Commercial Disputes, 2014, p. 488.
54 Professor Mahmoud El Briery, International Commercial Arbitration, Fourth Edition 2010, Dar El Nahda El Arabi’a p118; Court of Cassation, Challenge No. 1479/53 JY, hearing dated 19 November 1987.
55Article 46 of Arbitration Act No. 27/1994.
56Article 14 of Arbitration Act No. 27/1994.
57Article 37 of Arbitration Act No. 27/1994. More examples are set out in articles (9), (17), (19), (45), (20) and (24) of the Arbitration Act.
58 Article 45(1) of the Arbitration Act No. 27/1994; Cairo Court of Appeal, Circuit 91 Commercial, Case No. 55/2005 JY, session dated 27 February 2005.
59 Professor Mahmoud El Briery, International Commercial Arbitration, Fourth Edition 2010, Dar El Nahda El Arabi’a, pp. 516–517.
60 Article 45(2) of the Arbitration Act No. 27/1994.
61 Professor Mahmoud El Briery, International Commercial Arbitration, Fourth Edition 2010, Dar El Nahda El Arabi’a, p. 525.
62 Article 8 of the Arbitration Act No. 27/1994; Court of Cassation, Challenge No. 3869/78 JY, session dated 23 April 2009.
63Cairo Court of Appeal, Challenge no.78 of 131 JY, dated 4 May 2015
64Cairo Court of Appeal Judgment, Case No. 11, 12, 14/132 JY, Session dated 6 January 2016, the Bassem Youssef case.
65 Court of Appeal Judgment, Case No. 2/132 JY, Session dated 3 February 2016.
66Court of Cassation, Challenge no. 5162 of 79 JY, dated 21 January 2016.
67Court of Cassation, Challenge no. 12459 of 85 JY, dated 1 June 2016
68 Article 55 of Arbitration Act No. 27/1994.
69 Article 56 of Arbitration Act No. 27/1994.
70 Article 58 of Arbitration Act No. 27/1994.
71 Some jurists take the view that the Arbitration Act and the Egyptian Civil and Commercial Procedures Law No. 131/1948 (articles 296–301) also apply.
72 Court of Cassation Judgment, Case No. 5000/78 JY, Session dated 6 April 2015
73 Court of Cassation, Challenge no. 7088 of 78 JY, dated 11 January 2016.
74 News article published in the newspaper Rose Al Youssef dated 6 September 2016
75News article published in Reuters Africa, ‘Egypt Agrees to International Arbitration in the Next Phase of Solar Scheme’, dated 6 September 2016, http://af.reuters.com/article/energyOilNews/idAFL8N1BI3LB
76 Article 85 of the New Investment Law No. 72 of 2017.
77 Article 88 of the New Investment Law No. 72 of 2017
78Article 3 of the New Investment Law No. 72 of 2017.
79Article 66 and Article 67of the Sports Law No.71 of 2017.
80 Article 70 of the Sports Law No.71 of 2017.
81 The Cabinet’s Decree No. 13 of the Year 2017.
82 Court of Cassation, Challenge No. 4715 and 4868 of JY 86, hearing session dated 18 January 2017.
83 Court of Cassation, Challenge No. 1394 of JY 86, hearing session dated 13 June 2017.
84 Article 13 (6) of CRCICA rules states ‘If, within 15 days from the date of communicating the notice of challenge, all parties do not agree to remove the challenged arbitrator or the latter does not withdraw, the party making the challenge may elect to pursue it. In that case, the challenge shall be finally decided by an impartial and independent tripartite ad hoc committee to be composed by the Centre from among the members of the Advisory Committee’.
85 Court of Cassation, Challenge No. 1394 of JY 86, hearing session dated 13 June 2017.
86 Court of Cassation, Challenge No. 1394 of JY 86, hearing session dated 13 June 2017.
87 Cairo Court of Appeal, Circuit (7), Challenge No.4 of JY 134, hearing session dated 10 May 2017.
88 Cairo Court of Appeal, Circuit (7), Challenge No. 39, 44 of 132. Hearing session dated 6 September 2017.
89 Cairo Court Of Appeal, Circuit (7), Challenge No. 30 of JY 134, hearing session dated 8 January 2018.