Egypt

International arbitration in Egypt has continued to grow over the past year. Since the Arab Spring in Egypt, investment treaty claims against the Arab Republic of Egypt have increased. Egypt has been actively pursuing settlements to these disputes and has been 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 of which have been terminated. ^[1] Egypt is also a contracting state to the International Centre for the Settlement of Investment Disputes (ICSID). In 2019, two new investment treaty cases were registered with ICSID against Egypt. To date, a total of 34 cases against Egypt have been registered with ICSID. Of these 34 cases, 10 are currently pending ^[2] (including one annulment proceeding brought by Egypt). ^[3]

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. ^[4] While the Arbitration Act is regarded as being the general law governing arbitration in Egypt, there are other laws that govern certain aspects of arbitration in respect of certain legal relationships. For example, technology transfer contracts, sport arbitrations, investments under the investment law and contracts of public entities.

The Egyptian legislator has also been expanding the scope of matters that may be resolved by compromise, including matters that are classically regarded as matters of public law – for example, tax disputes, ^[5] custom disputes ^[6] and certain crimes under the new investment law of 2017, ^[7] as well as the new criminal procedural law. ^[8] These are beside crimes that can be prosecuted only upon a complaint by specific public or private persons. ^[9] This may be of importance since all matters that can be resolved by compromise, as in waived, can be settled by arbitration under the Arbitration Act. This means that there is a possibility that arbitration in Egypt may extend to a completely new level that would include certain public law matters. It is yet to be seen whether and to what extent such a possibility exists.

Under the Arbitration Act, an arbitration is considered international if the subject matter thereof relates to international trade and, inter alia, if the parties to the arbitration agree to resort to a permanent arbitral organisation or centre headquartered in Egypt or abroad. ^[10] That being said, the criteria of international arbitration has been subject to different judicial views in the recent years. The High Administrative Court, ^[11] following a reading of a judgment by the constitutional court, ^[12] took the view that resorting to a permanent arbitral organisation such as the Cairo Regional Centre for International Commercial Arbitration (CRCICA) is sufficient to consider the arbitration international. Yet, in 2018, the Court of Cassation, in the context of enforcing an arbitral award, took the opposite view, considering that an arbitration conducted under the auspices of CRCICA is a ‘national’ arbitration rather than an international one. ^[13] The Cairo Court of Appeal took the same position in 2018. ^[14] However, in 2019, the Court of Appeal adopted the stance of the High Administrative Court holding that:

institutional arbitration awards rendered by CRCICA are considered ‘international’ awards regardless of the commercial relationship nature subject of the dispute, even if such relationship does not relate to international commerce. It is only sufficient that the award is registered, issued by the said centre and within the scope of its objects, competence and system to be considered an international award. ^[15]

The Court of Cassation ^[16] has indicated a change in its position by stating dicta that resorting to arbitration under a ‘reputable’ permanent arbitral organisation would suffice to consider the arbitration ‘international’ similar to the Court of Appeal and the High Administrative Court stance.

The Arbitration Act is applicable without prejudice to the international conventions that Egypt is party to ^[17] and applies to all arbitrations between public or private law persons, irrespective of the nature of the legal relationship that the dispute revolves around, ^[18] unless other contradictory and specific provisions of law exist.

The arbitration agreement

The Arbitration Act defines an arbitration agreement as an agreement that the parties agree to resolve by arbitration all or part of a dispute, which arose or may arise between them in connection with a specific legal relationship, contractual or otherwise. ^[19] Since 2005, the Cairo Court of Appeal has held that the arbitration agreement is considered to be the constitution of an arbitration that determines the scope, extent and subject of arbitration, and grants the arbitrators their powers resulting in excluding the dispute from the jurisdiction of the courts. ^[20]

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 a ‘submission agreement’, which is an arbitration agreement that the parties agree to after a dispute has risen – if so, the parties must define in the arbitration agreement the matters or disputes subject to arbitration, otherwise the agreement shall be null and void ^[21] ; 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. ^[22] 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 that the reference is made to 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 it is an integral part of the contract (a general reference to the existing document or its terms is not sufficient). ^[23]

In terms of the scope of the arbitration agreement, the Court of Appeal has recently held that the arbitration agreement scope excludes disputes related to the execution of the respective contract, in case the arbitration agreement is drafted in a manner that would only empower the arbitral tribunal to hear disputes arising out of the difference in interpreting the provisions of the agreement. The Court of Appeal decided that the tribunal would only be competent to hear those disputes relating to interpretation and not performance of the contract. ^[24]

Conditions of validity of the arbitration agreement

In addition to the general requirements for the validity of contracts, such as consent, capacity and the existence of a legal relationship, the following requirements, as well as any further requirements mandated by a specific provision of law, must be satisfied for there to be a valid arbitration agreement.

• The arbitration agreement must relate to matters that are amenable to compromise. ^[25] In this regard, the Cairo Court of Appeal maintained that matters relating to deciding ownership of real estate in Egypt relates to public policy and, therefore, are non-arbitrable and that any arbitration agreement in this respect is null and void being against public policy. ^[26]
• The arbitration agreement must be in writing, otherwise it shall be null and void. ^[27] 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 exchanging offers and acceptance through electronic means. ^[28] Silence may be considered as acceptance of the arbitration agreement if there are previous continued transactions between the parties where the arbitration agreement is included, ^[29] or where proceedings are initiated without objection from the opposing party. ^[30]
• In accordance with article 702 of the Egyptian Civil Code and article 76 of the Civil and Commercial Procedures Law (CCPL), the arbitration agreement may not be concluded by an agent except by virtue of private and specific written delegation, ^[31] otherwise the arbitration clause will not be effective in relation to the principal.

Defective arbitration clauses have been repeatedly held by the Cairo Court of Appeal as valid arbitration agreements and were interpreted to favour arbitration over courts. ^[32]

Administrative contracts

Arbitration relating in administrative contracts was a highly contested matter before it was settled by an amendment to the Arbitration Act in 1997. ^[33]

Arbitration in relation to administrative contracts is permissible, provided that the arbitration agreement is approved by the competent minister or by whomever assumes his or her authority with respect to independent public authorities. ^[34] The power to approve the arbitration agreement may not be delegated. ^[35] The approval of the competent minister for the validity of an arbitration agreement is a matter of public policy. ^[36] Egyptian courts had held that the absence of ministerial approval invalidates the arbitration agreement. ^[37]

In 2010, the Cairo Court of Appeal held that ministerial approval is a legislative requirement for the validity of the arbitration clause and is a requirement addressed to both parties, ^[38] which was similarly upheld by the Supreme Administrative Court in 2011. ^[39] 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 as this requirement should not be applicable to international commercial arbitrations conducted with foreign investors. ^[40] The Arbitration Act does not provide for an annulment sanction for violation of article 1, and, therefore, this requirement is addressed, and needs to be fulfilled by the administrative entity and not the other party (that is it is the sole responsibility of the administrative entity and it should therefore bear the liability for not obtaining ministerial approval). ^[41] Other tribunals have, as recently as 2011, taken the view that the arbitration agreement is void in the absence of ministerial approval. ^[42] The consensus of case law settled for a while on the position that 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. ^[43]

How the approval may be given has been subject to various views. One indicates that approval may be subsequent to the conclusion of the administrative contract and does not need to be written or expressed in a specific form. ^[44] 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 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. ^[45] The Constitutional Court seemed to support that view. ^[46] Nonetheless, in a recent Court of Appeal Judgement, dated 19 September 2018, the court decided that the law did not require a specific form of the competent minister’s approval. ^[47]

Competent court with regards to administrative contracts

Under article 54(2) of the Arbitration Act, the competent court for ‘matters the Arbitration Act refers to courts’ is the court of first instance, which has jurisdiction over the dispute if there is no arbitration agreement. The competent court to decide on the annulment of an arbitral award is the second-degree court, which hears the appeals against the judgments from the court of first instance. An arbitral dispute arising out of administrative matters, for example, would be subject, if there was no arbitration agreement, to the jurisdiction of the Administrative Court. ^[48] Therefore, a challenge of the respective arbitral award would be within the jurisdiction of the Supreme Administrative Court. Yet, if the arbitration is an international commercial one, the challenge of 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. ^[49] It was held by the Supreme Constitutional Court that even in the event that the dispute arises out of an administrative contract, the Cairo Court of Appeal will be the competent court if the subject matter of the contract contains elements that are commercial international in nature. ^[50]

In line with this, the Cairo Court of Appeal 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, according to article 1 of the Arbitration Act, if the dispute arises in connection to an administrative contract and is an international commercial dispute, then the Cairo Court of Appeal shall be the competent court, not the Supreme Administrative Court. ^[51] As explained, the question of whether an arbitration is international, particularly when held under the auspices of a permanent arbitral institution, is subject to uncertainty.

Arbitral proceedings: 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 comprised of three arbitrators if the parties fail to reach an agreement. ^[52] The same principle applies in the CRCICA Rules. ^[53]

Substituting an arbitrator

Generally, 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. ^[54] Where the arbitration is institutional and the agreed appointing authority – for example, CRCICA – made an appointment, the Court of Appeal held that the court may not interfere by appointing an arbitrator in substitution of CRCICA’s appointed arbitrator even if one of the parties alleges that it did not agree to the arbitrator appointed by CRCICA. ^[55]

If an arbitrator is substituted for any reason, the Cairo Court of Appeal held that this shall not necessitate a repeat of the arbitral proceedings before the newly constituted tribunal. Rather, the new tribunal shall continue the proceedings that took place before its appointment. This is on the condition that the parties shall have the opportunity to participate in the proceedings (respecting principle of confrontation) and that all members of the arbitral tribunal have had the opportunity to deliberate with each other before rendering the award. ^[56]

The possibility of challenging a court decision appointing an arbitrator

Pursuant to article 17(3) of the Arbitration Act, a decision by the competent court to appoint an arbitrator in cases of failure to appoint one is unchallengeable independently. A party may still challenge such decision when seeking to set aside the final arbitration award on the bases of constituting the tribunal in breach of the law or the arbitration agreement as per article (53)(e) of the Arbitration Act. However, a party may do so only if it objected to such appointment in the context of the arbitration proceedings subsequently to the court’s decision. Failure to so object is considered by the Court of Appeal to be a waiver of the right to seek annulment on that ground. The court considered this to be the case especially where the party elects to pay such arbitrator’s fees among the fees of other arbitrators. ^[57] However, the Court of Cassation seems to accept challenging the court’s decision to appoint an arbitrator independently. In one case, the Court of Cassation found such challenge to be admissible and cancelled a decision of the first instance court upheld by the Court of Appeal. The court reasoned that such decision becomes challengeable if rendered in contradiction with law, the parties’ agreement or jurisdiction rules that are of public policy. ^[58]

Truncated tribunals

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 during the very late stages of the arbitral proceedings. ^[59]

According to the general rules of substitution of arbitrators, a substitute arbitrator shall be appointed by the same mechanism used to appoint his predecessor. ^[60] 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, at the request of a party, CRCICA can determine, 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. ^[61]

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. ^[62] 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 or her consequential refusal to sign the award, are not sufficient reasons to annul the award as provided for by article 43 of Arbitration Act. ^[63]

Recently, the Court of Cassation in 2015 held that awards rendered by a truncated tribunal could 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. ^[64]

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. ^[65] The arbitral tribunal is obliged to then refer the challenge to the competent court to decide the challenge. ^[66] The parties’ ability to agree to different challenge proceedings, including by agreeing to certain institutional arbitral rules, such as CRCICA rules, remains differential. For instance, under the CRCICA Rules the challenge 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. ^[67] Nevertheless, the Cairo Court of Appeal accepted that it has jurisdiction to decide on such challenges, even though it relied on CRCICA’s decision on the challenge to arrive to the very same outcome. ^[68]

Removal of arbitrators

The Arbitration Act provides in article 20 for the possibility of seeking the removal of an arbitrator by a court decision if he or she is unable or fails to perform his or her mission, or acts in a manner that unduly delays the arbitral proceedings. In application, the Court of Appeal considered that increasing ad hoc arbitration fees, which are decided by the ad hoc tribunal, repeatedly and exaggeratedly from US$50,000 to US$6 million, then suspending the proceedings for the parties’ failure to pay such fees is a conduct that obstructs and unnecessarily delay the proceedings. Accordingly, the court found that such conduct justifies the removal the presiding arbitrator, but not a party’s appointed arbitrator in the same tribunal on the basis that this would interfere with such party’s freedom to choose its arbitrator. ^[69]

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 acting as arbitrator falls outside the 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 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. ^[70]

Procedural law

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. ^[71]

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, ^[72] except where these norms are considered ‘basic guarantees of adjudication’. ^[73]

Suspension

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, such as forgery challenges, including respective criminal proceedings, or criminal acts in general. In such cases, the tribunal may suspend the arbitral proceedings on the condition that the matter is essential or necessary for the tribunal to be able to decide the subject matter of the dispute. ^[74] In such case, the arbitral tribunal shall suspend the proceedings until a final judgment is rendered in this respect by the competent authority. ^[75] This results in the suspension of the time limit for rendering the final arbitral award where such limit applies. ^[76]

The Court of Appeal judgments seem to narrow the scope where the arbitral tribunal shall suspend the proceedings. In its interpretation of article 46, the Court of Appeal found that it is within the tribunal’s jurisdiction to assess whether the forgery allegation is of any seriousness, and, if not, it may proceed with the arbitration. In addition, as ruled by the same court, if the forgery allegation concerns the arbitration agreement itself, the arbitral tribunal may decide it without the need to suspend the proceedings as it would be a matter within its jurisdiction in such case. ^[77] Even in cases where the tribunal is obliged to suspend the proceedings, deciding so remains the exclusive jurisdiction of the tribunal. The Court of Appeal found that it has no competency to decide suspension in general. ^[78] Furthermore, the Court of Appeal recently held that the reliance by the arbitral tribunal on a document that turned out to be forged would not result in annulling the award because this is not among the exhaustively defined grounds for annulment of an arbitral award provided under article (53) of the Arbitration Act. ^[79]

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 competent local court may order provisional or conservatory measures, whether before the commencement of arbitral proceedings or during the procedure based on an application from one of the parties ^[80] and the president of the court referred to in article 9 of the Arbitration Act 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. ^[81]

The arbitral award: Time limit

The Arbitration Act grants the parties the right to agree upon the time limit of arbitration proceedings. In absence of the parties’ agreement, arbitration proceedings are limited to 12 months from the date of commencement of the proceedings. This period may be extended by an additional six months by the tribunal, unless the parties agree to extend the period. ^[82] In this regard, if the parties agree to certain arbitration rules that provide for a different time limit, or are even silent on the point, 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 is agreed by the parties. ^[83] 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. ^[84] 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. ^[85] In a recent case, ^[86] it was found that if the competent court’s order terminating the proceedings was unchallenged within the prescribed period, it would have the authority of res judicata. Thus, if the arbitral tribunal rendered its award afterwards, it would be annulled due to its contradiction with a court judgment that has the authority of res judicata, an issue that pertain to public policy.

However, the parties’ continuance in the proceedings beyond the determined time limit is considered as an implied extension to such limit. ^[87] Recently, the Cairo Court of Appeal has ruled that the lapse of the 18-month period provided under the Arbitration Act for the issuance of the award does not entail the annulment of the arbitral award, as this time limit is deemed to be merely of an ‘organisational’ nature. ^[88]

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 may only lead to the annulment of an arbitral award when the objective of mentioning such information is not fulfilled. The court of appeal considered in the above 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. ^[89] Nevertheless, the Court of Cassation considered that it is not sufficient to refer to the arbitration agreement as cited in a party’s submission, as it does not indicate that the tribunal examined the arbitration agreement itself. ^[90]

Setting aside arbitral awards

Pursuant to article 53 of the Arbitration Act, arbitral awards can only be challenged by annulment proceedings, and it 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. The Supreme Constitutional Court held that the right to bring annulment proceedings against arbitral awards is a constitutional one. ^[91] Additionally, 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 lawsuit after the arbitral award is permitted under Egyptian law. ^[92]

In 2018, the Court of Cassation confirmed its stance regarding whether the reasoning of the arbitral award might lead to its annulment under article 53. The Court of Cassation refused a previous Court of Appeal judgment annulling an arbitral award rendered against a famous Egyptian television personality for being based on ambiguous, illogical, unfounded facts and assumptions, and full of flagrant discrepancies and unsubstantiated statements to the extent that renders the award without reasoning. ^[93] The Court of Cassation refused the reasoning of the Court of Appeal and held that lack of reasoning is not one of the grounds of annulment stipulated in article 53 of the Arbitration Act. ^[94]

Article 53 further provides that the court adjudicating the annulment action should decide ipso jure the nullity if it is in conflict with Egyptian public policy. The Egyptian courts defined public policy in the context of arbitration to mean only those rules forming the social, economic and political foundations of the society, and not all mandatory rules of law. ^[95]

In another case, ^[96] after the arbitral award was issued and annulment was refused by the Court of Appeal, the losing party petitioned for reconsideration of the court judgment rendered in the annulment case based on the article 241(1) of the CCPL. Article 241(1) provides that the parties may, even after a final judgment is rendered, petition for reconsideration of the final judgment, if, inter alia, 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 influenced the outcome of the dispute. The Court of Appeal, in a first precedent, found in favour of the plaintiff and annulled the court judgment, and the arbitral award in question based on that petition. However, the Court of Cassation refused such judgment. ^[97]

Conversely, in another case, the Court of Appeal decided that the prescription of the right to arbitrate by the lapse of 15 years, the general prescription period of civil obligations stipulated in the Egyptian Civil Code, is not one of the grounds for annulment. ^[98]

Egyptian courts opined on whether an international commercial arbitration award rendered in Egypt in the context of an international treaty could be subject to annulment proceedings before Egyptian courts, where the treaty seems to prohibit challenging the award. The Cairo Court of Appeal took the view that annulment proceedings are not allowed under the treaty. ^[99] However, the Court of Cassation rejected this view. In its reasoning, the court decided that the annulment proceedings do not qualify as a challenge and therefore are not prohibited under the treaty. The court concluded that the treaty does not contradict the Arbitration Act regarding the right to request annulment and referred the case back to the Cairo Court of Appeal. ^[100] The latter court rendered a second judgment maintaining its initial position. ^[101] However, the Court of Cassation ^[102] overturned this judgement and referred the case to another circuit within the Court of Appeal on the basis that judgments rendered by the Court of Cassation must be followed by other courts, including the Court of Appeal.

Recently, Cairo Court of Appeal found that its jurisdiction to decide setting aside cases does not extend to amending the arbitral award, and, in particular, its dispositive part. ^[103] The case pertained to an application made under article (192)(1) of the Procedural Law to interpret a previous Court of Appeal’s judgment that partially set aside an arbitral award. The applicants requested that the Court of Appeal interpret the setting aside judgment by adding a certain wording to the dispositive part of the arbitral award, which the court refused on the basis that it is not empowered to amend such dispositive part.

The Cairo Court of Appeal still maintains that only the binding final arbitral award may be subject to annulment. ^[104] Accordingly, any other decisions, orders or evidence proceedings may not be subject to independent annulment proceedings. On such grounds, the court found that it lacks jurisdiction to decide on the annulment of a notice of an arbitration hearing.

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 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 or her determination is based on reasonable grounds. The court further provides that the judge may rely on the parties’ intent in the contract to reach his determination. ^[105]

The Court of Cassation power to decide annulment upon its own initiative or upon the public prosecutor’s request

The Egyptian Court of Cassation recently held that parties and 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 the elements of those grounds were already available before the Court of Appeal. In this regard, the Court of Cassation reaffirmed the principles of article 109 of the CCPL that the jurisdiction of the courts is of public policy. The court further decided that the public prosecution might 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 Arbitration Act. ^[106]

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. ^[107] 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. ^[108] 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. ^[109] The enforcement of foreign arbitral awards in Egypt is governed by the New York Convention on the Enforcement of Foreign Arbitral Awards (the New York Convention), ^[110] and, as such, are subject to the same enforcement rules applicable to national arbitral awards under the Arbitration Act. ^[111] 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 were in contradiction with the provisions of domestic Egyptian law, the provisions of the New York Convention would prevail. ^[112] The Court of Appeal also held that the enforcement of foreign arbitral awards cannot be subject to rules stricter than those applicable to national arbitral awards under the Arbitration Act. Therefore, subjecting foreign arbitral awards to the rules of enforcement of the CCPL would contradict the object of New York Convention. ^[113]

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 CCPL. According to article 55 of the ICSID Convention, 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 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 Appeal held that the Constitutional Court already ruled that article 58(3) of the Arbitration Act is unconstitutional because it allows for the challenging of the judge’s order to refuse enforcement of an arbitral award while prohibiting the challenging of the judge’s refusal to grant such order. A Constitutional Court judgment is binding for the courts. ^[114] Accordingly, the Cairo Court of Appeal ruled that the period to challenge the enforcement order, as per the Constitutional Court’s judgment, should be 30 days equal to the period allowed for challenging the refusal to grant such order, not 10 days as per the general rules of challenging orders on application under the CCPL. ^[115]

In terms of objections to enforcement, the Cairo Court of Appeal refused the enforcement of an arbitral award for contradicting a final judgment by the Court of Administrative Jurisprudence rendered after the arbitral award but before the request for obtaining the enforcement order. ^[116]

For the first time, on 9 May 2018, the Court of Appeal rendered a judgement enforcing a foreign arbitral interim measure that was issued by an International Chamber of Commerce (ICC) tribunal. The judgment found that arbitral interim measures are to be applied according to the same legal procedures to enforce a final arbitral award – that is, by an order on application without notification or hearing of the parties. The court went further and required such interim measure: ^[117]

• to be final, and is considered so if it is rendered by a competent arbitral tribunal;
• to be based on a valid arbitration agreement;
• to have offered both parties the opportunity to present their case; and
• is not against public order.

It is worth mentioning that article 24 of the Arbitration Act allows the court to order the enforcement of interim measures decided by arbitral tribunals in arbitrations that are subject to the Arbitration Act. ^[118]

2019 highlight developments: In sports arbitration

Overview

The Sports Law No. 71 of 2017 (the Sports Law) was enacted to regulate sports matters. 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) for settlement of any sports disputes subject to the parties’ respective agreement or sports regulations.

Article 66 of the Sports Law provides the mechanisms to settle any dispute arising in relation to sports. 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. ^[119]

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.

According to the Sports Law, the Sports Centre shall consider the Olympic Charter and the international criteria of the relevant sports’ associations. Furthermore, the centre shall consider the fundamental procedurals guarantees and principles of the CCPL. The Sports Law empowered the Olympic Committee to put its own mediation and arbitration rules, which was issued by Decision No. 88 of 2017. As per the Sports Law, absent a provision in it or in the centre’s rules, the Arbitration Act shall apply. ^[120]

The centre’s rules organises not only the mediation and arbitration proceedings but also the summary decisions, which are to be decided by a sole arbitrator, ^[121] challenging the arbitral awards and the enforcement thereof.

Annulment of awards by the Sports Centre

Several annulment proceedings were brought in respect of arbitral awards rendered under the Sports Law. The Egyptian courts’ jurisprudence is not consistent on whether such annulment proceedings can be brought forward under the Arbitration Act. In one case, the Court of Appeal decided that such proceedings are subject to the annulment procedures defined under the centre’s rules, which are given precedence over the Arbitration Act by the Sports Law. ^[122] In the same vein, the Court of Appeal has also adopted the view that an appeal cannot be lodged against an arbitral award issued by the Sports Centre, as the Sports Law does not provide for such an appeal mechanism. ^[123]

On the contrary, there were other judgments by the Court of Appeal that held that sports arbitration awards are subject to the same annulment procedures stipulated in the Arbitration Act. ^[124] Confirming the same view, the Court of Appeal set aside a sports arbitration award because it was made by three arbitrators, ^[125] while the default clause of the Rules of the Sports Centre requires, in absence of an agreement, that the tribunal is composed of a sole arbitrator, ^[126] and because the award was not signed by the three arbitrators

The stance of the courts from the mandatory arbitration under the Sports Centre

The Court of Appeal has previously described arbitration under the Sports Law as being mandatory, ^[127] although mandatory arbitration is systematically declared by the Constitutional Court as unconstitutional. ^[128] In a recent judgment, the Court of Cassation found that arbitration under the Sports Law, although mandatory, conforms with international practice in this respect, which aims to limit states’ interference in sports as well as the directions of the International Olympic Committee. ^[129] Nevertheless, the court found that the rules of arbitration of the Sports Law as well as the Sports Centre’s rules of arbitration might be unconstitutional for other reasons and referred the matter to the Constitutional Court.

Possible unconstitutionality of several articles of the Sports Law

The Court of Cassation referred articles 66 and 69 of the Sports Law to the Supreme Constitutional Court to decide on their constitutionality. ^[130] The Court of Cassation found in its landmark judgment that article 66 and 69 are possibly in contradiction with the guarantee of impartiality and independence of judiciary stipulated in article 94 of the Constitution. The court view is that article 66 links the Sports Centre to the Egyptian Olympic Committee, although it was mentioned in the same article that the Sports Centre is independent. Similarly, article 69 of the Sports Law has established several links between the Sports Centre and the Egyptian Olympic Committee including granting the President of the Board of Directors of the Olympic Committee the legislative mandate to issue the Sports Centre’s rules.

Moreover, the Court of Cassation ruled that the Sports Centre’s Rules were issued upon a legislative mandate granted to the Olympic Committee by the Sports Law. This deemed such rules a law, the constitutionality of which is subject to the jurisdiction of the Constitutional Court. The Court of Cassation found that articles 2, 81, 92 bis (b) and 92 bis (c) of the Sports Centre’s Rules may be in breach of articles 53, 84(2), 97 and 170 of the constitution, ^[131] which require equality between citizens before the law, prohibit immunisation from judicial review, define the limits of legislative mandates and the hierarchy of different legislative instruments.

In particular, the Court of Cassation found articles 2 and 81 of the Sports Centre’s Rules are potentially exceeding the legislative mandate granted by article 69 of Sports Law to the Olympic Committee. Specifically, the court’s view is that such mandate requires the rules to be consistent with international standards and requires the Sports Centre to abide to the Olympic Charter, international standards, provisions of the Sports Law, main guarantees and principles of adjudication of the CCPL and the Arbitration Act. However, the rules did not abide by these requirements.

Importantly, the Court of Cassation found that articles 81, 92 bis (b) and 92 bis (c) of the Sports Centre’s Rules immunised the arbitration awards from judicial review inconsistently with the international standards. The court draw such standards from the rules governing the Court of Arbitration for Sports (CAS), which allows for the review of sports arbitration awards by the Swiss Federal Courts.

Arbitrations where state organs and companies are parties

The Prime Minister issued Decree No. 1062 of 2019 regulating the rules governing the Supreme Committee for Advising on International Arbitration Cases (the Supreme Committee) by introducing significant changes to its composition while simultaneously expanding its powers.

The Supreme Committee is competent to review and submit its opinion in all types of arbitral disputes, commercial and investment, where the state or one of its authorities, entities or subordinated companies is a party to the dispute. The Supreme Committee is also competent to carry out the following:

• providing advice and opinions regarding the defence submitted in arbitration cases;
• determining the strength and suitability of the defence and the documents presented, and proposing any additions or changes that the Supreme Committee deems necessary to improve the Egyptian position;
• providing all types of legal assistance that may be required by the State Lawsuits Authority or the law firms carrying out the state’s defence before arbitral tribunals; and
• suggesting an amicable settlement with the other parties.

The decree focuses on the establishment of the Technical Secretariat, which is expected to be the driving force behind the substantive work of the Supreme Committee. The Deputy Minister of Justice for Arbitration heads the Technical Secretariat, and a decree setting out the composition of the secretariat is expected to be issued shortly.

In addition, the decree explicitly prohibited any governmental or administrative authority to take any action with respect to an arbitral dispute, without first referring the matter to the Supreme Committee. ^[132]

The non-banking financial sector

Establishment of the Non-Banking Financial Disputes Arbitration Centre

In continuation of the state’s policy of expanding the reliance on arbitration as the primary dispute resolution instrument, the law organising control over the Non-Banking Financial Markets and Instruments provided for the establishment of an arbitration centre by a presidential decree to resolve disputes arising out of the application of the laws governing non-banking financial transactions, subject to the parties agreement on arbitration. Presidential Decree No. 335 of 2019 was issued in this regard, establishing the Non-Banking Financial Disputes Arbitration Centre (NBF Centre). The centre is competent with all disputes that arise from application of the laws concerning non-financial transactions, in particular those disputes between shareholders, partners or members of the companies and entities that work in the non-banking financial markets. It is also competent with disputes between those dealing with those companies and the beneficiaries from the non-­banking financial activities. However, the NPF Centre is only competent if the parties agree to its jurisdiction, whether before or after the disputes. The centre offers mediation and conciliation services before starting arbitration proceedings, unless the parties agree otherwise.

Principles from the Egyptian courts issued in 2019: Impartiality and independence of arbitrators

Criteria of impartiality and independence

The Court of Cassation ^[133] defined independence and impartiality to mean the freedom of the arbitrator from any hierarchal, material or mental relationship with any of the parties that contradicts the arbitrator’s independence, and that it requires a prevailing assumption by the parties that the arbitration award to be rendered will be just. In its analysis, the court made reference to the IBA Guidelines on Conflict of Interest in International Arbitration as a reference in determining whether any conflict of interest of the arbitrators exists or not.

Proof of breach of impartiality and independence

The Cairo Court of Appeal ^[134] refused the allegation by one of the parties that a telephone conversation between one of the parties’ counsels and the arbitrators proves partiality of the arbitrator in question. The appellant was able to obtain, by virtue of a request to the public prosecution, the log of phone calls between the other party’s counsel, its appointed co-arbitrator and the presiding arbitrator during the arbitration proceedings. Despite the logs showing that there were such calls, the court, while recognising that a breach of independence and impartiality is a reason for annulment, found that a breach of impartiality or independence must be certain, not based on assumptions and absent of proof that the conversations made during these calls related to the arbitration proceedings that no proof of such breach exist.

Failure to disclose is a breach of impartiality and independence

In another case, the Court of Appeal found that acting as an attorney for one party without disclosing such issue to the other party breaches the requirements of independence and impartiality, and, thus, leads to the annulment of the arbitral award. ^[135]

The criteria for determining the seat of arbitration

In a Court of Appeal ^[136] judgment, the court found that the place of issuance of the award is the criteria for determining whether the arbitration proceedings were conducted in Egypt or abroad. In this case, the court refused to annul an award on the basis that it was conducted in London and thus is not subject to annulment in Egypt as per the provisions of New York Convention. The court also confirmed that a judgment by Egyptian courts annulling an arbitral award rendered abroad would bear no legal effect absent the parties’ agreement to subject the arbitration to the Arbitration Act.

The Court of Cassation refused to adopt a physical criterion in identifying the place where the award is issued. In one case, the court held that ‘holding deliberations and signature of the award by the tribunal outside Cairo does not change the fact that it was issued in Cairo, being the seat of arbitration.’ ^[137]

The applicable interest rate

The applicable interest rate remains an alive topic. The Egyptian Civil Code allows parties to agree on an interest rate, but only to a maximum of 7 per cent. ^[138] Absent agreement, the applicable rate shall be 4 per cent in civil matters and 5 per cent in commercial matters. ^[139] It has been a subject of debate whether the maximum rate pertains to public policy for the purposes of deciding on annulment of arbitration awards. The Court of Appeal did not consider it as such, which it confirmed in a recent judgment. ^[140] The court held that the interest rate does not relate to public policy and awarding a higher interest rate than that stipulated by the Civil Code is merely a wrong application of the legal provisions that is not subject to review by the annulment court. The court, in denying that the maximum rate pertains to public policy, relied on the fact that the legislator already provides for higher rates in the Egyptian Central Bank Law in banking transactions and commercial law for commercial matters. In addition, it found that public policy is a matter that changes over time and upon change in circumstances. Thus, the maximum rate stipulated by the Civil Code, which was promulgated since 1948, is no longer necessitated by an essential public interest that justifies maintaining it as a public policy rule. ^[141]

Criteria of ‘arbitral institution’ for purposes of defining what would be an international arbitration award

The Arbitration Act adopts in article 3 certain criteria for what would be considered an international arbitration thereunder. Among these criteria is where the arbitration is institutional. ^[142] Categorising an arbitration as international is of specific importance for defining the court competent for annulment and enforcement purposes. If the arbitration is international, the competent court for both matters is the Cairo Court of Appeal. For national arbitration, the competent court for annulment shall be the appellant court that was originally competent to decide the dispute absent the arbitration agreement, and the first-degree court for purposes of enforcement.

It has been a matter of debate in the judgments of the Court of Appeal and the Court of Cassation, whether institutional arbitration is international per se, particularly the arbitration held under the auspices of CRCICA. In 2019, the Court of Cassation drew a distinctive line in respect of the institutions whose arbitrations are deemed international. ^[143] The court held that, for institutions located in Egypt, their arbitrations are international only if the institution is based or established by virtue of an international or regional treaty (eg, CRCICA) or a law for the purpose of administering international commercial arbitration. For institutions located outside Egypt, the court limited them to those having international or regional reputation with strong trust of clients in the field of business and investment. In illustrating what institutions would satisfy such criteria, the court, following the preparatory works of the Arbitration Act, drew an example in the ICC in Paris. Arbitrations held under the auspices of institutions that do not fulfil either of these criteria are deemed national.

Constitution of the tribunal

Appointment of arbitrator: Application may be by an order rather than by a lawsuit

In a Court of Cassation judgment, ^[144] the court decided that, according to article 17 of the Arbitration Act, the request for appointment of an arbitrator shall be through a judgment rendered in a case that filed to the court and not through an order upon an application. The latter is much quicker as the order is granted or denied in the absence of the opponent. Therefore, issuance of an enforcement order appointing an arbitrator is considered null and void as a matter of public policy. However, the court decided that the order on application in question would be considered valid since it already achieved the goal of the procedures, which is to ensure due process, attendance of the parties and the opportunity that each party expresses its views. The approach adopted by the Court of Cassation might imply that appointment of an arbitrator could be made through an order on application; specifically in that the Court of Appeal judgment that was challenged was considered, by the Court of Cassation, to have reached a correct reasoning and the fact that the Court of Appeal accepted an application of an order on application to appoint the arbitrator in question.

Article 26 of Law No. 211 of 1994 requiring mandatory arbitration deemed unconstitutional

The Supreme Constitutional Court has considered article 26 of the Cotton Exporters Union Law No. 211 of 1994 to be unconstitutional. ^[145] The article stipulated that disputes between the cotton exporters union and buyers must be settled by means of arbitration. In 2019, the Cairo Court of Appeal has taken note of the judgment issued by the Supreme Constitutional Court, holding certain provisions of the Law No. 210 of 1994 unconstitutional and has annulled arbitral awards rendered in reliance of those same provisions. ^[146]

CRCICA in 2019

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 Court of Appeal considered CRCICA’s status, as a non-profit international organisation, to be an international body enjoying judicial immunity in practicing its role as an arbitration institution and thus may not act as defendant in challenging its arbitration-related function. ^[147]

The total number of cases filed before CRCICA until 30 September 2019 was 1,354 cases. In the third quarter of 2019, 15 new cases were filed, demonstrating a slight increase in new cases when compared to the 13 new cases filed in third quarter of 2018. ^[148]

CRCICA’s caseload in the third quarter of 2019 involved disputes related to construction, oil and gas, public–private partnership, media and entertainment, international sale of goods, tourism and hospitality, pharmaceuticals, telecommunications, and retail and real estate development. CRCICA has also highlighted that it has signed a total of 88 cooperation agreements with three new agreements in 2019, with the Nairobi Centre for International Arbitration, the Lagos Court of Arbitration and the Abu Dhabi Global Market. ^[149]

Since it was established, CRCICA has adopted, with minor modifications, the arbitration rules of 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, Mr Moamen Elwan, Mr Lokmen Kassim and Ms Eman Hussein, associates at Matouk Bassiouny, for their support and research in preparation for this chapter.