Contributed By Matouk Bassiouny & Hennawy
There are a number of public registers that might help identify defendant’s assets. These include the Real Estate Register’s Office for the identification of immovables and the Commercial Register for the identification of commercial companies.
In addition, Egyptian law obliges banks to disclose the financial position of debtors subject to the fulfilment of certain judicial procedures.
Moreover, the Central Depository and Registry Law of Financial Instruments creates a centralised system that keeps records of all shares, including names of owners and transactions that take place on those shares. Thus, it can be used to determine the defendant’s ownings of shares and financial instruments.
Egyptian law permits the issuance of different types of domestic judgments. These vary depending on the competent court, ie the civil or criminal court. The civil and commercial courts may render the following types of judgment:
In addition, the criminal courts may render:
The Civil and Commercial Procedures Law No 13 for the year 1986 regulates the enforcement procedures for domestic judgments.
As a general rule, final judgments are subject to compulsory enforcement, which is also the case for awards rendered by the Court of Appeal. Some judgments rendered by the court of first instance may also be enforceable if provided for by law, such as summary judgments, unless the judgment provides for the depositing of a security. The law grants the successful party the right to impose a precautionary attachment over movables that are owned by and in the possession of the debtor or a third party (eg the defendant’s bank account). This law also regulates the requirements and procedures for the compulsory enforcement of domestic judgments.
The Enforcement Process
The first step in the enforcement process is the service of the relevant judgment on the defendant, demanding that he or she take the necessary action, eg, pay the amount awarded or deliver the land sold. Precautionary attachments do not require a court decision. They can be conducted by a court bailiff following the satisfaction of certain legal requirements.
For insolvency proceedings, Egyptian law differentiates between insolvency, which is regulated under Egyptian Civil Law, and bankruptcy, which is regulated under a recently promulgated law (Law No 11 for the year 2018). The insolvency procedures apply to non-traders with respect to non-commercial disputes.
Under the civil law, a debtor may be declared insolvent if his or her assets are insufficient to satisfy his or her debts. Insolvency is declared by the judgment of the court of first instance of the district in which the debtor is domiciled, or upon petition by the debtor himself or one of his or her creditors. The lawsuit shall be adjudicated in an expedited manner.
Generally, there is no specific time in which to enforce a domestic judgment. However, the costs and timeframe vary depending on the selected enforcement method, ie, a precautionary or a compulsory enforcement, and also whether the enforcement procedures are against movables or immovables. The law regulates the necessary requirements and procedures for each enforcement method. Assuming that enforcement will be made against movables owned by the debtor, the expected time frame may take approximately 18–24 months. For precautionary attachment, this may take six to eight months.
It is to be noted that those periods might be affected by the COVID-19 pandemic, and the measures taken by the Egyptian government and judiciary to face the consequences of this pandemic.
It is generally advisable to commence enforcement procedures against the defendant’s bank account as this is a more efficient and prompt enforcement procedure.
Generally, there is no central official record where the successful party can identify the assets owned by the defendant. However, certain public registries may be helpful in identifying some of the defendant’s assets. These registers include the Real Estate Register’s Office for the identification of the immovables ownership), and the Commercial Register for the identification of commercial companies.
Additionally, there are some procedures that can be followed by the successful party to identify the defendant’s assets. For example, for the attachment on the defendant’s bank account, the applicant has to notify the relevant banks with its debt and the sought attachment through a document issued by a court bailiff. The applicant has then to submit an application to the competent judicial authority to obtain an order obliging the banks to disclose the financial position of the defendant.
The banks shall then disclose the financial position of the defendant within 15 days of the receipt of the court bailiff document and the disclosure order. The banks cannot then pay the amounts under their custody to the defendant.
It should be noted that the COVID-19 outbreak led the government to temporarily close and suspend the operation of the Real Estate Register’s Office to curb the spread of the virus. This office has currently resumed its operation with a limited capacity.
The Prime Minister, on 29 June 2020, issued its Decree No 1295 for the year of 2020, stating that the period of lockdown, starting from 17 March until 27 June 2020, is considered a period of suspension of all limitation periods, including those of enforcement proceedings. Thus, non-initiation of enforcement proceedings within that period does not affect any limitation periods of enforcement proceedings.
The Civil and Commercial Procedures Law No 13 for the year 1986 includes the legal options available for the defendant to challenge the enforcement of domestic judgments. These options include filing an appeal before the highest courts, such as the Court of Cassation, seeking the cancellation of the judgment and a stay of enforcement until the final decision on merits is rendered by the court. Additionally, in order to balance between the creditor’s right to obtain its rights through the compulsory enforcement and the debtor’s right to avoid an invalid enforcement, Egyptian law regulates the initiation of certain lawsuits to either:
Egyptian law further regulates the legal requirements and procedures for the initiation of these lawsuits. For example, the defendant can challenge the enforcement if the creditor’s right is extinguished for any reason. The defendant can also challenge the enforcement if the applicant is seeking enforcement on an asset that cannot be subject to enforcement or attachment. This includes property owned by the state or public artificial persons and allocated for a public purpose.
Another option is to file a contestation against the enforcement of the judgment. The first contestation automatically suspends the enforcement of the judgment until the court’s determination on the merits of the contestation itself.
Any judgment that does not impose an obligation on its parties cannot be subject to enforcement. For example, the declaratory judgment cannot be subject to enforcement. In addition, the judgment should be final, and not subject to an appeal (other than challenge before the Court of Cassation) unless it is issued in a summary matter or accompanied by an expeditious execution.
There is no central register including all rendered judgments from the Egyptian courts. However, each court has a documentary record for all the judgments issued from it. This record only includes the parties’ names, the number of the judicial proceedings and the date of the judgment.
The Ministry of Justice is currently preparing documentary records for all judgments issued from the Egyptian courts.
On 10 June 2020, in a welcomed response to the COVID-19 outbreak, the Court of Cassation announced the launch of a new electronic platform that contains a record of all challenges before the Court of Cassation, including the challenge number, status, hearing date and other relevant data.
The Civil and Commercial Procedures Law No 13 for the year 1986 regulates the enforcement procedures of foreign judgments in Egypt. A party seeking the enforcement of a foreign judgement must obtain an exequatur. Foreign judgments can be enforced in accordance with the same requirements for the enforcement of domestic judgments.
A petition for the enforcement of foreign judgments should be filed before the competent court of first instance as per the normal procedures for the initiation of a lawsuit. The court will not render its enforcement order unless the following conditions are satisfied:
In addition, the court has to ensure that the country in which the judgment was rendered enforces judgments issued by the Egyptian court (reciprocity).
The application of the above requirements and procedures is subject to the provisions of the relevant conventions and treaties to which Egypt is a party. If, however, any of these requirements were absent but the applicant feared the loss of its right, it may apply to obtain a precautionary seizure but will have, in any case, to file a writ of enforcement within eight days from enforcing the precautionary seizure.
Furthermore, Egypt has joined the Al Riyadh Arab Convention for Judicial Cooperation of 6 April 1983. Egypt is also a signatory to certain enforcement conventions such as the Arab League Convention of 1952 and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters of 1965. In addition, Egypt is a member to a number of bilateral treaties concerning the judicial enforcement such as with France and China as well as the Legal and Judicial Cooperation Agreement with the UAE.
Egyptian law does not differentiate between the enforcement of domestic and foreign judgments. All types of foreign judgments are subject to the same legal requirements and procedures.
Subject to the provisions of the relevant enforcement conventions or treaties to which Egypt is a party, Egyptian courts do not generally enforce any foreign judgment that is subject to an appeal in the country in which the judgment was rendered. Also, the courts will not enforce a foreign judgment if the party or parties concerned were not duly notified and represented in the proceedings.
Subject to the application of the relevant conventions and treaties, Egyptian law requires the party seeking enforcement of a foreign judgment to obtain an exequatur. Foreign judgments are enforced in accordance with the same requirements as domestic judgments. A writ of enforcement of a foreign judgment should be filed before the competent court of first instance, as per the normal procedure for the initiation of a lawsuit before such courts.
Practically, the applicant party submits a bundle of documents, including the original version of the foreign judgment along with its official Arabic translation, a certificate ensuring that the judgment is final according to the laws of the country in which the judgment was rendered and a copy of any relevant convention, treaty or agreement between the issuing country and Egypt. The request for enforcement is then submitted to the court whose jurisdiction encompasses the place of enforcement. The competent court will render its exequatur without reviewing the merits of the foreign judgment.
Once the exequatur is issued, the applicant must serve it on the defendant. If the defendant does not accept the judgment voluntarily, the applicant may seek compulsory enforcement of the judgment.
The receipt of an exequatur on a foreign judgment takes around six to 12 months. The court’s decision to issue an exequatur is subject to appeal, which takes around six months to decide.
The costs incurred on the enforcement of a foreign judgment in Egypt consists of the payment of a filing fee of approximately EGP1000 and a percentage of 7.5% of the awarded amount in the foreign judgment to be paid following the issuance of the exequatur.
Generally, the party against whom enforcement of a foreign judgment is sought may argue non-fulfilment of the legal requirements in order to stop the enforcement procedures. However, once an exequatur is issued, the judgment will be enforced according to the same requirements and procedures as for the enforcement of domestic judgments. It will also be subject to the same challenges and obstacles explained in 2.5 Challenging Enforcement of Domestic Judgments.
Subject to the provisions of international conventions applicable in Egypt, the enforcement of arbitral awards is regulated under the Egyptian Arbitration Law No 27 for the year of 1994. Arbitral awards enjoy the authority of res judicata under Egyptian law. However, a party seeking the enforcement of an arbitral award must obtain an execution order from the competent court (Exequatur) to forcibly enforce it against the defendant.
In addition, Egypt is a signatory to a number of conventions that facilitate the enforcement of arbitral awards such as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Egypt signed it on 2 February 1959, and ratified it on 8 June 1959) and the 1966 ICSID Convention (Egypt signed it on 11 February 1972, and ratified the same on 2 June 1972).
Egyptian arbitration law differentiates between domestic arbitral awards seated in Egypt and foreign arbitral awards seated outside of Egypt. While the enforcement of domestic arbitral awards is governed by Article 56 of the Arbitration Law, the enforcement of foreign arbitral awards is governed by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Recently, the courts found that in case of contradiction between the provisions of the domestic Egyptian law and the provisions of the New York Convention, the provisions of the New York Convention would prevail.
Furthermore, Egyptian courts found that the enforcement of foreign arbitral awards cannot be subject to rules stricter than those applicable to national arbitral awards.
Generally, the arbitral awards that do not impose any obligation on their parties cannot be subject to compulsory enforcement. To be enforceable, the arbitral awards should not contradict any previous judgment rendered by Egyptian courts, nor violate the provisions of public policy. In addition, the enforcement of the arbitral award cannot be granted if the award is rendered in a matter that cannot be subject to compromise such as matters relating to crimes, status and family law.
As regards the requirement that the foreign arbitral awards must not violate public policy, if such violation is only partial, ie, that only part of the award violates public policy, the other parts of the award that do not violate public policy may still be enforced. This requires that the parts that may be enforced could be separated from the parts that violate public policy.
In any event, for any foreign arbitral award to be enforced it must be final.
Recently, Egyptian courts has recently adopted a friendlier approach to arbitration. For instance, the Court of Appeal rendered a judgement enforcing a foreign arbitral interim measure issued by an ICC tribunal. The Court found that enforcement of interim measures is through the same procedures to enforce final arbitral awards, ie, through an order on application without notification or hearing of the parties. The court only required that the interim measure must be final, based on a valid arbitration agreement, both parties had the opportunity to present their case and is not against public order.
A party seeking the enforcement of an arbitral award must obtain an exequatur from the competent court. The following provides a summary of the legal steps that should be followed to enforce an arbitral award.
First, the applicant should serve the arbitral award, together with its Arabic translation, on the defendant through a court bailiff. The applicant must then deposit with the secretariat of the competent court the original arbitral award, or a signed copy thereof, as well as an authenticated Arabic translation thereof. In this respect, a specific forum called “the Technical Office for Arbitration at the Ministry of Justice” has to review the arbitral award before accepting its deposit.
Following the deposit of the arbitral award, a court notice should be served on the defendant to inform him or her of the deposit. An enforcement application must then be submitted to the president of the competent court, in case of foreign arbitral awards with the president of Cairo Court of Appeal, together with the following documents:
Conditions for Enforcement
The Arbitration Law imposes the following conditions on the enforcement of arbitral awards:
Upon the lapse of the 90 days, the applicant will then be entitled to seek official execution of the arbitral award (ie, requesting the issuance of an execution order “exequatur”), regardless of whether or not an annulment lawsuit is filed. Following the fulfilment of the above conditions and procedures, the competent court will then issue its execution order (ie, exequatur) on the arbitral award.
Additional Requirements for Enforcement of Foreign Arbitral Awards
For foreign arbitral awards seated outside Egypt, the applicant must submit evidence concerning the status of any nullification action in the country where the award was rendered. If the court finds that a nullification action was filed, in practice, the court would delay enforcement procedures until a judgement in the set aside action is rendered. This is made in particular in case of requests to enforce foreign arbitral awards because it is made through an order on petition that does not require attendance or submission of defense by the other party (against whom enforcement is sought).
For the enforcement of ICSID awards, and pursuant to the Article 54(20) of the ICSID Convention, the Ministry of Justice has been designated by Egypt as the competent authority for the recognition and enforcement of arbitral awards rendered pursuant to the ICSID Convention.
In the absence of exceptional circumstances, the receipt of an exequatur pursuant to an arbitral award takes between eight to twelve months. The costs may vary depending on whether an official Arabic translation of the award is required.
Under the Egyptian Arbitration Law, the arbitral award is final, not subject to appeal and enjoys the authority of res judicata, but it may be subject to a nullification lawsuit provided that sufficient grounds exist. However, Egyptian courts only have jurisdiction to decide on a nullity action against an arbitral award seated in Egypt. Thus, foreign arbitral awards seated outside Egypt are not subject to nullification lawsuits.
As a general rule, Egyptian courts are not authorised to review the merits of the relevant arbitral award. They are only permitted to review an award if it violates any of the aspects exhaustively listed under Article 53 of the Egyptian Arbitration Law.
From a procedural perspective, an annulment lawsuit should be filed before the competent court within 90 days of the date of receiving official notification of the arbitral award from the successful party (Article 54 of Arbitration law).
Grounds for Annulment
Article 53(1) of the EAL sets out an exhaustive list for the grounds of the annulment of arbitral awards. It provides:
“1. An arbitral award may be annulled only:
a) If there is no arbitration agreement, if it was void, voidable or its duration had elapsed;
b) If either party to the arbitration agreement was at the time of the conclusion of the arbitration agreement fully or partially incapacitated according to the law governing its legal capacity;
c) If either party to the arbitration was unable to present its case as a result of not being given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or for any other reason beyond its control;
d) If the arbitral award failed to apply the law agreed upon by the parties to govern the subject matter in dispute;
e) If the composition of the arbitral tribunal or the appointment of the arbitrators was in conflict with this Law or the parties' agreement;
f) If the arbitral award dealt with matters not falling within the scope of the arbitration agreement or exceeding the limits of this agreement. However, in the case when matters falling within the scope of the arbitration can be separated from the part of the award which contains matters not included within the scope of the arbitration, the nullity affects exclusively the latter parts only;
g) If the arbitral award itself or the arbitration procedures affecting the award contain a legal violation that causes nullity.”
Furthermore, Article 53(2) grants the court adjudicating the nullity action the right to decide ipso jure the nullity of the award if it is in conflict with Egyptian public policy.
However, the mere filing of annulment action does not stay the enforcement of the arbitral award whose annulment is being sought. The party against whom enforcement is sought may request the suspension of the enforcement pending the court’s judgment on the annulment action itself. This request should be accompanied by an explanation of the (serious) reasons that justify the requested suspension. Therefore, the decision that suspends enforcement, if granted, is a temporary decision. It will lapse once a judgment on the annulment action is rendered.
Other legal challenges, as explained in 2.5 Challenging Enforcement of Domestic Judgments, are also applicable to the enforcement of arbitral awards.