International Arbitration 2020

Last Updated August 18, 2020

Egypt

Law and Practice

Authors



SHEHATA, Attorneys at Law is a small business law firm established in Cairo whose founder has more than 30 years of experience, and whose lawyers have extensive experience and knowledge. SHEHATA is active in most areas of business law, with a special focus on commercial arbitration (inter alia, Mr Shehata acted for OCI in a USD200 million arbitration and for Vodafone Egypt in an interconnection dispute exceeding EGP10.2 billion), and also on corporate and M&A transactions. The arbitration team has handled more than ten arbitrations and related court challenges in the past three years, including successfully acting for a major multimedia group against a famous football club in Egypt. The firm is perfectly proficient in Arabic, English and French. Its clients include Etisalat Misr, Vodafone Egypt, Archirodon, Vinavil Egypt for Chemicals, Jewellery of Egypt (Azza Fahmy), Qiagen GmbH, Careem and IPTC Egypt.

Arbitration has become a commonly used dispute resolution method that is almost systematically provided for in contracts involving a foreign party (whether a foreign company or an Egyptian entity owned by foreign investors), but also in high-stakes contracts between domestic entities. In the past decade, recourse to arbitration as a method of resolving disputes has gained more and more ground in smaller transactions, even in transactions that are not commercial in nature.

Since 2013, many laws have been amended or replaced altogether to encourage foreign investment, such as the investment law, the general corporate law, the capital market law and the bankruptcy law. Arbitration legislation has not been impacted, as it is commonly admitted as progressive.

Recently, specialised chambers in the Court of Appeal and the Court of Cassation became dedicated to dealing with arbitration-related recourses. Furthermore, systematisation has been witnessed in the courts' approach, with the courts becoming more inclined to uphold arbitral awards rather than to annul them. Courts’ rulings show greater reserve in applying the grounds for the annulment of arbitral awards.

Due to the COVID-19 pandemic and the restrictions it caused for the conduct of hearings, many of the arbitral tribunals have opted to conduct hearings through video-conferencing. The Cairo Regional Centre for International Commercial Arbitration (CRCICA) is the main arbitration centre in Egypt, and has issued recommendations encouraging the conduct of proceedings virtually; it has also imposed some restrictions on the conduct of hearings at the Centre’s premises.

The construction field continues to be a major provider of commercial arbitration cases in Egypt, as confirmed by CRCICA statistics for 2019. This simply reflects the fact that it has been the most active economic sector in Egypt during the last decade, as well as the intrinsically conflictual nature of its transactions. Oil and gas sector arbitrations rose to the first position in the CRCICA statistics for 2019 (statistics limited to arbitration cases under CRCICA). Otherwise, the usual sectors have been present in the commercial arbitration scene, like lease agreements, distribution, sale and purchase agreements and real estate development disputes.

CRCICA was established as an arbitration institution in 1979 under the auspices of the Asian-African Legal Consultative Organization, and stands as the predominant arbitral institution in Egypt in terms of experience and recognition. This is due to the fact that it is an independent non-profit international organisation that has adopted the UNCITRAL arbitration rules of 1976, with minor modifications to adapt them to the institution's function. The creation of many small private arbitration centres has been witnessed, but none of them enjoys the reputation or professionalism of CRCICA.

Egypt has adopted specific legislation dedicated to arbitration by issuing Law No 27 of 1994 on Arbitration in Civil and Commercial Matters (the Arbitration Law), to govern arbitration conducted in Egypt as well as international commercial arbitrations conducted abroad whenever governed by this Arbitration Law.

The law was largely inspired by the UNCITRAL Model Law (1985 version), with some variations, such as being applicable not only to international arbitrations but also to domestic arbitrations. It is worth noting in that respect that institutional arbitrations are ispo facto considered "international arbitrations" by the law. The Arbitration Law also diverges from the UNCITRAL Model Law in many minor aspects. For instance, while the UNCITRAL Model Law provides for the possibility to challenge the partial or preliminary awards rendered by the arbitral tribunal once rendered, the law in Egypt provides that partial or preliminary awards cannot be challenged except with the challenge of the final award ending the whole arbitration proceeding. Also, the rule is reversed regarding the arbitral tribunal’s powers to order interim measures where, under the Egyptian law, the parties must confer such powers expressly to the arbitral tribunal in the arbitration agreement, otherwise the arbitral tribunal is devoid of such powers. Also, the law in Egypt adds the non-application by the arbitral tribunal of the law chosen by the parties as a ground for setting aside an award.

Finally, the Code of Civil and Commercial Procedures still governs the enforcement of foreign awards, at least a priori (see 12.2 Enforcement Procedure).

Law No 27 of 1994 was amended twice, by Law No 9 of 1997 and Law No 8 of 2000. Law No 9 of 1997 added a paragraph to Article 1 of the Arbitration Law, providing that, in administrative contracts, agreement on arbitration shall be reached only upon the approval of the competent minister or the official assuming his powers with respect to public juridical persons. Law No 8 of 2000 amended Article 19 relating to challenges to and the removal of arbitrators, to fill the gap created by a decision of unconstitutionality. The amended Article 19 now gives competence to the state courts to rule on challenges to the arbitrators. The Court of Cassation (the highest court in Egypt) considers such competence of the state courts to be a matter of public order.

Without being a legislative amendment to the law, Decree No 2105 of 1995, issued by the Minister of Justice, created a specialised arbitration "technical bureau" affiliated to the Ministry of Justice, the main mission of which was, initially, to maintain a list of arbitrators for courts’ use when nominating arbitrators. Later on, by Decree No 8310 of 2008, this technical bureau became responsible for issuing reports approving or rejecting the deposit at the courts of arbitral awards. This deposit of arbitral awards with the courts is a crucial step towards affixing the execution formula on the award (for its enforcement). The role of the technical bureau in such proceedings, therefore, constitutes an added step to the execution of arbitral awards that was not provided for under the law.

Two provisions of the Arbitration Law of 1994 were found unconstitutional by the Constitutional Court. In 1999, the Constitutional Court ruled that the provision of the first paragraph of Article 19 is unconstitutional; this provision has since been amended by Law No 8 of 2000. In 2001, the Court declared a portion of paragraph 3 of Article 58 of the law that prevented recourse against a court’s decision granting execution of an award to be unconstitutional. The censured provision did not allow for a court’s decision granting exequatur of an arbitral award to be challenged; only a court’s decision refusing to grant exequatur was challengeable. By the Constitutional Court decision of 2001, now both the rejection and the granting of exequatur could be challenged by the party concerned.

There have been talks about possible amendments to the Arbitration Law, with the aim of adding some clarity to the application of some of its provisions, but that has not yet been confirmed by a draft law.

An arbitration agreement is defined by the Arbitration Law as an agreement by which the parties (natural or legal persons) agree to submit all or certain disputes to arbitration in order to be resolved.

As with all agreements, an arbitration agreement is subject to the common law conditions of the validity of contracts, like consent and capacity. As to its form, Article 12 of the Arbitration Law provides that an arbitration agreement must be made in writing or it will be considered null and void. The arbitration agreement is considered to be made in writing if it is in one of the following forms:

  • a separate arbitration agreement clearly identifying the scope of the disputes that are covered by arbitration;
  • an arbitration clause embodied in a contract signed by the parties (or an annex to such contract);
  • a reference in an agreement to another document containing an arbitration agreement. In such case, the reference must clearly indicate that the arbitration agreement referred to is meant to be applicable; or
  • after a dispute arises, a submission agreement, which is an agreement to resort specific existing disputes to arbitration, even if an action has already been brought before a judicial court. The Arbitration Law requests, however, that the submission agreement clearly defines the scope of the issues subject to arbitration, in order to be enforceable. This is strictly applied by the jurisprudence, which interprets submission agreements narrowly.

Arbitrability is addressed very briefly but strictly by the Arbitration Law, Article 11 of which provides that arbitration is not permitted in matters that cannot be subject to compromise. Article 551 of the Egyptian Civil Code defines such rights that cannot be subject to compromise as matters related to personal status and public order (to be distinguished from mandatory provisions of the law). Compromise is, however, allowed regarding the financial interests arising out of the personal status of individuals or out of a criminal offence.

Public order matters are various and multiple, determined by law provisions and jurisprudence, with many being debated. Uncontested public order domains include criminal matters, insolvency procedures and disputes relating to the registration of real estate properties.

The national courts' approach to the enforcement of arbitration agreements is determined by the provisions of the Arbitration Law, which, first, acknowledge the principle of competence-competence (Article 22), granting the arbitral tribunal the competence to rule on its own competence, and, second, provide for the corollary (Article 13) by virtue of which a court must declare inadmissible a dispute brought before it and for which a party objects that it is covered by an arbitration agreement. Naturally, the court would still have to acknowledge the existence of a valid arbitration agreement, but the jurisprudence considers that it must be restricted to prima facie review of the arbitration agreement.

The objection of the existence of an arbitration agreement must be raised by a party, and must necessarily be made before making any other defences in the case.

Like most arbitration legislation, Article 23 of the Egyptian Arbitration Law provides for the independence of the arbitration agreement rule. By virtue of such rule, an arbitration agreement is "independent" or "separate" from the other terms of the underlying contract so that the nullity, rescission or termination of the underlying contract would not, in itself, affect the validity of the arbitration agreement. Hence, the invalidity of the contract containing an arbitration agreement does not result in the invalidity of the arbitration agreement ipso facto, with the latter standing on its own in terms of valid existence. Courts tend to apply such provisions correctly.

The Egyptian Arbitration Law does not impose any restrictions or limits on the parties’ autonomy in selecting the arbitrators. Arbitrators can be of any nationality, gender, faith, education or profession.

The Arbitration Law provides for only two restrictions on the parties’ autonomy to select arbitrators. Article 16 of the law provides that an arbitrator cannot be a minor, under guardianship, or deprived of his civil rights by reason of a judgment against him for a felony or misdemeanour contrary to honesty or due to a declaration of bankruptcy (unless restored to his rights), whereas Article 15 provides that, whenever the parties do not opt for a sole arbitrator, the number of arbitrators must be odd.

The Arbitration Law provides, as a principle, that the parties are free to determine the method and timing for the appointment of arbitrators. To ensure the effectiveness of arbitration agreements, it nevertheless provides for a set of default procedures and empowers the court – a juge d’appui – to remedy parties’ failure to appoint arbitrators, as well as arbitrators’ failure to appoint the presiding arbitrator.

In that respect, Article 17 of the Arbitration Law provides that, if the parties fail to agree on the number of arbitrators, the number shall be three. Furthermore, whenever a party or parties fail to appoint an arbitrator within 30 days of being requested to do so, the court would appoint that arbitrator, upon a party’s request. Also, when the parties or the co-arbitrators fail to appoint the presiding arbitrator within 30 days of the date on which the last of the co-arbitrators is nominated, the court would appoint such presiding arbitrator, upon a party’s request.

Although Article 4/3 of the Arbitration Law provides that references in said law to the two parties to the arbitration are references to all the parties, even if many, the Law did not provide for default procedures for the appointment of arbitrators in the case of multi-party arbitrations.

The court cannot intervene in the selection of arbitrators by the parties. It is only when acting under the default procedures that a court would be requested to appoint one or more arbitrators.

The Arbitration Law provides that, in appointing arbitrators, the court shall observe the conditions required by law and those agreed upon by the parties, that the decision will be rendered expeditiously and that it is not subject to appeal. The Court of Cassation has ruled, however, that only an affirmative appointing decision is not subject to appeal, whereas a refusal to appoint is subject to appeal (Cass. No 5211 of judicial year 78, dated 18 February 2015), but also that appeal is always admissible in cases of breach of law, breach of parties’ agreement or breach of the rules of attribution of jurisdiction by the court decision (Cass. No 12459 of judicial year 85, dated 10 June 2016).

Finally, it is worth noting that the Court of Cassation ruled that the request to appoint an arbitrator is a normal contradictory proceeding and that, therefore, the court would appoint the arbitrator by a judgment, not an order on ex parte application (Cass. No 489 of judicial year 67 dated 12 March 2013).

The Arbitration Law contains two provisions regarding ending an arbitrator’s mandate and the removal of an arbitrator.

Article 20 provides for the possibility to end the mandate of an arbitrator who is, or becomes, unable to perform his mission, or who is simply not performing his duties and causing undue delay in the arbitral proceedings. The court is empowered to issue an order thereon, at the request of either party.

Article 19 provides for the possibility to remove an arbitrator(s) when circumstances give rise to serious doubts as to that arbitrator’s impartiality or independence. As stated before, prior to a welcomed decision of the Constitutional Court in 1999, Article 19 empowered the arbitral tribunal to rule on such challenge to one of its own arbitrators. Since 2000, pursuant to the amended Article 19, the challenge request is to be submitted to the arbitral tribunal within 15 days of the date of the constitution of the arbitral tribunal or the date the challenging party becomes aware of circumstances giving rise to such challenge. The arbitral tribunal is then invited to transmit such request to the court for a ruling.

Only one challenge per party for the same arbitrator is allowed. The court’s decision on the request of recusal is not subject to appeal.

A challenge of one or all of the arbitrators does not necessitate the suspension of the arbitral proceedings. However, whenever the challenge succeeds, all the prior proceedings of the removed arbitrator shall be considered null and void, including any award he may have participated in rendering.

This approach of the law has caused a great deal of uncertainty for institutional arbitrations where it is commonly provided in their arbitration rules for an independent body to rule on such challenges, as is the case of the CRCICA Arbitration Rules. CRCICA would rule on removal challenges, and the party whose challenge was denied, or who objects to the decision to remove an arbitrator, would have no means to appeal said decision before the court until the final award is rendered, as part of the set aside procedures.

In 2017, the Court of Cassation ruled that Article 19 obligates the arbitral tribunal to transmit the request to remove an arbitrator to the court, but only after the tribunal was constituted, not before (Cass. No 1394 of judicial year 86 on 13 June 2017). According to said ruling, the arbitral institution may still have powers to decide on the request to remove an arbitrator before the constitution of the arbitral tribunal. Also, and more importantly, said ruling decided that transmitting the request of recusal to the Court (Article 19) is a matter of public order. Notwithstanding this Court of Cassation ruling, the public order nature of that provision of Article 19 is contested by many.

Under both the Arbitration Law and the CRCICA Arbitration Rules, an arbitrator must be independent and impartial, and must disclose to the parties all events and circumstances that may cast doubt on his impartiality or independence. Such disclosure is required to be made by the arbitrator at the time of accepting his appointment. A disclosure is also required as and when the issue arises after the arbitrator has accepted the appointment.

As stated in 3.2 Arbitrability, the Arbitration Law prohibits arbitration in matters that cannot be subject to compromise, defined by the Egyptian Civil Code as personal status matters (but not their financial consequences), as well as matters of public order, such as criminal offences, the registration of immovable assets and bankruptcy procedures.

Article 22 of the Arbitration Law provides that the arbitral tribunal is competent to rule on objections related to its lack of jurisdiction, including objections claiming the non-existence of an arbitration agreement, its extinction or nullity, or that the disputed issues do not fall into its scope. By granting the arbitral tribunal the competence to rule over its own competence, the Egyptian legislator provides for the competence-competence principle. The provision explicitly stipulates that an affirmative decision of an arbitral tribunal retaining its jurisdiction cannot be challenged before the courts, except within the request to annul the final award.

That being said, the state courts’ competence to rule ultimately on the jurisdiction is preserved within the setting aside procedures.

Egyptian courts would address issues of the jurisdiction of an arbitral tribunal in two circumstances:

  • when a party raises an objection as to the admissibility of a case filed before the court on the basis of the existence of an arbitration agreement, in which case the court is invited by the Arbitration Law to declare the case inadmissible, which it does after a prima facie review of such arbitration agreement as to its existence, validity and scope; and
  • on the occasion of a request for the annulment of an arbitral award on the grounds of the non-existence of a valid arbitration agreement or the lack of jurisdiction of the arbitral tribunal as to all or part of the disputed matters. The courts in general show willingness to review the jurisdiction of the arbitral tribunal in such annulment cases.

The decision of the arbitral tribunal denying its jurisdiction to rule on a disputed matter is not subject to annulment proceedings, as the rejection of jurisdiction, partially or totally, by the arbitral tribunal is not a valid ground for annulment proceedings (see 11.1 Grounds for Appeal).

As stated above, a party will be able to challenge the jurisdiction of the arbitral tribunal in court only by way of a request for annulment, after an award putting an end to the arbitration proceedings is rendered and not before. It is not possible to challenge interim awards on jurisdiction (Article 22), and the party concerned will have to wait until the end of the arbitration proceedings to challenge such interim award.

The standard for judicial review for questions of jurisdiction by Egyptian courts is de novo. The court would normally assess the parties’ arguments, on both law and facts, to establish the existence, validity and scope of the arbitration agreement in order to rule on a party’s objections to the jurisdiction of the arbitral tribunal.

Pursuant to Article 13 of the Arbitration Law, the court must not admit before it a case for which a party submits is covered by an arbitration agreement. This exception of inadmissibility cannot be raised by the court ex officio. A party against whom a court case was initiated will have to make such objection to the admissibility of the court case before submitting any claims or defences in the case.

The court’s review of the existence of an arbitration agreement is prima facie and is restricted to the arbitration agreement's manifest inexistence, invalidity or inapplicability.

Despite the fact that the Arbitration Law provides that only parties to a written arbitration agreement are bound by it, the Court of Cassation has laid down the rule that a non-signatory person to an arbitration agreement can be bound by it when it has intervened actively in the execution of the contract (whether during its conclusion, execution or termination) or when it has, by its acts, caused the creation of a confusion to the other signatory party as to the identity of the signing party (ie, implying that the third party was a party to the arbitration agreement).

One of the courts’ applications of such rule is the extension of the arbitration agreement to companies of the same group and to jointly liable persons, under certain conditions. Similarly, the application of the arbitration agreement is extended – in the case of the assignment of rights – to the assignee, who would not be considered a third party.

This rule applies to both foreign and local entities.

Article 42 of the Arbitration Law provides that an arbitral tribunal can issue partial and temporary awards. Partial awards would deal with a part of the dispute, while temporary awards would deal with matters that the arbitral tribunal would need to address on a temporary basis, such as the appointment of a guardian over some assets or a company before rendering the final award.

Arbitral tribunals can also issue preliminary awards. This was not specifically mentioned under the law, and few articles of the law make reference to this type of award. There is no specific form for these preliminary awards and they can, therefore, be issued in the form of an award or as a tribunal’s decision.

The arbitral tribunal can also issue conservatory and temporary measures/reliefs. Article 24 of the law, however, restricts the arbitral tribunal’s power to order such conservatory and temporary measures/reliefs to the parties having agreed in advance to grant the arbitral tribunal such powers. This is deemed realised whenever the parties submit their arbitration to institutional arbitration rules that provide for such powers of the tribunal (according to the CRCICA Arbitration Rules).

The issuance of conservatory or interim measures is subject to the provisions of the Code of Civil and Commercial Procedures, which restricts such orders to events where there are imminent (and hence probable) risks of the occurrence of substantial irreversible prejudice that the relief aims to avoid without affecting the final ruling.

The enforceability of such reliefs is uncertain, as the law does not provide for special execution procedures for these reliefs.

Parties to arbitration can apply to the courts for provisional or conservatory measures, either before starting the arbitration proceedings or during such proceedings (Article 14). Interim reliefs granted by the arbitral tribunal could form the basis for claiming similar reliefs from the court.

As is the case for the arbitral tribunal, the issuance of conservatory or interim measures by the court is subject to the provisions of the Code of Civil and Commercial Procedures, which restricts such orders to events where there are imminent (and hence probable) risks of the occurrence of substantial irreversible prejudice that the relief aims at avoiding without affecting the final ruling. In non-contradictory measures, such as for an "ordonance sur requête", the ordering judge can only order the taking of measures that are specifically mentioned in the law. The ordering judge is, therefore, prohibited from issuing orders that were not specifically provided for in the law.

Provisioning for costs falls under interim measures and is governed as such (see 6.1 Types of Relief). No particular provision of the Arbitration Law deals explicitly with security for costs, except in relation to interim measures.

Article 25 of the Arbitration Law provides that the parties are free to determine the rules governing the procedures of the arbitration, including referring to institutional rules, as long as there is no violation of public order.

If the parties fail to agree on the rules governing the procedures of the arbitration, the arbitral tribunal is free to apply whichever rules (law or otherwise) it considers convenient for the arbitration.

The Arbitration Law does not provide for any particular mandatory procedural step, as long as public order is preserved. At stake, especially, is equitable or due process. As noted above, the Arbitration Law gives the parties freedom to choose the rules that would apply to the procedures of the arbitration, and, if no such agreement between the parties exists, gives the arbitral tribunal extreme flexibility as to the rules it would apply to the arbitration.

The law, however, provides for broad supplementary procedural steps. It determines that the arbitration proceedings start with the request for arbitration. The arbitral tribunal, once constituted, will determine (or the parties would agree on) the timing for the submission of the statement of claim and statement of defence, which would normally include the parties’ names and addresses, an explanation of the matter under dispute and a determination of the claims made. If the claimant does not submit its statement of claim as decided, the arbitral tribunal will have to end the proceedings, unless the parties have agreed otherwise. On the contrary, if the respondent does not submit its statement of defence, the arbitral tribunal will proceed with the arbitrations normally, unless the parties agree otherwise. A hearing is to be conducted to hear the parties’ arguments and defences, unless the parties agree not to hold that hearing.

In general, the procedures must be contradictory and equitable, and each party must be given the chance to explain/defend its case.

An arbitrator must accomplish its duties diligently, with independence and impartiality, and must ultimately issue the award within the defined timeframe imposed by the parties or according to the default rules provided by the Arbitration Law (12 months, which can be extended for another six months).

The arbitrators could order interim measures within certain conditions, decide to appoint experts and decide ex officio to hear the experts, make requests to the parties in the course of examining the case, rule on their jurisdiction and issue the final award. In general, arbitrators have all the powers and duties of a judge in the conduct of the arbitration, but naturally within the limits and scope of the arbitration agreement. However, arbitrators cannot make a determination as to the forgery of a document. This determination is specifically excluded by the law from the arbitrators’ powers (Article 46).

The Arbitration Law does not stipulate any requirement as to the parties’ representation in the arbitration proceedings, nor does it require a party to be represented by a lawyer in these proceedings.

However, it is important to note that, under Law No 17 of 1983 regulating lawyers’ profession, legal representations of a party before an arbitral tribunal in Egypt can only be made by a lawyer admitted to the Bar in Egypt. A person attending before an arbitral tribunal as a lawyer, but who is not a lawyer admitted at the Bar in Egypt, is subject to legal penalties. Nevertheless, this would not affect the arbitration procedures, which do not require any sort of qualification or affiliation for the parties’ representatives in all events.

The above would apply to both domestic and international arbitrations.

There are no specific rules that apply to the submission of evidence in arbitrations conducted in Egypt. General rules on the taking of evidence, as applied under the Egyptian law on evidence in civil and commercial matters No 25 of 1968, are also applicable to arbitration. However, in arbitration, the arbitral tribunal has more flexibility in applying procedural rules to the proceedings, including in relation to the taking of evidence. It is therefore common in Egypt for the arbitral tribunals to apply the International Bar Association's Rules on the Taking of Evidence, especially in international arbitrations.

Discovery, as known under common law, is not recognised in Egypt. Each party may submit to the tribunal only the documents it considers necessary to support its case. A party may, however, be obliged to submit documents in its possession, upon the other party’s request, if the arbitral tribunal so orders it. However, aside from negative inferences, there are no true means of enforcing a tribunal’s order for the production of documents against a reluctant party.

Witness and expert statements are allowed in arbitration, and it is common practice to recourse to witness statements and to cross-examination of the witnesses or experts. The only restriction existing in the law with regard to witness statements is that the testimony of the witness must be taken without taking oath, which distinguishes the testimony given in a court of law from that given in arbitration proceedings.

Further to 8.1 Collection and Submission of Evidence, the scholars and the jurisprudence regularly insist on the fact that, whereas court judges are empowered and have an active role in the proceedings, including with respect to evidence, an arbitrator’s role is more neutral, as he is empowered only by the parties with a mission strictly limited to seeking the parties’ private interests.

Deprived of coercive powers, arbitral tribunals can only draw negative inferences as a result of a party’s reluctance to execute the tribunal’s orders (such as on the production of documents) and witness appearance before the tribunal. Article 37 of the Arbitration Law only explicitly provides for two assisting roles of the court with respect to witness and expert testimony:

  • for the court to impose a fine (ridiculously low) on those witnesses that refuse to appear before the arbitral tribunal or refuse to answer questions; and
  • to order a rogatory commission to collect the witness testimony (Article 37).

As far as is known, such provisions are seldom applied.

The Arbitration Law is silent on the issue of the confidentiality of arbitration proceedings. Only Article 44 provides that an arbitral award is confidential and cannot be divulged in whole or in part, unless all the parties expressly consent to it. It is, nonetheless, implied that arbitration proceedings are confidential in nature. This is commonly admitted in Egypt.

However, whenever an award is challenged before state courts, the confidentiality of the arbitration proceedings is somewhat breached, considering that court proceedings are conducted publicly.

Article 43 of the Arbitration Law provides for the following mandatory requirements in an arbitral award:

  • the award shall be in writing and signed by the majority of the arbitrators, provided that the award justifies the reason for the missing signature of the remaining arbitrator(s);
  • the award shall contain a summary of the parties’ claims, argumentations and evidence, and the ruling;
  • it shall contain a copy of the arbitration agreement, the names and addresses of the parties and the arbitrators, and, for the latter, their nationalities and titles, and the date and place of issuance of the award; and
  • the award must expose the reasoning leading to the decision, unless the parties have agreed otherwise. Article 40 provides that, unless the parties agree otherwise, an award is rendered by the majority after deliberations (in the way that is determined by the arbitral tribunal).

As to the time limits for issuing an award, Article 45 of the Arbitration Law provides that, unless the parties agree otherwise, the award must be rendered within a period of 12 months from the beginning of the proceedings and may be extended for another six months. The sanction of a delay with respect to the above entitles a party to request from the court an additional extension or an order to terminate the arbitration proceedings.

The Arbitration Law does not address the types of remedies available, but as a principle all kinds of remedies are available, provided they find legal support under the applicable law and are not violating public order. Tribunals can, therefore, make declaratory reliefs and order monetary compensation or specific performance.

The Arbitration Law does not provide any specific rule in relation to recovering interests and legal costs. However, in arbitrations conducted in Egypt, it is common to apply the rules of the Code of Civil and Commercial Procedures in relation to recovering legal costs and the civil and commercial laws in relation to the recovering of interests.

According to the Code of Civil and Commercial Procedures, the losing party is the one that would bear the legal costs. However, the law gives the court flexibility to apportion the cost of the proceedings amongst the parties according to the circumstances.

Articles 52 and 53 of the Arbitration Law stipulate the grounds for annulling awards rendered in Egypt or foreign awards rendered in accordance with the Egyptian Arbitration Law. Awards that were not issued in Egypt and were not subject to the application of the Egyptian Arbitration Law are not subject to any form of challenge before the Egyptian courts.

Article 52 explicitly provides that an arbitral award is not subject to appeal pursuant to the Code of Civil and Commercial Procedures. Only a setting aside challenge (or annulment of the award) is permitted for one of a number of exhaustive reasons stipulated under Article 53. An arbitral award may be set aside if:

  • there was no arbitration agreement, or if the arbitration agreement was not valid, or has been terminated by the lapse of its duration;
  • a party to the arbitration agreement was under some incapacity at the time of concluding the arbitration agreement, in accordance with the law regulating said person’s capacities;
  • either party to the arbitration proceedings was not able to properly submit its defences because it was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable to present its case for reasons not attributable to it;
  • the award excluded the application of the substantive law chosen by the parties;
  • the composition of the arbitral tribunal was not made in accordance with the agreement of the parties or the law;
  • the award ruled on issues falling outside or exceeding the scope of the arbitration agreement – however, if the parts of the award that relate to matters falling outside the scope of the arbitration agreement can be separated from the other parts that do fall within the scope of the arbitration agreement, then only that part of the award that contains decisions on matters falling outside the scope of the arbitration may be set aside;
  • there has been a nullity in the award or if the arbitration procedures were null; or
  • the award contains issues violating the public order.

A set aside procedure is brought before the court by way of a contradictory procedure and follows the same rules for filing lawsuits in Egypt.

The reasons for the setting aside of an arbitral award are exhaustively determined in the law; they cannot be expanded. On the contrary, the right to recourse to annulment can be waived, although such waiver can only be made after the right to set aside the award is established – ie, after the issuance of the award.

It is to be noted that, under the law, some of the grounds for setting aside an award must be raised earlier in the procedures, during the arbitration proceedings. Article 8 of the Arbitration Law provides that any party that does not object in due course to a violation of the arbitration agreement or a provision of the law (that can be waived) will be considered as having waived the right to object to such violation.

Setting aside review is not an appeal but rather a control of the legality of the award. The court is therefore restricted from operating a de novo review of the merits of the case. The Egyptian jurisprudence is quite clear and strict in that respect.

Egypt has ratified, without reservations, the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, which was published in the Egyptian Gazette on 5 May 1959. Egypt has also ratified the Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards of 1952.

To enforce an arbitral award in Egypt, the party seeking enforcement must request the exequatur before the Egyptian courts – ie, the affixing of the execution formula on the award. This is made with the following steps.

  • A notification is to be made to the other party, through court bailiffs, with a copy of the award rendered.
  • An original copy of the award (and an official translation thereof in Arabic if it is not in that language) is then deposited with the competent Court of Appeal and a procès verbal is drafted to evidence such deposit of the award.
  • The requesting party must wait for 90 days from the date on which the award was notified to the other party before applying to the court for exequatur.
  • Once the 90 days have lapsed, an ex parte application is made to the competent Court of Appeal along with the following documents:
    1. the original of the award and an official translation thereof in Arabic if not in Arabic;
    2. a copy of the arbitration agreement;
    3. a copy of the court report evidencing the deposit of the award at the court; and
    4. a copy of the notification to the other party of the award (so that the court may ensure the lapse of the 90 days to file a set aside procedure).
  • The judge will then, upon inspecting the documents and finding them satisfactory, issue its order to affix the execution formula on the award.

The judge has to ascertain that the arbitral award for which exequatur is requested does not contain anything contradicting public order in Egypt, was properly notified to the other party and does not contradict a prior judgment issued by the courts in Egypt on the same disputed matters.

It is to be noted that these procedures were intended for domestic arbitral awards as well as for arbitral awards rendered outside Egypt, but made subject to the application of the Egyptian Arbitration Law. The jurisprudence has extended such procedures to foreign arbitral awards rendered in a country that is a signatory of the New York Convention of 1958.

For the other rare arbitral awards that are both foreign and issued in a country that is not a signatory of the New York Convention of 1958, the procedure for obtaining exequatur is through a contradictory proceeding before the normal Courts of First Instance where execution is requested, in application of Articles 296 to 299 of the Code of Civil and Commercial Procedures. Articles 296 to 298 relate to the conditions of execution of foreign judgments, while Article 299 extends the application of Articles 296 to 298 to arbitral awards rendered abroad. The conditions for exequatur require that:

  • the Egyptian courts have no jurisdiction over the dispute and the foreign court has jurisdiction pursuant to its applicable conflict of law rules;
  • the parties were duly notified and represented;
  • the judgment is enforceable in the country where it was issued;
  • the judgment does not contradict a previous Egyptian court judgment; and
  • there is no violation of the Egyptian public order.

The courts in Egypt are not inclined to take a restrictive definition of public order to refuse the execution of awards on public policy grounds. The violation of the public order that the court would retain must relate to the enunciation of the award and not to its reasoning, unless such reasoning is part of the enunciation. Also, the courts commonly consider any matters that “contradict the social, political, economical and moral basis of the state that relate to the high interests of the society” to be a violation of the public order(Cass. 1259 of 49 JY on 13 June 1983).

The Egyptian Arbitration Law does not provide for class action or group arbitration. Under the existing rules, class actions or group arbitration are not admissible in arbitration unless there is a specific agreement between all parties concerned to arbitrate as a class action or as a group arbitration – ie, to join the procedures of many in just one arbitration.

There are no written codes of conduct for counsels and arbitrators conducting arbitral proceedings in Egypt. Although codes of conduct per se are not mentioned under the law, they are implied in practice and under the general rules of law.

Counsels, especially legal counsels who are members of the Bar Association, have various obligations towards their clients, including that of the confidentiality of communications, and of providing their client with proper legal advice.

There are no rules or restrictions on third-party funders in the Arbitration Law or the Code of Civil and Commercial Procedures.

There are no provisions in the Arbitration Law that would allow the arbitral tribunal or a court of law to order the consolidation of separate arbitral proceedings. Such consolidation can be made, under applicable laws, only with the approval of all parties concerned. Similarly, the CRCICA Arbitration Rules do not contain any provisions regarding the consolidation of separate arbitral proceedings.

Third parties cannot be bound by an arbitration agreement except to the extent that such arbitration agreement can be extended to said third parties as explained above. However, the extension of the arbitration agreement to these parties denies them the qualification of third parties.

As to awards, third parties cannot be bound by an award to which they were not a party. Indeed, awards enjoy res judicata, which has a relative effect – ie, they are only valid towards those persons that were party to the arbitration proceedings.

SHEHATA, Attorneys at Law

25, Cleopatra Street, Heliopolis
11341 Cairo, Egypt

+20 2 26910643

+20 2 26909129

tshehata@shehatanet.com www.shehatanet.com
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Law and Practice

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SHEHATA, Attorneys at Law is a small business law firm established in Cairo whose founder has more than 30 years of experience, and whose lawyers have extensive experience and knowledge. SHEHATA is active in most areas of business law, with a special focus on commercial arbitration (inter alia, Mr Shehata acted for OCI in a USD200 million arbitration and for Vodafone Egypt in an interconnection dispute exceeding EGP10.2 billion), and also on corporate and M&A transactions. The arbitration team has handled more than ten arbitrations and related court challenges in the past three years, including successfully acting for a major multimedia group against a famous football club in Egypt. The firm is perfectly proficient in Arabic, English and French. Its clients include Etisalat Misr, Vodafone Egypt, Archirodon, Vinavil Egypt for Chemicals, Jewellery of Egypt (Azza Fahmy), Qiagen GmbH, Careem and IPTC Egypt.

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