International Arbitration 2024

Last Updated August 22, 2024

Egypt

Law and Practice

Authors



Zulficar & Partners is an international arbitration and corporate law practice based in Cairo, Egypt, prosecuting arbitration cases across the MENA region and beyond, with unique market expertise in international arbitration. The firm is regularly ranked as top-tier in various practice areas, and its partners and lawyers are regularly ranked as leading practitioners, notably in Chambers & Partners. The firm is increasingly instructed to prosecute high-value and highly complex arbitral proceedings spanning the business and investment spectra, and has handled mega-multimillion-dollar disputes and successfully prosecuted complex cases under major institutional rules and in ad hoc proceedings in the MENA region, Africa, Europe and Asia. Attorneys of the firm are highly regarded in the market and have earned the title “precedent setters”.

Arbitration is commonly used as a method for resolving commercial disputes arising between private parties in Egypt. Contracting parties tend to insert an arbitration clause in their commercial contracts to guarantee a faster process for the resolution of any potential disputes that may arise. Usually, in most of the contracts, commercial transactions or projects of high value, whether being concluded between domestic parties or with a foreign party, an arbitration clause is automatically included.

The prevalence of arbitration is recognised by Egyptian courts. In this respect the Cairo Court of Appeal held that, internationally, arbitration is a conventional and efficient means for resolving commercial disputes. Thus, the international commercial community constantly seeks to unify the arbitral legal principles, terms, criteria, interpretation and applicability of arbitration-related laws on the international level, in order to promote and ensure confidence and trust between contracting parties, and eventually safeguard their rights to maintain a stable international market. The Court explained that arbitration, being an international legal system, has its own legal principles and standards, its specific criteria and its unified interpretations, which are stable and known to the international market and cannot be denied. National courts are bound to respect the aforementioned unified and well-known principles and standards, as these “most probably” relate to international procedural public policy (Cairo Court of Appeal, (First) Commercial Circuit, Petition No 2 of JY 139, Hearing session dated 9 March 2022).

The Egyptian judiciary generally tends to adopt a pro-arbitration policy with respect to the recognition and enforcement of arbitral awards by limiting the grounds for setting aside an arbitral award to those specifically provided for under Law No 27 of 1994 on Arbitration in Civil and Commercial Matters (the “Egyptian Arbitration Law”, or EAL). This has been explained by the Court of Cassation, which has expressly inserted the English term “pro-arbitration policy” in a recent judgment whereby the Court held that by limiting the grounds for setting aside an arbitral award, the Egyptian legislature has adopted a pro-arbitration policy in compliance with the principle of party autonomy, which grants the parties the freedom to choose to resort to arbitration for the resolution of their disputes, being practically, the dispute resolution mechanism used in settling international commercial disputes (Court of Cassation, Commercial and Economic Circuit, Challenge No 8199 of JY 80, Hearing session dated 22 March 2022).

However, in administrative contracts, arbitration agreements must be approved by the competent minister or whoever assumes their authority with respect to public entities, and delegation in this regard is prohibited (Article 1 of the EAL and State Council, Challenge No 8256 of JY 56, Hearing session dated 5 March 2016).

Moreover, Prime Ministerial Decree No 1062 of 2019 (as amended by Prime Ministerial Decrees No 2592 of 2020 and No 3218 of 2022) establishing the ‘High Committee for Arbitration and International Disputes’ within the Council of Ministers binds ministries, public entities, state-owned companies and companies in which the state participates in any form not to conclude any contracts with foreign investors or enter into contracts including an arbitration clause, and/or amend these contracts, or take any measure that would lead to the rescission or termination of any of these contracts including an arbitration clause without having them first reviewed by the said Committee. The Committee, which is reconstituted occasionally, is entrusted with reviewing and opining on pending international arbitration in both commercial and investment cases involving the state, its organs and state-controlled entities.

As to investment disputes, arbitration remains a favourable dispute resolution mechanism, as most of Egypt’s bilateral investment treaties (BITs) provide for arbitration as the available dispute settlement mechanism. Since the Egyptian Revolution in 2011, a considerable number of investment cases have been brought against Egypt (26 ICSID cases until July 2024). This led to the enactment of a new Investment Law No 72 of 2017 (the “Investment Law”) repealing and replacing the previous Law No 8 of 1997 and imposing a rigid mechanism of dispute avoidance and amicable settlement to minimise the financial burden of investment arbitration. The Investment Law reserves the parties’ right to resort to litigation under Article 82 and provides under Article 90 that disputes shall be settled in the manner agreed with the investor or pursuant to the provisions of the EAL; it also refers to ad hoc and institutional arbitration as available options.

Whilst remaining a favourable dispute resolution mechanism in commercial matters, resorting to arbitration in investment disputes is subject to the prior review and opinion of the High Committee for Arbitration and International Disputes. The Egyptian state’s intention regarding investment disputes is to provide a dispute avoidance and amicable settlement mechanism rather than resorting to arbitration or litigation.

In 2020-23, the construction sector and the banking and finance sector remain the sectors experiencing significant arbitration activity in Egypt, where disputes arise out of or in connection with ongoing construction projects and works taking place all over Egypt, as well as the financing of large projects. This results from the increased construction activity in Egypt and new infrastructure projects undertaken to build compounds, factories and facilities in the new cities. In this respect, the Cairo Regional Centre for International Commercial Arbitration (CRCICA) statistics for 2023 confirm that construction represents the most active sector in terms of disputes brought before it, whereby 39.62% of the 2023 caseload (21 cases related to construction disputes out of a total of 53 cases filed during 2023) consisted of construction disputes. Arbitrations also continue to be conducted in other industries, such as energy, telecommunications, transportation, tourism, media and real estate development.

The most used and leading arbitral institution in Egypt is the CRCICA, which is an independent non-profit international organisation established in 1979 under the auspices of the Asian African Legal Consultative Organisation. The CRCICA administers domestic and international arbitration disputes and also offers alternative dispute resolution mechanisms, such as mediation, conciliation and mini-trials. The CRCICA also has its own set of arbitration rules (2024) amending the 2011 arbitration rules and entering into force as of 15 January 2024, mediation rules (2013) and dispute board rules (2021) in the Arabic, English and French languages, except for the mediation rules, which are available only in the Arabic and English languages. Furthermore, the CRCICA often organises conferences and workshops led by renowned international arbitration practitioners from Egypt and abroad.

There is also another specialised arbitral institution, established in 2019 within the Financial Regulatory Authority in Egypt, named the Egyptian Center for Arbitration and Settlement of Non-Banking Financial Disputes (ECAS). In 2019, Presidential Decree No 335 of 2019 provided for the establishment of the ECAS as an independent body established within the Financial Regulatory Authority. On 10 December 2020, the statutes of the ECAS as well as its arbitration and mediation rules were issued by virtue of Prime Ministerial Decree No 2597 of 2020.

There are no specific courts per se designated to hear disputes relating to arbitration. However, there are specialised circuits for hearing arbitration-related matters within the competent national courts, where judges in said circuits are experienced in arbitration-related matters. In this regard, Article 9 of the EAL provides that the competent court is that having original jurisdiction over the dispute, and in relation to international arbitration, whether conducted in Egypt or abroad, the Cairo Court of Appeal is the competent court, unless the parties agree on another appellate court.

Arbitration in Egypt is governed by the EAL, which replaced the provisions pertaining to arbitration that were previously included in the Egyptian Code of Civil and Commercial Procedures (CCCP). The EAL is based on the 1985 UNCITRAL Model Law but diverges therefrom on the following points:

  • The EAL applies to both domestic and international arbitrations (Article 1 of the EAL).
  • The EAL has possible extraterritorial application to arbitral proceedings seated abroad, subject to the parties’ agreement (Article 1 of the EAL).
  • The arbitration agreement in an administrative contract must be approved by the competent minister or whoever assumes their authority with respect to public entities, and delegation in this regard is prohibited (Article 1 of the EAL).
  • The EAL introduces several criteria for establishing the international nature of an arbitration including, amongst others, if the arbitration is institutional, if it involves parties whose principal places of business are in different states or, alternatively, if the place of the arbitration determined by the arbitration agreement, the place of performance of the obligations or the place with the closest connection to the dispute is abroad (Article 3 of the EAL).
  • The EAL requires in case of incorporation by reference that the reference to the arbitration agreement is explicit in order for it to form an integral part of the main contract (Article 10 of the EAL).
  • The EAL does not expressly include the possibility to enter into an arbitration agreement by electronic means, but it does not exclude it either. Therefore, the conclusion of arbitration agreements by electronic means is not prohibited as long as it fulfils the writing requirement for validity of the arbitration agreement. In this respect, the EAL provides that an arbitration agreement is in writing if it is contained in a document signed by the parties or contained in an exchange of letters, telegrams or other means of communication. The arbitration agreement must be in writing under penalty of nullity. Accordingly, the writing requirement under the EAL is stricter than the one under the Model Law (Article 12 of the EAL).
  • The EAL has excluded the “referral exception” provided for under Article 8 of the Model Law, whereby a state court may decide over jurisdiction if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed (Article 13 of the EAL). However, in practice, some Egyptian courts have considered the validity and operability of the arbitration agreement before an arbitral tribunal rendered its award.
  • The EAL requires an odd number of arbitrators, under penalty of nullity of the arbitral award (Article 15 of the EAL).
  • The threshold used by the EAL for the challenge of arbitrators is relatively higher than its counterpart (Article 12 of the Model Law), such that an arbitrator may be challenged only if there exist serious doubts as to their impartiality or independence (Article 18 of the EAL).
  • A preliminary arbitral award on jurisdiction cannot be challenged before the competent court prior to the rendering of the final award deciding on the entire dispute (Article 22 of the EAL).
  • The arbitral tribunal does not have default power to order interim relief; rather, the parties must agree to confer such power to the tribunal (Article 24 of the EAL). Such power is granted to the tribunal when the parties agree to the application of institutional arbitration rules that provide for the tribunal’s power to order interim relief.
  • The default language for conducting the arbitration is Arabic unless the parties have agreed otherwise (Article 29 of the EAL).
  • The arbitral tribunal may apply the law having the closest connection to the dispute in case of absence of agreement between the parties on the applicable law (Article 39 of the EAL).
  • The EAL adds a ground for annulment based on the non-application by the arbitral tribunal of the lex causae chosen by the parties (Article 53 of the EAL).
  • The EAL introduces a further condition for purposes of exequatur that is not listed in the Model Law, namely that the award does not contradict a prior judgment rendered by the Egyptian courts on the merits of the dispute (Article 58 of the EAL).

There are ongoing discussions for possible amendments to the EAL. On 22 March 2022, the Deputy Minister of Justice for Arbitration and International Disputes issued Decree No 8 of 2022 establishing a committee in charge of discussing possible amendments to the EAL. The committee is headed by the Deputy Minister of Justice for Arbitration and International Disputes and comprises the members of the ministry’s arbitration and international disputes department as well as other arbitration practitioners, including academics and lawyers. The committee is in charge of preparing a proposal for the amendment of the EAL to be submitted to the Minister of Justice for his review and consideration.

The legal requirements for an arbitration agreement to be enforceable under the EAL consist of the following:

  • The parties, whether physical or juridical persons, must dispose of all their rights and have the capacity to enter into the arbitration agreement (Article 11 of the EAL).
  • The subject matter of the arbitration must be arbitrable, ie, can be subject to compromise (Article 11 of the EAL).
  • The compromis (arbitration agreement concluded after the dispute has arisen) must indicate the subject of the dispute, or, in case of a clause compromissoire (prior agreement to arbitrate), the subject of the dispute must be specified in the request for arbitration. Also, in case of incorporation by reference, the arbitration agreement must be explicit in order for the arbitration agreement to form an integral part of the main contract (Article 10 of the EAL).
  • The arbitration agreement must be in writing under penalty of nullity. The writing requirement is fulfilled when the arbitration agreement is contained in a document signed by both parties or contained in an exchange of letters, telegrams or other means of written communication (Article 12 of the EAL).
  • The arbitration agreement included in an administrative contract must be approved by the competent minister or whoever assumes their authority with respect to public entities, under penalty of nullity, and delegation in this regard is prohibited (Article 1 of the EAL and State Council, Challenge No 8256 of JY 56, Hearing session dated 5 March 2016). Also, see 1.1 Prevalence of Arbitration.

The general approach used in Egypt to determine the arbitrability of a dispute is whether the subject matter of the dispute is capable of compromise. Article 11 of the EAL expressly states that matters not capable of compromise are inarbitrable, and these mainly include criminal matters, personal status or family relations, and/or rights in rem over immovables, such as registration of real estate mortgages. Furthermore, Article 2 of the EAL provides that the right subject to arbitration must be of an economic nature, whether it is contractual or non-contractual.

The approach adopted by Egyptian courts with respect to determining the law governing the arbitration agreement consists of applying the law of the seat as chosen by the parties, provided that the provisions of said law are not contradictory to Egyptian public policy rules (Court of Cassation, Challenge No 453 of JY 42, Hearing session dated 9 February 1981; and Challenge No 1259 of JY 49, Hearing session dated 13 June 1983).

With respect to enforcement of arbitration agreements by Egyptian courts, please see 3.1 Enforceability. Arbitration agreements fulfilling the above-referenced legal requirements are usually enforced by Egyptian courts, when the matter is brought by a party before the competent court.

In this respect, the Court of Cassation held that the arbitration agreement is a contract with all the conditions and pillars of contracts at large, which must be respected by the parties to that contract, such that in its presence each party has an obligation to refrain from filing an action before the judiciary on any dispute subject to the contract, including the arbitration agreement, and the court before which the action is filed shall declare the case inadmissible (Court of Cassation, Challenge No 3449 of JY 78, Hearing session dated 11 February 2020).

Also see 5.2 Challenges to Jurisdiction.

The EAL recognises the rule of separability of the arbitration clause from the contract in which it is contained as per Article 23. The EAL treats the arbitration clause as an independent agreement separate from the other provisions of the contract, such that it is not affected by the invalidity, termination or rescission of the contract, provided that the arbitration clause itself is valid.

Generally, the parties are free to select the arbitrators of their choice to decide their dispute. The EAL does not impose limits as to the parties’ autonomy in the selection of arbitrators in relation to their gender, nationality, education, ethnicity or religious belief, other than attaining the age of majority and disposing of all of their civil rights (Article 16 of the EAL). With respect to the appointment of judges to sit as arbitrators, judges are required to obtain the permission of the Supreme Judicial Council. The absence of obtaining such authorisation does not affect the validity of the arbitral award (Court of Cassation, Commercial Circuit, Challenge No 9968 of JY 81, Hearing session dated 9 January 2018).

Generally, in institutional arbitration, the procedural rules of the institution provide for the method of appointment of arbitrators. However, in ad hoc arbitration, and absent the parties’ choice of the method of appointment of arbitrators, the EAL provides for a default procedure in its Article 17, differentiating between the appointment of a sole arbitrator and a panel of arbitrators. In the event of appointment of a sole arbitrator, the competent court undertakes the appointment of the arbitrator upon the request of either party. However, if the arbitral tribunal consists of three arbitrators, each party shall appoint an arbitrator, then both arbitrators shall appoint the chairperson. The competent court may intervene, upon the request of a party, to appoint any arbitrator in case of failure of their appointment by a party or failure of the appointment of the chairperson by the co-arbitrators within 30 days from the request to appoint the arbitrator. The same procedure applies to arbitral tribunals composed of more than three arbitrators.

Moreover, the number of arbitrators must be an odd number under penalty of nullity of the arbitration (Article 15 of the EAL).

The EAL does not address issues pertaining to multi-party arbitrations; hence, there are no provisions specifying a default procedure for the appointment of arbitrators applicable to multi-party arbitrations.

Egyptian courts can intervene in the selection of arbitrators only upon a party’s request to do so, as explained in 4.2 Default Procedures.

Furthermore, when appointing an arbitrator, the competent court shall observe the conditions required by the law (see 4.1 Limits on Selection) and those agreed upon by the parties. The court’s decision is final and is not subject to an appeal (Article 17 of the EAL).

However, the Court of Cassation held that affirmative appointing decisions are not subject to appeal but that refusal appointing decisions are subject to appeal (Court of Cassation, Challenge No 5211 of JY 78, Hearing session dated 18 February 2015). Furthermore, the Court of Cassation held that appeal is also admissible in cases of breach of the law, breach of the parties’ agreement, or breach of the rules of attribution of jurisdiction by the court decision (Court of Cassation, Challenge No 12459 of JY 85, Hearing session dated 10 June 2016).

The EAL contains particular provisions governing the challenge or removal of arbitrators. In this respect, an arbitrator may only be challenged if there exist circumstances that give rise to serious doubts as to their impartiality or independence (Article 18 of the EAL).

In this regard, in ad hoc arbitration, Article 19 of the EAL provides for the procedure of challenging arbitrators. The challenge request must be submitted to the arbitral tribunal in writing incorporating the reasons for such challenge within 15 days from the date of knowledge of the circumstances giving rise to serious doubts as to the arbitrator’s impartiality or independence, and if the arbitrator does not withdraw from their office within 15 days, the challenge request shall be forwarded to the competent court, which decides on the matter and renders a final decision that is subject to no appeal. An arbitrator can only be challenged once by a party in the same proceedings. The challenge request does not suspend the arbitral proceedings, but if the challenge request is successful, it results in the annulment of the prior arbitral proceedings conducted by the challenged arbitrator, including the arbitral award.

Furthermore, Article 20 of the EAL enables the competent court, upon the request of a party, to end the mandate of an arbitrator who fails to perform their mission or duties or who interrupts the performance thereof causing undue delay in the arbitral proceedings. In this respect, the Cairo Court of Appeal ended a chairman’s mandate for his inability to manage the procedural hearing and for suspending the proceedings in unwarranted circumstances (Cairo Court of Appeal, 50th Commercial Circuit, Challenge No 3 of JY 132, Hearing session dated 30 January 2019).

Under Article 16 of the EAL, an arbitrator shall accept their mission in writing, and shall disclose any circumstances that are likely to cast doubts as to their independence or impartiality at the time of accepting their mission. In the same vein, Article 12 of the CRCICA Arbitration Rules 2024 binds an arbitrator to disclose in writing at the time of accepting their mission any circumstances likely to give rise to justifiable doubts as to their independence or impartiality from the time of their appointment and throughout the proceedings. Arbitrators shall also avoid ex parte communications with any party.

Egyptian courts’ judgments have set the definitions of the duties of independence and impartiality of arbitrators. In this respect, the Cairo Court of Appeal held in pertinent part: “The independence of the arbitrator is the absence of his connection to or dependency on the parties to the dispute, the state or the third party, and the absence of any financial or psychological relation that is contradictory to his independence, whereas such [circumstances] constitute a definite danger resulting in the inclination to one of the parties of the arbitration” (Cairo Court of Appeal, 91 Commercial Circuit, Appeal No 1 of JY 120, Hearing session dated 29 April 2003).

Impartialité is any psychological or mental inclination of the arbitrator towards or against any of the parties to the dispute, a third party, or the state, which is likely to result in the arbitrator’s inability to rule without inclination towards or against any of the parties mentioned above” (Cairo Court of Appeal, 91 Commercial Circuit, Appeal No 78 of JY 120, Hearing session dated 30 March 2004).

These definitions have been upheld in many other judgments such as the judgment of the Cairo Court of Appeal in Challenge No 42 of JY 136, Hearing session dated 8 March 2021, the judgments of the Court of Cassation in Challenge No 1392 of JY 81, Hearing session dated 22 February 2022 and Challenges Nos 7913 and 13996 of JY 91, Hearing session dated 9 May 2023. In the Court of Cassation judgments, the Court of Cassation expressly referred to the IBA Guidelines on Conflicts of Interest in International Arbitration (2014). In this respect, it is worth mentioning that the IBA Guidelines on Conflicts of Interest in International Arbitration (2014) provide for three non-exhaustive lists of specific situations indicating whether the arbitrator has a duty of disclosure, depending on the gravity and sensibility of the situation that would require or not such arbitrator’s disclosure (ie, ‘Red’, ‘Orange’ and ‘Green’ Lists) to avoid unnecessary challenge, withdrawal or removal of an arbitrator. The Orange List sets out non-exhaustive examples of specific situations that may give rise to justifiable doubts as to an arbitrator’s impartiality or independence, in the eyes of the parties, where the arbitrator has a duty to disclose but can nevertheless act unless the parties make a timely objection. In the 2022 judgment, the Court of Cassation quoted clause 3.3.5 of the Orange List, which reads: “A close family member of the arbitrator is a partner or employee of the law firm representing one of the parties, but is not assisting with the dispute.” The Court of Cassation explained that the duty of disclosure of an arbitrator is a binding legal obligation that is necessary to guarantee integrity and impartiality in the conduct of the arbitration process. In this regard, the arbitrator’s failure to disclose does not in itself lead to setting aside the arbitral award; however, the Court shall assess on a case-by-case basis whether the undisclosed circumstance in itself gives reason to infer a real danger of bias and therefore to set aside the award. In the circumstances of this case, the chairman of the arbitral tribunal had not disclosed that one of the partners of the law firm representing the claimant in the arbitral proceedings was a family relative; however, this partner was not involved in any counsel work related to the arbitration case (Court of Cassation, Commercial and Economic Circuit, Challenge No 13892 of JY 81, Hearing session dated 22 February 2022). In the 2023 judgment, the Court of Cassation referred to Clauses 4.3.1 and 4.3.4 of the Green list, which read consecutively: “The arbitrator has a relationship with another arbitrator, or with the counsel for one of the parties, through membership in the same professional association, or social or charitable organisation, or through a social media network,” and: “The arbitrator was a speaker, moderator or organiser in one or more conferences, or participated in seminars or working parties of a professional, social or charitable organisation, with another arbitrator or counsel to the parties.” In the circumstances of this case, the chairman and one appointed arbitrator failed to disclose that they were both members of the advisory committee at the CRCICA. Also, the legal counsel of one of the parties was a member of the same committee. The Court of Cassation held that the membership of both arbitrators and the legal counsel is publicly available information in their respective biographies accessible on the CRCICA’s official website. Furthermore, the Court held that the chairman disclosed his participation in an event where the legal counsel of one of the parties was a speaker and the parties did not raise any concerns during the arbitral proceedings, which constitutes a waiver of their right to object. In this respect, the Court upheld its findings by relying on the IBA Guidelines on Conflicts of Interest in International Arbitration (2014) to confirm that the above-mentioned circumstances do not raise doubts as to the impartiality and independence of the arbitrators (Court of Cassation, Commercial and Economic Circuit, Challenges Nos 7913 and 13996 of JY 91, Hearing session dated 9 May 2023).

Interestingly, in another, prior decision, the Cairo Court of Appeal set aside an arbitral award for breach of the duty of disclosure resulting from the non-disclosure of an existing relationship between a co-arbitrator and the chairman, which created doubts as to their impartiality and independence (Cairo Court of Appeal, 18th Commercial Circuit, Challenge No 92 of JY 135, Hearing session dated 12 January 2019).

Matters that are not capable of compromise are excluded from arbitration under the EAL. Please see 3.2 Arbitrability.

Article 22 of the EAL acknowledges the principle of competence-competence granting arbitral tribunals the authority to decide any jurisdiction-related claims, including the existence, validity and scope of the arbitration agreement.

However, in practice, there are instances where Egyptian courts, in relation to administrative contracts and beyond, have decided on the existence and validity of an arbitration agreement prior to the commencement of arbitral proceedings or while arbitral proceedings were still pending and irrespective of the arbitral tribunal’s jurisdiction.

Egyptian courts can only intervene to address issues of jurisdiction of an arbitral tribunal when requested by a party to do so and provided that the other party does not object to such intervention. In this respect, according to Article 13 of the EAL, Egyptian courts are under an obligation to declare inadmissible any claim pertaining to a dispute subject to an arbitration agreement only when the defendant raises an objection at the commencement of the proceedings. The court cannot declare inadmissibility ex officio. In the absence of an objection by the defendant before the competent court, parallel proceedings will be conducted before the arbitral tribunal and the competent court to decide on the matter, and if the two decisions are contradictory, the winning party may elevate the conflict to the Supreme Constitutional Court.

Furthermore, Egyptian courts may also address issues of jurisdiction in the event of an action for nullity of an arbitral award based on the ground of non-existence of the arbitration agreement or the lack of jurisdiction of the arbitral tribunal as to all or part of the disputed matters. Please see 11.1 Grounds for Appeal.

Decisions on jurisdiction rendered by arbitral tribunals cannot be challenged before the competent court prior to the rendering of the final award on the merits within the course of a nullity action (Article 22 of the EAL).

As stated in 5.3 Circumstances for Court Intervention, the parties have the right to go to court to challenge the jurisdiction of the arbitral tribunal only after the rendering of the final award within 90 days of the date of notification of the award to the party against which it was made, ie, the time limit for initiating a nullity action.

With regard to questions of admissibility and jurisdiction, Egyptian courts conduct a de novo review. In this respect, courts normally assess the parties’ arguments on questions of law and questions of fact to determine the existence, validity and scope of the arbitration agreement in order to decide on a party’s objection to the tribunal’s jurisdiction.

If a party commences court proceedings in breach of an arbitration agreement, national courts shall hold this action inadmissible only if the defendant raises an objection pertaining to the existence of an arbitration agreement at the commencement of those proceedings and prior to submitting any defence on the substance. Accordingly, the court is not under an obligation to reject the case ex officio, such that in the absence of an objection raised by the defendant, the court will continue examining the action brought before it in breach of the arbitration agreement, and this shall not prevent parallel arbitral proceedings from being commenced or continued (Article 13 of the EAL).

The EAL does not expressly regulate the extension of the arbitration agreement to third parties or non-signatories of the contract containing the arbitration agreement. However, the Egyptian courts have addressed the issue of extension of the arbitration agreement under several doctrines; they are becoming more flexible in considering such extension and usually defer to the arbitral tribunal’s findings in this regard.

In this respect, in application of the ‘group of companies’ doctrine, the Court of Cassation ruled that the extension of the arbitration agreement is subject to the non-signatory company’s active contribution in the performance of the contract causing a confusion between the intents of the two relevant companies, ie, the signatory and the non-signatory company forming part of the group (Court of Cassation, Challenge No 4729 of JY 72, Hearing session dated 22 June 2004).

Furthermore, the Court of Cassation held that an arbitration agreement cannot exist without the consent of the parties; however, it may extend to third parties and to other contracts connected to the principal contract on the basis of several doctrines which include the following: group of companies, group of contracts, universal succession, merger and assignment, if their conditions are met (Court of Cassation, Challenges Nos 2698, 3100 and 3299 of JY 86, Hearing session dated 13 March 2018).

The doctrines of extension of the arbitration agreement apply to both domestic and foreign third parties.

An arbitral tribunal may award interim relief or conservatory measures only if the parties to arbitration have conferred such power to the tribunal (Article 24 of the EAL). Such power could be conferred to an arbitral tribunal by the choice of the parties to apply institutional arbitration rules providing for such default power.

Furthermore, Article 42 of the EAL provides that arbitral tribunals may issue interim or partial awards. In this respect, interim relief rendered in the form of an award is subject to the ordinary procedures for enforcement and recognition of arbitral awards. Nevertheless, interim awards do not have a res judicata effect.

As to the types of relief that can be awarded, the EAL does not provide for a specific list. Therefore, it is generally accepted that arbitrators have the discretion to order any type of interim relief or conservatory measure provided that such relief or measure is warranted and available under the applicable law.

Article 14 of the EAL expressly allows courts to order interim relief or conservatory measures, upon the request of a party, before or during the arbitration proceedings.

Furthermore, Egyptian courts may grant interim relief to a foreign-seated arbitration, if the parties agreed to apply the provisions of the EAL to their arbitration.

The types of preliminary or interim relief that may be granted by Egyptian courts are subject to the provisions of the CCCP. The general requirements for issuing an interim order are as follows:

  • the possible existence of a right;
  • the matter is urgent; and
  • the purpose of the interim order is to avoid a prejudice without affecting the final ruling.

The EAL does not address the use of emergency arbitrators.

The EAL allows arbitral tribunals to request adequate security to cover the costs of ordered interim relief (Article 24 of the EAL). In the same vein, courts are free to order security for costs to ensure the implementation of interim orders or conservatory measures.

Article 25 of the EAL provides that the parties are free to determine the rules governing the procedure of their arbitration, including submitting the arbitral proceedings to the institutional arbitration rules of any arbitral institution, in Egypt or abroad. In the absence of an agreement by the parties, the arbitral tribunal may, subject to the mandatory provisions of the EAL, adopt the rules it considers appropriate to govern the procedure.

The EAL does not provide for any particular mandatory procedural steps as long as public policy is preserved. The parties shall be treated with equality and shall be given an equal and full opportunity to present their case (Article 26 of the EAL).

The EAL provides for procedural steps which generally pertain to the below-mentioned steps.

  • Arbitral proceedings commence on the day the respondent receives the request for arbitration, unless otherwise agreed by the parties (Article 27 of the EAL).
  • The parties are invited to exchange written submissions with supporting evidence, ie, a statement of claim and a statement of defence (and counterclaim if desired), within the period of time agreed by the parties (Article 30 of the EAL). Either party may amend or supplement its submission or supporting evidence (Article 32 of the EAL).
  • The arbitral tribunal may hold a hearing or decide on a document-only basis, unless otherwise agreed between the parties. Also, the parties must be notified of the hearing dates sufficiently in advance and the minutes of the hearing shall be recorded in a procès-verbal. The hearing of witnesses and experts shall be conducted without taking an oath (Article 33 of the EAL).
  • Unless otherwise agreed by the parties, if the claimant fails to submit its written submission without showing sufficient cause, the tribunal shall terminate the proceedings, but if the respondent fails to submit its statement of defence, the tribunal shall continue the proceedings without treating such failure as an admission by the respondent of the claimant’s allegations (Article 34 of the EAL).
  • If a party fails to appear before the tribunal or fails to submit a document required therefrom, the tribunal may continue the proceedings and decide upon the elements of evidence before it (Article 35 of the EAL).
  • The arbitral tribunal may appoint one or more experts, who may be heard and examined by the tribunal and the parties (Article 36 of the EAL).
  • The arbitral tribunal shall issue an award terminating the dispute within the period agreed by the parties, or in the absence of an agreement between the parties, within 12 months from the beginning of the proceedings, which may be extended for six months, unless otherwise agreed by the parties (Article 45 of the EAL).

Arbitrators shall exercise their mission in compliance with the duties of impartiality and independence (see 4.5 Arbitrator Requirements).

As to the powers attributed to the arbitral tribunal, these mainly include:

  • ordering interim relief and conservatory measures, if the parties conferred such power to the tribunal;
  • issuing interim and partial awards;
  • deciding on its own competence;
  • determining the procedural rules applicable to the dispute in the absence of an agreement between the parties;
  • appointing experts;
  • assessing, admitting and weighing evidence;
  • acting as amiable compositeur by agreement between the parties; and
  • determining the place of arbitration in the absence of an agreement between the parties, and deciding to convene meetings/hearings at any place it deems appropriate.

However, an arbitral tribunal cannot make a determination with respect to a challenge for forgery of a submitted document; this falls within the competence of national courts, which shall conduct criminal proceedings (Article 46 of the EAL).

Also see 10.2 Types of Remedies.

Article 3 of the Egyptian Advocacy Law No 17 of 1983 expressly stipulates that advocacy work is exclusively reserved to lawyers admitted to the Egyptian Bar Association, such that non-lawyers cannot undertake any advocacy-related work, which includes representing parties before arbitral tribunals.

Nevertheless, in a decision issued by the Egyptian Court of Cassation on 27 October 2020, the Court held that there are no limitations or restrictions on party representation in arbitrations seated in Egypt. The Court recognised that the parties to an arbitration, be it domestic or international, may be represented by any person of their choice, irrespective of their nationality or qualification (Court of Cassation, Economic and Commercial Circuit, Challenge No 18309 of JY 89, Hearing session dated 27 October 2020).

The EAL does not specifically address the manner of collection and submission of evidence. The parties normally adduce evidence in support of their written submissions. The applicable rules are those provided under the Egyptian Evidence Law No 25 of 1968.

Generally, arbitral tribunals enjoy the power to admit, assess and weigh evidence on record. For example, an arbitral tribunal may undertake any evidentiary procedure it deems appropriate, or reverse a procedure it had previously ordered, and accept or deny a party’s request for an order on evidentiary procedures without prejudice to the party’s rights of defence. The types of evidence that may be admitted before arbitral tribunals in Egypt are:

  • documentary evidence;
  • witness statements;
  • expert reports; and
  • site inspections as ordered by an arbitral tribunal.

Fact witnesses and technical experts may be examined and cross-examined during hearings. However, witness testimony cannot be taken under oath.

It is common for arbitral tribunals to apply the IBA Rules on the Taking of Evidence in International Arbitration, subject to the parties’ agreement and in the manner and to the extent agreed upon by the parties.

With respect to document disclosure, the common law practice of discovery is neither recognised nor applicable in Egypt. Article 20 of the Egyptian Evidence Law No 25 of 1968 (the “Evidence Law”) provides for limited requests for production of documents at the possession of a party in exceptional cases, namely:

  • if the law permits the request for submitting said document;
  • if the document in possession of the party is a joint document providing for reciprocal obligations and rights; and/or
  • if the opposing party relies on said document at any stage of the procedures.

Furthermore, Article 21 of the Evidence Law provides for the following requirements to be included in a request for document production:

  • the specificity and characteristics of the document(s) requested;
  • its content to the extent possible;
  • its materiality and relevance to the disputed fact;
  • the circumstances and indications that prove that such document is in the possession of the opposing party; and
  • the basis for ordering the production thereof.

The rules of evidence that apply to arbitral proceedings seated in Egypt are the same rules as those that apply to domestic matters, ie, the provisions of the Egyptian Evidence Law No 25 of 1968 (see 8.1 Collection and Submission of Evidence).

Arbitral tribunals do not possess the coercive and executive powers enjoyed by courts and may only draw negative inferences as a result of a party’s non-compliance with the tribunal’s orders, especially if no reasonable justification is provided.

Arbitral tribunals may seek the competent court’s assistance with respect to:

  • imposing a fine on witnesses who refrain from appearing before arbitral tribunals; and
  • ordering a rogatory commission (Article 37 of the EAL).

Arbitral proceedings are generally confidential. Article 44 of the EAL provides that arbitral awards cannot be published, in whole or in part, unless agreed by the parties. There is an implied duty of confidentiality with respect to pleadings and documents pertaining to arbitration. However, the confidentiality of the award may be breached by initiating arbitration-related court proceedings, ie, requests for enforcement or nullity actions, which like other court proceedings would form part of the public domain.

Article 43 of the EAL provides for the legal requirements for validity of arbitral awards, which include the following:

  • The award must be in writing and signed by the majority of arbitrators, indicating the reasons of the minority of arbitrators for refusing to sign, if it is the case.
  • The award must include the reasoning leading to the decision, unless otherwise agreed by the parties or if it is not required by the law applicable to the proceedings.
  • The award must include the names and addresses of the parties, the names, addresses, nationalities and titles of the arbitrators, a copy of the arbitration agreement, a summary of the parties’ requests, submissions and documents, the dispositive (ie, the award’s operative part), the date and place of issuance of the award, as well as the reasons for a decision whenever their inclusion is required.

As to the time limits for issuing an award, Article 45 of the EAL provides that in the absence of an agreement between the parties on a specific period, the award must be issued within 12 months from the beginning of the proceedings, and such period may be extended for six months, unless otherwise agreed by the parties. The sanction of a delay entitles any of the parties to request from the competent court an additional extension or an order to terminate the arbitration proceedings.

There are no specific limits on the types of remedies awarded by arbitral tribunals other than issues relating to public policy. Arbitrators generally have a broad authority to order any declaratory relief, specific performance or monetary compensation, and to award interest and costs. However, arbitral tribunals are generally not entitled to award punitive damages.

Parties are generally entitled to recover interest and legal costs; however, there are no specific provisions addressing the same under the EAL.

With respect to interest, Egyptian courts strictly adhere to the cap of 7% per annum imposed by the Court of Cassation, which is considered a rule of public policy for the purpose of enforcement and annulment of arbitral awards, even if the parties had agreed on a higher rate (in such case, the interest rate will be reduced to the 7% cap) (Court of Cassation, Challenge No 3778 of JY 64, Hearing session dated 17 February 2004).

However, there exists an exception with regard to banking transactions that are exempted from the 7% cap and public policy should not be contravened. In this regard, interest may be payable at the rate set by the Central Bank of Egypt (CBE) which in fact may exceed 7% at the CBE’s annual decision. This rate would apply in relation to (i) commercial loans; and (ii) amounts/expenses pertinent to the trader’s trade (Article 50 of the Egyptian Commercial Code). Furthermore, compound interest is perceived contrary to public policy, unless a clear and unequivocal practice of compounding interest exists in the trade pertinent to the transaction.

As to the recovery of incurred legal costs, arbitral tribunals enjoy a broad discretion in allocating costs. The costs sharing approach is not uncommon; however, arbitral tribunals tend to apply international norms of costs allocation, and the general practice is that costs follow the event.

Arbitral awards are not subject to appeal before Egyptian courts (Article 52 of the EAL); they can only be challenged by initiating an action for nullity or for the setting aside of the award within 90 days from the date of notification of the award to the party against which it was rendered (Article 54 of the EAL).

Article 53 of the EAL expressly provides an exhaustive list of grounds for setting aside an arbitral award, namely:

  • if there is no arbitration agreement, or if it was void or voidable, or if its duration had lapsed;
  • if either party to the arbitration agreement was at the time of the conclusion of the arbitration agreement fully or partially incapacitated, in accordance with the law governing said person’s legal capacity;
  • 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;
  • if the arbitral award excluded the application of the substantive law chosen by the parties to govern the merits of the dispute;
  • if the composition of the arbitral tribunal or the appointment of the arbitrators was in conflict with the EAL or the parties’ agreement;
  • if the arbitral award ruled on matters not falling within the scope of the arbitration agreement or exceeding the limits of that agreement – however, if the matters falling within the scope of the arbitration can be separated from the parts of the award which relate to matters not included within the scope of the arbitration, the nullity affects exclusively the latter parts only;
  • if the arbitral award itself or the arbitration procedures affecting the award contain a legal violation that causes nullity; or
  • if the award contains issues violating the public order in Egypt.

In this respect, a nullity action is a contradictory procedure subject to the same rules for bringing a legal action before a court.

The parties cannot agree to exclude or expand the scope of challenge of an arbitral award as Article 53 of the EAL strictly provides for an exhaustive list as to the grounds of annulment of an arbitral award. However, the parties may waive their right to recourse to annulment, only after and not prior to the issuance of the arbitral award (Article 54 of the EAL).

Moreover, it shall be noted that pleas pertaining to the violation of the arbitration agreement or to a non-mandatory provision of the EAL must be raised earlier during the arbitral proceedings (Article 8 of the EAL) in order to be admissible as a ground for annulment at the time of bringing the nullity action.

Courts’ judicial review of nullity actions consists of a control of the legality of the award. A nullity action is not an appeal of the award; hence, Egyptian courts are restricted from conducting a de novo review of the merits of the case. This has been confirmed by Egyptian courts on many occasions. The Court of Cassation has issued several judgments upholding the same principle, ie, the court examining the nullity action shall not conduct a de novo review of the merits, such that any error in the arbitral tribunal’s assessment or findings does not qualify as a nullity ground given that a nullity action is not an appeal. In this respect, there are two important judgments worth mentioning. In the first judgment, the Court of Cassation dismissed with prejudice the nullity action brought against the famous Al Kharafi v Libya arbitral award rendered in 2013 (Court of Cassation, Civil and Commercial Circuit, Challenge No 12262 of JY 90, Hearing session dated 24 June 2021). Furthermore, in another important judgment, the Court of Cassation annulled an ICC arbitral award, on its own initiative for the first time in its history, on the ground of violation of Egyptian public policy being one of the grounds for annulment under Article 53 of the EAL. The Court upheld the principle restricting a de novo review of the merits, unless a matter of public policy is in play (Court of Cassation, Civil and Commercial Circuit, Challenges Nos 1964 and 1968 of JY 91, Hearing session dated 8 July 2021).

Egypt ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 9 March 1959 and it entered into force as part of the Egyptian legal system on 7 June 1959 without any reservations or declarations.

Egypt also ratified the 1952 Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards on 28 August 1954, and signed the 1983 Riyadh Arab Agreement for Judicial Co-operation in 2014. There are also several bilateral treaties on judicial co-operation that refer to mutual co-operation in the recognition and enforcement of arbitral awards, concluded by Egypt with Tunisia (1976); Italy (1978); France (1982); Jordan (1987); Morocco (1989); Bahrain (1989); Libya (1993); China (1994); Hungary (1996); Syria (1998); the United Arab Emirates (2000); Oman (2002); and Kuwait (2017).

Article 56 of the EAL sets out the procedure for enforcing a domestic arbitral award or a foreign arbitral award subject to the application of the EAL provisions by agreement of the parties in Egypt.

In this respect, a party seeking to enforce an arbitral award shall submit before the president of the competent court an application/request for enforcement to obtain the exequatur, ie, affixing of the execution formula on the award, accompanied by:

  • the original award or a signed copy thereof;
  • a copy of the arbitration agreement;
  • an Arabic translation of the award, certified by a competent entity, if the award was not in that language; and
  • a copy of the procès-verbal attesting to the deposit of the award pursuant to Article 47 of the EAL.

Furthermore, pursuant to Article 58 of the EAL, the application for enforcement will not be admissible prior to the expiry of the 90-day period for initiating a nullity action and it shall not be granted unless it is ascertained that:

  • it does not contradict a judgment previously rendered by the Egyptian courts on the subject matter in dispute;
  • it does not violate the public policy in the Arab Republic of Egypt; and
  • it was properly notified to the party against whom it was rendered.

An order granting or refusing exequatur may be challenged before the competent court within 30 days from the date of issuance of such order.

Moreover, Article 57 of the EAL provides that, in principle, a nullity action does not suspend the enforcement of the arbitral award. Nevertheless, the court may order said suspension if requested by the applicant upon serious grounds.

As to the enforcement of foreign arbitral awards, the default applicable provisions are Articles 296 to 299 of the CCCP, which apply to foreign judgments without prejudice to the provisions of treaties concluded between Egypt and any foreign state. Accordingly, Article 299 extends the application of Article 298 of the CCCP to foreign arbitral awards, which provides that enforcement will be granted if the following conditions are satisfied:

  • Egyptian courts do not have jurisdiction over the dispute, and the foreign court which rendered the judgment enjoys jurisdiction pursuant to its rules on international jurisdiction;
  • the parties have been notified of the proceedings and were duly represented before the competent court;
  • the judgment is final and binding pursuant to the rules prevailing under the law of the foreign court;
  • the foreign judgment is not in conflict with a prior award or judgment rendered by Egyptian courts; and
  • the judgment is not in contravention of the prevailing public policy considerations.

However, Egyptian courts have extended the application of the EAL provisions to the enforcement of foreign arbitral awards, which provide for less onerous conditions, based on Article III of the New York Convention. This has been recently confirmed by the Cairo Court of Appeal in its judgment in relation to Petition No 2 of JY 139, Hearing session dated 9 March 2022.

Egyptian courts have not directly addressed the issue of enforcing an award that has been set aside in the seat of arbitration, and the EAL is silent in this regard.

State entities may successfully raise a defence of sovereign immunity at the enforcement stage, only if enforcement is sought against publicly owned assets that are not subject to enforcement, such as a public utility or public interest funds.

Egyptian courts are generally pro-enforcement with respect to arbitral awards rendered in non-administrative disputes, as they strictly observe the annulment grounds and normally the public policy ground is narrowly construed. This was confirmed by the Court of Cassation, which held that the Egyptian judiciary adopts a ‘pro-arbitration policy’ with respect to the recognition and enforcement of arbitral awards by limiting the annulment to those specifically provided for under the EAL (Court of Cassation, Commercial and Economic Circuit, Challenge No 8199 of JY 80, Hearing session dated 22 March 2022).

The approach taken by Egyptian courts with respect to the contravention of the public policy ground for annulment of an arbitral award is discussed below by means of some examples.

The definition of public policy set by the Court of Cassation consists in the contravention of the social, political, economic and ethical principles in Egypt, which are related to the nation’s higher interests (Court of Cassation, Challenge No 385 of JY 44, Hearing session dated 24 April 1980). This approach adopted by the Court consists of an “objective” notion of public policy, such that the judge must define public policy based on objective criteria, reflecting general trends of the Egyptian community at a given time (Court of Cassation, Challenge No 10132 of JY 78, Hearing session dated 11 May 2010 and Challenge No 12790 of JY 75, Hearing session dated 22 March 2011).

There is also a distinction between procedural public policy, which relates to the violation of provisions of the law regulating the arbitral process, and substantive public policy, which deals with violations of public policy through the process of deciding on the merits of the dispute (Court of Cassation, Challenge No 10132 of JY 78, Hearing session dated 11 May 2010 and Challenge No 12790 of JY 75, Hearing session dated 22 March 2011).

Moreover, the Court of Cassation held that the breach of a mandatory rule does not ex officio or ipso facto qualify as a ground for annulment of an award for a violation of public policy (Court of Cassation, Challenge No 12790 of JY 75, Hearing session dated 22 March 2011).

The EAL does not provide for class action or group arbitration.

The EAL does not provide for specific ethical codes that apply to counsel and/or arbitrators. However, lawyers are subject to the ethical rules provided under the Advocacy Law No 17 of 1983. Nevertheless, arbitrators and counsel adhere to acceptable professional standards prevailing in practice, unless they are bound by other specific prevailing standards in their own jurisdiction.

The EAL does not address the issue of third-party funding. However, third-party funding may be prohibited in case the funding arrangement is considered as a gambling contract (which is contrary to Sharia) and/or if there is counsel funding in the form of champerty. It is worth mentioning that despite the absence of provisions addressing third-party funding, the CRCICA Arbitration Rules 2024 introduced a provision regarding third-party funding in Article 53 thereof. Moreover, the 2019 Egyptian Model BIT, as amended in 2022, contains a provision addressing third-party funding, allowing same under a strict duty of disclosure of the funding agreement all throughout the arbitral proceedings; otherwise, the failure of disclosure would constitute a manifest contravention of a fundamental rule of procedure. This may indicate that third-party funding in Egypt is becoming gradually accepted in the context of international arbitration, as it is becoming recognised in investment disputes (being included in the Egyptian Model BIT) and also given that the CRCICA, being the leading arbitral institution in Egypt, is embracing this increasingly important practice.

The EAL does not address the issue of consolidation of separate arbitral proceedings; however, nothing prohibits the parties from agreeing to consolidate separate proceedings, whether directly or indirectly by agreeing to apply institutional arbitration rules permitting so. It is worth noting that the CRCICA Arbitration Rules 2024 introduced new provisions relating to the consolidation of arbitrations (Article 50), multi-party arbitrations (Article 11) and multiple contract arbitrations (Article 51).

Third parties can be bound by an arbitration agreement in the case of an extension of said arbitration agreement, as explained in 5.7 Jurisdiction Over Third Parties.

As to arbitral awards, third parties cannot be bound by an award pertaining to a dispute to which they were not a party.

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Zulficar & Partners is an international arbitration and corporate law practice based in Cairo, Egypt, prosecuting arbitration cases across the MENA region and beyond, with unique market expertise in international arbitration. The firm is regularly ranked as top-tier in various practice areas, and its partners and lawyers are regularly ranked as leading practitioners, notably in Chambers & Partners. The firm is increasingly instructed to prosecute high-value and highly complex arbitral proceedings spanning the business and investment spectra, and has handled mega-multimillion-dollar disputes and successfully prosecuted complex cases under major institutional rules and in ad hoc proceedings in the MENA region, Africa, Europe and Asia. Attorneys of the firm are highly regarded in the market and have earned the title “precedent setters”.

Overview of Egypt

Egypt is located in the heart of the Middle East and North Africa (MENA) region, attracting foreign direct investment due to its strategic geographical placement but also due to the available investment opportunities for doing business in many sectors, including construction, transportation, energy and tourism.

More than a decade “post-revolution” and four years “post-pandemic” have led to a lot of changes witnessed by the executive power, the legislative power and the judicial system. The political environment has heavily impacted the legal environment.

Here is a snapshot of the Egyptian legal system. Egypt is a civil law jurisdiction based on a well-established system of codified laws. Arabic is the official language, but English is commonly used in business transactions. The supreme law is the Egyptian Constitution, which supports the fundamental principles of legislation of the Arab Republic of Egypt. Many other specialised codes exist, among which the most important are:

  • the Egyptian Civil Code;
  • the Egyptian Commercial Code;
  • the Code of Civil and Commercial Procedures;
  • the Egyptian Arbitration Law;
  • the Evidence Law;
  • the Companies Law;
  • the Capital Markets Law;
  • the Investment Law; and
  • the Penal Code.

The major financial authorities/actors in Egypt are:

  • the General Authority for Investments and Free Zones (GAFI);
  • the Financial Regulatory Authority (FRA);
  • the Central Bank of Egypt; and
  • the Egyptian Stock Exchange (EGX).

As to the courts system, distinction is made between the administrative judicial order (administrative courts within the State Council vested with the power to decide over disputes pertaining to administrative contracts and administrative decrees issued by government officials or public law entities) and the ordinary judicial order, which is divided into three degrees (the Court of Cassation, which sits at the apex of the judicial system, courts of appeal and courts of first instance).

Specialised courts, such as economic courts, were established by virtue of Law No 120 of 2008.

Egypt has also signed and ratified many multilateral conventions and bilateral treaties with respect to the promotion of investment and judicial co-operation. Egypt is a party to over 100 bilateral investment treaties (BITs) and is usually proactive in adhering to regional and international multilateral conventions, such as:

  • the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (the “ICSID Convention”);
  • the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”);
  • the Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards of 1952;
  • the Unified Agreement for Investment of Arab Capital in the Arab States signed on 26 November 1980 in Amman and in force as of 7 September 1981;
  • the Organisation of the Islamic Conference Investment Agreement of 1981 (the “OIC Investment Agreement”);
  • the Convention establishing the Multilateral Investment Guarantee Agency (the “MIGA Convention”) of 1985;
  • the COMESA Investment Agreement signed on 23 May 2007; and
  • the Riyadh Arab Agreement for Judicial Co-operation of 1983.

On 15 August 2021, Law No 137 of 2021 amending Law No 48 of 1979 of the Supreme Constitutional Court was passed and published in the Egyptian Official Gazette extending the scope of the Supreme Constitutional Court’s control and vesting it with new powers to review the constitutionality of (i) decisions rendered by international organisations and bodies, and (ii) foreign court judgments whose enforcement is sought against the Egyptian state.

In light of these new powers, the Prime Minister may request the Supreme Constitutional Court to disregard any decision/judgment rendered by an international organisation/body or a foreign court, and the obligations deriving therefrom, when enforcement is sought against the state. The request shall indicate the alleged violated constitutional provision or constitutional court judgment and the nature of said violation. The Court shall promptly rule over said request.

The adoption of these amendments came as a surprise and has spurred a lot of debate over their impact on investing in Egypt and the state’s international obligations under the treaties to which the state is a party. It remains to be seen whether and to what extent such new powers will be exercised by the Supreme Constitutional Court and in what context.

Moreover, it is worth noting that an earlier draft of Law No 137 of 2021 had also included review of arbitral awards among the new powers to be vested in the Supreme Constitutional Court. However, this was later excluded, such that the Supreme Constitutional Court will not have jurisdiction to review arbitral awards, which remain subject to the traditional review regimes under the Egyptian Arbitral Law No 27 of 1994 and any pertinent applicable international treaties.

The Egyptian state is keen to attract foreign investment, but this new law comes at a time when investors were expecting further assurances and protections. Thus, the ramifications of this new law remain, at the present time, uncertain and unknown.

The Arbitration Legal Framework

Egypt remains a central hub for arbitration practice in the MENA region. The Egyptian legal system constitutes the basis of the respective legal systems of other countries in the region. In the same vein, Egyptian court practice and scholarly writings remain a main source of influence over arbitration practice in the region at large.

The Egyptian Arbitration Law No 27 of 1994 (EAL) is principally derived from the UNCITRAL Model Law (1985) with some variations. The EAL addresses all principal aspects of arbitral proceedings, including the arbitration agreement, issues of arbitrability, the composition of the arbitral tribunal, the challenge of arbitrators, the conduct of the proceedings, the intervention and assistance by national courts throughout the proceedings, the applicable law(s) and the rules pertaining to the award, its annulment and enforcement. The EAL offers a certain flexibility with respect to the choice of procedural rules and guarantees fundamental principles, such as treating the parties to an arbitration with equality. The EAL also recognises well-established principles such as the principle of competence-competence and the principle of separability of the arbitration agreement from the main contract.

Egyptian courts are generally viewed as arbitration-friendly and are attentive to the implementation of international arbitration trends within the Egyptian legal system. Despite the non-existence of specific courts designated to hear arbitration-related disputes, specialised circuits have been designated within the competent national courts in order to deal with arbitration-related matters, where sitting judges are familiar with arbitration matters. The competent national court with respect to matters pertinent to international commercial arbitrations is the Cairo Court of Appeal, unless the parties agree on another appellate court.

There are specific issues worth highlighting with respect to arbitration in administrative contracts. At the outset, the EAL expressly provides that an arbitration agreement included in an administrative contract must be approved by the competent minister, or whoever assumes their authority with respect to public entities, and delegation in this regard is prohibited. Such requirement is a matter of public policy and, in the absence of the approval of the competent minister or whoever assumes their authority with respect to public entities, the arbitration agreement will be null and void.

Moreover, Prime Ministerial Decree No 1062 of 2019 (as amended by Prime Ministerial Decrees No 2592 of 2020 and No 3218 of 2022) establishing the ‘High Committee for Arbitration and International Disputes’ within the Council of Ministers, binds ministries, public entities, state-owned companies and companies in which the state participates in any form not to conclude any contracts with foreign investors or enter into contracts including an arbitration clause, and/or amend these contracts, or take any measure that would lead to the rescission or termination of any of these contracts including an arbitration clause without having them first reviewed by the said Committee. The Committee, which is reconstituted occasionally, is entrusted with reviewing and opining on pending international arbitration in both commercial and investment cases involving the state, its organs and state-controlled entities. The Decree does not present an obstacle to investor-state arbitration involving Egypt, as it makes express reference to the prevalence of the provisions of the Investment Law, and does not impact any of the valid BITs or multilateral treaties concluded by Egypt.

It is worth noting that in March 2022, the Deputy Minister of Justice for Arbitration and International Disputes issued Decree No 8 of 2022, establishing a committee headed by him and comprising Egyptian arbitration practitioners in charge of preparing a proposal for the amendment of the EAL. These discussions are still ongoing.

Arbitral Institutions in Egypt

The leading arbitral institution in Egypt is the Cairo Regional Centre for International Commercial Arbitration (CRCICA), which is an independent non-profit international organisation established in 1979 under the auspices of the Asian African Legal Consultative Organization. The CRCICA offers other alternative dispute resolution services such as mediation, conciliation and mini-trials. The CRCICA has its own set of arbitration rules (2024) amending the 2011 arbitration rules and entering into force as of 15 January 2024, mediation rules (2013) and dispute board rules (2021) in the Arabic, English and French languages, except for the mediation rules, which are available only in the Arabic and English languages. The latest version of the CRCICA arbitration rules (2024) entered into force as of 15 January 2024. The amended arbitration rules (2024) include provisions addressing issues that were not addressed in the 2011 arbitration rules, such as, for example, consolidation of arbitrations, multi-party arbitrations, multiple contract arbitrations, third-party funding, emergency arbitrator rules and expedited procedure rules. The CRCICA also has many partnerships with other reputable institutions and constantly organises conferences, seminars ‒ and now webinars ‒ and workshops in relation to the services it provides.

There is also the Egyptian Center for Arbitration and Settlement of Non-Banking Financial Disputes (ECAS), which is a specialised arbitral institution established by virtue of Presidential Decree No 335 of 2019 as an independent body within the FRA in Egypt. On 10 December 2020, the statutes of ECAS, as well as its arbitration and mediation rules, were issued by virtue of Prime Ministerial Decree No 2597 of 2020.

Recent Developments in Arbitration Jurisprudence

Egyptian judges are following trends in international arbitration and incorporating them to the extent possible within the Egyptian legal system. Below are a few examples of the Court of Cassation’s and the Cairo Court of Appeal’s judgments.

(i) The Court of Cassation referred to Clauses 4.3.1 and 4.3.4 of the Green list of the IBA Guidelines on Conflicts of Interest in International Arbitration (2014) in the circumstances where: (1) the chairman and one appointed arbitrator failed to disclose that they were both members of the advisory committee at the CRCICA; and (2) the legal counsel of one of the parties was a member of the same committee. The Court held that the membership of both arbitrators and the legal counsel is publicly available information in their respective biographies accessible on the CRCICA’s official website. The Court added that the chairman disclosed his participation in an event where the legal counsel of one of the parties was a speaker and the parties did not raise any concerns during the arbitral proceedings, which constitutes a waiver of their right to object. Therefore, the above-mentioned circumstances do not raise doubts as to the impartiality and independence of the arbitrators (Court of Cassation, Commercial and Economic Circuit, Challenges Nos 7913 and 13996 of JY 91, Hearing session dated 9 May 2023).

(ii) The Cairo Court of Appeal held that the requirement for an arbitral award to be reasoned is not a public policy requirement, given that Article 43 of the EAL enables the parties to agree on releasing the arbitral tribunal from its duty to render a reasoned award. The Court explained that a defect or lack of reasoning does not lead to the setting aside of an arbitral award, given that this ground is not provided under Article 53 of the EAL, which strictly stipulates all grounds for setting aside. In this specific case, the Court found that the awards subject to the motion for setting aside were sufficiently reasoned, by including a clear and unambiguous description of the facts in dispute, expressly referring to the evidence submitted and complying with the dispositive part of the award. The Court explained that contradictory reasoning is a defect in substance (“vice de fond”) while the lack of reasoning is a defect in form (“vice de forme”); thus, they are not synonymous. In this regard, the Court concluded that allowing the nullity court to examine the existence of a contradiction in the reasoning of an award would be a back door for the court to re-examine the merits of the case, which falls outside the scope of its review (Cairo Court of Appeal, 4th Commercial Circuit, Challenge No 53 of JY 138, Hearing session dated 30 May 2022).

(iii) The Court of Cassation expressly held that the Egyptian judicial system adopts a “pro-arbitration policy” with respect to the recognition and enforcement of arbitral awards by limiting the grounds for setting aside an arbitral award to those specifically provided for under the EAL. In the same judgment, the Court of Cassation seized the opportunity to define what is meant by deliberations and dissenting opinions. The Court explained that deliberations consist in the exchange of views between the arbitrators regarding the facts of the case, the claims put forward by the parties and the relief sought. Furthermore, the Court stated that it is well established in international arbitration for arbitrators who refuse to sign an arbitral award to render a dissenting opinion; this derives from the judicial duty upon arbitrators to issue a reasoned award. On this occasion, the Court explained that the arbitrator who refrains from signing the award shall state the reasons for their non-signature of the award in the form of a dissenting opinion, whether included in the award or in a separate document. The Court added that in case the minority arbitrator (who refused to sign the award) has not stated the reason(s) for their non-signature, the chair of the tribunal shall state in the award that the minority arbitrator refused to sign due to their disagreement with the opinion of the majority. The Court stated that there are three conditions to be met to dismiss a motion for setting aside an arbitral award that is not signed by all arbitrators:

  • all arbitrators must have participated in the deliberations (including the arbitrator(s) who refused to sign the award);
  • the arbitral award must be signed by the majority of arbitrators; and
  • the award must state the reason(s) for non-signature of the minority arbitrator if the latter has not stated said reason(s).

In the same judgment, the Court reaffirmed that an arbitral award’s erroneous reasoning does not lead to setting aside the award, given that the grounds for setting aside are strictly listed in the EAL (Court of Cassation, Commercial and Economic Circuit, Challenge No 8199 of JY 80, Hearing session dated 22 March 2022).

(iv) The Cairo Court of Appeal upheld that the writing requirement is fulfilled when the arbitration agreement is contained in any exchange of letters, telegrams, emails or any means of communication, but also held that when the parties to a contract refer to the terms, conditions or templates of well-known and widely spread model agreements which include an arbitration agreement, the arbitration agreement is thus included by reference in the parties’ initial contract. The incorporation into the contract by reference to a model agreement containing an arbitration agreement fulfils the writing requirement and is considered as a written agreement which is sufficient to enable the parties to resort to arbitration. The clauses of the model agreement that are incorporated by reference in the initial contract, which include the arbitration agreement clause, are binding on the contracting parties (ie cannot be denied by the contracting parties) and are well-established and prevailing clauses in the same type of transaction. In the same judgment, the Court of Appeal reaffirmed the importance of the New York Convention, which forms part of the Egyptian legal system and which extends the applicability of the EAL provisions to the enforcement of foreign arbitral awards, given that the EAL provisions are less onerous than the default provisions for enforcement of foreign judgments (Cairo Court of Appeal, (First) Commercial Circuit, Petition No 2 of JY 139, Hearing session dated 9 March 2022).

(v) The Court of Cassation expressly referred to the IBA Guidelines on Conflicts of Interest in International Arbitration (2014) quoting clause 3.3.5 of the Orange List in its judgment, on the occasion of non-disclosure by an arbitrator that a partner of the law firm representing the claimant in the arbitral proceedings, but who was not involved with any counsel work in the case, was a family relative of the chairman. The Orange List sets non-exhaustive examples of specific situations that may give rise to justifiable doubts as to an arbitrator’s impartiality or independence, in the eyes of the parties, where the arbitrator has a duty to disclose but can nevertheless act unless the parties make a timely objection. The Court explained that simple non-disclosure does not lead to the setting aside of an award, and the Court shall assess whether the undisclosed circumstance leads in a reasonable manner to an inference that there is a real danger of bias and therefore to the setting aside of the award. The Court added that the Egyptian judicial system supports and ensures the independence and impartiality of arbitrators, which is among the reasons for the increased trust of international arbitration parties and their choosing Egypt as the seat of arbitration (Court of Cassation, Commercial and Economic Circuit, Challenge No 13892 of JY 81, Hearing session dated 22 February 2022).

(vi) The Court of Cassation, for the first time in its history, has annulled, on its own motion, an ICC arbitral award for violation of Egyptian public policy, in compliance with the provision of Article 53(2) of the EAL (Court of Cassation, Civil and Commercial Circuit, Challenges Nos 1964 and 1968 of JY 91, Hearing session dated 8 July 2021).

(vii) The Court of Cassation has put an end to the ongoing saga in relation to the setting aside of the famous Al Kharafi v Libya arbitral award after almost a decade. The Court upheld the validity of the arbitral award and dismissed the nullity action brought by Libya (Court of Cassation, Civil and Commercial Circuit, Challenge No 12262 of JY 90, Hearing session dated 24 June 2021).

(viii) The Court of Cassation affirmed the parties’ right to be represented by foreign lawyers and/or non-lawyers under Egyptian law, and also recognised trends in international arbitration such as delocalisation and the increase of virtual hearings (Court of Cassation, Challenge No 18309 of JY 89, Hearing session dated 27 October 2020). The delocalisation trend distinguishing between the legal seat and physical place of hearings was confirmed in a more recent judgment in 2021 (Cairo Court of Appeal, Challenge No 42 of JY 136, Hearing session dated 8 March 2021).

(ix) The Court of Cassation provided insight on what is meant by an arbitral institution under Article 3 of the EAL by referring to the ICC International Court of Arbitration (Court of Cassation, Challenge No 14126 of JY 88, Hearing session dated 22 October 2019).

(x) The Court of Cassation held that for an arbitration to be international, it is not a prerequisite that its subject matter relates to international trade. The Court explained that Article 3 of the EAL provides for specific criteria for a “deemed internationalisation”, which include resorting to arbitral institutions in Egypt or abroad (Court of Cassation, Challenge No 11348 of JY 88, Hearing session dated 11 April 2019).

Tendency Towards Dispute Avoidance Rather Than Dispute Settlement

The Investment Law in Egypt has undergone considerable change and constant development since the enactment of the first Investment Law No 65 of 1971 until the enactment of the current Investment Law No 72 of 2017. The current Investment Law is a result of many lessons learnt throughout the past four decades, whereby Egypt has entered into a considerable number of investment arbitration disputes, be it ICSID arbitration (38 cases against Egypt until July 2024), or other institutional arbitration, or ad hoc arbitration.

The Egyptian legislature has observed all provisions in relation to dispute settlement and has gathered the best practices to ensure a favourable investment climate for investors by granting them preferential treatment. Rather than wasting time and spending colossal sums on arbitration, the Egyptian state has preferred to adopt a dispute-avoidance and amicable-settlement mechanism.

This has been reflected in the provisions of the current Investment Law, such that the reference to ICSID arbitration or any other arbitral institution has been removed and replaced by a reference to the Egyptian Arbitration and Mediation Centre, which is yet to be established as provided under the Law.

The Investment Law encourages the amicable settlement of any dispute through negotiations between the parties at any time, but also reserves the parties’ right to litigation. It allows disputes to be settled in the manner agreed with the investor or pursuant to the provisions of the EAL, and also refers to ad hoc and institutional arbitration as available options. Three committees have been established, namely:

  • the Grievance Committee, which has the authority to examine complaints filed by investors against decisions/orders relating to issuance of approvals, permits and licences;
  • the Ministerial Committee on Investment Dispute Resolution, which examines applications, complaints or disputes between investors and the state or any of its entities; and
  • the Ministerial Committee for the Settlement of Investment Contract Disputes, which shall examine the differences arising between the parties to the investment contract.

Impact of the COVID-19 Pandemic

Like any other jurisdiction, the COVID-19 pandemic accelerated the access to and use of information and communication technologies in Egypt, in both arbitration and litigation. With respect to arbitration, parties were encouraged to conduct virtual hearings and proceed with cross-examination via video-conferencing tools and platforms. This led to the postponement of some hearings, changes to procedural timetables and delays in the issuance of arbitral awards. However, it was observed that the costs of arbitration were reduced to some extent, owing to the absence of costs associated with travel and the booking of hearing rooms, as well as expenses in relation to binding and printing of hearing bundles. There were some difficulties at the beginning of the pandemic resulting from the complete shift to online, such as poor internet connection, enabling and disabling the camera and microphone, finding the online platforms, time zone differences, etc. Now, things run much more smoothly and parties are more used to online platforms, whether they are used to conduct virtual hearings or attend webinars.

The COVID-19 pandemic has accelerated the Egyptian government’s plan to digitalise its services generally, within the legal system and beyond, by gradually offering more online services to the public. There are ongoing discussions between dispute resolution practitioners and the Ministry of Justice as to the possibility of introducing the digitalisation of judicial proceedings within the Egyptian judicial system.

Zulficar & Partners

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Law and Practice

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Zulficar & Partners is an international arbitration and corporate law practice based in Cairo, Egypt, prosecuting arbitration cases across the MENA region and beyond, with unique market expertise in international arbitration. The firm is regularly ranked as top-tier in various practice areas, and its partners and lawyers are regularly ranked as leading practitioners, notably in Chambers & Partners. The firm is increasingly instructed to prosecute high-value and highly complex arbitral proceedings spanning the business and investment spectra, and has handled mega-multimillion-dollar disputes and successfully prosecuted complex cases under major institutional rules and in ad hoc proceedings in the MENA region, Africa, Europe and Asia. Attorneys of the firm are highly regarded in the market and have earned the title “precedent setters”.

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Authors



Zulficar & Partners is an international arbitration and corporate law practice based in Cairo, Egypt, prosecuting arbitration cases across the MENA region and beyond, with unique market expertise in international arbitration. The firm is regularly ranked as top-tier in various practice areas, and its partners and lawyers are regularly ranked as leading practitioners, notably in Chambers & Partners. The firm is increasingly instructed to prosecute high-value and highly complex arbitral proceedings spanning the business and investment spectra, and has handled mega-multimillion-dollar disputes and successfully prosecuted complex cases under major institutional rules and in ad hoc proceedings in the MENA region, Africa, Europe and Asia. Attorneys of the firm are highly regarded in the market and have earned the title “precedent setters”.

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