Egypt: Competition Litigation

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This country-specific Q&A provides an overview to competition litigation laws and regulations that may occur in Egypt.

This Q&A is part of the global guide to Competition Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/competition-litigation/

  1. What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?

    The Egyptian Competition Law No. 3 of 2005 (“ECL”) tackles only criminal offenses, which are acts that aim to prevent, restrict, or harm the freedom of competition in Egypt and are exhaustively provided for in Articles 6, 7 and 8 of the ECL.

    However, Anti-competitive practices such as hard-core cartels, abuse of dominant position and vertical restraints may be the basis of a competition damage claim. It is worth mentioning that the competition damages claims are not bound by specific provisions in Egyptian Law, therefore the general provisions for damage claims as provided for in the Egyptian Civil Code (“ECC”) shall apply thereon.

    In addition, a contractual breach of a non-compete clause could be a cause of action that can be relied upon as the basis of a competition damages claim. In this case, the Court shall interpret the agreement between both parties and determine whether or not the Defendant, by breaching the agreement, has caused harm to the Claimant.

    In all cases, the court shall establish the existence of a fault (i.e. an anti-competitive practice or a contractual breach), the existence of damage and the causal link between fault and damage.

  2. What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?

    According to the Egyptian Civil and Commercial Procedural Code (“ECCPC”), proceedings are commenced ab initio by filing a Statement of Claim before the competent Court. According to the ECCPC, the Statement of Claim should include the following:

    a) The Plaintiff's name, surname, profession/occupation, and domicile; and his Representative's name, surname, profession/occupation, capacity, and domicile;

    b) The Defendant's name, surname, profession/occupation and domicile or last known domicile if he has no known domicile;

    c) Date of filing the Statement of Claim;

    d) The Court before which the action is being brought;

    e) The Plaintiff's elected domicile in the circuit where the Court is located if he does not have a domicile therein;

    f) The facts of the action and the Plaintiff's claims and the supporting evidence thereof.

    In practice, pleadings before the Court are mostly through written submissions, and the Court may as well rely on oral pleadings as may be requested by the parties.

  3. What remedies are available to claimants in competition damages claims?

    Claimant may claim material and moral damages based on the harm incurred by her/him due to the defendant act, this also includes damages incurred by the claimant due to his loss of profit.

  4. What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?

    Measure of Damages

    Article 221 of the ECC provides that “The judge shall fix the amount of damages, if it has not been fixed in the contract or by law”. Accordingly, the Court may award damages equal to the substantiated harm incurred by the claimant.

    Joint and Several Liability

    As a general rule, joint and several liability is recognized under Egyptian law. In this regard, Article 169 of the ECC provides that “When several persons are responsible for an injury, they are jointly and severally responsible to make reparation for the injury. The liability will be shared equally between them, unless the judge fixes their individual share in the damage due”. Therefore, it may be concluded that persons may be jointly and severally liable for compensation damages claims.

    Leniency

    The ECL provides for a leniency program for those persons in breach who notify the ECA of the violations and provide information on the persons involved or the evidence that may prove the violations. However, this leniency program applies in the context of criminal liability and not in the context of competition damages claims. This means that persons may claim competition damages even if the liable person benefited from the leniency program. The person then needs to prove fault, damage and causal link as the fault may not be established by the ECA due to the leniency program.

  5. What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?

    As per the general provisions, time limits for civil and commercial claims are as follows:

    • The time limit for bringing civil claims is generally fifteen years from the date in which it becomes due. This limit has some exceptions. The term of prescription is five years for the following:
      • recurring sums payable periodically;
      • sums due to physicians, chemists, lawyers, engineers, experts, receivers in bankruptcy, brokers, professors or teachers;
      • taxes and sums payable to the government and public entities; and recovery of unduly paid taxes.

    The term of prescription is one year for rights due to traders and manufacturers for goods supplied to persons who do not trade in these goods; hotels and restaurants proprietors for accommodation, food and expenses; and workmen, servants and wage earners.

    Time limits start running from the date the right becomes due. In case a term or condition exists, time limits start running from the day they are realised. Time limits do not start if there are circumstances preventing the claimant from acting, this include moral restrictions.

    The term of prescription is three years with respect to tortuous liability such as liability for injury, restitution of the undue, enrichment without cause, or acting voluntarily on behalf of another person. The starting point for this limit is generally the date at which the person entitled to the right becomes aware of his right. In all events, such rights prescribe after fifteen years from the date the event giving rise to these rights.

    • The time limit for bringing commercial claims is seven years from the date the right of a party becomes due.
    • The limitation periods shall be interrupted if the claimant files a judicial action against the defendant, or if he summons him.
  6. Which local courts and/or tribunals deal with competition damages claims?

    Article 6 of the Economic Courts Law No 120/2008 provides that unless the Council of State has jurisdiction over a dispute arising in the application of ECL, first instance circuits of the Economics Courts shall have exclusive jurisdiction over disputes arising from the application of the Competition Law for disputes amounting up to five million Egyptian Pounds. Same exclusive jurisdiction is granted to appeal circuits in Economic Courts when the dispute in question is unquantified or when it exceeds five million Egyptian Pounds.

    Since ECL tackles only the criminal aspect of the competition matters (which excludes the competition damage claims that are of civil nature), parties who have interest and capacity could submit civil claims in ongoing criminal matters before Economic Courts requesting compensation out of the crimes committed by the defendant(s) with regards to ECL. However, in practice the Economic Courts after establishing the criminal aspect in a case, may transfer these civil claims to the competent civil Court.

  7. How does the court determine whether it has jurisdiction over a competition damages claim?

    The ECCPC provides that Courts of First Instance are competent in civil and commercial matters except those falling within the jurisdiction of any specialised court. Rulings of First Instance Courts are, generally, subject to appeal.

    The Egyptian Courts have jurisdiction to hear a dispute provided that:

    (i) at least one of the Defendants is domiciled in Egypt;

    (ii) the dispute relates to a contract concluded or performed in Egypt;

    (iii) the dispute arises against non-Egyptians who have no home or place of residence in Egypt if:

    a. If they have an elected domicile in Egypt;

    b. If the action relates to an asset in Egypt or to any obligation arising or performed or to be performed there, or to insolvency of which notice is published therein.

    Since competition damages claims stem out of contractual breach or violation to the ECL provisions, the Egyptian courts shall have jurisdiction if one of the above criteria does exist.

  8. How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?

    A) Applicable law on competition damages claim:

    In order to determine the applicable law, we shall distinguish between two situations:

    a) In the event where there is no foreign element in a competition damage claim, i.e. 1) the parties are Egyptians, 2) the agreement clearly provides that it is subject to the Egyptian law, and that this latter is signed and concluded in Egypt, 3) or the tort (anti-competitive practice) is committed in Egypt, in this case, Egyptian Courts shall apply the Egyptian Law.

    b) In the event where there is a foreign element in the competition damages claim, and unless there is a convention directly determining the applicable law on competition damages claims, the Court shall apply the Egyptian private international rules on determining the applicable law on the dispute, which are:

    a. The applicable law of the agreement (if it is clearly provided in the agreement);

    b. The law of the State in which the agreement shall be executed (if the agreement does not provide an applicable law);

    c. The law of the State in which the tort has been committed.

    In this case, the Egyptian Court shall apply the relevant foreign law on the dispute as long as the said law does not contradict public policy in Egypt.

    B) Standard of proof:

    The Egyptian Law No. 25 of 1968 concerning the Proof in Civil and Commercial Matters (“PCCM”) stipulates certain standard of proof principles that the Court and the parties shall abide by. These principles include the following:

    (i) The creditor (most likely the Claimant) shall bear the burden of proving obligations, while the debtor (most likely the Defendant) shall bear the burden of proving discharging the debt or the obligation.

    (ii) The facts that are to be proved shall be related to the case, and shall be productive and admissible.

    (iii) Official documents issued by a public servant or a person commissioned to perform a public service shall be binding vis-à-vis all people in terms of all contents recorded therein made by authors within the extent of their mandates, or signed by the concerned parties, unless they have been duly proved counterfeited.

    (iv) If the original instrument exists, its authenticated copy - whether written or photographic - shall be binding to the extent of its matching to the original. A copy shall be authentic unless a party challenged it, then the copy shall be verified against the original.

    (v) Where an original instrument doesn't exist, a copy shall be admitted in evidence as follows:

    a. The authentic copy, whether executive or not, shall be admitted in evidence as the original, if its outer appearance doesn't create any doubt in being identical to the original.

    b. The authentic copy shall be as admissible in evidence as the original document; however, in this case each party may demand verifying it against the original copy thereof.

    c. Authentic copies taken from copies shall not be taken into consideration unless for the purpose of guidance only, as the case may be.

    (vi) Unofficial documents shall be considered as issued by the person who signed it, unless where such a person explicitly denies that such handwriting, signature, seal, or fingerprint is attributable to him. Inheritors or successors may not be asked to deny, but it is sufficient for them to take the oath that they do not know that the handwriting, signature, seal, or fingerprint is attributable to the person from whom the right passed to the successor or inheritor.

    (vii) An unofficial document shall not be an evidence vis-à-vis third parties unless when it has a fixed date. The document shall be considered to have a fixed date:

    a. As of the date at which it is registered in the appropriate record.

    b. As of the date at which its content is registered in another paper with a fixed date.

    c. As of the date at which it is annotated by an authorized public servant.

    d. As of the date of the death of a person who has a recognized trace on the paper such as a handwriting, signature, and fingerprints, or as of the date at which it became impossible for one of them to write or seal the instrument for a physical defect.

    e. As of the date of the occurrence of an event that is conclusive in proving that the paper is issued before its occurrence.

  9. To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?

    Competition (criminal) cases before the Court are initiated by the Public Prosecution upon a request from ECA. It is worth noting that there is no direct link between the ECA and the Court. The Court shall take into consideration the investigations made by ECA along with the investigations made by the Public Prosecution. The Court may cross-examine members of ECA as expert witnesses, however the Court shall have a discretionary appreciation on the merits of the case based on the report of the ECA and the investigation of the Public Prosecution Office as opposed to the defence of the defendant. The court judgment shall be binding erga omnes.

    ECA has a territorial jurisdiction in Egypt to:

    • Receive complaints and initiate inspections.
    • Receive mandatory notifications of M&As (when the annual turnover of the persons involved, or when by result of an M&A, the annual turnover exceeds 100 million EGP, the Law obliges that ECA shall be notified of same).
    • Conduct market studies.
    • Create a database for economic activities.
    • Advocate for competition law and policy through awareness and training.
    • Coordinate with sector regulators.
    • Coordinate with peer competition authorities in different jurisdiction.

    It is worth noting that article 5 of ECL grants ECA an extraterritorial jurisdiction to the acts committed outside of Egypt subject to the following conditions:

    • The acts committed abroad prevent, restrict, or harm the freedom of competition in Egypt; and
    • The acts committed abroad Constitute crimes under ECL.
  10. To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?

    In a criminal litigation context, whereby Economic Court have the exclusive jurisdiction over criminal competition cases, parties who suffered harm due to the criminal offenses committed by the accused persons with regards to competition offences may join the criminal case by filing dependent civil compensation claims parallel to criminal proceedings.

    Review of civil claims by the Court shall be dependent on the criminal claim, meaning that the criminal aspect has a priority over the civil aspect. The reason of this priority is that the harm subject of the civil compensation claim is supposedly the consequence of the criminal offence. If the criminal offence is not established by the Court, the civil compensation claim may be deemed groundless and inadmissible.

  11. What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?

    Civil compensation claims could always be initiated by interested parties before the Economic Court against one or more accused parties. The class actions are not recognized in competition damages claims. However, this does not prevent harmed persons from consolidating their claims in one case.

  12. Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?

    Since competition damages cases are subject to the general provisions under ECC, the person who claims damages has the burden to prove his case as to fault, harm and causal link, failing which may result in her/his claims being inadmissible.

    The defendant however, has all possible means to defend her/himself. This include economic analysis and business regulations affecting the activities of the defendant. In theory, Pass-on defence may be accepted by courts however, in practice there is no precedence in courts that this defence has been used.

  13. Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?

    In civil and commercial matters, expert witness is generally permitted in litigation disputes under Egyptian Evidence Law. A party may appoint its own expert to provide an expert report to the court. Alternatively, either of the parties may demand the appointment of an expert or the Court may decide at its own discretion to appoint an expert.

    In the event where an expert is appointed by the Court, the Court shall issue a preliminary judgment ordering the appointment of an expert from within the list of experts admitted to the Economic Courts. The judgment shall include: 1) the mission and the scope of work of the expert, 2) the time limit for the expert to deposit his report, 3) the expert fees and the party who shall pay the expert fees.

    The Court Clerk shall then notify the Experts Department for the appointment of a competent expert, who shall review the case file and obtain a copy from the preliminary judgment. The expert shall set a hearing date by summoning the parties to attend. The number of hearings before the expert may vary depending on the complexity of the case.

    After having completed his mission, the expert will then submit its report to the Court which will include his opinion and conclusions.

    The Court will consider the expert report however; the Court will have a discretionary power in appreciating its content and may cross-examine the expert witness and allow his cross-examination by the parties.

  14. Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?

    The trial process in civil and commercial disputes begins by filing a Statement of Claim before the Clerk of the competent Court. Once the Statement of Claim has been filed before the competent Court, the Court Clerk will open a Court file (provided the attendant Court fees have been paid) by entering the case onto the Court’s register (the date of registration marking the official date of commencement of the action before the Court), assign a case number and schedule a hearing for the case to be heard before the Court.

    The Court Clerk then provides the Plaintiff with the Statement of Claim containing the case number and the hearing date. The Plaintiff then has the obligation to submit the Statement of Claim to the Court Bailiff Office, which shall notify the Statement of Claim to the Defendant(s) via bailiff notice. The Plaintiff shall then receive the executed Statement of Claim and present it in the first hearing before the Court. In practice, the Bailiff Office serves the notice within ten working days. There are no time limits for the notice to be served to the Defendant, however, the Plaintiff must establish to the Court that the Defendant has been duly notified of the hearing date.

    The judge then shall decide the court sessions dates and allow for the submission of memorandums and supporting documents by both parties on equal footing.

    Concerning the evidences, as explained earlier, the Egyptian Law No. 25 of 1968 concerning the Proof in Civil and Commercial Matters (“PCCM”) sets the standard of proof principles that the Court and the parties shall abide by. These principles include the following:

    (i) The creditor (most likely the Claimant) shall bear the burden of proving obligations, while the debtor (most likely the Defendant) shall bear the burden of proving discharging the debt or the obligation.

    (ii) The facts that are to be proved shall be related to the case, and shall be productive and admissible.

    (iii) Official documents issued by a public servant or a person commissioned to perform a public service shall be binding vis-à-vis all people in terms of all contents recorded therein made by authors within the extent of their mandates, or signed by the concerned parties, unless they have been duly proved counterfeited.

    (iv) If the original document exists, its authenticated copy - whether written or photographic - shall be binding to the extent of its matching to the original. A copy shall be authentic unless a party challenged it, then the copy shall be verified against the original.

    (v) Where an original document doesn't exist, a copy shall be admitted in evidence as follows:

    a. The authentic copy, whether executive or not, shall be admitted in evidence as the original, if its outer appearance doesn't create any doubt in being identical to the original.

    b. The authentic copy shall be as admissible in evidence as the original document; however, in this case each party may demand verifying it against the original copy thereof.

    c. Authentic copies taken from copies shall not be taken into consideration unless for the purpose of guidance only, as the case may be.

    (vi) Unofficial documents shall be considered as issued by the person who signed it, unless where such a person explicitly denies that such handwriting, signature, seal, or fingerprint is attributable to him. Inheritors or successors may not be asked to deny, but it is sufficient for them to take the oath that they do not know that the handwriting, signature, seal, or fingerprint is attributable to the person from whom the right passed to the successor or inheritor.

    (vii) An unofficial document shall not be an evidence vis-à-vis third parties unless when it has a fixed date. The document shall be considered to have a fixed date:

    a. As of the date at which it is registered in the appropriate record.

    b. As of the date at which its content is registered in another paper with a fixed date.

    c. As of the date at which it is annotated by an authorized public servant.

    d. As of the date of the death of a person who has a recognized trace on the paper such as a handwriting, signature, and fingerprints, or as of the date at which it became impossible for one of them to write or seal the instrument for a physical defect.

    e. As of the date of the occurrence of an event that is conclusive in proving that the paper is issued before its occurrence.

    Concerning cross examination, the Court and the parties may call witnesses for cross-examination, should the matter requires their presence for the sake of the dispute. The requesting party has to demand from the Court in writing or verbally during the Court hearing the specific information he is asking the witness to provide to the Court. In this case, the other party always preserve his right to challenge and cross-examine this witness either through documents or another witness testimony.

  15. How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?

    The time between the commencing of the proceedings (i.e. the filing of the statement of claim) and the first hearing depends on the caseload before a certain Court. It is estimated, in light of the current practice, that the time will vary between an average of three weeks to two months.

    The court proceedings then takes around one year from commencement of the proceedings to issue the judgment. Depending on the nature and complexity of the individual dispute, this may, of course, differ on a case-by-case basis, especially where a technical expert is involved. In the latter case, the time limit of the case may be extended up to one or more year.

    In criminal, civil and commercial matters, a judgment rendered by a Court of First Instance may be appealed before the Court of Appeal. Moreover, except some specific matters in which the value of the dispute is very minor, an appealable final judgment should have an amount of dispute equal or above Five Thousand Egyptian Pounds.

    The Court of Cassation has jurisdiction to hear challenges against final judgments. However, it shall be clear that the Court of Cassation is not a second appellate degree as it only reviews the application of the law with no revision of Courts’ assessment of the facts or the merits of the case.

  16. Do leniency recipients receive any benefit in the damages litigation context?

    Leniency recipients do not receive any benefit in the damages litigation context due to the fact that leniency policy only applies in criminal litigation context under Egyptian Law.

  17. How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?

    The Economic Court usually rely on the economic study of the ECA along with the investigations done by the Public Prosecution in order to establish the concept of loss, which has rather an economic perspective on the relevant market in Egypt. In the presence of complex cases, the Court may also appoint an expert if it deems necessary to have a better understanding of the case.

    With regards to interests, the general rule is that when the object of an obligation is the payment of a sum of money of which the amount is known at the time when the claim is made, the debtor shall be bound, in case of delay in payment, to pay to the creditor, as damages for the delay, interest at the rate of four percent in civil matters and five percent in commercial matters. Such interest shall run from the date of the claim in court, unless the contract or commercial usage fixes another date. If the amount is not known when the claim is made then the court shall decide the interest from the date of the issuance of the judgment.

  18. Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?

    In the context of civil and commercial litigation, a joinder is only possible when the contract or the law provides so. If no contractual or legal basis, then the defendant cannot seek contribution or indemnity from other defendants.

  19. In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?

    In the context of criminal litigation whereby ECA has discovered offences that are sanctioned under ECL or when any interested person notifies ECA of potential anti-competitive or monopolistic practices, ECA may upon acceptance of the majority of its board members, accept reconciliation with parties in breach. The reconciliation may be done:

    • Prior the initiation of the criminal action by the Public Prosecution. The reconciliation sum shall not exceed the maximum limit of the penalty for such crime.
    • After the initiation of the criminal action by the Public Prosecution, and before a final judgment is rendered. The reconciliation sum shall not be less than three times the minimum limit of the fine for such crime, and not exceeding half of its maximum limit.

    In the abovementioned cases, the competition damages claim are disposed of without a full trial.

  20. What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?

    Class actions are only recognized under Egyptian law in consumer protection cases. However, neither the ECL nor the ECC allow for class actions in competition damages claims. Having this in mind, there is nothing in the law to prevent collective settlement of competition damages claims. This settlement may include parties outside of the jurisdiction provided that their claims are substantiated.

  21. What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?

    There is mainly an obligation of non-disclosure in handling competition matters before ECA. The ECL imposes a non-disclosure obligation on all ECA employees with regard to information, documents, evidences, certificates, and their sources (“investigation components”) that are used during ECA investigations prior issuing a decision. These instruction components could only be disclosed to the relevant authorities i.e. the Public Prosecution and the Economic Court or to any other relevant authority which may assist in such investigations. In all events, the investigation components shall not be used for any other purpose whatsoever.

    Contrary to the non-disclosure obligation before ECA, proceedings before the Court are public. The parties may request however, that proceedings, upon acceptance of the Court, shall be partially or fully confidential.

  22. Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?

    As a general rule, the losing party is held responsible for reimbursing the court fees and litigation expenses previously paid by the wining party. The judge has a discretionary power to determine the amount of attorney’s fees, the expert fees and other expenses. If there are more than one losing party, the Court may divide the expenses pro rata or equally among them. As to the court fee, it is estimated at a maximum of 7.5% of the ruled claims amount.

  23. Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?

    Litigation funding by third parties is not regulated under Egyptian law. Though there is no legal provision restricting third party funding, the Lawyers Profession Law prevents lawyers and law firms from providing any funding to their clients.

  24. What, in your opinion, are the main obstacles to litigating competition damages claims?

    Lack of competition damages claims awareness, which makes harmed persons unaware of their rights to have recourse in courts against defendants of anti-competitive practices. Another obstacle is the lack of competition experts who are capable of examining the causal link and quantify the damage that is directly related to competition breaches.

  25. What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?

    Enforcement approach of the ECA in recent years shall lead to increasing number of competition cases and accordingly the possible increase of competition damages claims cases.

    Another significant development may be the introduction of class actions in competition damages claims.