This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Egypt.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration? Are there any mandatory laws?
Arbitration in Egypt is governed by the Egyptian Arbitration Law (Law 27 of 1994), as amended, which is based on the UNCITRAL Model Law. The Arbitration Law provides provisions and rules for both domestic arbitrations and international commercial arbitrations whose seat of arbitration is in Egypt. No distinction is made between the two in terms of substantive rules and public policies governing the arbitration. The distinction between the two arises in procedural issues such as the location of the court circuit that will enforce the award or determine the award’s validity or lack thereof.
Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Egypt has been a party to the New York Convention since 1959. There are no reservations.
What other arbitration-related treaties and conventions is the country a party to?
There are also several bilateral and multilateral treaties for reciprocal enforcement of judicial awards (for example, between Egypt and France, and the Arab League Treaty). Therefore, if a court writ of execution is obtained, the writ can be enforced abroad under these treaties. Egypt ratified the ICSID Convention in 1972. Moreover, Egypt is a signatory to many bilateral investment treaties that include ICSID and other arbitration clauses.
Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
The Egyptian Arbitration Law is based on the UNCITRAL Model Law. There are some differences, basically in the distinction between domestic arbitrations and international commercial arbitrations (see 1. above).
Are there any impending plans to reform the arbitration laws?
The legal framework in relation to arbitration is not likely to change in the near future.
What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered?
The most prominent arbitration organization is the Cairo Regional Centre for International Commercial Arbitration (CRCICA) www.crcica.org.eg.
CRCICA applies the UNCITRAL rules with some amendments.
What are the validity requirements for an arbitration agreement?
A valid arbitration agreement must be in writing (but could be established also through exchanges of written correspondence). If the arbitration agreement was concluded after the dispute, then the arbitration agreement must specify the dispute to be resolved. If the parties incorporate within their agreement a model form of contract that includes an arbitration provision, they must expressly confirm that they also incorporate the arbitration provision. An administrative contract with a public body requires explicit ministerial approval of the arbitration clause.
There are other additional non-mandatory but recommended best practice provisions not mentioned in the Arbitration Law. The Arbitration Law sets an 18-month time limit for rendering awards (unless otherwise agreed by the parties). If the parties foresee the need for a longer period, they should specify a longer period in their agreement. If the parties want to grant the tribunal the power to award interim measures and injunctive relief this must be expressly provided for in the arbitration provision. If the parties wish for the proceedings to be conducted in a language other than Arabic, it is recommended that this be expressly stated (the default, absent agreement or a decision by the tribunal, is Arabic).
Are arbitration clauses considered separable from the main contract?
Yes, the autonomy of the agreement to arbitrate is recognized as established through court precedents.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
The Arbitration Law makes no distinction between a multi-party arbitration agreement and a bilateral arbitration agreement.
How is the law applicable to the substance determined?
Primarily through the agreement of the Parties as reflected in the applicable contract. If the contract is silent, then the rules of conflicts of law are applied to determine the law with the closest connection. In practice, where the contract is silent, but is being implemented in Egypt, Egyptian law would be deemed to be the law governing the substance of the dispute.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Arbitration is not allowed in matters that are not, by law, potentially capable of amicable settlement between the parties. For example, matters that would give rise to criminal charges that cannot be waived cannot be subject to arbitration. Also family law matters are not arbitrable. Transfer of title to real property is not arbitrable.
Are there any restrictions in the appointment of arbitrators?
Yes, there are limitations on who may serve as arbitrator. An arbitrator must not be a minor or under legal custody, and must not have been deprived of his or her civil rights by reason of criminal conviction in a felony, misdemeanor in crimes relating to honour or by reason of bankruptcy. Arbitrators have ethical duties. They are required to perform the role of the judiciary for the dispute in question and must therefore conform to the ethical standards of a judge which includes impartiality, neutrality and independence.
Are there any default requirements as to the selection of a tribunal?
There are no default provisions in relation to the qualifications or characteristics of arbitrators. In ad hoc arbitrations the default procedures under the Arbitration Law are applied and if a party fails to nominate an arbitrator, or the party appointed arbitrators fail to appoint a chairperson, then the arbitrator in question is appointed through a court action.
Can the local courts intervene in the selection of arbitrators? If so, how?
Arbitrators are selected in accordance with the contractual arbitration provisions and any rules incorporated therein, failing which they are selected in accordance with the default procedural rules in the Arbitration Law. If the default procedures under the Arbitration Law are applied and a party fails to nominate an arbitrator, or the parties fail to appoint a chairperson, then the arbitrator in question is appointed through a court action.
Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
The Arbitration Law has a specific procedure for the recusal of arbitrators. According to Article 18 of the Arbitration Law an arbitrator cannot be recused unless there is an issue regarding his or her neutrality or impartiality. According to the Arbitration Law Article 19, a party may make an application for recusal of an arbitrator to the arbitral tribunal. The arbitrator then has 15 days to step down as arbitrator. If the arbitrator does not step down within 15 days of the application then the recusal application must be referred to the competent court for review. The competent court then decides on the application. The above procedure of referral is mandatory public policy. The Cairo Regional Center has objected to this Rule, and it has been subjected to challenges before the courts, where it was submitted that where parties have agreed to a set of rules including recusal procedures, recusal should be subject to these rules and not a court decision. The matter is still not clear. Absent an amendment to the Law, it is likely that the courts will continue to apply the mandatory statutory provision that provides that recusal is to be decided by the courts.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
Not in accordance with the provisions of the Arbitration Law. However, similar to the issue of recusal, this point is also being challenged through court cases.
Are arbitrators immune from liability?
There is no default immunity under the Arbitration Law. Immunity granted by the parties under the agreement to arbitrate, or through institutional rules, may be challenged in cases of fraud and gross fault (gross negligence or intentional fault).
Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
The arbitration tribunal in the first instance rules on all these jurisdictional issues (competence-competence). The arbitration clause is deemed separate from the underlying agreement for this purpose. At the end of the arbitration, a party can bring an action in court for nullity of the arbitration award on the basis of lack of jurisdiction. In all cases, jurisdictional challenges must be recorded in the arbitration process before submissions on the merits. Otherwise, the party bringing these challenges can be deemed to have waived its right to challenge.
How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
The Arbitration Law provides default procedural rules. Arbitral proceedings are commenced by a request for arbitration served by the claimant on the respondent. In ad hoc arbitrations, the request for arbitration must be served formally through a court process server.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
A Tribunal cannot compel a party to attend. If a party is properly notified and fails to attend, the procedures may continue in its absence.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
State immunity may not be invoked. However, for administrative contracts, the approval of the Minister in question is required to have a valid agreement to arbitrate.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award?
There are some precedents where the corporate veil was pierced when a parent company completely controls the contracting subsidiary and was directly involved in the transaction. Other cases include instances where a company signs as a guarantor. There can be no joinder of a party that is not a signatory to the arbitration agreement, except by agreement of all the parties (that is, a third party consensually becomes a party to the arbitration).
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
The tribunal can issue interim conservatory orders only when this is specifically agreed by the parties, failing which only the competent court can issue such orders. The tribunal generally has a broad discretion in terms of procedures. The tribunal can order security for interim measures. Security for costs is not common, but in theory it can be ordered. Generally, a claimant must cover its costs. If the respondent does not pay its share of the costs, the claimant must also pay this amount, subject to a claim for recovery in the final award.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
There is no concept of disclosure in Egyptian evidence law that is similar to the common law concept of disclosure. However, courts are entitled, at the request of a party, to order disclosure of a specific document, which must be identified (that is, no "fishing expeditions" are permitted). The same principles apply to arbitrations conducted in Egypt. The parties can determine the rules on disclosure in the arbitration agreement, or as part of the mutually agreed arbitration procedures in the course of the arbitration process.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?
An arbitrator must not be a minor or under legal custody, and must not have been deprived of his or her civil rights by reason of criminal conviction in a felony, misdemeanor in crimes relating to honour or by reason of bankruptcy. Arbitrators have ethical duties. They are required to perform the role of the judiciary for the dispute in question and must therefore conform to the ethical standards of a judge which includes impartiality, neutrality and independence. Counsel are held to the ethical rules governing the legal profession in Egypt, including confidentiality and other duties to their clients.
How are the costs of arbitration proceedings estimated and allocated?
Tribunals have the right to award costs. In practice, however, they rarely do so. If a party makes a frivolous claim or counterclaim, a tribunal may award costs to the other party.
The cost calculation depends on the arbitration rules that are applied. Absent such rules, generally the arbitrators in ad hoc arbitrations are free to determine their own fees.
Costs are usually calculated based on the actual costs, subject to the requirement of reasonableness. An arbitral tribunal has the discretion to apportion costs between the parties. As mentioned the general practice is for each party to bear its own costs. When the costs are apportioned, commonly they are apportioned according to the relative success of each party in its claims.
Can pre- and post-award interest be included on the principal claim and costs incurred?
The tribunal can award damages, pre-award and post-award interest. Compound interest may not be awarded. As part of the final award, the tribunal can also order specific performance.
What legal requirements are there for the recognition of an award?
First, the losing party must be legally notified with a copy and an Arabic translation of the award if the award is in another language. The winning party must then wait 90 days before enforcing the award, after which an original copy of the award must be deposited by the winning party with the competent court secretary who registers the deposit. The award is then sent to a technical office within the Ministry of Justice. If the technical office approves the award for execution the winning party is then ready to enforce the award. A final and binding award must then be submitted to the president of the competent court for execution. The original award or a certified official copy must be submitted. The award will then be engrossed with a writ of execution (exequatur) by the competent court execution judge.
For an award to be valid in Egypt, the award, as well as the proceedings, must not include any reasons for nullity as set out under the Arbitration Law. An award must be in writing and signed by at least a majority of the tribunal. Reasons for non-signature by the minority must be provided in the award. Formalistically an award must include a variety of specific information. For example, it must include the names, addresses and nationalities of the arbitrators, the names and addresses of the parties and a copy of the agreement to arbitrate.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
Arbitrators cannot award punitive or exemplary damages as these contradict mandatory public policy in Egypt.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
Arbitration awards are final, binding and subject to no appeal on the merits. However, awards can be challenged in actions of nullity.
Grounds for nullity are set out in the Arbitration Law, and include:
- Lack of jurisdiction.
- Breach of public policy (normally statutory provisions of mandatory application).
- Failure to grant a party a right of defence.
- Excluding the application of the agreed law governing the merits of the claim.
If the nullity claim is successful, the arbitration award is declared null and void.
A nullity action must be brought within 90 days from the date on which the successful party notifies the other party of the award. A nullity action does not stop enforcement. However, the enforcement of the arbitration award may be suspended by the court if a nullity action includes a request for suspension, based on prima facie strong grounds.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
The right to bring a nullity action cannot be waived prior to the issuance of the award, by contract or otherwise. Following the issuance of the award and its notification to both parties, the right to initiate a nullity action can be waived.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
State entities are not immune to enforcement in Egypt. A public official who intentionally refuses to implement a court order or judgment may face criminal prosecution.
To what extent might a third party challenge the recognition of an award?
Third parties may not challenge the recognition of an award that will not be enforceable against them.
Have there been any significant developments with regard to third party funding recently?
There have been no significant developments, and third party funding remains to be a practice that effectively still does not exist in Egypt.
Is emergency arbitrator relief available? Is this frequently used?
No provisions are available under the Arbitration Law. However, if agreed procedures (such as agreed institutional rules) provide for such appointment, in theory this should be valid.
Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?
There are no such rules.
Have measures been taken by arbitral institutions to promote transparency in arbitration?
No specific measures have been taken in this regards.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?
No, there is no active promotion of such measures.
Have there been any developments regarding mediation?
Mediation is starting to become more and more recognized as an efficient and viable alternative. Several organizations are strongly promoting mediation, including CRCICA, the General Investment Authority and the Egyptian ADR Association. However, mediation remains subject to contractual agreement, and is not formally regulated by legislation, although the Ministry of Justice some years back considered working on a draft law for mediation.
Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
To the best of our knowledge there have been no such recent decisions.