This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in Egypt.
This Q&A is part of the global guide to International Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/international-arbitration-4th-edition/
What legislation applies to arbitration in your country? Are there any mandatory laws?
The Egyptian Arbitration Law No. 27 of 1994 (‘EAL’) was adopted in 1994 and is based on the UNCITRAL Model Law (1985), with some variations. Most of the procedural rules governing the conduct of the proceedings are not mandatory and the parties may derogate from by agreement. However, few rules appear to be mandatory, such as non-arbitrability of disputes that cannot be subject to a compromise and rights in rem, witnesses and experts may not be heard under oath, awards may not be rendered by truncated tribunals, tribunals may not be constituted from an even number of arbitrators and parties may not agree to exclude the right to apply for setting aside of an award prior to the rendering of the said award.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Egypt is a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). Egypt has consented to join the New York Convention on 2 February 1959, ratified same 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.
What other arbitration-related treaties and conventions is your country a party to?
Egypt is a party to many arbitration-related treaties and conventions. In this regard, amongst the most recent instruments Egypt became party to is the Egypt-MERCOSUR Preferential Free Trade Agreement which has entered into force in September 2017. Furthermore, Egypt is also party to the following conventions:
The Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards of 1952 (the Arab League Convention) ratified on 28 August 1954, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (the ICSID Convention) ratified on 3 May 1972, the Unified Agreement for Investment of Arab Capital in the Arab States (the Arab Investment Agreement”) signed on 26 November 1980 in Amman and entered into force on 7 September 1981, the Organisation of the Islamic Conference Investment Agreement of 1981 (the OIC Investment Agreement) ratified in February 1988, 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 Cooperation of 1983 signed in 2014.
Egypt has signed more than 100 Bilateral Investment Treaties (‘BITs’) among which around 72 BITs entered into force in the following dates and with the following countries:
Albania (6/4/1995); Algeria (3/5/2000); Argentina (3/12/1993); Armenia (1/3/2006); Australia (5/9/2002); Austria (29/4/2002); Bahrain (11/1/1999); Belarus (18/1/1999); Belgium– Luxembourg Economic Union (24/5/2002); Bosnia & Herzegovina (29/10/2001); Bulgaria (8/6/2000); Canada (3/1/1997); China (1/4/1996); Comoros (27/2/2000); Croatia (2/5/1999); Cyprus (11/5/1999); Czech Republic (4/6/1994); Denmark (29/10/2000); Ethiopia (27/5/2010); Finland (5/2/2005); France (1/10/1975); Germany (22/3/2009); Greece (6/4/1995); Hungary (21/8/1997); Iceland (15/6/2009); Italy (1/5/1994); Japan (14/1/1978); Jordan (11/4//1998); Kazakhstan (8/8/1996); Korean Democratic Peoples Republic (12/1/2000); Korean Republic (25/51997); Kuwait (26/4/2002); Latvia (3/6/1998); Lebanon (2/6/1997); Libya (4/7/1991); Malawi (7/9/1999); Malaysia (3/2/2000); Mali (7/7/2000); Malta (17/7/2000); Mauritius (17/12/2014); Mongolia (25/1/2005); Morocco (1/7/1998); Netherlands (1/3/1998); Oman (3/3/2000); Palestine (19/6/1999); Poland (17/11998); Portugal (23/12/2000); Qatar (14/7/2006); Romania (3/4/1997); Russia (12/6/2000); Serbia (20/3/2006); Singapore (20/3/2002); Slovakia (1/1/2000); Slovenia (7/2/2000); Somalia (16/4/1983); Spain (26/4/1994); Sri Lanka (10/3/1998); Sudan (1/4/2003); Sweden (29/1/1979); Switzerland (15/5/2016); Syria (5/10/1998); Thailand (27/2/2002); Tunisia (2/1/1991); Turkey (31/7/2002); Turkmenistan (28/2/1996); United Arab Emirates (11/1/1999); Ukraine (10/10/1993); United Kingdom (24/2/1976); United States of America (27/6/1992); Uzbekistan (8/2/1994); Vietnam (4/3/2002); and Yemen (10/4/1998). (UNCTAD Investment Policy Hub, available at https://investmentpolicy.unctad.org/international-investment-agreements/countries/62/egypt?type=bits, last visited on 29 August 2019)
Furthermore, Egypt has concluded several bilateral treaties on judicial cooperation that refer to mutual cooperation in the recognition and enforcement of arbitral awards, which by way of illustration include the treaties concluded with the following countries: Tunisia (1976); Italy (1978); France (1982); Jordan (1987); Morocco (1989); Bahrain (1989); Libya (1993); China (1994); Hungary (1996); Syria (1998); United Arab Emirates (2000); Oman (2002); and Kuwait (2017).
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The EAL is indeed based on the UNCITRAL Model Law (1985), however there exist some differences between both which consist in the following:
- the applicability of the EAL to both domestic and international arbitrations (article 1);
- the possible extraterritorial application of the EAL to proceedings seated abroad only if the parties have agreed to such extraterritorial application (article 1);
- the requirement that an arbitration agreement in an administrative contract is approved by the competent minister or whoever assumes his or her authority with respect to public entities, and delegation in this regard is prohibited (article 1);
- the EAL introduces several criteria for the establishment of the international nature of an arbitration including, amongst others, whether the arbitration is institutional, whether 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);
- the EAL does not expressly include the possibility to enter into an arbitration agreement by way of electronic means. However, it does not exclude it and therefore nothing prohibits the conclusion of arbitration agreements by electronic means and insofar as the electronic communication fulfills the requirement of writing, the arbitration agreement shall be valid. In brief, the writing requirement under the EAL is a condition for the validity of the arbitration agreement and is not simply a mere evidentiary requirement. According to the EAL, an 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. Absence of an arbitration agreement in writing results in the nullity of the arbitration agreement and the writing requirement under the arbitration law is stricter than the one under the Model Law (article 12);
- in the case of incorporation by reference, the reference to the arbitration agreement must be explicit in order for the arbitration agreement to form an integral part of the main contract (article 10);
- the EAL does not provide for the ‘referral exception’ whereby a state court may accept to decide over jurisdiction if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed (article 13). 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 for purposes of constitution of the arbitral tribunal, the violation of which leads to the nullity of the award (article 15);
- a preliminary arbitral award on jurisdiction cannot be the subject of a court review prior to the tribunal’s rendering of the final award deciding on the entire dispute must be rendered for purposes of the competent court’s review or annulment (article 22);
- the arbitral tribunal may only issue orders interim relief if the parties bestow this power upon it (article 24);
- if the parties do not agree on the language of the arbitration, the latter shall be conducted in Arabic (article 29);
- if the parties do not agree on the applicable law, the arbitral tribunal may apply the law having the closest connection to the dispute (article 39);
- the threshold used by the EAL for the challenge of arbitrators is relatively higher than its Model Law counterpart; the doubts as to the arbitrator’s impartiality and independence must be serious (article 18);
- 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); and
- the EAL introduces a further condition for purposes of exequatur that is not listed in the Model Law, namely: the award does not contradict a prior judgment rendered by the Egyptian courts on the merits of the dispute (article 58).
Are there any impending plans to reform the arbitration laws in your country?
There are ongoing discussions for reform and possible amendments to the EAL, but it remains unclear when such amendments will be considered.
What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
The leading arbitral institution existing in Egypt is the Cairo Regional Centre for International Commercial Arbitration (‘CRCICA’) which is an independent non-profit international organisation that administers domestic and international arbitral proceedings. The CRCICA arbitration rules were amended in 2011, and there are ongoing discussions for the amendment of the CRCICA arbitration rules to include provisions in relation to multiparty arbitration, multi-contract arbitration and consolidation of arbitrations, as well as expedited procedure rules. It is also worth noting that in 2017, the CRCICA published the French version of its arbitration rules aiming to reach for francophone users and encourage them to choose the CRCICA as the arbitral institution administering their dispute in French language.
There exist other institutions that are more specialised, such as the ‘Egyptian Settlement and Arbitration Centre for Sports’ which was created in 2017 by the Egyptian Olympic Committee, as provided by the Egyptian Sports Law No. 71 of 2017. The Egyptian Olympic Committee issued, by its decision no. 88 of 2017, the regulation on the statutes of the Egyptian Settlement and Arbitration Centre for Sports, which provides for the procedural rules to be followed when settling a sports dispute under the auspice of the aforementioned Centre. In this regard, it is worth mentioning that at present, all sports related disputes are expected to be settled through conciliation, mediation or arbitration and not to be submitted before national courts.
Furthermore, a new specialised arbitration centre is to be created in the near future for the settlement of financial non-banking disputes as per the very recent presidential decree no. 335 of 2019 (11 July 2019) for the establishment of a settlement and arbitration centre for disputes arising from the application of legal provisions related to financial non-banking transactions.
What are the validity requirements for an arbitration agreement under the laws of your country?
According to the EAL, an arbitration agreement may be concluded prior to the existence of the dispute or after it has arisen. Whether being an arbitration clause (clause compromissoire) or a submission agreement (compromise), the validity requirements of an arbitration agreement under the arbitration law are the following:
- the parties must have capacity to enter into the arbitration agreement (article 11);
- the subject matter of the arbitration must be arbitrable (article 11);
- the subject of the dispute to be resolved by arbitration must be specified in the compromise, or in the statement of claim in case of a prior agreement to arbitrate (article 10); and
- the arbitration agreement must be in writing or else it is null. The writing requirement includes a document signed by the parties, an agreement by exchange of correspondences or other means of communication (article 12), and/or an incorporation into the contract by reference to a document containing an arbitration agreement insofar as the reference is explicit in considering the arbitration agreement part of the parties’ contract (article 10(3)).
Furthermore, it is worth noting that in administrative contracts, the arbitration agreement must be approved by the competent minister, or whoever assumes his or her authority with respect to public entities, and delegation in this regard is prohibited (article 1). This has been confirmed by a judgment of the State Council where it ruled that the arbitration agreement is void when the competent minister, or whoever assumes his or her authority with respect to public entities, has not approved it and that such requirement is a matter of public policy. It also ruled that the arbitration agreement must deal only with matters that are arbitrable and in the case of a submission agreement (compromis d’arbitrage), the parties must identify the dispute subjected to the arbitral proceedings or the agreement would be null and void. (State Council, challenge no. 8256 of JY 56, hearing session dated 5 March 2016)
Are arbitration clauses considered separable from the main contract?
According to the EAL, the arbitration clause is considered separable from the main contract and is not affected by the latter’s invalidity, termination and/or rescission insofar as the arbitration agreement itself is valid (article 23). The principle of separability of the arbitration clause from the main contract has also been confirmed by Egyptian courts and considered as one of the fundamental pillars of arbitration in Egypt. (Court of Cassation, challenge no. 824 of JY 71, hearing session dated 24 May 2007; and challenge no. 933 of JY 71, hearing session dated 24 May 2007)
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There are no specific rules regarding that matter under the EAL. However, the applicable institutional rules may include pertinent provisions. Absent such regulation under institutional rules, if any are applicable, it is preferable that a multiparty arbitration agreement explicitly states whether several parties shall jointly appoint one or more arbitrators. In this regard, the arbitration clause must be clearly drafted in order to determine the role of the parties in the choice of arbitrators.
In what instances can third parties or non-signatories be bound by an arbitration agreement?
The EAL does not expressly regulate the extension of the arbitration agreement to third parties or non-signatories. Egyptian court decisions, all the same, do not portray a clear trend as to the doctrine and accord the ultimate weight to the parties’ consent to arbitration as determined by arbitral tribunals. Egyptian courts are increasingly becoming more flexible in considering the extension of arbitration agreements to third parties and/or the joinder of third parties to arbitral proceedings and will usually defer to the arbitral tribunal’s findings in this regard, unless there is no agreement in writing or principles of public policy have been contravened.
The Egyptian Court of Cassation decisively rules that an arbitration agreement included in a contract does not automatically extend to a company that forms part of a larger group of companies entering into the said contract. The company must have actively contributed in the performance of the contract or there must have been a confusion between the intents of the two relevant companies (Court of Cassation, challenge no. 4729 of JY 72, hearing session dated 22 June 2004). In other words, the doctrine of group of companies is accepted by the courts for purposes of extension of the arbitration agreement in the presence of an implication in the performance process of the contract.
The doctrine of economic unity is not sufficient, in and of itself, for purposes of extension of the arbitration agreement if the third party has not exhibited consent to arbitration. (Cairo Court of Appeal, commercial circuit no. 62, case no. 83 of JY 118, hearing session dated 5 August 2002, in Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 195-196) However, Egyptian courts have shown flexibility regarding extension to third parties and would normally defer to the tribunal’s reasoning in this respect, unless a clear principle of public policy is compromised.
The Egyptian Court of Cassation recently held that an arbitration agreement cannot exist without consent of the parties, but added that an arbitration agreement may extend to third parties and to other contracts connected to the principal contract on the basis of several doctrines and principles including: group of companies, group of contracts, universal succession, mergers or assignment if their conditions are met. (Court of Cassation, challenges nos. 2698, 3100 and 3299 of JY 86, hearing session dated 13 March 2018)
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
At the outset, the EAL recognises the principle of party autonomy where the parties are free to determine the law applicable to the substance of the dispute, subject to exceptional legislative constraints (as in technology transfer contracts and remuneration of Egyptian commercial agents, where application of Egyptian law is mandatory). This is confirmed by article 39.1 of the EAL which provides that the arbitral tribunal shall apply the rules chosen by the parties, and that if the parties agreed on the applicability of the law of a given state, only the substantive rules thereof shall be applicable excluding its rules of conflict of laws, unless otherwise agreed by the parties.
However, if the parties have not agreed on specific rules or law applicable to the substance of their dispute, the EAL provides that the arbitral tribunal shall apply the substantive rules of the law it considers having the closest connection to the dispute. (article 39.2)
The EAL has not provided for a specific set of connecting factors that the arbitrators shall follow in determining the substantive rules having the closest connection with the dispute. The choice of the applicable substantive rules will be dependent on the nature of the dispute and shall be determined on a case by case basis. For example, if the validity of a contract is disputed, hence the law having the closest connection with the dispute will be the law of the state where the contract has been concluded. Also, if the dispute is related to the performance of an obligation, then the law having the closest connection with the dispute is the law of the state where the obligation has been performed or that of the agreed place of performance of this obligation. It is also submitted that Egyptian law is considered having the closest connection with a dispute when all the elements of the legal relationship forming the dispute are Egyptian. (Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 537)
Furthermore, in an arbitration case administered by the CRCICA, an arbitral tribunal has listed how it determined the law applicable to the substance of the dispute as follows: the law of the place of arbitration; the law of the place of signing of the original contract; the law of residency of the parties to the contract; the law of the state where the contract is performed; the law of the language of the contract; and the law of the language of arbitration if it was different from the language of the contract. (Arbitration case no. 95 of 1997, hearing held on 12/3/1998 in Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 537)
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Yes, the EAL provides that any matter that is not capable of settlement is non-arbitrable (article 11). Non-arbitrable matters principally pertain to matters of personal or family status, public policy, criminal matters, or rights in rem relating to immovables such as registration of real estate mortgages.
Otherwise, the EAL requires that the right subject to arbitration be of an economic nature (article 2).
In your country, are there any restrictions in the appointment of arbitrators?
There are no specific restrictions in the appointment of arbitrators other than having attained the age of majority, enjoying full legal capacity and capable of disposing of his or her own rights. The arbitrator shall accept his or her appointment in writing and shall declare any events giving rise to justifiable doubts as to his or her impartiality and independence. (article 16)
It is worth noting that judges or members of the judiciary may sit as arbitrators, but they are required to obtain an administrative permission from the Supreme Judicial Council to sit as arbitrators in a specific case. In this regard, in a recent judgment of the Egyptian Court of Cassation ruled that the absence of the Supreme Judicial Council authorisation for a sitting judge to sit as an arbitrator in a specific case – despite being in breach of the Judicial Authority Law – 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)
Are there any default requirements as to the selection of a tribunal?
In this regard, it is important to differentiate between ad hoc and institutional arbitration, such that in institutional arbitration, the applicable institutional rules shall apply. However, in ad hoc arbitration that is not subject to specific agreed arrangements between the parties with regard to the number of arbitrators, the EAL provides that the default number of arbitrators is three, and requires it to be an odd number. (article 15)
Can the local courts intervene in the selection of arbitrators? If so, how?
Yes, local courts can intervene in the selection of arbitrators in ad hoc proceedings. In this regard, the EAL provides that in absence of agreement between the parties on the selection of the tribunal, the competent Egyptian court shall undertake the appointment of the arbitrator(s), upon the request of one of the parties. That said, if the tribunal is composed of a sole arbitrator, the competent court shall undertake the appointment of the sole arbitrator, upon the request of one of the parties. However, if the tribunal is composed of three arbitrators, the default requirement is that each party shall appoint an arbitrator and both arbitrators shall appoint the chairman. If either party fails to appoint the arbitrator within thirty days of a request to do so from the other party, or if the two appointed arbitrators fail to agree on the third arbitrator (chairman) within thirty days of the date of the latest appointment between both, the competent court shall undertake the appointment of this arbitrator, upon the request of either party, and the court decision in this respect is final and not subject to any appeal or challenge. (article 17)
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?
Yes, the appointment of arbitrators can be challenged. The EAL provides that an arbitrator may only be challenged if there exist circumstances that give rise to serious and justifiable doubts as to his or her impartiality or independence. (article 18)
According to the EAL, the party requesting to challenge an arbitrator shall submit to the arbitral tribunal a challenge request, incorporating the reasons for such challenge, within 15 days from the date it becomes aware of the constitution of the arbitral tribunal or of the circumstances justifying such challenge. If the challenged arbitrator does not withdraw from his or her office within 15 days from the date of submitting the challenge request, the request shall be forwarded to the Egyptian competent court to decide on this matter and render a final decision that will be subject to no appeal. Moreover, a party may not challenge the same arbitrator more than once in the same proceedings. (article 19)
In case of institutional arbitration the applicable rules would include specific provisions on the regulation of challenges. For example, the current rules and practice of CRCICA is that any challenges must be submitted within 15 days after it has been notified of the appointment of the challenged arbitrator, or within 15 days from the date of knowledge of the circumstances giving rise to justifiable doubts as to an arbitrator’s impartiality and independence. If the challenged arbitrator does not resign, the challenge shall be decided by an ad hoc legal committee of three members selected from among the members of the CRCICA’s Advisory Committee.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
In principle, arbitral awards rendered by truncated tribunals are annulled for contravening Egyptian public policy. This is confirmed by article 15.2 of the EAL which states that the number of arbitrators shall be an odd number, otherwise the arbitration is null. To continue with the proceedings the missing arbitrator(s) must be appointed.
Furthermore, it is worth mentioning that in institutional arbitration, it may be acceptable for truncated tribunals to render arbitral awards, and this is the case in the CRCICA arbitration rules which permit, in exceptional circumstances, a truncated tribunal to continue with the arbitral proceedings. This is primarily the case of proceedings governed by the CRCICA rules but seated outside Egypt. In this regard, there are several conditions required so that the CRCICA can take a decision authorising the other arbitrators to proceed with the arbitral proceedings and render the award: (1) a party shall request from the CRCICA to take such decision, i.e. the CRCICA shall not take such decision ex officio; (2) the CRCICA shall allow all parties and the other arbitrators to express their opinion in writing for taking such decision; (3) the CRCICA shall establish the existence of exceptional circumstances that would substantiate taking such decision, which can be proven if there was not a serious cause for the arbitrator to resign or that such resignation was at a very late stage of the proceedings; and (4) the CRCICA Advisory Committee shall approve such decision. (Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 353)
Nevertheless, if an award is rendered by a truncated tribunal in compliance with the CRCICA arbitration rules, it might be annulled by the competent Egyptian court. It is established by Egyptian courts that even though under the EAL, the parties are free to agree on the usage of institutional procedural rules (article 25), the said rules are applicable insofar as they do not contravene Egyptian public policy. Also, all arbitrators shall participate in the deliberation, otherwise the award would be rendered in breach of the fundamental judicial safeguards. (Cairo Court of Appeal, commercial circuit no. 91, case no. 47 of JY 119, hearing session dated 29 June 2003 and cases nos. 34 and 35 of JY 119, hearing session dated 29 January 2003)
Are arbitrators immune from liability?
Despite the absence of any legal text providing for the arbitrator’s immunity, such immunity is presumed and applied by analogy from the legislative immunity accorded to the judge/court. However, the immunity does not apply in cases of fraud, deceit or gross fault (gross negligence), in which cases the arbitrator’s civil liability can be exceptionally invoked before the courts. (Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 369-371)
Furthermore, in case of institutional arbitration, the CRCICA arbitration rules provide for the exclusion of liability of the arbitrators, the Centre, its employees and any members of the Board or Advisory Committee thereof, save for intentional wrongdoing.
Is the principle of competence-competence recognised in your country?
The principle of competence-competence is generally recognised in Egypt. The EAL provides that the arbitral tribunal shall decide over any jurisdiction-related claims including the existence, validity and scope of the arbitration agreement. (article 22.1) However, in practice, there exist instances where Egyptian courts, in relation to administrative contracts and beyond, have decided over the existence and validity of an arbitration agreement prior to or while arbitral proceedings were still pending and irrespective of the arbitral tribunal’s jurisdiction.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
Egyptian courts are under a legal obligation to dismiss litigation with respect to disputes subject to an arbitration agreement if the defendant, at the commencement of the proceedings, advances a plea pertaining to the existence of an arbitration agreement. (article 13.1) In this respect, it is worth noting that article 13.1 of the EAL, which partially reproduces article 8 of the UNCITRAL Model law, has excluded the ‘referral exception’ whereby the state court may accept to decide over jurisdiction if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. This entails that the arbitral tribunal enjoys the priority to decide its competence over state courts. However, the court is not under an obligation to reject the case ex officio for the mere existence of an arbitration agreement; the defendant must raise its objection at the commencement of the proceedings. This is principally due to the fact that an arbitration agreement is not constitutive of public policy. In the absence of a plea by the defendant in litigation, parallel proceedings will be conducted before the arbitral tribunals and the courts and decisions will be rendered irrespective of the parties’ prior agreement to arbitrate. In the event that the two decisions are contradictory, the successful party in the arbitration may elevate the conflict to the Supreme Constitutional Court in accordance with the law.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
Unless otherwise agreed by the parties, the EAL provides that arbitral proceedings commence on the day the respondent receives the notice of arbitration. (article 27) There are no mandatory procedural time limits enshrined in the arbitration law and relating to the commencement of arbitral proceedings, and the parties may agree on a different date to mark the commencement of the proceedings.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
Normally, the state immunity cannot be invoked, so long as the state or state entity has validly consented to the arbitration and that the matter in dispute is arbitrable. In this regard it is important to note that in administrative contracts, the arbitration agreement must be approved by the competent minister or whoever assumes his or her authority with respect to public entities, and that delegation of this power is prohibited. (article 1 of the arbitration law) This has been confirmed in a judgment of the State Council which ruled that the arbitration agreement is void when the competent minister, or whoever assumes his or her authority with respect to public entities, has not approved it, and that such requirement is a matter of public policy. (State Council, challenge no. 8256 of JY 56, hearing session dated 5 March 2016)
What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
If a respondent fails to participate in the arbitration without a valid cause, the EAL enables the arbitral tribunal to continue with the proceedings and objectively assess the claims of the claimant, and to render the arbitral award based on the submitted elements of evidence. However, it should be noted that a non-participating or absent party should be duly notified of all the documents submitted and orders issued, and must be given a proper and adequate opportunity to present its case and defences at every stage of the proceedings. (article 35) Furthermore, if the submitted evidence is not sufficient for the arbitral tribunal to make an award, the proceedings may be terminated by a decision of the arbitral tribunal. (article 48.1)
Moreover, local court cannot compel participation of a respondent who failed to participate in the arbitration.
Can local courts order third parties to participate in arbitration proceedings in your country?
Ordering third parties to participate in the arbitration proceedings is within the discretionary authority of the arbitral tribunal. The EAL expressly provides for the cases where local courts can intervene in the arbitration proceedings. In this regard, the EAL is silent on the local courts’ authority to order third parties to participate in the arbitration proceedings. Furthermore, in institutional arbitration, the CRCICA arbitration rules grants the arbitral tribunal the authority to decide over any of the parties’ request for joinder of a party to the arbitration proceedings.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
The EAL grants an arbitral tribunal the right to award provisional or interim relief only if the parties have agreed to confer such power upon the arbitral tribunal. (article 24) It is also acknowledged that such power could be conferred upon the arbitral tribunal by agreeing to the application of institutional rules that provide for such default power.
The EAL does not provide a list of the types of relief available to arbitrators, but it is generally accepted that an arbitral tribunal, if the parties so agree, has the discretion to order any type of interim relief or provisional measures that are warranted provided that such relief is available under the applicable law to such relief. Furthermore, under the EAL, arbitral tribunals may award interim relief by issuing an interim award (article 42) which makes it subject to the ordinary procedures for the enforcement and recognition of arbitral awards. Nonetheless, interim awards do not a have res judicata effect.
Alternatively, a party may directly seek to obtain such interim relief directly from the competent court, such that the EAL allows local courts to issue interim and conservatory measures, upon the request of one of the parties, before commencing the arbitration proceedings or during said proceedings. (article 14)
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?
The EAL does not regulate the arbitrators’ powers with respect to evidence. It merely gives the arbitrators the right to request the originals of the documents submitted in support of the parties’ claims. (article 30) However, it is unequivocal that the arbitral tribunal enjoys the power to admit and weigh evidence. The arbitral tribunal’s powers include: undertaking any evidentiary procedure it deems appropriate, reversing a procedure it had previously ordered and the discretion to decide on the evidence on record. Arbitrators also have the right to accept or deny a party’s request for an order on evidentiary procedures without prejudice to the party’s defence rights. The evidence that may be admitted in arbitral proceedings in Egypt are documentary evidence, witness testimony, expert reports and/or site inspection by the arbitral tribunal. If a party does not submit to, and comply with, the orders of the arbitral tribunal, the latter may draw negative inferences that could adversely affect the non-complying party’s position, especially if no adequate or reasonable justification is provided for a failure to comply. An arbitral tribunal is entitled to seek an Egyptian court’s assistance in this respect, especially in cases of penalising witnesses who do not comply or ordering third parties to produce documents in their possession and/or undertake certain actions as properly and legally ordered by the arbitral tribunal insofar as the tribunal has jurisdiction to order same.
In this regard, the EAL grants the local competent court, upon the request of the arbitral tribunal, the authority to penalise and compel witnesses who declined to appear at the hearing for testimony. (article 37.1)
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
Legal counsel are bound by the ethical code of the Bar Association and standard professional code of ethics. While the EAL does not include a specific set of ethical standards applicable to arbitrators and counsel, they are generally expected to adhere to the acceptable ethical standards prevailing in practice, unless they are specifically and extraterritorially bound by certain standards prevailing in their own jurisdiction.
The IBA Guidelines on Party Representation in International Arbitration (2013) are not yet commonly used in the jurisdiction, but are increasingly offering guidance in international proceedings seated in Egypt.
In your country, are there any rules with respect to the confidentiality of arbitration proceedings?
The principle of confidentiality of the arbitral proceedings is inferred from the rule prohibiting the publication of the arbitral award and is confirmed by the Explanatory Note of EAL, which explains that the confidentiality of the arbitration is of significant importance to the parties in order to preserve inter-commercial relations. There is no explicit reference in the EAL providing for the confidentiality of the proceedings, however, the EAL provides that an arbitral award may not be published, in whole or in part, unless agreed by the parties. In any event, when an award is subject to nullity or enforcement proceedings, its content will likely fall in the public domain, unless otherwise ordered by the court.
How are the costs of arbitration proceedings estimated and allocated?
The EAL does not include any provision relating to the allocation of costs which accords the tribunal a broad discretion in assessing the reasonableness of the fees and allocating the fees and costs between the parties, unless otherwise agreed between the parties. In practice, it is not uncommon for arbitral tribunals seated in Egypt to follow international practice as to costs’ allocation by adopting the ‘costs follow the event’ rule insofar as winning party is able to justify and substantiate its fees and costs.
Can pre- and post-award interest be included on the principal claim and costs incurred?
It is a standard practice that arbitral awards include an award of interest insofar as claimed by the parties, either pre- or post-award interest, such that the arbitral tribunal has the ultimate power to decide on issues of compensation and interest. In this regard, the EAL does not limit the arbitral tribunal’s power as to the award of interest. However, a legal cap of 7% interest rate exists and is characterized as a public policy rule by Egyptian courts. (Court of Cassation, challenge no. 3778 of JY 64, hearing session dated 17 February 2004)
However, certain exceptions to the cap on interest rate exists, amongst which is the award of interest in banking transactions which can and do exceed the 7% cap. Similarly, 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, in relation to (i) commercial loans; and (ii) amounts/expenses pertinent to the trader’s trade (Article 50 of the Egyptian Commercial Code).
Furthermore, it is worth noting that compounding interest is generally perceived to be contrary to public policy, unless a trade usage on compounding exists in the pertinent transaction.
What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
The EAL sets the requirements for recognition and enforcement of an award as follows: the award must be in writing and signed by the arbitrators (if the minority refused to sign the award, the majority must include the reasons for the minority’s refusal to sign); be reasoned unless the parties have agreed otherwise, or the applicable procedural law does not mandate such reasoning; include the names and addresses of the parties; include the names, addresses, nationalities, and title of arbitrators; include a copy of the arbitration agreement (an explicit citation of the arbitration agreement would suffice); include a summary of the parties’ claims, statements, and relevant documents; have an operative part (dispositive) ordering specific remedies; include the date and place of issuing the award. (article 43) At the time of the deposit of the award for enforcement, a certified Arabic translation of the award must accompany its original or certified copy. (article 47)
Accordingly, with respect to enforcement procedures, the EAL sets the following requirements: the deposit of an original or a signed copy of the award and its Arabic translation if the award is in another language; the deposit of a copy of the arbitration agreement; and a copy of the minutes indicating the deposit of the award at the competent court. (article 56)
However, enforcement may be refused in the following cases: contradiction with a previous judgment by the Egyptian courts on the merits of the dispute; contravention of rules of public policy in Egypt; and improper or lack of notification to the losing party. (article 58.2)
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
According to the EAL, the application for the enforcement of an award shall not be admissible prior to filing an action for annulment or the expiration of the 90 days period for filing the action for annulment of the arbitral award. (article 58) An action for annulment does not suspend the enforcement of the arbitral award, unless the applicant requested from the court to do so based on serious grounds. Therefore, the competent court has 60 days from the date of the first hearing fixed in relation thereto to rule on the request for suspension of the enforcement. Finally, if the court orders a suspension of enforcement, it is expected to rule on the action for annulment within 6 months from the date the suspension order was rendered. (article 57)
It is worth noting that obtaining the awarded amounts and tracing assets of the losing party may last for few years.
Furthermore, indeed a party may bring a motion for recognition and enforcement of an arbitral award on an ex parte basis as provided by the EAL, such that the application for enforcement of an arbitral award shall be accompanied by the following: (1) the original award or a signed copy thereof; (2) a copy of the arbitration agreement; (3) a certified Arabic translation of the award, if it was not in Arabic language; and (4) a copy of the procès-verbal attesting the deposit of the award at the court. (article 56)
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
The EAL does not provide for a different standard of review for recognition and enforcement of a foreign award compared with a domestic award. However, Egypt is a signatory to the New York Convention on the recognition and enforcement of foreign arbitral awards (1958) and so foreign arbitral awards are subject to the New York Convention, including article VII thereof, which entitles a party to avail itself of more favourable local conditions for enforcement, if any. Thus, enforcement of domestic awards is subject to the requirements set forth under the EAL and foreign awards are subject to the enforcement requirements of the New York Convention, without prejudice to the applicant’s right to invoke local conditions/grounds for enforcement if more beneficial thereto.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
There are no specific limits imposed on remedies, other than issues related to public policy. Generally, an arbitral tribunal enjoys a broad authority and power to order any declaratory relief, monetary compensation, specific performance, interest, and costs. However, an arbitral tribunal is not generally entitled to award punitive damages.
Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?
An award is not subject of an appeal before the Egyptian courts, but can be subject to an action for setting aside. Save for setting aside (annulment), any other form of challenge of or recourse against the arbitral award is strictly prohibited by the EAL. (article 52)
Accordingly, the EAL expressly provides in article 53 thereof for an exhaustive list of the grounds according to which an award may be set aside or annulled, and reads:
1. an arbitral award may be annulled only:
a) If there is no arbitration agreement, if it was void, voidable or its duration had elapsed;
b) If either party to the arbitration agreement was at the time of the conclusion of the arbitration
Agreement fully or partially incapacitated according to the law governing its legal capacity;
c) If either party to the arbitration was unable to present its case as a result of not being given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or for any other reason beyond its control;
d) If the arbitral award excluded the application of the law agreed upon by the parties to govern the merits of the dispute;
e) If the composition of the arbitral tribunal or the appointment of the arbitrators was in conflict with the EAL or the parties’ agreement;
f) If the arbitral award dealt with matters not falling within the scope of the arbitration agreement or exceeding the limits of this agreement. However, in the case when matters falling within the scope of the arbitration can be separated from the part of the award which contains matters not included within the scope of the arbitration, the nullity affects exclusively the latter parts only;
g) If the arbitral award itself or the arbitration procedures affecting the award contain a legal violation that causes nullity.
2. The court adjudicating the action for annulment shall ipso jure annul the arbitral award if it is in conflict with the public policy in the Arab Republic of Egypt.’
The arbitration law provides that the nullity action is brought before the competent court within 90 days from the date of notification of the arbitral award to the party against whom it was rendered. (article 54.1)
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)?
As per the EAL, a party cannot waive its right to apply for annulment of the award prior to rendering the said award. (article 54.1)
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
A defence of state or sovereign immunity at the enforcement stage will not normally be successful, unless enforcement is sought against publicly owned assets that are not subject to enforcement.
In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
In principle, only the parties having consented to the arbitration agreement shall be bound by the arbitral award. Non-signatories can only be bound by the arbitral award if the arbitration agreement has been extended thereto during the arbitral proceedings. No third party can be bound by the award, if it was not joined as a party to the arbitral proceedings.
Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?
There are no recent judgment with respect to third-party funding, as the Egyptian law generally and the EAL, more specifically, do not expressly address the issue of third-party funding in arbitration. Thus, it may not be argued that third party funding is prohibited per se under Egyptian law, insofar as the funding arrangement is not a gambling contract and counsel funding is not in the form of champerty. It is expected that, in due course, the matter will be subject to clear regulation to determine the legally permissible practices in this increasingly important area of arbitration practice, which may then lead Egyptian courts to consider it.
Is emergency arbitrator relief available in your country? Is this frequently used?
No, the EAL does not provide for emergency arbitrator. The CRCICA arbitral rules (2011) also do not include emergency arbitrator relief, but the CRCICA is currently considering amending its rules to include new provisions for emergency arbitrator relief.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
At present, there are no simplified or expedited procedures that exist in the EAL or in the institutional rules of the CRCICA.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
No specific measures exist to that effect. However, the CRCICA publishes quarterly all statistics related to the number of cases, nationalities of participants and arbitrators, sectors of disputes. Also, the CRCICA publishes some of the arbitral awards whose proceedings were conducted under its auspices, without disclosing identities or nationalities of the parties to the dispute.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
According to the EAL, there are no restrictions on the choice of arbitrators, as to their gender, nationality, age (provided that he or she has attained the age of majority). (article 16) However, more recently, diversity initiatives have been actively promoted in Egypt and the CRCICA has signed the Pledge for Equal Representation in Arbitration in 2017, which resulted in an increase in the number of female arbitrators appointed by the Centre (11 female arbitrators in 2018), as well as the number of arbitrators under the age of 40 (13 arbitrators under the age of 40). (Ismail Selim, Interviews with our Editors: Cairo in the Spotlight with Dr Ismail Selim, Director at CRCICA, Kluwer Arbitration Blog, published on 17 July 2019, available online at http://arbitrationblog.kluwerarbitration.com/2019/07/17/interviews-with-our-editors-cairo-in-the-spotlight-with-dr-ismail-selim-director-at-crcica/)
As to counsel, the same applies, as there are no restrictions as to the gender, age or origin.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
The EAL provides for the supremacy of international conventions. (article 1) In this instance, the Egyptian courts shall apply the New York Convention. Anyhow, the EAL does not contain a provision that is similar to the New York Convention with respect to the possibility to enforce annulled awards or to refuse enforcement based on the setting aside of the award by the courts of the seat. Egyptian courts have not directly addressed the said issue and there is no judicial trend in this respect. However, with respect to arbitral awards set aside in Egypt and enforced in another jurisdiction, in Chromalloy Aeroservices v. Air Force of the Arab Republic of Egypt, the Cairo Court of Appeal set aside the award rendered in said case (Cairo Court of Appeal, case no. 8 of JY 115, hearing session dated 5 December 1995), then the same award, after being set aside in Egypt, was enforced in the US. (US District Court, District of Columbia, case no. 94-2339, 31 July 1996)
Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
Corruption is not an issue that is raised regularly in arbitration proceedings in domestic cases, but, since 2011, it has been increasingly invoked and pleaded in cases involving the State and state entities whether in international or local proceedings. That said, it is worth noting that Egypt has ratified the United Nations Convention against Corruption in 2005, which aims at eliminating corruption as a major impediment to development in poor countries and regions, and obliges member states to implement a wide and detailed range of anti-corruption measures affecting their laws, institutions and practices. Before national courts, the standards for proving corruption is quite high and it must be proven beyond reasonable doubt.
Also, it is worth noting that sometimes arbitral proceedings may be seriously abused to conceal sham dealings. For example, in a recent sham arbitration case, in January and May 2019 the Egyptian courts passed and confirmed imprisonment sentences against certain individuals and members of a purported local arbitration institution who were engaged in sham arbitral proceedings. Criminal charges of misappropriation by fraudulent means and forgery were made against the sentenced individuals. (Al-Nozha Misdemeanor Court in Cairo, case no. 12648 of JY 2018; Cairo Court of Appeal, appeal no. 695 of JY 2019 (East Cairo Appeals)). This was an exceptional case that involved a criminal scheme that resulted in the issuance of a US$18 billion award against Chevron and enforcement petitions were also declined by US courts in California and Houston in relation to the award resulting from the said proceedings in Cairo.
Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?
In fact, there exist numerous court decisions addressing public policy as a ground for annulment and refusal of enforcement of arbitral awards. However, Egyptian courts appear to be enforcement friendly (with respect to awards related to non-administrative contracts) and the public policy ground is normally narrowly construed.
As to the definition of public policy, it is worth noting that it has been well-established by the Egyptian Court of Cassation that contravention of public policy in Egypt consists that the award is in contravention with the social, political, economic and ethical principles in the country which are related to the nation’s higher interests.
The public policy definition provided by Egyptian courts reads: ‘Rules aiming to achieve a public interest, whether political, social, economic, pertaining to the society’s high order and which prevails over the individual’s interest.’ (Court of Cassation, challenge no. 385 of JY 44, hearing session dated 24 April 1980) In this regard, the Court of Cassation has adopted an ‘objective’ notion of public policy, and ruled that a 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).
Furthermore, there exists two separate categories of public policy in Egypt, i.e. procedural public policy and substantive public policy. In this respect, the Egyptian Court of Cassation held that the violation of public policy may occur ‘in case of violation of provisions of the law regulating the arbitral process or violation through deciding [on the merits] in contravention with public policy.’ (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) Accordingly, examples of procedural public policy, as adopted by Egyptian courts, include the prohibition of compulsory arbitration (See, for example, Cairo Court of Appeal, commercial circuit no. 91, case no. 88 of JY 120, hearing session dated 28 April 2004) and the requirement that at least one oral hearing be repeated if an arbitrator is replaced after hearings have ended. (Court of Cassation, challenge no. 4083 of JY 77, hearing session dated 27 April 2014) As to the substantive public policy application by Egyptian courts, it can be referred to the example of prohibition of late payment interest exceeding the maximum ceiling of 7% set by law, and which does not apply to bank loans. (Court of Cassation, challenge no. 810 of JY 71, hearing session dated 25 January 2007)
Moreover, it is worth noting that the Cairo Court of Appeal considered that a mandatory rule is not necessarily part of public policy and stated that ‘if public policy encompasses, in general, the fundamental interests of the society affecting its economic, social and political values on which it is based, it is difficult to provide an exhaustive definition for public policy since its content is relative, flexible and evolving.’ (Cairo Court of Appeal, commercial circuit no. 91, cases nos. 108 and 111 of JY 121, hearing session dated 30 May 2005) The Court of Cassation confirmed same approach and ruled that the breach of a mandatory rule does not ex officio or ipso facto qualify as a ground for annulment of an award for violation of public policy. (Court of Cassation, challenge no. 12790 of JY 75, hearing session dated 22 March 2011)
Finally, in a very recent court decision annulling an arbitral award, the concept of public policy has been defined as a group of imperative/peremptory norms which the parties cannot derogate from by agreement, by way of exception from the principle of party autonomy. (Cairo Court of Appeal, commercial circuit no. 91, case no. 17 of JY 134, hearing session dated 14 May 2019)
Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?
No court decisions have been made on this case specifically. Furthermore, with regard to the matter of respective views on intra BITs, the trend in Egypt, considering its place in the African region, is quite the contrary to Europe as a whole. The African region is presently pro-intra-African/intra-regional BITs, a trend that is generally on the rise between countries of the African region.
Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?
No court decisions have been made on this specific case and there are no known pending decisions in this respect.