This is the third in a series of Guides to International Arbitration in the Middle East.
In this guide, we will look at international arbitration in Egypt.
The information found in this guide is accurate as of January 11, 2022.
Is Egypt a signatory to the New York Convention?
Egypt is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).
Egypt consented to join the New York Convention on February 2, 1959, ratified on March 9, 1959, and entered into force as part of the Egyptian legal system on June 7, 1959, without any reservations or declarations.
What legislation applies to arbitration in Egypt?
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 them by agreement. However, a few rules appear to be mandatory, such as:
What other arbitration-related treaties and conventions is Egypt 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 was 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 among which around 72 entered into force on the following dates and with the following countries:
Albania (6/4/1994); 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 (3/6/2000); Canada (3/11/1997); China (1/4/1996); Comoros (27/2/2000); Croatia (2/5/1999); Cyprus (9/6/1999); Czech Republic (4/6/1994); Denmark (29/10/2000); Ethiopia (27/5/2010); Finland (5/2/2005); France (1/10/1975); Germany (22/11/2009); 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 (25/5/1997); 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 (17/10/2014); Mongolia (25/1/2005); Morocco (27/6/1998); Netherlands (1/3/1998); Oman (3/3/2000); Palestine (19/6/1999); Poland (17/1/1998); 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 (15/5/2012); Syria (5/10/1998); Thailand (4/3/2002); Tunisia (2/1/1991); Turkey (31/7/2002); Turkmenistan (29/3/1996); 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).
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 Egypt based on the UNCITRAL Model Law? Are there significant differences between the two?
The EAL is based on the UNCITRAL Model Law (1985), however, there exist some differences between both which consist of the following:
What arbitration institutes exist in Egypt?
The leading arbitral institution existing in Egypt is the Cairo Regional Centre for International Commercial Arbitration (“CRCICA”) which is an independent non-profit international organization 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 specialized, 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, vis-à-vis 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 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 specialized arbitration centre, the ‘Egyptian Centre for Voluntary Arbitration and Settlement of Non-Banking Financial Disputes’, was established within the Financial Regulatory Authority by virtue of the Presidential Decree No. 335 of 2019 (11 July 2019). The Centre offers mediation and arbitration services. The statutes of the Centre as well as its arbitration and mediation rules were issued on 10 December 2020 by virtue of Prime Ministerial Decree No. 2597 of 2020.
What are the validity requirements for an arbitration agreement under the laws of Egypt?
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:
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 (delegation in this regard is prohibited) (Article 1).
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 Egypt 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 state 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? Are there any recent court decisions on these issues?
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).
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). 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.
Recently, the Egyptian Court of Cassation 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 No. 2698, 3100 and 3299 of JY 86, hearing session dated 13 March 2018).
Are any types of disputes considered non-arbitrable? Has there been any evolution in this regard in recent years?
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).
Are there any restrictions in the appointment of arbitrators in Egypt?
At the outset, the EAL recognizes 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. 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.
Furthermore, in an arbitration case administered by the CRCICA, an arbitral tribunal has previously determined the law applicable to the substance of the dispute as follows: (1) the law of the place of arbitration; (2) the law of the place of signing of the original contract; (3) the law of residency of the parties to the contract; (4) the law of the state where the contract is performed; (5) the law of the language of the contract; and (6) the law of the language of arbitration if it was different from the language of the contract. (CRCICA Arbitration Case No. 95 of 1997, hearing held on 12/3/1998).
Can the local courts intervene in the selection of arbitrators? If so, how?
The 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?
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 fifteen 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 position within fifteen days from the date of submission of the challenge request, the request shall be forwarded to the competent court in Egypt to decide on the 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 the 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 fifteen days after it has been notified of the appointment of the challenged arbitrator, or within fifteen 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 consisting of three members selected from among the members of CRCICA’s Advisory Committee.
Are arbitrators immune from liability in Egypt?
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. In this regard, in January and May 2019, the Egyptian courts passed and confirmed imprisonment sentences against certain arbitrators and members of a purported local arbitration institution who were engaged in the rendering of an arbitral award in sham arbitral proceedings. 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 flagrant criminal scheme that resulted in the issuance of a USD 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 sham proceedings in Cairo.
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.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in Egypt play any role in the obtaining of evidence? Can the 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 penalizing 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 penalize and compel witnesses who declined to appear at the hearing for testimony (Article 37.1).
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 the winning party is able to justify and substantiate its fees and costs.
What legal requirements are there in Egypt for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
Pursuant to Article 43, the EAL sets the requirements for recognition and enforcement of an award as follows:
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 as per Article 56:
As a requirement for the enforcement, the award creditor shall submit an application for depositing the award with the registry of the competent court. That deposit application will be sent to the Arbitration Technical Bureau within the Ministry of Justice to render its opinion on the application, noting that the opinion of the Technical Bureau is advisory and non-binding on the court, which ultimately decides whether to accept or reject the application for enforcement (Decree No. 8310 of 2008, as amended by Decree No. 6570 of 2009, Decree No. 9739 of 2011, and Decree No. 1096 of 2017).
Following the deposit of the award with the registry of the competent court, the Chief Judge of the court issues its order regarding the acceptance or rejection of the request for enforcement.
The request for enforcement of an arbitral award will not be accepted unless the period for filing a nullity action has lapsed (i.e. 90 days from the date of notification of the award to the party against whom it was rendered). However, for foreign arbitral awards seated outside Egypt and which are not governed by the EAL, the applicant must submit evidence concerning the status of any nullity action in the country where the award was rendered, as Egyptian courts do not generally have jurisdiction to entertain a setting aside action.
However, in accordance with Article 58.2, enforcement may be refused in the following cases:
Orders granting or refusing exequatur may be challenged before the competent court within thirty days from the date of issuance of such orders (Article 58.3).
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 ninety 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 the court to do so on the basis of serious grounds. Therefore, the competent court has sixty days from the date of the first hearing fixed in relation thereto to rule on the request for suspension of the enforcement. If the court orders a suspension of enforcement, it is expected that the court will rule on the action for annulment within six 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 potentially last for several years.
Furthermore, 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).
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 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:
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 EAL provides that the nullity action is brought before the competent court within ninety days from the date of notification of the arbitral award to the party against whom it was rendered (Article 54.1).
In this regard, it is worth noting that the role of the review courts is limited to examining the nullity of an arbitral award strictly based on the grounds set forth under Article 53 of the EAL, and that these courts shall not conduct a de novo review of the merits, such that any error in the arbitral tribunal’s assessment does not qualify as a ground for annulment given that a nullity action is not an appeal. This well-established principle has been recently confirmed by the Court of Cassation, which dismissed the nullity action against the famous Kharafi vs. Libya arbitral award – after almost a decade of being debated before Egyptian courts – and reversed the ruling of the Cairo Court of Appeal, which had annulled the arbitral award in 2020. In the same vein, the Court of Cassation upheld this well-established principle that reviews are bound not to re-examine the subject matter of the dispute or even delve into the arbitral tribunal’s findings, unless a matter of public policy is in play. However, in this case, the Court of Cassation annulled, on its own initiative, the arbitral award for its violation of Egyptian public policy (Court of Cassation, Civil and Commercial Circuit, Challenges No. 1964 and 1968 of JY 91, hearing session dated 8 July 2021).
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