Jurisdiction. Egypt.

Transcription

1 Jurisdiction Egypt. Arbitration legislation Egypt conceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ( New York Convention ) on 2nd of February 1959, ratified it on the 9th of March 1959, and it entered into force as part of the Egyptian legal system on the 7th of June 1959 without any reservations or declarations. Since Egypt introduced its Arbitration Law (Law No. 27 of 1994) 1, arbitration parties have increasingly resorted to arbitration in commercial disputes as a faster and more controlled method of dispute resolution with expert judges. The Arbitration law is based on the UNCITRAL Model Law, with sizeable case law applying the Arbitration Law in Egypt. The Agreement to Arbitrate In Egypt, an agreement to arbitrate must be in writing in order to be valid. An arbitration clause is held as a distinct agreement separate from other provisions in the underlying contract. 2 Therefore, an arbitration agreement would remain valid to regulate disputes about the validity and/or enforceability of the underlying contract including the arbitration agreement. Furthermore, the Arbitration Law prohibits the courts from accepting a case if there is an agreement to arbitrate. The Arbitration Law allows parties to build their own arbitration agreements choosing their own procedural rules subject to mandatory provisions including that parties are treated fairly and equitably. Nevertheless, parties may choose the number and qualifications of arbitrators (subject to the mandatory provisions in the law), and the Arbitration Law provides default rules if absent from the contractual arbitration clause. For example, the time for issuance of an ad hoc arbitral award is 12 months, which may be extended by the tribunal for a further six months. 1 Law 27 of 1994 ( Arbitration Law ) available at : 2 Arbitration Law at Article 10.

2 Arbitration and the Local Courts In Egypt, if a tribunal does not have jurisdiction under the arbitration agreement to issue interim awards, the parties may request the courts to issue interim awards (for example, injunctions and attachments). However, the courts can neither intervene in arbitration proceedings nor compel the attendance of witnesses The Arbitration Law expressly provides that all challenges to the tribunal's decisions and preliminary awards must await the final conclusion of the arbitration process and issuance of the final arbitration award. Furthermore, Egypt recognizes the principle of Kompetenz Kompetenz, the arbitration tribunal in the first instance rules on all these jurisdictional issues prior to the merits. 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. Appeals Arbitration awards are final, binding and subject to no appeal on the merits. However, awards can be challenged in actions of nullity within 90 days from the date on which the losing party is notified of the arbitration award. A court may not force the suspension of an arbitration award unless a nullity action includes a request for suspensiona dn provides strong prima facie evidence as grounds. 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. Arbitration institutions CRCICA Egypt s most prominent arbitration institution is the Cairo Regional Centre for International Commercial Arbitration (CRCICA) ( CRCICA applies

3 the UNCITRAL rules with some amendments. 3 The CRCICA provides a competitive and less costly alternative to foreign arbitration and mediation centres for Egyptian and regional disputes. International Maritime Arbitration Centre The International Maritime Arbitration Centre is based in Port Said, Egypt, and resolves maritime disputes. Arab Investment Court The Arab Investment Agreement has a body established for the purpose of hearing disputes brought under it. The Arab Investment Court (AIC) is seated at the permanent headquarters of the League of Arab States in Cairo and is composed of at least five serving judges each with a different Arab nationality (which must not be the same nationality as either of the parties to the dispute). It heard its first case in 2003 when Tanmiah a Saudi Company sued the Tunisian government. The AIC has compulsory jurisdiction over disputes involving investors, who may initiate proceedings before the AIC without prior consent. The jurisdiction of the AIC is, however, subsidiary; recourse to the AIC is only permissible in cases where the parties failed to agree to submit the dispute to arbitration, the arbitrator(s) failed to make a ruling or any arbitral award was not executed within three months of being rendered. Judgments rendered by the AIC are final and binding and are enforceable in each of the contracting parties in the same manner as a judgment delivered by their national courts. Contracting parties may expressly agree to extend the AIC's jurisdiction to their investment agreements. Some inter Arab bilateral investment treaties provide for recourse to the AIC, as do some national investment laws. The criteria for benefitting from the substantive protections of the Arab Investment Agreement are far more stringent than those for the OIC Agreement. The Arab Investment Agreement protects "an Arab citizen who owns Arab capital which he invests in the territory of a State Party of which he is not a national." To qualify as an Arab citizen a corporate entity must not only be located in an Arab state but also be fully owned by Arab nationals. Furthermore, to fall within the scope of the Arab CRCICA Arbitration Rules available at:

4 Investment Agreement the investment must contribute to the economic development of the host state or strengthen economic integration between the states. The protections offered by the Arab Investment Agreement are broadly comparable to those under the OIC Agreement. The Arab Investment Agreement does not contain a fair and equitable treatment clause, however it does offer protection against expropriation and contains an MFN clause. In addition, unlike the OIC Agreement, it provides that the host state must not treat an investor less favourably than domestic investors. Unusually, the Arab Investment Agreement also imposes a number of obligations on investors. Amongst other things, investors are required to observe the host state's domestic laws to the extent consistent with the agreement and comply with national development programmes when administering and developing investment projects. Failure by an investor to observe such requirements may give rise to responsibility before the AIC. Recent Updates In June 2013, the Egyptian government negotiated with foreign investors to settle eight pending investment disputes against Egypt. These disputes arose out of judicial decisions taken against investors by the Egyptian courts following the January 2011 revolution. These include price revisions for land, natural gas, and the nullification of privatization agreements with the former government. 4 In June 2012, the Swiss Supreme Court rejected an annulment application filed by Egyptian Football Association against an October 2012 award reducing sanctions on an Egyptian football Club Al Masry. After Al Masry appealed the initial ruling, the Egyptian Football Association increased sanctions on the club. Thereafter, Al Masry filed a claim with CAS and succeeded in an award by the tribunal to reduce sanctions on the club. The Egyptian Football Association then applied to the Swiss Courts to annul the CAS award, arguing that CAS did not have jurisdiction because Al Masry did 4 Egypt Negotiates End to International Disputes, June 16, 2013, available at negotiates end tointernational disputes/.

5 not exhaust its remedies in Egypt prior to its application. The Swiss Courts held that the Egyptian Football Association s failure to participate in the CAS arbitiration prohibited it from challenging CAS s jurisdiction or complain that it was denied the right to be heard. The Court held that a second appeal process would have offered Al Masry an incomplete legal remedy in comparison to the full review of the facts and case offered by CAS. 5 In May 2013, the Egyptian government announced that it settled its dispute with UAE s Damac Properties over a 2006 land purchase on the Red Sea and two other projects in Cairo. Damac filed the case against Egypt following the 2011 Egyptian Revolution once an Egyptian court convicted the company s owner and chairman of corruption for acquiring the land for a third of its alleged value. The country s tourism minister who approved the sale was also convicted as part of a wider investigation by the post revoluition military government into deals made by Mubarak era officials. Egypt still faces nine other arbitrations and one annulment proceeding at the ICSID, the majority of which were filed in the wake of the 2011 Arab uprising. These include claims by Singapore based Indorama over the nationalisation of a textile factory; the US s Ampal American Israel Corporation over a terminated gas pipeline project in the Sinai desert; and France s Veolia over a waste management contract in Alexandria. A Jordanian naval captain, Ossama Al Sharif, also brought three ICSID claimsagainst the state earlier this year relating to different investments in Sokhna port on the Suez Canal Swiss Court Uphold CAS Award Over Egyptian Riot, 19 November 2013, available at 6 Egypt Settles ICSID Claim Over Mubarak Land Deal, 4 June 2013, available at settles icsidclaim mubarak land deal/