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Introduction
M. E. I. Alam Eldin Author

M. E. I. Alam Eldin

This is the first time the awards of the Cairo Regional Centre for Publication date
International Commercial Arbitration (CRCICA) have been compiled
and published in a book, by the kind permission of the Director of the 2000
Centre, Dr. Mohammed Aboul Enein. The present volume contains
awards made originally in either English or Arabic, with Arabic Source
awards in translation. All awards have been summarised with brief
M. E. I. Alam Eldin ,
commentaries on some awards by the author.
Introduction in Mohie
As mentioned in the preface, CRCICA already has, to its credit, a Eldin I. Alam Eldin (ed) ,
string of over a hundred and thirty arbitration cases. The success of Arbitral Awards of the
CRCICA has been supplemented by the active role played by the Cairo Regional Centre
Egyptian jurists in developing arbitration as an effective forum for for International
settlement of disputes. In this behalf, the new law on arbitration was Commercial Arbitration
promulgated in 1994 i.e. Law No.27/1994. (2000) (Kluwer Law
International 2000) pp. xi
The new law applies to arbitration cases having their seat of - xx
arbitration in Egypt as well as to arbitration cases where the parties
conduct proceedings abroad, but agree to the contract being
governed by the Egyptian law. The application of the new law to
arbitrations taking place in Egypt is by no means mandatory. Parties
may agree to apply a foreign procedural law to an arbitration taking
place in Egypt. The choice of foreign procedural law, although
possible in theory is not recommended because of the practical
problems that are liable to arise.

The new law defines the term “commercial arbitration” which is

similar to that contained in the Model Law. The definition is
contained in a separate article rather than in a footnote, which is a
drafting technique alien to the Egyptian legal system. The term
“international arbitration” has also been defined on the lines of the
Model Law definition of the term. However, the new law considers an
arbitration “international” even where the parties agree to have their
arbitration conducted under the auspices of an international
organization, institution or centre and according to its rules, whether
such organization is based in Egypt or abroad.

Party Autonomy

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The new law has introduced principles harmonizing it with the

current trends in international arbitration. In this regard, the
arbitration agreement is given its full effect. It has accordingly
declared inadmissible any judicial action concerning a dispute in
respect of which an arbitration agreement has been concluded.
Under the new law, the parties have the freedom to choose the
method of selecting arbitrators. The parties may even empower a
third party, such as an organization or a centre to do so. Such
autonomy to the parties has successfully eradicated the abusive
recourse to the practice resorted to under the abolished article
502(3) of the Code of Civil and Com page "xi" mercial
Procedure (the ECCCP) which regulated arbitration and required the
nomination of arbitrators in person.

The parties may also agree on how the arbitration should be

conducted, the right to choose the form, arbitral tribunal, place of
arbitration and language of the arbitration.

Parties may authorize the arbitrator to decide the case ex aequo et

bono or to decide it according to the law agreed by the parties for
settlement of the dispute. Failing such agreement, the arbitrators
may apply the law that has the closest connection with the subject of
the dispute. In resolving the dispute the arbitral tribunal may also
take into consideration the usage of trade terms relevant to the
disputed transaction.

Party autonomy extends to power being conferred upon the arbitral

tribunal to order interim or conservatory measures. The party who
benefits from such measures ordered by the tribunal may also
request the president of the court with jurisdiction to issue a writ of
execution of the tribunal's order. This power granted to the arbitral
tribunal does not, however, preclude the court's right to order such
interim measures at the request of either party, either before or
during the arbitral process.

Challenging Arbitrators

The new law follows the Model law provisions of dealing with a
challenge to arbitrators. In an attempt to expedite the arbitral
process, the legislator has adopted several additional provisions in
this regard e.g. parties are not allowed to challenge their own
arbitrator's appointment after such appointment has already been
made. Further, parties may not challenge the same arbitrator twice
in the same arbitral process even though they may have different
grounds for the second challenge.

In so far as the composition of the tribunal is concerned, unlike the

Model law, the new law requires that, at the risk of nullity, the
number of arbitrators constituting the arbitral tribunal be odd.

Court Intervention

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Court intervention has been reduced to a minimum, especially as

regards the validity and enforceability of the arbitration agreement.
However, this does not diminish the supervisory role of the courts in
assisting the arbitral process. In the event that the parties fail to
appoint arbitrators, the courts have power to appoint ad hoc
arbitrators, enabling the arbitration to proceed. All matters
concerning the arbitration are dealt with by one court, which is the
court with the original jurisdiction to hear the dispute. In the case of
an international arbitration, the court would be the Cairo Court of
Appeal unless the parties have agreed to the jurisdiction of another
court of appeal in Egypt.

Separability and Kompetenz–Kompetenz

The new law upholds the principle of separability of the arbitration

agreement. Any question as to the validity of the contract containing
the arbitration agreement shall not affect the validity of the arbitration
agreement itself.

page "xii"

Similarly, the principle of Kompetenz–Kompetenz is recognized, by

virtue of which the arbitral tribunal has jurisdiction to decide upon its
own jurisdiction even if the validity of the main contract containing
the arbitration agreement is challenged. The new law has put an end
to the lengthy debates about whether or not an arbitral tribunal may
rule on a challenge to its own jurisdiction and whether it may also do
so in case the contract is in itself null or challenged for nullity. This
further restricts the intervention of the courts over the arbitral
process.

The new law has further expanded the jurisdiction of the arbitral
tribunal. Even if a matter is outside the jurisdiction of a tribunal, that
alone is not a reason for the tribunal to cease its determination, if it
can continue notwithstanding and decide other matters that are
within its jurisdiction. This would obviously deny parties with a mala
fide intention to hinder proceedings, a process allowed by the
ECCCP's abolished article 506(2).

Setting Aside the Award

The new law's provisions with respect to setting aside the award
once again reflect the legislator's attempt to expedite the process of
arbitration and eliminate obstacles causing unjustified delays
previously allowed by the ECCCP.

The new law has limited the means of recourse for challenging an
award. Unlike the provisions of the ECCCP for setting aside the
award, the new law restricts an application for setting aside the
award to the specific circumstances provided for in Article 53. To
begin with, a party may only file for an application for setting aside,

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once the award is final. No such application may be made at any

preliminary stage of the award. In line with the UNCITRAL Model
Law, setting aside is the only means of recourse that may be
instituted against the award [Article 52(1)]. The grounds for setting
aside enumerated in Article 53 are similar to Article 34(2) of die
Model Law, with the addition of two grounds - Article 53(1)(d) allows
the arbitral award to be set aside if it failed to apply the Law agreed
upon by the parties to govern the subject matter in dispute and
Article 53(1)(g) allows the award to be set aside if the arbitral award
itself or the arbitration procedures affecting the award contains a
legal violation that causes nullity. Article 53(2) entitles the court
hearing an application for setting aside an award, to set aside the
award at its own initiative, if the award violates matters of public
policy in Egypt.

Time limits for challenging awards are more stringent than those
provided for in the Model Law. The new law has, among other things
reduced the period in which an arbitral award may be set aside by
limiting it to ninety days from the receipt of the award, after which no
application for setting aside the award can be made. The filing of an
application for setting aside does not de jure result in the stay of
execution of the award, a practice previously allowed by the ECCCP
which almost threatened the very existence of arbitration as a forum
of settling disputes. However, it does allow parties to request the
court separately to stay the execution of the award while an
application to set aside is pending. If the court decides to stay the
execution of the award, it then has a period of six months, from the
date on which stay was granted, to make a judgment on setting
aside the award. The court may also, in granting a stay of execution
order a surety or pecuniary guarantee to be submitted to provide
security for the costs of the application.

page "xiii"

Parties may not request the enforcement of the award until the
period for instituting the action for setting aside expires [Article
58(1)]. Enforcement may only be refused if the award contradicts a
judgment previously rendered by the Egyptian Courts on the subject
matter in dispute. It may also be refused if it violates Egyptian public
policy or it was not properly notified to the party against whom it was
rendered. No special provision is made in the new law for the
enforcement of foreign awards which are enforceable under the
regime of the New York Convention. However, those awards made
in an international commercial arbitration outside of Egypt which the
parties have subjected to the new Law, would be enforceable under
this Law.

Shari'ah Principles on Arbitration

The current global trends in international arbitration are not vastly

different from the principles of arbitration that exist in the Shari'ah

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and have done so for the last fourteen centuries. Some of the
established principles are as follows:

1. Arbitration is one of the earliest means of dispute resolution,

recognised in the various Islamic sources: Qura'an, Sunnah
and Ijma (Consensus);
2. Arbitration may be used in disputes relating to funds and
property dealing with rights of individuals (Article No. 1841 of
Dorar El-Hokam, volume 4 page 695 [Dorar El-Hokam is the
codification of the Islamic Law which was applicable in Arab
Countries dominated by Turkey until the end of the first World
War, this Code is explained by Ali Haidar, in four volumes);
3. Public policy matters may not be submitted to arbitration as
they fall under the exclusive jurisdiction of a judge;
4. The essence of arbitration is voluntary mutual agreement
between the parties to submit their disputes to an independent
and impartial third party (ibid, p. 696);
5. As women have always had the right to testify and be admitted
as a witness, they may also be arbitrators. There is however a
degree of difference in the practice of various Islamic countries.
The Saudi law of arbitration does not provide on this issue, but
the executive regulations thereof stipulate that the arbitrator
must be male and must be Moslem. On the other hand, Saudi
Arabia is a member to the Washington Convention on the
Settlement of Investment Disputes (ICSID) which allow women
to adjudicate as arbitrators or chairpersons without any
restriction as to religion. Accordingly, Saudi Arabia as a State
may be subject to an arbitration tribunal where two members
are women and are not Moslems and may not be able to object
to such constitution. However, there may be a risk of
enforcement of awards made by such a tribunal in Saudi
Arabia;
6. Arbitrators are to be appointed by the parties themselves or by
the judge in case of a dispute. The parties may not have any
connection or relation with the arbitrators before their
appointment;
7. Arbitration awards are valid only as between the parties and do
not affect rights or obligations of third parties. For example,
where there were ten heirs of a deceased person in dispute
with one of his creditors and one of them agrees with the
creditor to arbitrate the dispute, any resulting award will bind
only that heir and will not be page "xiv" binding on the other
nine heirs. Awards are valid only as to the issues raised by the
parties and are not valid where the arbitrator adjudicates on
matters not subjected to arbitration (ibid, Article 1842);
8. Arbitrators are functus officio after the issuance of their award;
9. Once parties submit to arbitration, resulting awards are
enforceable despite any party's dissatisfaction;

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10. There is no limit as to the number of arbitrators (ibid, Articles

1843-1844);
11. If the arbitrators are authorised to arbitrate through other
arbitrators they can appoint such arbitrator (specially where
their number is even) (ibid, Article 1845);
12. The arbitrator is required to adhere to time limits set by the
parties for the issuance of the award. If the arbitrator fails to do
so, the award will cease to be enforceable (ibid, Article 1846);
and
13. Parties may agree to the arbitrator settling their dispute ex
aequo et bono. Such award is treated as a compromise or
transaction (ibid, Article 1850).

Role of the CRCICA

His Excellency B. Sen the Secretary General of the AALCC, with the
approval of His Excellency the Minister of Justice of Egypt, set out
the functions of the CRCICA as:

(a) Promoting international commercial arbitration in the region;

(b) Co-ordinating and assisting in the activities of existing arbitral
institutions, particularly amongst those within the region;
(c) Assisting in the conduct of ad hoc arbitrations in the region,
particularly those held under the UNCITRAL Arbitration Rules;
(d) Assisting in the enforcement of arbitral awards; and
(e) Providing for arbitration under the auspices of the CRCICA
where appropriate.

CRCICA is a public international organization and is not subject to

the jurisdiction of the Egyptian courts. No provisional order or
summary judgment for stay of procedure initiated before CRCICA for
nullity of the arbitration agreement may be rendered against
CRCICA. In a similar manner, parties are not entitled to initiate a
lawsuit against CRCICA for the declaration of nullity of an arbitration
agreement. They may raise such an objection before the arbitrators
during proceedings and after rendering of the award, which is
subject to appeal for nullity.

Also in the event that action is not taken upon a request from a party
to discontinue the proceedings before CRCICA causing moral or
material prejudice to the party, the appropriate remedy is for the
party to make a submission to the Arbitral Tribunal and to challenge
the award according to the applicable law. The aggrieved party may
not file a claim for damages in the Egyptian courts against CRCICA.

Structure of the CRCICA

CRCICA has a list of accredited arbitrators from over sixty different

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nationalities, with specializations in various areas of international

trade and commercial law. Most page "xv" of the arbitrations
conducted under the CRCICA have been composed of a panel of
three arbitrators. Three arbitrations have been decided by a sole
arbitrator and there has been only one instance of a multi-party
arbitration, with five arbitrators comprising the tribunal. This
particular arbitration involved two respondents and each of them
appointed an arbitrator to equalize the two arbitrators appointed by
the claimant.

All arbitral tribunals have had a secretary to the tribunal provided by

the Centre and there is also an instance where a staff member of the
CRCICA (a Counsel) was appointed to assist the arbitral tribunal.

Most of the arbitrators in the cases conducted under the CRCICA

have been university professors of law, lawyers and members of the
Egyptian judiciary. In a few specific construction arbitrations,
engineers have been appointed either as chairman or as arbitrators.

Most contracts on the basis of which proceedings were initiated,

contained a provision for Egyptian law being the applicable law but
in a few cases, the applicable law had not been agreed by the
parties and required to be determined by the tribunal.

Confidentiality is upheld in all arbitrations and the identity and

nationality of the parties are not revealed. All currencies involved in
disputes, are converted into dollars for convenience of
determination.

The regulations governing the operation of the CRCICA have been

modelled largely on the UNCITRAL Arbitration Rules, but include
two separate tables dealing with administrative expenses and
arbitrators fees, which has been set out in an annex of this volume.

Arbitrations conducted under CRCICA

Arbitrations conducted under the Centre include awards which have

dealt with the effects of the Gulf War, terrorism and its effects on
tourism, force majeure and exceptional events and hardships. The
first case was settled in 1984, and the last one published in this
volume was concluded at the end of 1996. There are thirty-two
cases in this volume which relate to:

1. Supply of services;
2. Supply and sale contracts;
3. Construction;
4. Maritime transport;
5. Work and material contracts;
6. Joint ventures;
7. Commercial agencies;

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8. Management contracts;
9. Fees of consulting engineers;
10. Interpretation of contracts; and
11. Exchange rates.

Some of the legal principles established by the arbitral tribunals in

the cases conducted by the CRCICA have been summarized for the
interest of the readers and to give an idea of the diverse issues
being arbitrated.

page "xvi"

Damages

1. Contractual damage must be direct. An allegation that damage

resulted due to a party being prevented from performing a separate
contract did not amount to direct damage for purposes of a claim.

2. If the amount of damages have not been fixed in contract or by

law, they will be determined by the judge. Damages include lost
profit and loss suffered. Lost profit will only be awarded if the creditor
takes all available steps to avoid such loss.

3. Breach by both parties in a contract is sufficient to dismiss an

award for damages to either of them.

4. A contract which provides a right to one party to terminate the

contract at any time and for any reason, deprives the other party
from a subsequent claim for lost profit.

5. If the government is in breach of its obligations under the

contract, the contracting party is entitled to a claim for damages,
which may be determined by mutual agreement;

6. Damages shall not be awarded for delay or prejudice if the delay

was due to a breach by the company over a period of time and
prejudice alleged is contingent and not certain;

Contract by Public Auction

7. A bid contract is concluded when the final bid is accepted. A bid

is invalidated when a higher bid is made, even if the higher bid is
void.

International Trade

8. A party cannot be held responsible for circumstances beyond its

obligations under a C&F contract. This would be contrary to the
nature of a C&F contract and practice of international trade for it
would be tantamount to the party being responsible even for an act

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of God or force majeure without having committed any breach.

Unless this had been intended by the parties, this result would be
contrary to law.

9. A claim for the difference in exchange rates is not admissible in

international trade.

Contractual Interpretation

10. Non-familiar clauses in a contract do not make a contract an

administrative contract. The effect of such clauses is merely to
facilitate interpretation of parties' actual intentions. The Arbitral
Tribunal may determine proportional costs in a partial award prior to
the rendering of a final award.

11. Contractual stipulations shall be interpreted in accordance with

commercial usage applied in international sales of movable
corporeal goods.

page "xvii"

12. The mere application of government regulations on procurement

does not make a contract an administrative contract. A claim for
difference in exchange rates is not admissible in international trade.

13. Where a government contracts with a private party, it enjoys

certain privileges:

(i) A government party may amend clauses in the contract in so far

as they relate to the conduct of public utility.
(ii) The right of a government party to amend clauses in a contract
is limited. Even in cases where the government party may
amend clauses in a contract, the power to do so is limited. If the
limits set out are violated, a contracting party may abstain from
implementing the contract and request its dissolution. The same
right may be invoked where the amendment made by the
government party tantamounts to a new contract to which the
contracting party has not consented.

14. Contractual interpretation requires a clause to be interpreted

according to its evident meaning. Clarity is determined by the
evidence of intention not of wording. A phrase in a contract must be
considered in conjunction with other provisions of the contract and
not in isolation.

Costs

15. Arbitrators may fix costs in a partial award prior to the

completion of proceedings and rendering of final award.

Good Faith

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16. A contract must be performed according to its provisions and in

a manner that complies with requirements of good faith. A contract
shall not be interpreted on the basis of its provisions alone, but also
on law, custom, justice and in accordance with the nature of the
obligation.

Contractual Obligations

17. Appointment of a superintendent company was meant to

reimburse the supplier and did not vindicate the supplier from its
contractual responsibilities towards the authority for delivery of
agreed goods conforming to specifications in the contract.

18. Failure by a debtor to perform his contractual obligations was

considered the basis of his contractual liability which could not have
been avoided except by force majeure or tort committed by the
creditor.

19. A party's intentions were mala fide if it made performance of its

own obligations contingent upon the other party's withdrawal of a
claim for payment on a performance guarantee.

page "xviii"

20. Government decisions could not create rights in a contract

where such rights did not exist already.

21. Licences for public works were the responsibility of the

employer and not the contractor;

22. If a party suffered loss due to its failure to implement the

contract in good faith and honourable dealing and breached its
obligations, it cannot expect to claim compensation. The party
should have anticipated such result when it failed to perform its
obligations.

23. The departure of the Respondent's supervisory team was

interpreted as an abandonment of performance of contractual
obligations, constituting a serious breach of the contract.

24. For events to constitute force majeure or be exceptional, they

must cause impossibility and impose an onerous obligation
respectively. Neither ground existed where the party continued to
perform the contract willingly. A party could not seek a release from
an obligation, whilst at the same time performing it. Once an
obligation had been performed, it was considered extinguished and
there is therefore nothing remaining from which to be excused.

Construction Law

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25. An established principle in the construction industry was that

differences of prices were to be disbursed to the contractor as from
the date envelopes were opened.

Agency

26. The domicile of a maritime agent of a foreign vessel was

deemed to be the domicile of the owner of such a vessel, in which
notifications were made and time limits calculated and the original
domicile of the owner was disregarded.

27. Where a party acted as an agent without disclosing the name of

the principal, such party became the principal and had to bear the
effects of a contract.

Exchange Rates

28. Monetary authorities had the right to impose several exchange

rates for local currency and to determine circumstances in which
each rate was to be used.

Jurisdiction

29. Where a court in the state of a party to an arbitration rendered a

judgment upon a case despite the arbitration clause being invoked
before it, it was held to have ceased jurisdiction and the arbitral
tribunal was allowed to treat the judgment as such.

page "xix"

Fraud

30. The concept of fraud in the applicable law covered any

intentional violation of legal or contractual obligations. Gross
negligence was also associated with fraud and plea for defence of
exemption from liability was rejected for either offences.

Restitution

31. A party must be put in the same position that he would have
been in had the breach not occurred.

All Awards summarized in this volume are preceded by the following

brief details regarding the case:
(i) Case number;
(ii) Date of final award;
(iii) Parties;
(iv) Subject Matter;

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(v) Place of arbitration;

(vi) Applicable law;
(vii) Language of the arbitration;
(viii) Number of Arbitrators; and
(ix) Arbitrators' nationalities.

The Egyptian Law Concerning Arbitration in Civil and Commercial

Matters (No.27/1994) has been applied in several cases and its
translation is contained in one of the annexes of this volume.

As a lot of the provisions of the Egyptian Civil Code were used in

reasoning of awards, we put the most relevant part (contracts) in an
annex of this volume. The said part comprises articles 89 through
161. We have to state here that the translation of the articles of the
said Code are inspired mainly by the book of “Perrott, Fanner and
Sims Marshall”. Some articles were translated in whole or in part by
the author.

The author page "xx"

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