Case Study: Key Arbitration Principles from an Egyptian Court of Cassation
The case involved a contract dispute between a broadcasting company and a software provider over the production and airing of a television program. The contract included an arbitration clause, and when a disagreement arose, the matter was referred to arbitration. The arbitral tribunal awarded significant damages in favour of the broadcasting company, but the software provider challenged the award based on several legal grounds.
The case addressed three key legal issues, which are discussed in detail below:
1. Challenging an Arbitration Award Due to Alleged Errors in Assessing Damages
One of the primary legal questions in this case was whether it was possible to challenge the arbitration award on the grounds that the tribunal made errors in assessing damages. The appellants argued that the tribunal awarded excessive damages without explaining the elements of the harm. However, the Court of Cassation confirmed a fundamental principle: arbitral tribunals have broad discretion in assessing damages, and courts may not interfere unless there is a procedural or legal error that falls within the grounds for annulment as defined by the Arbitration Law.
2. Enforceability of Arbitration Clauses on Parties Who Signed as Witnesses or Guarantors
In this case, one of the critical issues was whether the arbitration clause could be enforced against a party who signed the contract as a witness and guarantor, rather than as a principal contracting party. The arbitral tribunal decided to include the guarantor, who had signed the contract in such capacities, in the arbitration proceedings. However, the Court of Cassation took a different stance, partially annulling the arbitral award.
The court clarified that the arbitration clause could not be applied to this individual, as arbitration agreements are contractual obligations that require precise and explicit consent from the parties involved. Simply signing as a witness or guarantor does not necessarily mean that the arbitration clause binds the individual unless this is explicitly stated in the contract. This decision underscores the importance of carefully drafting arbitration clauses to clarify which parties are bound by them and avoid any ambiguity regarding their obligations.
The Possibility of Appealing an Arbitration Award by Cassation Despite Parties Agreeing it Would Be Final
A third issue addressed was whether parties could appeal an arbitration award by cassation, even if they had previously agreed that the judgment issued by the Appeal Court in an annulment claim would be final and not subject to further appeal. The respondent argued that the parties had waived their right to appeal by agreeing to this finality clause.
Nevertheless, the Court of Cassation rejected this argument, emphasising that the Egyptian Code of Civil Procedure clearly permits cassation appeals if the judgment from the Appeal Court involves a legal error, misapplication, or procedural flaw affecting the outcome. Thus, the agreement between the parties that the appeal judgment would be final does not prevent a cassation appeal unless explicitly prohibited by law.
At Bait Al Qanoon, we understand the importance of carefully drafting arbitration clauses and the potential implications of arbitration awards. If you need guidance on arbitration matters or would like to review your contracts to ensure they align with best practices, do not hesitate to contact us for specialised legal advice