EGYPT: An Introduction to Dispute Resolution: Arbitration
This article offers a bird’s eye view of the profound changes that have shaped the Egyptian arbitration market during the past ten years and the opportunities and challenges that lie ahead for arbitration practitioners and clients in this jurisdiction. It also includes the author’s reflections on the state of the arbitration community and its most pressing needs.
Egypt as an Arbitration Hub
Egypt has emerged as a leading arbitration hub in the Middle East and Africa, thanks to its modern arbitration law, supportive judiciary, well-established arbitration institution, and thriving arbitration community. Arbitration practitioners have faced challenges in 2023 owing to the impact of local and regional upheaval. Despite progress, the country’s arbitration community also faces challenges in terms of diversity and inclusion, especially regarding the representation and participation of women and young practitioners.
Arbitration in Egypt has proven its strength and flexibility in the face of unprecedented changes and crises. After successfully navigating the political and economic upheavals of the Arab Spring (2011) and the COVID-19 pandemic, it is now confronting the emerging issues of diversity and regional instability.
Egypt’s Rich Arbitration Tradition and its Transformation After the Arab Spring
Egypt has a long and distinguished arbitration tradition, dating back to its accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) in 1959 – the first Arab country to do so – and to the International Centre for Settlement of Investment Disputes (ICSID) Convention in 1972. Its Arbitration Law, promulgated in 1994, set a high standard for many Arab arbitration regimes that followed. However, it was the 2011 Arab Spring uprisings that propelled Egyptian arbitration to a new level of vibrancy and sophistication, as the country faced a wave of investment treaty claims and commercial disputes arising from the political and economic turmoil.
Between 2011 and 2014, the Egyptian government faced more than 37 international arbitration cases worth more than USD14.3 billion. Egypt responded to this wave of investment treaty claims and commercial disputes with wisdom, sophistication, and pragmatism, honouring its international commitments to foreign investor protection, adopting a settlement policy where possible, and maintaining its network of bilateral investment treaties (BITs) and membership in the ICSID Convention.
Egypt also saw its arbitration community flourish, as Cairo became the seat of numerous high-value and complex claims. The Cairo Regional Centre for International Commercial Arbitration (CRCICA) was established in 1979 but doubled its caseload in the years following the uprisings, handling more than 1,500 cases – many of which had international elements.
The global rankings for practitioners reflect the transformational impact of the Arab Spring on the Egyptian arbitration market. Of the nine Egyptian arbitration firms ranked in the Chambers Global Guide, three are boutique firms established after the Arab Spring. At the same time, the remaining seven saw the growth of well-regarded arbitration practices after 2011.
The rankings also show that a generational shift has occurred in the structure of this growing arbitration community. Egyptian arbitration is young, cosmopolitan and increasingly inclusive. Both Star Individuals are in their 40s, most other individuals ranked in the guide are in their 40s and 50s – although the up-and-coming individuals are in their mid-30s or early 40s. However, the absence of any ranked women is a glaring and conspicuous issue and is only expected to change because there are arbitration practices in Egypt that make it a point that women play major roles in their ranks.
Critical Updates and Developments in 2023
The Egyptian arbitration market is not immune to the current economic conditions affecting clients and the legal profession in Egypt, such as the impact of the COVID-19 pandemic, the fluctuation of the Egyptian pound, the high inflation rate, and the political instability in the region. These factors have created opportunities for arbitration as a dispute resolution mechanism. Still, they have also posed difficulties for law firms and practitioners to maintain their competitiveness and quality of service. The post-pandemic “new normal” may have increased the demand for online and hybrid arbitration proceedings, for instance, but it may have also raised concerns about the accessibility, security, and efficiency of such processes.
Similarly, currency devaluation and inflation have affected the costs and fees of arbitration, both for arbitration institutions and law firms. They have also had dramatic effects on the valuation of damages and awards. Parties and counsel alike should consider catering for more currency uncertainty in 2024.
The recently unveiled CRCICA Arbitration Rules 2024 draft reflects a serious effort, led by Ismail Selim, to adapt the centre’s rules to the new needs and challenges of the arbitration field. The draft, which was open to comments from the arbitration community, introduces several innovations and updates that aim to enhance the efficiency, flexibility, cost-effectiveness, and adaptability of the arbitration process. Some of the key features include the mechanisms for the joinder of parties, consolidation of parallel proceedings, interim measures, emergency arbitrator rules, expedited rules, third-party funding, multiple contract arbitration, and online dispute resolution. The draft also provides model clauses for contracts to facilitate the drafting of arbitration agreements. The new rules are expected to be adopted by the CRCICA board of trustees and enter into force on 1 January 2024.
Trends and Challenges
The Egyptian arbitration market is constantly evolving and adapting to the changing needs and expectations of its clients and the global arbitration community. Some of the current trends and challenges that Egyptian arbitration practitioners and clients face include the following.
Adapting to the new normal and shifting to virtual hearings and online platforms
The CRCICA has been at the forefront of this transition, issuing guidelines for conducting virtual hearings and offering its online case management system to parties and arbitrators. However, some challenges remain, such as ensuring the reliability and security of the technology, the enforceability of awards rendered in virtual proceedings, and the adaptation of the procedural rules and the Arbitration Law to the new reality.
Development of sector-specific arbitration practices and expertise
Egypt has seen a surge of arbitration cases in specific sectors, such as energy, construction, telecommunications, banking, and finance. These cases often involve complex technical, regulatory, and contractual issues that require specialised knowledge and experience. Egyptian arbitration practitioners have been developing their skills and credentials in these areas and collaborating with experts and consultants from different disciplines. The CRCICA has also supported the development of sector-specific arbitration practices by organising conferences, seminars, and training programmes on topics such as renewable energy, construction, and sports arbitration.
Diversity and inclusion in arbitration
Egyptian arbitration has made significant strides in becoming more diverse and inclusive, especially when it comes to gender and age. The CRCICA has been a leader in this regard by appointing more female and young arbitrators and by supporting initiatives such as the African Promise, the Pledge for Equal Representation in Arbitration, the Young CRCICA, and the Women in Arbitration Initiative in the Middle East and Africa in 2019.
While the number of women and young practitioners in private practice has increased in recent years, more work needs to be done to ensure that Egyptian arbitration reflects the diversity of its stakeholders and society, as well as to address the barriers and biases that may hinder the inclusion of under-represented groups. Women and young practitioners are still under-represented in the country’s arbitration groups, both as counsel and as arbitrators. Significant divergences exist among Egyptian firms and stakeholders in terms of policies and practices embracing diversity and inclusion, along with different levels of representation and participation of women and young practitioners in their arbitration teams and cases.
Law firms and decision-makers within law firms bear a significant responsibility to allow women and young practitioners to play more substantial roles in the country’s arbitration groups. By way of example, they can provide genuine mentoring, training, networking opportunities, and fair and transparent criteria for promotion and remuneration. They can and should also foster a culture of empowerment for younger practitioners who aspire to play bigger roles in arbitration cases.
Conclusion
Egyptian arbitration has undergone a remarkable transformation in the past decade, offering a vibrant and diverse practice catering to local and international parties and arbitrators and building strong bridges with regional arbitration hubs. Despite facing political, economic and social upheavals such as the Arab Spring and the COVID-19 pandemic, Egyptian arbitration has shown remarkable resilience and innovation in adapting to changing circumstances and demands. Egyptian arbitration is not satisfied with the status quo. It strives to enhance its quality, efficiency and credibility and to respond to the evolving needs and aspirations of its users and the global arbitration community. Egyptian arbitration is a fascinating and rewarding field to be part of and presents many opportunities and challenges for arbitration practitioners and clients alike.