Corporate & Advisory - Economic Risk
Egypt regulatory update: Financial Regulatory Authority issues decrees regulating the development and use of FinTech within non-banking financial services and activities
This is the second article in Clyde & Co’s latest international arbitration series covering the topic of the landscape of arbitrators across various international jurisdictions. In this piece, associate Moamen Elwan from our Dubai and Cairo office provides the perspective on diversity and disclosure from Egypt.
Egyptian law is silent on the topic of the gender, age, religion, or nationality of arbitrators. Indeed, the Egyptian Arbitration Law No. 27 of 1994 (EAL), by its silence, leaves it free for parties to choose their arbitrators with no notable legal initiatives existing to encourage diversity within the arbitrators’ appointment spectrum.
A similar approach is adopted for counsel. Parties are free to choose their counsel, whether an Egyptian national or a foreigner. The Court has recently held that parties are not even required to appoint a lawyer to represent them in the arbitration proceedings.1
There are currently two main arbitration institutions in Egypt:
(a) the long-established Cairo Regional Centre for International Commercial Arbitration (CRCICA); and
(b) the newly established specialised Egyptian Centre for Arbitration and Settlement of Non-Banking Financial Disputes (specialising in financial disputes that are not considered as banking ones) (ECAS).
However, arbitration institutions across Egypt do not appear to yet have any specific rules encouraging diversity. Both CRCICA and ECAS have recently taken certain steps to encourage diversity.
Among CRCICA’s policies is to enhance gender and age diversity.2 It has been actively promoting female employees and the Deputy Director of CRCICA is currently a female. In 2017, CRCICA signed the Pledge for Equal Representation, which has increased the number of female appointments. In 2021, 7.5% of arbitrator appointments were women compared to 5% in 2020, and the first all-female tribunal was witnessed in 2018.3
In recognition of CRCICA’s efforts, it was awarded the “Diversity Champion” award of the African Arbitration Association (AfAA) 2020 Awards, and, in 2019, was awarded the GAR “arbitral institution that impressed” award. The award was won for CRCICA’s commitment to improving diversity in appointment of arbitrators, and promoting its own staff.4
Similar to CRCICA, ECAS does not have any rules governing diversity. However, ECAS is headed by the first female chairman of an arbitral institution in Egypt. Reportedly, more than 90% of the staff of ECAS are females. ECAS would normally offer discounts on the training offered if the applicant is a female. While acting as an appointing authority, ECAS frequently ensures that 1 or 2 female arbitrators are nominated for the parties’ choice.
In short, the EAL is influenced by the UNCITRAL Model Law and endorses, to a large extent, the disclosure obligations under the UNCITRAL Model Law.
The main provision governing the disclosure of arbitrators is Article 16 of the EAL.5 It requires an arbitrator to:
(a) confirm acceptance of appointment in writing; and
(b) disclose any circumstances that would lead to any doubts to impartiality or independence.
Disclosure is treated as an ongoing obligation. Accordingly, an arbitrator would have to disclose any circumstances that would raise any doubts to impartiality or independence, whenever those arise, at any point during the arbitration proceedings until the issuance of the arbitral award.6 Arbitrators are not under an obligation to disclose any circumstances that may doubt their impartiality or independence if the circumstances should be known to the parties and the other arbitrators by exercising a little bit of diligence7 e.g., the information might be easily obtainable.
In general, disclosure would establish a presumption that the parties became aware of the disclosed circumstances that might affect the impartiality or independence, which would shift the presumption of the lack of knowledge of such circumstances to the parties.8
Failure of the arbitrator to submit a disclosure would not lead to annulment (set aside) of the arbitral award, if there the arbitrator is independent and impartial.9 The effect (of failure to disclose), therefore, would be to make the burden of proof that the parties were aware of the circumstances that might affect the impartiality or independence to the arbitrator.10
If an arbitrator does not disclose any circumstances that would lead to impartiality and independence and any of the parties does not challenge such arbitrator within 15 days (after becoming aware of such circumstances), this would be considered an agreement on the validity of the arbitration proceedings.11
There is no definition in the EAL of the ‘circumstances’ that would lead to raise doubts that an arbitrator is impartial or independent. In a recent judgment, the Court of Cassation12 explained the definition of both independence and impartiality with the meaning of Article 16 of the EAL stating that:
In a recent landmark judgment, the Court of Cassation13 has considered that the courts can be guided by the IBA Guidelines on Conflicts of Interest in International Arbitration and made reference to Article 5.3.3 of the IBA Guidelines that one of the circumstances that raise doubts as to the independence and impartiality of an arbitrator is being a close relative of one of the parties (without disclosure).
Other examples where an arbitrator might be considered as impartial or independent include:
Nonetheless, given that arbitration is based on the parties’ agreement, the Courts have considered that the requirement for independence and impartiality of an arbitrator is less strict than that in the Courts. As such, the parties can find it more appropriate to appoint an arbitrator who is a caretaker for them both, a lawyer of one of the parties that is respected by the other or a close friend of both parties.20 The same circumstances would not be acceptable for a judge in a dispute before the courts.
The CRCICA and ECAS have rules governing the disclosure obligation of arbitrators and we deal with them below.
The disclosure obligations for CRCICA21 are stricter than that in EAL and make it clear that the disclosure obligation is an ongoing one. Arbitrators are required to:
(a) disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence;
(b) the disclosure shall be made within one week from the arbitrator’s nomination; and
(c) from the time of appointment and throughout the arbitral proceedings must, without delay, disclose such circumstances.
Further, arbitrators are required to disclose any communication with any of the parties regarding the arbitration and must inform the other parties and the arbitrators of its substance.22
Under Article 31 of ECAS Rules, arbitrators’ obligation for disclosure is more extensive than both of EAL and CRCICA. It includes any facts, circumstances, or relationships:
(a) that would raise doubts with regards to independence of an arbitrator from the parties’ point of view;
(b) might raise reasonable doubts justifiable doubts with regards to the arbitrator’s impartiality; or
(c) that might be understood as a conflict of interest.
The disclosure should be submitted within one week from the date of nomination.
The Courts’ trend shows that the threshold of disclosure is quite high. It is not a strict requirement and arbitrators enjoy a large degree of discretion as to whether certain facts or circumstances should be disclosed. Parties should be aware, however, that they should raise any challenges to arbitrators as soon as they became aware (or necessarily should be aware) of any circumstances that might raise doubts to the impartiality or independence of an arbitrator to avoid being considered as a waiver of the right to raise such challenge.
This series will continue next week with the position from France.
1 Court of Cassation Challenge No. 18309 of JY 89, dated 27 October 2020.
5 Article 16(3) of the EAL provides “Acceptance of an arbitrator of the appointment must be in writing. The arbitrator must disclose at the time of acceptance any circumstances that might raise doubts as to the impartiality or independence.”
6 Court of Cassation judgment in Challenge No. 1681 of JY91, dated 16 February 2022.
7 Cairo Court of Appeal judgment in Appeal No. 98 of JY32, dated 11 May 2016.
8 Court of Cassation judgment in Challenge No. 18116 of JY88, dated 11 June 2019.
9 Court of Cassation judgment in Challenge No. 30 of JY125, dated 22 January 2009.
10 Court of Cassation judgment in Challenge No. 18116 of JY88, dated 11 June 2019.
11 Court of Cassation judgment in Challenge no. 6887 of JY72, dated 23 January 2021.
12 Court of Cassation judgment in Challenge No. 13892 of JY81, dated 22 February 2022.
13 Court of Cassation judgment in Challenge No. 13892 of JY81, dated 22 February 2022.
14 Court of Cassation judgment in Challenge No. 18309 of JY89, dated 27 October 2020.
15 Court of Cassation judgment in Challenge No. 18116 of JY88, dated 11 June 2019.
16 Commercial Circuit (7), Cairo Court of Appeal judgment in Appeal No. 71 of JY125, dated 3 February 2009.
17 Commercial Circuit (8), Cairo Court of Appeal judgment in Appeal No. 75 of JY125, dated 18 May 2009.
18 Commercial Circuit (8), Cairo Court of Appeal judgment in Appeal No. 75 of JY125, dated 18 May 2009.
19 Commercial Circuit (8), Cairo Court of Appeal judgment in Appeal No. 75 of JY125, dated 18 May 2009.
20 Commercial Circuit (7), Cairo Court of Appeal judgment in Appeal No. 65 of JY124, dated 2 February 2009.
21 Article 11 of CRCICA Rules of Arbitration provides “1. When a person is approached in connection with his or her possible appointment as an arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. An arbitrator, from the time of his or her appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances. Any doubts as to the duty to disclose a fact, circumstance or a relationship shall be interpreted in favour of disclosure. 2. The appointment of an arbitrator shall be completed only upon the acceptance of his or her mission. The arbitrator thus appointed shall submit, within one week after being notified with his or her nomination, a written declaration confirming his or her impartiality and independence.”
22 Article 11 (3) of CRCICA Arbitration Rules provides “The arbitrator shall avoid ex parte communications with any party regarding the arbitration. If any such communication is made, the arbitrator shall inform the other parties and arbitrators of its substance.”