Subject: legal report concerning:
The Difference Between
Egyptian Arbitration Law and the UNCITRAL Arbitration Rules
Legal report
We will study the differences and similarities between the Egyptian Arbitration Law and UNCITRAL Arbitration Rules.
First: The importance of consistency between International and National Arbitration Rules:
The concept of Arbitration is not new, but its consistency within the borders of different countries has always been a challenge for swift International Trade.
Whenever a conflict arises in general between international business entities, the clause of arbitration plays a vital role in conflict resolution. Arbitration is preferred by the business community in general as it is a fast, cost-effective and trustworthy system which is enforceable throughout the world, however, a certain lacuna exists as whether the national rules of arbitration in a specific country are in conformity with the international rules of arbitration.
For this very reason, throughout this study we will explore the differences and similarities between the rules set out by the United Nations Commission on International Trade Law (UNCITRAL) and the national Egyptian Arbitration Law.
UNCITRAL was established in 1966 as a subsidy body of the United Nations General Assembly with a general purpose to further the progressive harmonization and unification of the law pertaining to international trade in the interest of all entities, especially those from developing countries. UNCITRAL Rules are recognized as a very successful text and are used in a wide variety of circumstances covering a broad range of disputes, including disputes between private commercial parties, investor-State disputes, State-to-State disputes and commercial disputes administered by arbitral institutions, in all parts of the world.
The Egyptian Law that covers the topic of Arbitration is “Law No. 27/1994 Promulgating the Law Concerning Arbitration in Civil and Commercial Matters” which details the procedural requirements for valid arbitration. Most of the law is standard and similar to what the UNICTRAL Arbitration Rules state such as the notice and calculation of periods of time, the notice of arbitration and its response, rules governing representation and assistance, etc.
Second: The key differences between Egyptian Arbitration Law and UNICTRAL rules:
- Splitting the law, which governs the elements of a legal relationship, is required and desirable if it leads to the application of the most appropriate laws for each element. This application of splitting the law is not permissible under Egyptian Arbitration Law but is allowed through the UNICTRAL Arbitration Rules. The dominant jurisprudence in Egypt rejects the idea of splitting the elements of the contract and giving the parties the right of subordinating each part to a law. This doctrine requires that unity of law shall apply to international contracts to be in harmony and to ensure harmony between the provisions applied to the elements that make up those contracts. The contract, therefore, will be subject to one law in terms of composition and effects.
- The second difference comes to the freedom to choose legal rules that do not constitute the law of the state. To understand this difference, we must understand that the freedom to choose legal rules as per the discretion of the parties is given however, that freedom comes with its limitations. The Egyptian law states that the freedom of the parties to choose the law is restricted and the agreement of the parties to apply the norms of international trade or on the application of the rules of a convention are not valid. In cases such as these, the judge refers to the activation of the rules of the statutory reserve which are set by the legislator if the parties do not explicitly or implicitly agree to the applicable law.
- The third difference is that off choosing the law of the contract later. It is argued that if a choice of a law is made after entering into the contract then that choice should have no retroactive effect as of the time of entering into the contract. In Egyptian law, there is no explicit clarification on this issue at the same time there is nothing in the law to prevent the parties from choosing the law after conclusion of the contract. They may also amend this selection at any time, since the one who has the power of making the subsequent choice is certain to own the authority of making amendments.
Third: Conclusion
The Egyptian Arbitration law is a very comprehensive law which is almost in line with UNICTRAL Arbitration Rules however, there are a few amendments required such as firstly, the contract shall be clearly considered as international in nature as this will close the door to explanations which disregard the internationality of these contracts. Secondly, the parties shall be granted freedom to choose the law to govern part of the contract and the freedom to choose more than one law, so that each law governs a selected part of the contract. Lastly, not restricting the freedom of the parties but restricting it to the selection of a specific national law and allowing this freedom to the choice of legal rules that are compatible with the necessities and needs of international trade, such as choosing the customs or norms of international trade or the legal rules of an agreement.
The current status of Egyptian Arbitration Law is very investor friendly and with these recommendations, the Egyptian Arbitration Law will eliminate any discrepancies that remain between the two laws.
Prepared by: Mustafa Ali Khan, L.C.C Legal Researcher
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Best Regards,
Dr. Ahmed Said
Founder & Managing Partner
L.C.C Law Firm