Prof. Dr. Mohamed S. Abdel Wahab, Chair of private international law and professor of international arbitration at Cairo University, and founding partner and head of international arbitration at Zulficar & Partners Law Firm, commences our new series, Arbitration in Africa.
In Part 1, Prof. Dr. Abdel Wahab discussed his personal and professional background, including his current roles. He also considered arbitral institutions and centres in the Middle East and North Africa (MENA) region and Africa. In Part 2, he examines arbitral procedure and culture in Egypt and in Africa more generally, including the courts’ support for arbitration, recognition and enforcement of awards in Egypt, and African investment trends and investment treaty arbitration. He also reflects on the challenges facing arbitration practitioners in Africa/Egypt and offers advice to those who wish to pursue an arbitration career on the continent.
Arbitral procedure and culture
Arbitration in Egypt and more generally in Africa dates back several centuries. Practising arbitration is rooted in the African tribal and social traditions. By way of a quick illustration, the Pharaohs, who are believed to have deeply rooted African origins and who extended their reach to the southern parts of the continent, practised and used arbitration. History and papyrus scrolls say that the Seth and Osiris/Horus dispute was resolved by Thoth (He who decides impartially) and funerary trust arrangements in 2,500 BC and 2,300 BC were also arbitrated.
However, arbitration in its modern form, procedure, principles and norms started to develop across the continent only few decades ago, with Egypt leading the way by signing the New York Convention on the Recognition and Enforcement of Foreign Awards in 1959 and enacting its modern (UNCITRAL inspired) arbitration law in 1994. Nowadays, the continent is undergoing profound alternative dispute resolution (ADR) related reforms and experiencing a colossal wave of arbitration-related developments and growth. Arbitration hubs are also developing across the continent. Together with Egypt and South Africa, Nigeria, Cameroon and Kenya offer talented arbitration practitioners and prominent figures in the world of international arbitration.
Practice shows that domestic arbitral proceedings on average take 8-18 months, and international arbitral proceedings on average take 18-24 months, with arbitral institutions pushing for a more expedited and efficient procedure.
Generally speaking, arbitral tribunals, especially in institutional arbitration under almost all African institutional rules, have powers to issue interim decisions/orders and can also issue partial awards. New and innovative practices on emergency arbitrator, consolidation, multi-contracts, expedited procedure and so on are being gradually introduced in national laws and institutional rules, across the African continent, whenever a revision of the said laws and rules take place. By way of illustration, the new Casablanca International Mediation and Arbitration Centre (CIMAC) Rules include innovative provisions on these and other matters, and the Cairo Regional Centre for International Commercial Arbitration (CRCICA) is also contemplating amending its rules to align it with best practices prevailing in institutional arbitration.
In my opinion, the needed areas for improvement in arbitral procedure across the African continent include:
- Ceasing to treat an agreement to arbitrate as an exception that is narrowly construed.
- Introducing UNCITRAL Model Law–based arbitration legislation with new provisions on emergency arbitrator, consolidation, multi-contracts, expedited procedure and so on.
- Regulating third party funding and arbitration finance in accordance with prevailing international standards.
- Introducing ethical and professional conduct obligations as normative practices for arbitrators and counsel in arbitral proceedings.
- Garnering more judicial support for the arbitral process through a more harnessed use of public policy as a ground for setting aside arbitral awards, and simplification of enforcement proceedings to align African states with the core obligations of the New York Convention.
- Offering ease of access and secure venues for hosting arbitral proceedings.
Africa is a talent-rich continent with diverse cultural practices and traditions and African arbitration is no exception to such richness. If afforded equal opportunity, Africa can positively contribute to the edifice of international arbitration.
Court support for arbitration in Egypt and Africa
Being conscious of the wealth of positive influence and contributions that the Egyptian legal system has exerted on legal systems throughout the MENA region, I believe that, over the years, the Egyptian judiciary and courts have played a major positive role in supporting credible arbitration practices and international arbitration. For example, the Egyptian Court of Cassation and the Cairo Court of Appeal are increasingly exhibiting prudent review and consideration of international arbitration principles and practices.
Whilst the Egyptian Arbitration Law No. 27 01 1994 (1994 Act), as amended, is inspired by and derived from the UNCITRAL Model law, there remains a myriad of issues that have arisen in practice and for which the law did not have clear and explicit provisions. For example, Egyptian courts intervened, through their judgments, to give effect to prudent international arbitration practices and to uphold arbitral awards that are worthy of being upheld. Accordingly, Egyptian courts have developed a wealth of persuasive decisions covering issues of subjective and objective arbitrability, procedure, appointment of arbitrators and conflicts of interest, setting aside grounds, and recognition and enforcement procedures. It suffices to say that the Egyptian Constitutional Court, in the early 2,000s, even upheld an arbitral award at the expense of a criminal court judgment, where the Constitutional Court stated that the arbitral tribunal had the full opportunity to ascertain liability and acquit the debtor from his debt; therefore, the penal sanction of imprisonment on account of a dishonoured cheque was overturned the cheque, signed by the debtor, did not represent a real and credible debt.
Similarly, African courts in Nigeria, Kenya, South Africa and beyond have demonstrated appreciation of international arbitration and are increasingly supportive of arbitration. Undoubtedly, courts have a major role to play, and I dare say that failures and successes of arbitration in Africa is therefore pretty much linked to the judicial perceptions of the process and the support needed. Having the best arbitration law would not count or matter, unless courts provide the necessary support and demonstrate full appreciation of the prevailing legal principles and best practices in international arbitration. The rise and fall of arbitration in a given jurisdiction pretty much falls squarely on the shoulders of the judiciary.
Recognition and enforcement of awards in Egypt
Egypt joined the New York Convention on 2 February 1959, ratified same on 9 March 1959, and it entered into force as part of the Egyptian legal system on 7 June 1959 without any reservations or declarations.
Whilst the 1994 Act provides for the explicit primacy of international conventions (such as the New York Convention), the grounds for refusal of recognition or enforcement under the 1994 Act do not include a provision similar to Article V(1)(e) of the New York Convention pertaining to non-enforcement of awards that have been set aside. That said, it is worth noting that Egyptian courts have not, up to now, adopted a clear position with respect to the French doctrine of delocalising arbitral awards. Recent enforcement decisions have shown that the trend in international arbitration (in non-administrative contracts) is pro-enforcement, but the actual procedure for recognition or enforcement remains daunting. Also, a defence of state or sovereign immunity at the enforcement stage will not normally be successful, unless enforcement is sought against publicly owned assets that are not subject to enforcement, such as a public utility or public interest funds.
African investment trends and investment treaty arbitration
- Oil and gas, and energy.
- Construction and infrastructure projects.
- Materials (cement, glass, and so on).
To this end, almost all African countries have enacted investment laws that aim to promote and protect foreign investment. Whilst each state has passed its own investment law(s) consistent with its strategic investment policies, the common denominator and fundamental gist of all such legislative initiatives is to afford adequate security and protection to foreign investment. Moreover, almost all African states have entered into and concluded bilateral investment treaties (BITs), which provide reciprocal investment guarantees and incentives for foreign and national investors. Most recently, in March 2018, 44 African states (including Egypt) entered into the Agreement on the establishment of a Continental Free Trade Area, which is the largest since the World Trade Organization (WTO) was established in 1995. The agreement aims to promote intra-African trade in goods and services through a continental market of approximately 1.2 billion people with a total GDP of more than USD 2 trillion. The agreement strengthens the negotiating power of the continent, especially within the framework of the WTO. It provides Egypt with a real opportunity to access new markets (the West and Central African countries) and also provides market access to Egyptian exports (especially manufacturing goods) to all African countries. It also allows the import of raw materials from across the African continent.
On a different note, China, which has spent over USD 1.3 billion under the Africa “Belt and Road Initiative”, established the China Africa Joint Arbitration Centre (CAJAC) in Shanghai and Johannesburg to resolve commercial disputes that involve Chinese and African parties.
In specific reference to investor-state dispute settlement (ISDS), African states have entered into more than 790 BITs and they are mostly respondents in ISDS proceedings. According to a report by the United Nations Economic Commission for Africa, between 1972 and 2014, African countries were involved in 111 investment dispute cases. Egypt now tops the chart of African states against which investment proceedings have been commenced with more than 31 cases, followed by Libya with more than 11 cases, followed by the Democratic Republic of Congo with eight cases, Algeria with six cases and Guinea with five cases.
More generally, the ISDS landscape is changing, but surely the answer to any shortcomings of the presently existing ISDS system lies not in the exclusive creation of state-centric or state-constituted investment courts. Whilst many speak of system “reform” to justify the profound changes advocated, I believe the question is whether the aim is really one of “reform” or “reformation” and “reconfiguration”. In a nutshell, a successful ISDS system should, in my opinion, remain founded on the balanced perception of its users, so that it is neither state-centric nor investor-oriented. System neutrality boosts confidence and is a guaranteed recipe for success.
Challenges facing arbitration practitioners in Africa/Egypt
The greatest challenges facing arbitration practitioners in Africa (including Egypt) are:
- Inadequate visibility and inaccessibility to global markets, which calls for “scouting of African arbitration talent”.
- The insufficient awareness of the importance, role and principles of ADR and international arbitration.
- Keeping up-to-date with developments and best practices in international arbitration.
- Modernising arbitration laws and the legislative regimes across the continent.
- The political and socio-economic instability that threatens sustainable development in some African states.
- The uncertain trends of the judiciaries and courts, and the scarcity of judges who specialise in cases involving international arbitration awards and proceedings.
Advice to those who wish to start a career in arbitration in Egypt/Africa
My advice to all those younger African colleagues who wish to pursue a successful career in arbitration is to work hard and enjoy doing so. Success necessitates the existence of a combination of soft and hard skills, and the path to success need not be pursued abroad. You can stay on the continent and excel globally; it is not where you are, but what you do that makes a real difference.
One must also strive to learn and acquire knowledge till the last breath, work with due diligence and integrity, maintain high ethical standards, develop competence and expertise, continue to have lust for innovation, and, most importantly, be patient and never lose focus and hope.
Finally, always remain modest no matter how knowledgeable, acknowledged and well established you become, for vanity working on a weak head produces every sort of mischief.