Dr. Nabil Farag, Managing Partner, Nabil Farag Law Firm
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Legal procedures for implementing Foreign International Arbitration Awards in Egypt in accordance with the New York Convention for the Recognition and Implementation of the Foreign Arbitrators awards of 1958, and provisions of the Egyptian Procedures Law, The Egyptian Arbitration Law No. 27 of 1994, and the Egyptian Maritime Law No 8/1990
A maritime dispute was raised between a Swiss company as the (Sellers) and an Egyptian company as the (Buyers). The claimant (Sellers) had filed an arbitration lawsuit with The Grain And Feed Trade Association (GAFTA) versus the (Buyers) requesting a compensation for the termination of the contract signed between them for the supply of wheat, which the buyers did not pay the price of wheat in accordance with the agreed contract and therefore, breached the contract. Since the contract was governed by the rules of GAFTA in London, the arbitrators were chosen and appointed by the parties. The arbitration tribunal heard the case and finally had ordered to oblige the buyers to pay the seller an amount of $5,800,000 (Five million and eight hundred thousand US dollars) in addition to interests of 4% quarterly plus the arbitrators fees. The International Arbitration Award issued by GAFTA became final whereas the buyers never appealed. The Arbitration Award was ratified and certified by the High Court of London, so, it became ready for implementation. The sale contract had included the conditions of the governing law and jurisdiction which stated:
“All other conditions or clauses that do not contradict with the above aforementioned terms of sale contract will be applied according to the said sales contract and the rules of GAFTA 49”.
“The Arbitration in London according to GAFTA Rules No. 125”.
The above-mentioned terms were the reason that the claimants (Sellers) submitted their arbitration lawsuit to the arbitration board stipulated in the sale contract and appointed an arbitrator to act for them and notified the (Buyers) with the initiate arbitration proceedings before the GAFTA organization.
The defendants had presented their legal defense before the aforementioned arbitration board represented by an Egyptian Law office. The Arbitration board ended ruling on the responsibility of the (Buyers) for the damages that occurred to the (Sellers) due to the breach of the sale contract and the obligation of the (Buyers) to pay the (Sellers) the amount of $5,800,000USD for the breach of the sale contract and the price difference between the contract price of 300 dollars per ton and the market price of 242 dollars per ton in total the contracted quantity, which is 100,000 tons, as compensation for the damages caused to the (Sellers). Also, the Arbitration tribunal ordered the (Buyers) to pay the (Sellers) a compound interest 4% Quarterly starting from the date of signed contract till the date of payment, in addition to the fees and expenses of the appointed arbitrator of the buyers, which amounted to a ruling of £8,876 pounds sterling.
Nabil Farag Law Firm had represented the claimants (Sellers) in Switzerland and asked to start implementing and execute the issued London Arbitration Award in Egypt where the buyers are located. Since this arbitration award was governed by the New York Convention for the Recognition and Implementation of the Foreign Arbitrators awards of 1958, which Egypt had been signed by the Presidential Decree No. 171 / 1959 dated February 2, 1959, and in addition to the provisions of the Egyptian Procedures Law, the Egyptian Arbitration Law No. 27 of 1994 and the Egyptian Maritime Law No 8/1990, the (Sellers) filed the petition No. 127 Q133 BC before the Cairo Appeal Court.
An official copy of the final Arbitration Award issued by the Permanent Arbitration Committee of The Grain And Feed Trade Association had been presented, accompanied by an official translation into Arabic, as well as the Arbitration Contract, and the original sale contract, and the rest of the arbitration documents for the aforementioned ruling was attached and presented to Cairo Appeal Court of Egypt, The official copy of the Arbitration Award was authenticated by the Egyptian Embassy in London. The Cairo Appeal Court heard the case and checked the above-mentioned documents, and The Cairo Appeal Court had issued a final and unappealable ruling, as follows verbatim:
8-1 We hereby adjudge that buyers pay plaintiffs $5,800,000,00 (Five million and eight hundred thousand US dollars) as the price difference between the contract price of 300 dollars per ton and the market price on contract date which It was proven that $242 per ton was on the contracted quantity of 100,000 tons, this amount is a ruling for the losses incurred by sellers according to the terms of the contract as a result of the buyers’ failure to open the bank credit letter required in the contract.
8-2 The sellers demanded an interest and the authority accepts the request, so we judge a compound interest of 4% (four percent ) quarterly, starting from the date the payment was made.
8-3 The tribunal of arbitration also rules that the fees and expenses of this ruling are at the expense of the buyers, and that the expenses of appointing Mr.: Gallagher as an arbitrator for the buyers include.
The ruling also included requiring buyers (defendants to be charged with arbitration fees”.
Whereas, The Article No 296 of the Egyptian Law of Procedure stipulated that:
“Judgments and orders issued in a foreign country may ordered to be implemented with the same conditions established in the law of the country to implement the provisions and orders of the Egyptian in it”.
The article No 299 of the Egyptian Law of Procedure states that:
“The provisions of the previous articles apply to the rulings of the arbitrators issued in a foreign country, and the ruling must be issued in a matter that may be controlled in accordance with the law of the Republic.
The article No 301 of the Egyptian Code of Procedure also states that:
“The implementation of the rules stipulated in the previous articles does not prejudice the provisions of the treaties concluded or concluded between the Republic and others from the states in this regard.
Article No 9 of the Egyptian Arbitration Law No. 27 of 1994 states that:
“The jurisdiction to consider arbitration matters referred by this law to the Egyptian judiciary is the court originally competent to hear the dispute, but if the arbitration is international commercial, whether it is conducted in Egypt or abroad, The jurisdiction of the Cairo Appeal Court shall be unless the parties agree on the jurisdiction of another court in Egypt”.
Also, The New York convention of the Recognition and Implementation of the Foreign Arbitrators Awards of 1958, which Egypt signed in accordance with Presidential Decree No. 171 of 1959 dated February 2, 1959, Which is thus considered as a part of the internal Egyptian legislation was stipulated that:
(1) The current treaty applies to recognition and implementation of arbitrators’ rulings. Issued in the territory of a state other than that which it is required to recognize and implement these provisions on its territory and that arise from disputes between persons natural or moral, as it applies to the provisions of arbitrators that are not considered national in the country required to recognize or implement these provisions.
(2) Arbitrators’ rulings” means not only judgments issued by specific arbitrators to adjudicate in specific cases, but also judgments issued by permanent arbitral tribunals to which the parties invoke.
(1) Each Contracting State recognizes the written agreement whereby the parties are obliged to submit to arbitration all or some disputes arising or that may arise between them on a contractual or non-contractual law link concerning an issue that may be settled by arbitration.
(2) by written agreement” means the arbitration clause in a contract or agreement of arbitration signed by the parties or the agreement contained in it mutual letters or telegrams.
Each Contracting State recognizes the authenticity of the arbitration award and orders its implementation in accordance with the rules of pleadings followed in the territory required for implementation and in accordance with the conditions stipulated in the following articles.
It is not imposed for recognition or implementation of the rulings of the arbitrators to which the provisions of the current agreement apply more severe conditions and no higher judicial fees, than those imposed for recognition and implementation of the rulings of national arbitrators.
Whereas, the New York treaty on the Recognition and Implementation of Foreign Arbitrators Provisions of 1958, was signed by Egypt, in accordance with Presidential Decree No. 171 of 1959 dated February 2, 1959, it is valid and considered as a part of the internal Egyptian legislation and even provides for our internal national legislation in this regard. The order with which the claimants asked the ruling to issue the order to implement the aforementioned final arbitration award issued in favor of the claimants “Sellers” in Switzerland versus the respondents “Buyers” in Egypt from the Permanent Arbitration Committee of (GAFTA) in London in the Arbitration Dispute No. 535-14 and in the form of enforcement.
The Chief of judge of the Cairo Appeal Court had been decided to appendix the issued Arbitration Award No. 535-14 by the (GAFTA) in London with the executive form No. 43 Q133 Q, Cairo Appeal Court, which decided to implement the mention arbitration award issued by GAFTA.
The “Sellers” had notified the “Buyers” by a copy of the executive form and asked them to pay the aforementioned amount immediately without delay or otherwise the claimants will proceed with the implementation procedures.
The respondents appealed to ordinance No. 28 of 133 Q, Cairo Court of Appeal, While the Cairo Appeal Court had ruled to reject and dismiss their appeal lawsuit, So, The Cairo Appeal Court decision had become final and was forward for implementation.