About Arbitration

What is Arbitration

Arbitration is an internationally established means of resolving disputes outside the national court system. Typically faster than court proceedings, it is often the preferred method of dispute resolution in international business relations.

Arbitration is a consensual dispute resolution process based on the parties’ agreement  to submit their disputes for resolution to an arbitral tribunal. These agreements are often found in the provisions of a commercial contract or applicable investment treaty. Arbitral tribunals are usually composed of one or three independent arbitrators appointed by or on behalf of the parties.

Arbitration is known for its procedural flexibility, which allows parties to engage in an efficient, confidential, and fair process leading to a final, binding and enforceable award.

Arbitration awards are enforceable in 169 countries around the world, thanks to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).

Why Arbitration

Neutrality

Parties are free to choose a neutral arbitral seat when drafting their arbitration clause. Also, once a dispute has arisen, parties have the ability to appoint independent arbitrators of their choice to form a neutral tribunal.

Flexibility

Arbitration allows the parties to determine the procedures, language, and law on the merits they wish to apply to their arbitration. Once in arbitration, parties might opt to settle their dispute amicably during the proceedings and agree on a consent-award, enforceable as other arbitral awards; or to resort to other ADR mechanisms during the proceedings, and return to arbitration if no settlement was reached.

The arbitration procedure, however, is regulated by law. The law provides for a number of requirements that need to be met by the arbitration procedure in order for the award to be valid and enforceable under the New York Convention.

Time and cost-efficiency

Due to the flexibility and finality of arbitral proceedings, resolving disputes through arbitration may often be faster and more cost effective than resolution through litigation.

Confidentiality

Arbitration hearings are conducted in private and awards are, under normal circumstances, not published.  Therefore, disputes will not be revealed to the public, thereby, maintaining business relationships where possible.

Enforceability

Enforcement of foreign court judgments can be difficult in the absence of an appropriate bilateral or multilateral treaty. This is not the case in arbitration where a single international convention,  the New York Convention, applicable in over 150 jurisdictions, requires its signatories to undertake to recognise and enforce arbitral awards made in other signatory countries.

Final and Binding

Arbitration is a one-instance procedure, resulting in a final and binding award. Therefore it is not possible to appeal an arbitration award (i.e. it is not subject to review on the merits). As it puts a definitive end to the dispute, this means that prolonged court appeal procedures can generally be avoided.

However, parties can challenge the validity of the arbitral award before the competent national court to set it aside. The court is tasked solely with determining whether or not the arbitration procedure has met the requirements provided for by the law. Regarding the Egyptian Arbitration Law No. 27 of 1994, it is Article 53 that provides the grounds for setting aside the arbitral award.

 

Types of Arbitration

There are two different types of arbitration, institutional and ad hoc, the essential features of each are set out below:

Institutional Arbitration

  • Institutional arbitrations are administered by an arbitration institution, such as the CRCICA, and are conducted according to its rules.
  • Institutional arbitration provides important administrative assistance to the Parties.
  • Institutional arbitration guarantees the predictability of the arbitration proceedings, especially the arbitrators’ fees, which are determined by the institution. The parties are able to assess, when they select an institution and before the commencement of the proceedings, the costs of the arbitration, except legal fees.
  • Institutional arbitration also regulates the deposits of the arbitrators’ fees.
  • Institutional arbitration makes the procedures more efficient by avoiding the need to resort to state courts in the proceedings, especially in the appointment, removal, and challenge of arbitrators.
  • Typically, proceedings are conducted under the arbitration rules of the chosen institution, which establish the parameters of the procedure from the submission of the notice of arbitration to the issuance of the award.

Parties who wish to agree on arbitration under the CRCICA Rules are recommended to use the following arbitration clauses.

Ad Hoc Arbitration

Ad hoc arbitrations are arranged solely between the arbitrator(s) and the parties. The parties must envisage and advance the arbitration procedure themselves under the supervision of the tribunal. The parties may choose to adopt a ready-made set of arbitration rules (such as the UNCITRAL Rules of Arbitration or the Egyptian Arbitration Law No. 27 for 1994) or the proceedings may be conducted in accordance with a set of bespoke rules, drawn up by the parties specifically for that particular case, as long as they comply with the legal requirements of the seat of the arbitration.