Case Law
Egypt / 27 March 1996 / Egypt, Court of Cassation / Egyptian Concrete Company & Hashem Ali Maher v. STC Finance & Ismail Ibrahim Mahmoud Thabet & Sabishi Trading and Contracting Company / 2660/59
| Country | Egypt |
| Court | Egypt, Court of Cassation |
| Date | 27 March 1996 |
| Parties | Egyptian Concrete Company & Hashem Ali Maher v. STC Finance & Ismail Ibrahim Mahmoud Thabet & Sabishi Trading and Contracting Company |
| Case number | 2660/59 |
| Applicable NYC Provisions | V | II | I | II(1) | I(2) | V(1)(a) | V(1)(b) |
| Languages | English |
| Summary | A contract for the lease of equipment was concluded on 16 November 1982 and provided for the application of Swedish law and for the settlement of all disputes arising from its interpretation or performance by arbitration in Sweden. After Egyptian Concrete Company and Hashem Ali Maher (“the Claimants”) stopped paying the rent, arbitration proceedings were initiated and an award was rendered on 4 July 1985 ordering the Claimants to pay damages to STC Finance (“STC”) and Sabishi Trading and Contracting Company (“Sabishi”) and to return the equipment. On 14 January 1987, the North Cairo Court of First Instance accepted STC’s request for granting enforcement to the arbitral award. This ruling was confirmed by the Court of Appeal on 20 May 1989. The Claimants challenged the judgment of the Court of Appeal before the Court of Cassation and alleged (i) that the Court of Appeal incorrectly applied the law since the contract for the lease of equipment, as well as the arbitration agreement it contained, was never concluded, (ii) that the arbitration agreement in question only determined the applicable law and the place of the arbitration without determining the names of the arbitrators or the arbitration body administering the dispute as is required by the NYC, (iii) that the Claimants were not given notice of the commencement of the arbitration proceedings, the names of the arbitrators or summoned to appear in accordance with Swedish law and the NYC, (iv) that the award could not be granted enforcement before having verified whether Sabishi owned the equipment concerned or whether it was owned by a third party, and (v) that the Court of Appeal did not verify whether Egyptian Courts had jurisdiction over the dispute, as is required by the Egyptian Code of Civil and Commercial Procedure (“Code of Procedure”), before granting enforcement to the arbitral award. The Court of Cassation rejected the Claimants’ challenge and upheld the judgment of the Court of Appeal granting enforcement to the award. It considered that the NYC presumes that arbitral awards are based on valid arbitration agreements unless the party objecting to enforcement provides evidence, according to Article V(1)(a) NYC, that the arbitration agreement is invalid under the law applicable thereto. In this case, the Claimants’ challenge should be rejected given that it was based on Egyptian law and the Claimants did not provide any such evidence under Swedish law. The Court also considered that Article II(1) NYC, together with Article I(2) NYC, indicates that international arbitration agreements are valid even if the Parties do not appoint the arbitrators as long as the arbitration agreement explicitly or implicitly indicates that the Parties intended that the arbitrators be appointed in accordance with the rules of a permanent arbitral body. According to the Court, the Parties’ agreement that arbitration be held in Sweden and the nature of the lease contract necessarily indicated that the arbitration would be administered by the commercial arbitration center in Sweden. The Court also considered that the Claimants provided no proper evidence that the notices provided to them, with respect to the appointment of arbitrators and of the arbitration proceedings, were not valid under Swedish law. It further considered that, in accordance with Articles I and II NYC, each State party to the NYC recognizes the res judicata effect (“autorité de la chose jugée”) of foreign arbitral awards unless one of the grounds for non-enforcement contained in Article V NYC is established and that arbitral awards have a res judicata effect starting from the date of their issuance and maintain this res judicata effect as long as they exist. Therefore, the local judge may not, when ordering enforcement of arbitral awards, verify whether they are fair or correct on the merits. Accordingly, the Claimants’ challenge of the Court of Appeal’s judgment on the basis that it did not verify whether the equipment was owned by a third party does not fall under any of the grounds for non-enforcement under the NYC. The Court finally noted that, given that Egypt acceded to the NYC by Presidential Decree No. 171/1959, the NYC is applicable as is any other law of the Egyptian State, even when it contradicts the Code of Procedure. Accordingly, it rejected the Claimants’ challenge on the basis that the Court of Appeal did not verify whether Egyptian Courts have jurisdiction over the dispute, reasoning this is not required by the NYC. |
Attachment (1)
 Original Language Adobe Acrobat PDF |
