Egypt / 23 May 2001 / Egypt, Cairo Court of Appeal / Ahmed Mostapha Shawky v. Andersen Worldwide & Wahid El Din Abdel Ghaffar Megahed & Emad Hafez Ragheb & Nabil Istanboly Akram Istanboly / 25/116
| Country | Egypt |
| Court | Egypt, Cairo Court of Appeal |
| Date | 23 May 2001 |
| Parties | Ahmed Mostapha Shawky v. Andersen Worldwide & Wahid El Din Abdel Ghaffar Megahed & Emad Hafez Ragheb & Nabil Istanboly Akram Istanboly |
| Case number | 25/116 |
| Applicable NYC Provisions | III | V | V(1)(e) |
| Languages | English |
| Summary | On 22 August 1985, Shawky & Co. and Andersen Worldwide entered into a cooperation agreement which provided for disputes to be settled by a sole arbitrator in Geneva, Switzerland. Following a dispute between Shawky & Co. and Andersen Worldwide and the subsequent termination of the cooperation agreement, Andersen Worldwide initiated arbitration proceedings on 28 March 1994. Shawky & Co. raised objections to the jurisdiction of the arbitrator which he dismissed in an award dated 11 January 1995. On 10 June 1996, the sole arbitrator issued an award ordering Shawky & Co. to pay damages along with 8% interest to Andersen Worldwide. Ahmed Mostapha Shawky (“Ahmed Shawky”), one of the shareholders of Shawky & Co., filed a lawsuit before the South Cairo Court of First Instance, requesting it set aside both awards issued by the sole arbitrator. On 30 January 1997, a second lawsuit was filed by Andersen Worldwide before the South Cairo Court of First Instance, applying for enforcement of the award dated 10 June 1996. The South Cairo Court of First Instance decided to consolidate the lawsuits filed by Ahmed Shawky and Andersen Worldwide. By a judgment dated 22 February 1999, it rejected Ahmed Shawky’s request to have the awards set aside and granted enforcement to the award dated 10 June 1996 pursuant to the NYC. On 24 March 1999, Ahmed Shawky challenged the first instance judgment before the Cairo Court of Appeal and alleged, inter alia, (i) that the sole arbitrator had decided on allegations of corruption made by Andersen Worldwide against Shawky & Co. in breach of Article V(2) NYC, as the matter is not capable of settlement by arbitration, (ii) that the award was not binding because no treaty for the reciprocal recognition of arbitral awards existed between Egypt and Switzerland, (iii) that the lawsuit by Andersen Worldwide was filed in accordance with the Code of Civil and Commercial Procedure (“Code of Procedure”) which provides more onerous conditions than those in the Egyptian Arbitration Law, thereby contravening the provisions of the NYC, and (iv) that the award contravened public policy in Egypt by ordering the payment of interest at the rate of 8%, thereby exceeding the maximum interest rate of 4% in civil matters provided in Article 226 of the Civil Code. The Cairo Court of Appeal amended the first instance judgment, reducing the rate of interest from 8% to 4%. It rejected the rest of Ahmed Shawky’s arguments. The Court recalled that Egypt acceded to the NYC by Presidential Decree No. 171/1959 and that the provisions of the NYC are applicable even when they contradict the Code of Procedure. It held that, in accordance with Article V(1)(e) NYC, the Courts of the State under the law of which the award was made have jurisdiction over requests for setting aside the award. It also noted that, pursuant to Article V(1) NYC, when Egyptian Courts are requested to grant enforcement to an award, they may not review its merits. For reasons unrelated to the NYC, the Court of Appeal decided that the award did not decide on any matter that is not capable of settlement by arbitration. The Court further rejected Ahmed Shawky’s allegation that the award was not binding, reasoning that Egypt and Switzerland had both acceded to the NYC, which is sufficient for each State to recognize the awards issued in the territory of the other. The Court decided that the provisions of the Code of Procedure under which Andersen Worldwide had filed its lawsuit are not more onerous than Articles 56 and 58 of the Egyptian Arbitration Law. The Court added that Article III NYC does not require contracting States to provide a specific procedure to be followed by applications for enforcement of foreign arbitral awards. Lastly, the Court of Appeal held that Article 226 of the Civil Code, which limits the rate of interest in civil disputes to a maximum of 4%, is a rule of public policy. It thereby reduced the rate of interest ordered by the award from 8% to 4%. |
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