Microsoft word - arb. in admin. contracts report.doc
16-18 April 2006 Cairo, Egypt
The Cairo Regional Centre for International Commercial Arbitration (CRCICA) organized in collaboration with the Egyptian State Council the seminar of "Arbitration in Disputes Arising out of International Administrative Contracts" during the period from 16 to 18 April 2006 in Cairo, Egypt. The program was divided into six sessions scheduled over three days. The inaugural speech was given by Dr. Mohamed Aboul-Enein, Director of CRCICA, H.E. Counselor, Abdel Rahman Azouz, President of the Egyptian State Council and Counselor, Moataz Kamel Morsi, Vice-President and Secretary General of the Egyptian State Council. Day One First Session
This session was chaired by H.E. Counselor. Abdel Rahman Azouz and was entitled "New International Administrative Contracts" Counselor Azouz mentioned that Article 28 of the State Council Law empowers the State Lawsuits Authority to offer to the other party amicable settlement of the dispute, whereas the Law of State Lawsuits Authority does not grant the Authority such right and gives the competent minister the final say in the disputes involving states. He also suggested that the State Lawsuits Authority should be empowered to conclude amicable settlements whenever it is appropriate. In his presentation Prof. Mohamed Badran, Professor of Public Law, Faculty of Law, Cairo University and International Arbitrator, illustrated a comparison between Civil Law Countries and Common Law Countries regarding government contracts in their preparation, conclusion, performance, termination and means of settling disputes arising thereof, as the government contracts are the most common means of satisfying public needs in both systems without distinction. He concluded that both systems do not differ in terms of preserving the rights of the government and the rights of the contractors but they differ in the means, as the Common Law system is based on the principle of party autonomy; whereas the Civil Law system is based to a large extent on regulatory legal positions in contracting, accordingly, there is a remarkable and increasing trend in the field of international contracting towards the first system. He recommended reviewing administrative contracts in order to restore the party autonomy principle which will lead to benefiting from great jurisprudence in the civil law field, which the State Council had always benefited from, this will assist in offering a legal environment that is suitable for establishing fairness in the realm of state contracts concluded with private entities. He concluded by asserting the
necessity of reviewing the amount of damages allocated by the State Council in case the administration breaches its contractual obligations. The paper of Dr. Mohamed S. Abdel Wahab, Lecturer at the Faculty of Law, Cairo University and Legal Advisor at the Cairo Regional Centre for International Commercial Arbitration, was titled "The Internationalization of Administrative Contracts and the Problem of the Applicable Law : Reconciling Public Interest and Freedom of Contract", his paper was divided into three sections, the first section dealt with internationalization of administrative contracts in light of the international notion and the criteria for internationalizing the contract, and he referred to the false internationalization of the contract, and shed some light on the legal criterion, the economic criterion and the forum shopping criterion as well as the role of the party autonomy principle in this context. Then, the question of whether the administrative nature is in consistency with the international aspect of the contract from the realistic and perspective points of view was raised. The second section dealt with the problem of the applicable law and implementing the system of conflict of laws, where he outlined the traditional trend that excludes restoring to conflict of laws in the realm of public law relations. He also outlined the scope of the party autonomy principle in the realm of international administrative contracts. The Public, Private Law dichotomy of the contract and the notion of depecage and the multiplicity of applicable laws and rules was tackled. The third and final section included the practices in determining the applicable law on the dispute. He concluded by making certain remarks and recommendations asserting the distinguished nature of administrative contracts while determining the possibility of internationalizing it, the necessity of excluding the idea of excluding public law branches and the legal relations arising thereof from the scope of the mechanism of conflicts of law, asserting the need of making the right and subjective characterization of state contracts and the possibility of influencing the provisions relating to the administrative nature of the international contract in order to protect public interests, and finally the necessity of reconciling public interest and freedom of contract.
The presentation of Dr. Mohamed Abd Al-Majeed Ismail, Counselor at the State
Council, Legal Advisor at the Investment Authority and Member of the CIArb, was entitled "Reflections regarding Engineering-Procurement-Construction (EPC) Contract in the realm of Public Law provisions". His paper was divided into two sections, the first section related to the subject of Petroleum, Gas and Liquidified Gas Contracts, the second section dealt with the contractual system and the new legal nature of EPC contracts and the necessity of insuring consistency between procurement contract and site construction contract. He also pointed out the reliance of contractors on the stabilization clauses, which is included in most international concession contracts, as the latter is a form of long term agreement. He also tackled the issue of alternative dispute resolution (ADR) and arbitration as means of settling disputes. Finally he confirmed the importance of settling disputes arising of administrative contracts using arbitration. Second Session This session was chaired by Prof. Aktham El Kholy, Ex-Associate Dean and Professor, Faculty of Law, Cairo University and International Lawyer and Arbitrator ,
and was entitled "Disputes Arising out of Administrative Contracts and the Applicable Law on International Administrative Contracts", the Chairman of this session mentioned the false conjunction between the notion of imbalance and the administrative contracts, as the notion of financial balance is mentioned in the Administrative law. He also mentioned that the theory of international administrative contracts was invented to restrict the application of national laws on disputes. The presentation of Dr. Sherif El Haggan, International Arbitrator, Consulting Engineer and Partner, Contract Administration & Arbitration Bureau and Fellow, Chartered Institute of Arbitrators, London, started by outlining a number of statistics in both America and Kuwait regarding the reasons of delay in construction and the means of its reduction and mitigating its effect. He mentioned that in assessing liquidated damages, it is necessary to review the time period in which the maximum limit of damage is calculated bearing in mind the period of performing the project and its value. He asserted the importance of supporting alternative dispute resolution methods and applauded the English judiciary's stance in upholding the adjudicator's decisions which had a positive effect regarding the settlement of disputes and minimizing the number of disputes referred to litigation. He also asserted the importance of the balance of the contract and the allocation of risks among the parties which leads to a better end product i.e. better public service in terms of costs, quality or the time period within which the performance is completed. He clarified that it is better for the administrative authority to reduce the probable risks that the contractor incurs so that the price of the contracts becomes more adequate. He illustrated that the FIDIC contracts are considered balanced and that they are based on the construction contracts subject to English laws, therefore, it is important to remove the misconception that the FIDIC contracts were prepared to protect the interests of international contractors in the projects that are performed in developing countries. He concluded by requesting the contribution of engineers having expertise in contractual and legal issues in drafting laws concerning the construction industry and he confirmed the importance of facilitating the access to information and learning the lessons thereof. The presentation of Dr. Samy Abdel Baky, Lecturer of Commercial Law, Faculty of Law, Cairo University and Legal Advisor to the President of the Egyptian Capital Authority, dealt with the matter of obstacles facing the resort to arbitration in disputes arising from the execution of infrastructure projects according to the B.O.T system. He commenced his presentation by defining B.O.T. and describing the mechanism of resorting to arbitration. He made two remarks regarding the enumeration that the legislator had made in the Egyptian Arbitration Law in connection with the economic contracts that could be subject to arbitration, the first is relating to the admissibility of arbitration in disputes arising from contracts relating to public policy in Egypt (e.g. environment protection and nuclear power contracts). The second remark relates to the expansion by the legislator of the scope of arbitrable matters which signifies his will to attract more investments. Then, Dr. Abdel Baky referred to two kinds of obstacles; the first was a legal obstacle, which resided in the old law, which did not explicitly authorize public legal persons to resort to arbitration. The second obstacle is of a practical nature and arises due to the numerous parties involved in the performance of B.O.T. projects and also the variety of contracts concluded in the
scope of B.O.T. projects. Finally he outlined the advantages and disadvantages of both multiparty arbitration arising between the consortium and the owner and the disputes in case there are subcontractors.
Second Day: Third Session: This session, was chaired by Dr. Mahmoud Samir El Sharkawi, Professor of Commercial Law, Former Dean of the Faculty of Law, Cairo University and Arbitrator and International Lawyer. It was titled "Arbitration as means of Dispute Resolution in Administrative Contracts"; The Chairman supported the opinion of arbitrability of administrative contracts, even prior to the issuance of the Egyptian Arbitration Law No. 27 of the year 1994 and its subsequent amendments. Counselor/ Tarek El Beshry, Former Senior Vice President of the Egyptian State Council and Former President of the Advisory Legislative Department, General Assembly, State Council, displayed the development of the Egyptian State Council's position regarding arbitration in administrative contracts prior and subsequent to the issuance of the Egyptian Arbitration Law No. 27 of 1994. He confirmed that arbitration in administrative contracts does not relate to the admissibility of arbitration itself, i.e. the jurisdiction of the judiciary, but rather a matter relating to the capacity of concluding the arbitration agreement. He mentioned that inserting an additional paragraph to Article 1, of the Egyptian Arbitration Law No. 27 of 1994, requiring the acceptance of the competent minister in authorizing arbitration in administrative contracts, though explicitly putting an end to the debate, some decisions rendered by the Supreme Administrative Court are still of the opinion that arbitration in administrative contracts is not authorized. Dr. Hosam Lotfy, Professor of Civil Law at the Faculty of Law, Beni-Suef University, initiated his presentation by calling for the necessity of avoiding the unexplained sensitivity towards arbitration. He also proposed an amendment to the title of the arbitration law in the civil and commercial matters, since it is a misleading title, especially when discussing arbitration in administrative contracts, and suggested that it should be called the Arbitration Law. He also dealt with the issue of evidence in electronic transactions, the role of the law in electronic signatures and the Information Technology Development Authority in that context. Monsieur Jean-Francois Mary, Counselor in the French Conseil d'Etat, referred to the prevailing principal in France ruling that the State, Localities and Public legal persons can not be parties to domestic arbitrations but rather can resort to arbitration, with certain conditions, in contracts relating to International Law. He also mentioned that all legal provisions authorizing arbitration relate to discretionary (non-compulsory) arbitration, and that the conclusion by France of international conventions does not affect the optional element in arbitration. He concluded his presentation by stating that there is no hostility regarding arbitration and alternative dispute resolutions especially that in 1993, the French Conseil d'Etat suggested the adoption of such matters and the French Government issued special legislations regarding mediation and conciliation.
Mr. Ismail Selim, Prosecutor, General Prosecution Office, Legal Advisor at the Cairo Regional Centre for International Commercial Arbitration, discussed "The Rationae Personae in Entering into Arbitration Agreements Involving Juridicial Public Persons and whether it is related to Public Policy", where he commenced his presentation by explaining the controversy regarding the admissibility of arbitration in administrative contracts, until the matter was settled by Law No. 7 of the Year 1999. He also went through the effect of the actual application of that legislative amendment through two arbitral cases. Then, he discussed the difference between the Transnational Public Policy and National Public Policy notions. Following that, he explained how the French Judiciary resorted to the approach of (Regles Materielles), which could exclude such non-application as stipulated in the French law- and other laws- relating to the inclusion of juridical persons as parties to arbitration. He concluded his presentation by mentioning that a ministerial decree has been issued in Thailand making arbitration in administrative contracts subject to the acceptance of the ministerial council. Fourth Session: This session was chaired by Dr. Mohamed Aboul Enein and it was titled "Arbitral Institutions and Disputes Arising out of International Administrative Contracts". Dr. Mohamed Aboul Enein presented a paper on the role of arbitral institutions in administrative contracts' disputes and a paper titled "The Special Nature of Disputes arising from Administrative Contracts and the Role of Arbitral Institutions in their Settlement". He displayed the special nature of disputes arising out of administrative contracts, and the reflection of such distinctive feature on their avoidance. He also shed some light on the role of arbitral institutions, the UNCITRAL Rules, the Dispute Resolution Boards, the appointment of arbitrators, the preference of appointing more than one arbitrator having different fields of specialization, the process of rendering, assessing and reviewing awards and the preparation for arbitration hearings. Based on the above, Dr. Aboul Enein favors the resort to institutional arbitrations, since they are more organized and administered than ad hoc arbitrations. Counselor Ahmed Hasan, the Vice President of the Egyptian State Council, mentioned the importance of attracting investments to the country by drafting attractive laws. Then, he discussed the process and objectives of the International Centre for Settlement of Investment Disputes (ICSID). He clarified that the benefit of resorting to the ICSID is subject to the requirement that the claiming investor does not hold the nationality of the defendant state; he also referred to the dilemma of double nationality of the investor and discussed the tactics of certain investors in dropping nationalities so as to benefit from the ICSID protective system. He concluded his presentation by criticizing the Wena vs. Egypt award and Joy Mining vs. Egypt case in detail. Counselor Dr. Amin El Mahdy, Former President of the Egyptian State Council, discussed Le Plateau des Pyramides case with a thorough analysis of the award issued by the ICSID. He mentioned that the case was the first ICSID case involving Egypt as a party. He clarified that in relation to the applicable law on the merits of the dispute ,
the award rendered in this case by majority of the arbitrators has misinterpreted Article 42/1 of the Washington Convention. He also questioned the supposed protected investor and also the problem of deceitful manipulation with respect to nationalities indicating that in many circumstances; the nationality laws are being applied improperly. This session was concluded by a presentation, titled "The Egyptian State Contracts and the ICSID: Quo Vadis?" presented by Dr. Mohamed Abdel Raouf, Lawyer and Secretary General of the Cairo Regional Centre for International Commercial Arbitration. He discussed the past, present and future of the settlement of disputes arising out of Egyptian state contracts before the ICSID through a display of certain statistics showing the number of cases filed against the Egyptian Government before the ICSID and the awards rendered therein. He indicated that Egypt is ranked the third country in the world with respect to the arbitration cases filed against it before the ICSID (10 cases) right after Argentina and Mexico. He also mentioned that Egypt is considered the fifth country in the world with respect to the number of concluded Bilateral Investment Treaties (BITs) for the encouragement and protection of investments (90 BITs till June 2005). He went through the various versions of dispute settlement provisions inserted in such BITs, indicating that as a result of the Egyptian Government's automatic consent offered in most of such treaties, more cases will be filed against Egypt regardless of the type of the investment and its nature, and even if the Egyptian government has no contractual relationship with the investor. He concluded his presentation by making a number of recommendations regarding the necessity of publishing, analyzing and commenting ICSID awards, and preparing a team composed of young and competent Egyptian lawyers to represent the Egyptian Government, Dr. Abdel Raouf also stressed on the importance of raising awareness of state's advisors whilst negotiating and implementing State Contracts. Third Day:
This session titled "The Role of the Administrative Judiciary in Arbitration", was chaired by Dr. Mohamed Aboul Enein. Counselor Abdel Fatah Abu El Leil, Vice-President of the Egyptian State Council, discussed the concept of arbitration and the positions of the Egyptian and French Judiciaries regarding the arbitrability of administrative contracts, then he dealt with the role of the judiciary in appointing arbitrators and whether there are certain conditions to be satisfied in the arbitrators and the reasons for challenging arbitrators. He also confirmed that the whole arbitration process is undertaken under the umbrella of the judiciary, from its start till its end and its supporting and assisting role as well. Mainly, the judiciary is competent to issue conservatory measures, whilst the arbitration law authorizes the Arbitral Tribunal to issue such measures. Counselor Abdel Fattah Al-Gazzar, Vice President of the Egyptian State Council, discussed the jurisdiction of the administrative judiciary regarding the examination and possible annulment of the arbitration clause inserted in administrative contracts. He stressed that the dispute involving arbitration clauses should be referred to arbitration by the court and that the Arbitral Tribunal should rule upon its own
jurisdiction (the concept of Competence Competence). He substantiated the necessity of striking a balance between the judge's exercise of his competence and not surpassing his own jurisdiction with the parties' acceptance. He also commented on the section, in the preparatory work of the Arbitration Law, according to which the Court had the upper hand in concluding the arbitration proceedings if it detects the nullity of such arbitration clause, however this provision was not inserted in the Arbitration Law, where there is no conflict between this section and the other legal provisions e.g. Article 22 of the law that authorizes the Arbitral Tribunal to rule upon its own jurisdiction and therefore there was no need to cancel it. Dr. Karim Hafez, the principal of a Cairo-based specialist arbitration practice, HAFEZ, discussed the limits of pre-award judicial review of arbitration agreements. For him, eight conflicting considerations determined the nature of that review function: 1) considerations of speed, 2) of finality, 3) of economy, 4) the tribunal’s right to decide its jurisdiction, 5) the need to avoid negative conflicts (between courts and tribunals), 6) the need to avoid positive conflicts, 7) the right to seek judicial redress, and 8) the advisability of concentrating judicial review functions in a few courts. The speaker posited an intimate relationship between the tribunal’s right/obligation to decide its jurisdiction as a preliminary point of law, the parties’ right to challenge that decision without awaiting the award on the merits, and the standard of judicial review at the pre-award stage. In support of his thesis, he reviewed the position in Egypt, France, Germany, Switzerland, England, as well as under the Model Law. By way of conclusion, Dr. Hafez suggested that consideration ought now to be given to allowing immediate judicial review of decisions on jurisdiction, and in that case of applying the prima-facie standard to pre-award judicial review of arbitration agreements. Sixth and Concluding Session: This session was chaired by Dr. Hatem Gabr, Former Counselor at the Egyptian State Council, and was dedicated to discussing the case study in which many issues were tackled, including the validity of the arbitration clause in administrative contracts and the pleas of non-jurisdiction based on the absence of the competent minister's approval of the arbitration clause. Also the scope of the administrative judiciary's jurisdiction regarding the termination of arbitral proceedings for non issuance of the arbitral award within the time-limit specified by the Egyptian Arbitration Law no. 27/1994, in addition to the possibility of any of the parties withdrawing their agreement to the effect that the arbitral tribunal decides as amiable compositeurs. The attendees examined each of these matters and reached some conclusions that were submitted to the chairman of the session. Finally, Counselor. Hussein Mostafa Fathi, Vice-President of the Law Suite Authority and Legal Advisor, Cairo Regional Centre for International Commercial Arbitration and Dr. Mohamed Abdel Raouf discussed the position of the Law, the national courts and arbitral tribunals in this respect.
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