The rise and fall of international administrative arbitration: An inquiry into the commerciality of international arbitration under Egyptian Law

Abstract

This article proposes a new expanded take on the definition of commerciality of international arbitration and its ramifications on the applicable law to the merits, the jurisdiction and authority of courts to review and execute foreign arbitral awards.

The problem manifests in states with dual jurisdiction court systems such as Egypt and France, where there are ordinary courts and administrative courts. In such states, administrative courts assume jurisdiction over contracts entered by the state as a public person enjoying sovereign powers, i.e., administrative contracts, whereas ordinary courts’ jurisdiction extends to all disputes arising between private parties. Unlike ordinary courts, administrative courts apply public law and favor public interest considerations over private ones.

The case should be distinguished when it comes to arbitration even when the state is involved in a so-called administrative contract, for arbitration is a private means of dispute settlement. This is why article 1 of Egypt's Arbitration Law on Civil and Commercial Matters (Arbitration Law) expressly extends its scope of application to “all arbitration between public or private law persons, whatever the nature of the legal relationship around which the dispute revolves”. Furthermore, article 2 ties the “commerciality” of a dispute to its economic nature notwithstanding the parties’ capacities or the nature of their legal relationship whether contractual or non-contractual.

Despite the uncertainty created by Egypt's paradoxical court decisions in several precedents such as the oft-cited Chromalloy case, these provisions imply that the legislator intended to extend the provisions of Arbitration Law to all disputes of economic nature without distinguishing between civil and administrative disputes, providing that the matter relates to international transaction. A corollary is that only the provisions of Arbitration Law should govern any international arbitration over a legal relationship of an economic nature even when it relates to an administrative contract. It also follows that private law, i.e., civil and commercial laws, not public administrative law should apply to such disputes if Egyptian law is applicable to the merits. And this means granting ordinary courts an exclusive authority to review and enforce international arbitral awards.

This proposed interpretation, which controverts the idea of administrative contracts in international transactions, is in line with international commercial arbitration objectives as a private and consensual means of settling disputes between equals. Adopting such approach also helps restore investor confidence in the Egyptian government and encourage foreign investments needed to boost Egyptian post-revolutionary economy.