Malicorp Ltd v the Government of the Arab Republic of Egypt, Egyptian Holding Company for Aviation, Egyption Airports Company, CRCICA Arbitration Case 382/2004
CRCICA · Investment (ICSID and treaty) · Egypt · 7 Mar 2006
Why it matters
This case is significant for its application of Egyptian arbitration law to a BOT concession contract, addressing the validity of arbitration clauses in administrative contracts and the requirement of ministerial approval under Article 1 of Law No. 27/1994. It also illustrates the interplay between criminal proceedings and arbitration, and the tribunal's refusal to suspend proceedings despite parallel criminal investigations.
Summary
Malicorp Ltd, a UK company, entered into a BOT concession contract with the Egyptian government to build and operate Ras Sudr Airport. The contract was signed on November 4, 2000, and contained an arbitration clause providing for CRCICA arbitration in Cairo under Egyptian law. Malicorp was required to form an Egyptian company and provide bank guarantees. After delays and disputes over documentation, the Egyptian authorities cancelled the contract in August 2001, citing Malicorp's failure to complete formalities and submit authentic documents. Malicorp commenced arbitration in April 2004, claiming over USD 500 million in damages for breach of contract. The respondents challenged the tribunal's jurisdiction, arguing that the arbitration clause was void because it lacked the approval of the concerned minister as required by Article 1 of Egyptian Arbitration Law No. 27/1994 for administrative contracts. They also sought suspension of the arbitration due to parallel criminal proceedings against Malicorp's representatives for fraud. The tribunal, by majority, rejected the jurisdictional challenge, finding that the contract was signed by the Minister of Civil Aviation, who had the authority to approve the arbitration clause. It also denied the suspension request, noting that the criminal proceedings did not prevent the arbitration from proceeding. On the merits, the tribunal found that Malicorp had failed to perform its obligations under the contract, including forming the Egyptian company and providing valid bank guarantees. It held that the cancellation was justified and dismissed all claims. The award was rendered on March 7, 2006.
The detail
Parties: Malicorp Ltd v the Government of the Arab Republic of Egypt, Egyptian Holding Company for Aviation, Egyption Airports Company, CRCICA Arbitration Case 382/2004
Case number: italaw/cases/4400
Outcome: The tribunal dismissed all claims by Malicorp and ordered Malicorp to bear the costs of the arbitration.
Applicable law: Egyptian law (Law No. 27/1994 on Arbitration in Civil and Commercial Matters); CRCICA Rules; Concession Contract governed by Egyptian civil law.
Issues in play: The dispute involved Egyptian administrative contract law and the validity of the arbitration clause under Egyptian public policy, particularly the requirement for ministerial approval of arbitration agreements in administrative contracts.
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