Arbitrating Government Contracts in Egypt: Observations on DIPCO v. Damietta Port Authority.

In a recent judgment regarding the development of the port of Damietta, the Egyptian Court of Cassation held that public policy considerations prevent arbitral tribunals from ruling on Cabinet approvals of certain government contracts. This article provides an overview of the key tenets of the judgment and their impact on government contract arbitration in Middle East. It discusses the essential reasoning of the award and the subsequent judgments, and puts them in the context of previous jurisprudence. A striking feature of the Court of Cassation's decision is its conclusion qualifying the approval of the contract as an administrative decision. As a consequence, the existence and validity of the approval was held to be inarbitrable - even if the arbitration does not concern the approval as such, but rather the financial rights arising out of the concession. This outcome adds to the uncertainties associated with administrative approvals and may render arbitration involving such approvals practically unfeasible. Given the influence of Egyptian jurisprudence, courts elsewhere in the Arab world may be inspired to take a similar stance. Investors entering into such contracts are well-advised to ensure that all necessary approvals clear and unequivocal; parties and arbitrators should be aware that an award may be susceptible to a challenge and enforcement may be necessary outside of Egypt. [ABSTRACT FROM AUTHOR]