Answer ... Generally speaking, a party to arbitration (a natural or juristic person) must enjoy capacity to exercise (have the legal capacity to validly sign contracts).
In accordance with article 702 of the Egyptian Civil Code and article 76 of Civil and Commercial Procedures Law, the arbitration agreement may not be concluded by an agent except by virtue of private and specific written delegation; otherwise, the arbitration clause will not be effective in relation to the principal.
In this context, it is worth mention that arbitration in relation to administrative contracts is permissible provided the arbitration agreement is approved by the competent minister or by whomever assumes his or her authority with respect to public entities. The power to approve the arbitration agreement may not be delegated. Approval may be rendered subsequent to the conclusion of the administrative contract and does not need to be written or expressed in a specific form. A recent CRCICA award held that approval may be implicit, inferred from the circumstances of the case3.
In 2010, the Cairo Court of Appeal held that ministerial approval is a legislative requirement for the validity of the arbitration clause and is addressed to both parties4. Similarly, in 2011, the Administrative Supreme Court upheld the principle that ministerial approval of the arbitration clause is addressed to both parties5. Some CRCICA tribunals have held that the arbitration agreement is not invalidated due to the absence of ministerial approval because this requirement should not be applicable to international commercial arbitrations conducted with foreign investors6, the Arbitration Law does not provide for an annulment sanction for violation of article 1, and such requirement needs to be fulfilled by the administrative entity and not the other party (ie, it is the sole responsibility of the administrative entity and it should bear the liability for not obtaining ministerial approval)7.
In 2015, the Egyptian Court of Cassation upheld a relatively anti-arbitration interpretation of Article 1(2) of the Egyptian Arbitration Law. The Egyptian Court of Cassation has confirmed the precedents of the Conseil d’Etat that without Ministerial approval arbitration clauses in administrative contracts are ineffective, and any award made as a result of them will be annulled. Persons who are negotiating administrative contracts to be entered into with Egyptian public bodies must therefore be vigilant should they wish to select arbitration as the means of resolving any future dispute with the Egyptian State or any other Egyptian public juristic person. Written approval of the competent minister must be obtained on or before the date of signature of the administrative contract.
3. CRCICA Arbitration Case No. 676/2010, award dated 21/08/2011, Journal of Arab Arbitration, Issue No. 17, pp. 263-264.
4. Cairo Court of Appeal Judgment No. 111/126 JY, hearing dated 30 March 2010 referred to in Mohamed Amin El Mahdy, ‘Return to the Problematic Arbitration in Administrative Contracts Disputes’, Journal Arab Arbitration, Issue No. 19, p. 26.
5. Administrative Court Judgment No. 11492/65 JY, session dated 7 May 2011.
6. CRCICA Arbitration Case No. 382/2004, session dated 7 March 2006 referred to in Walid Mohamed Abbas, Arbitration in Administrative Disputes of Contractual Nature, 2010, Dar El Gama’a El Gadida, pp. 221–222.
7. CRCICA Arbitration Case No. 464/2006, session dated 2 July 2006; CRCICA Arbitration Case No. 553/2007, session dated 5 November 2009 referred to in Journal of Arab Arbitration, Issue No. 13, December 2009, p. 237; CRCICA Arbitration Case No. 567/2008, session dated 12 September 2009 referred to in Journal of Arab Arbitration, Issue No. 13, December 2009, p. 237; CRCICA Arbitration Case No. 495/2006, award dated 17 May 2007, referred to in Journal of Arab Arbitration, Issue No. 12, pp. 121–123.