Answer ... In principle, the arbitration agreement is governed and regulated under the law applicable to the arbitration per se (the law of the seat – lex arbitri), under which the arbitration agreement (along with its requirements, validity, form etc) is defined. In this regard, pursuant to the Arbitration Law, the choice of applicable law is fully subject to party autonomy. Accordingly, there will be no issues where the parties agree on the law of the seat in advance of any dispute. However, if the parties do not agree on the applicable law, the arbitration agreement will be governed by the law of the seat of the arbitration. This principle has been upheld by the Court of Cassation, which has stated that in the absence of the parties’ agreement, the arbitration agreement will be governed by the law of the seat. However, this does not conflict with the requirements for capacity to enter into an arbitration agreement, which are ultimately governed by the Arbitration Law. In this regard, the requirements for capacity set out in the law governing the capacity of the contracting party will apply.

Answer ... Pursuant to the Arbitration Law, the arbitral tribunal must apply the substantive law of the dispute as chosen by the parties. However, there are certain exceptions whereby the tribunal either must or can decide not to uphold the agreed substantive law, as follows:

• The elected substantive law contradicts Egyptian public policy. In this case, the tribunal should observe these public policy rules and give them precedence over the rules agreed by the parties. This is essential in order for the tribunal to obviate the risk of annulment of its award where the seat is Egypt.
• The circumstances are such that Egyptian law per se requires that Egyptian law will be the governing substantive law. For example, the Commercial Code mandates that a transfer of technology contract must be governed by Egyptian law; otherwise the contract itself is void.
• The parties empower the tribunal to act as amiable compositeur. In this case, the tribunal has the scope to apply the maxims of equity over the provisions of the agreed substantive law (Article 39/4 of the Arbitration Law).

Where the substantive law is unclear (eg, there is no agreement on same), the tribunal will apply those substantive rules which, in its opinion, are most closely connected to the dispute (Article 39/2 of the Arbitration Law).