Arbitration is considered the primary alternative dispute resolution method, whereby parties avoid resorting to courts. When choosing arbitration, the parties agree to present their dispute to a person(s) of their choice or to determine the method they wish to settle the dispute.
The arbitration agreement is then considered the legal tool for arbitration and its constitution, which defines its scope and extent. The will of the parties has a fundamental role in choosing the arbitrator/s.
In institutional arbitration, the arbitration center's rules would apply. The parties would then explicitly express their will that the arbitrators should be appointed according to such rules, regardless of whether said rules stipulate that the appointment should be made by the parties in a specific manner, or via the center.
However, the problem arises in private "ad hoc" arbitration, especially if the parties disagree on the appointment of a sole arbitrator, or the primary arbitrator in case the tribunal consists of multiple arbitrators.
According to Egyptian law, if the Arbitral Tribunal is composed of three arbitrators, each party shall appoint an arbitrator, and then the two parties or the two arbitrators shall appoint the third arbitrator within thirty days following the date of the last appointed arbitrator.
In case an agreement cannot be reached, or another obstacle has prevented the appointment of the third arbitrator from carrying out his work, for example, if he rejects being appointed, is found to be deceased, ill, or retired before or after starting the arbitration, and it was not possible to choose a substitute, the courts of Egypt will be responsible for the task of this choice
According to article 17 of the Arbitration Law, it is permissible to resort to the court to appoint an arbitrator, if the arbitration is carried out in Egypt, or, if the dispute is international in nature and carried out outside of Egypt, and the parties have agreed to be governed by Egyptian Arbitration Law.
A request for appointing the arbitrator shall be submitted by the interested party, and the request shall be notified to the other party according to the standard procedures in the Egyptian Civil and Commercial Proceeding Law. Thereafter, the court considers the case in accordance with standard procedures. It is worth noting, however, that the judgment issued by the court in this respect shall be final and may not be challenged.
Despite the above, challenging the decision of appointing an arbitrator is limited according to Article 17 of the Arbitration Law, on the decision of the competent court to select the arbitrator, and does not extend to the invalidity of the procedure for appointing the arbitrator, which shall remain subject to appeal in the manner stipulated in the above mentioned Procedural law.
We refer here to one of the cases initiated by our office, where one of the companies had filed a legal action before the competent court to appoint an arbitrator. During litigation, it was claimed that the arbitration agreement was fraudulent, and the court issued a preliminary award by sending the subject matter of the dispute to the forensic department, whose report concluded that the contested signature is original. Accordingly, the court ruled on the validity of the arbitration agreement and the appointment of the arbitrator together.
The judgment was appealed before the Court of Appeal on the basis that the appointment procedures followed to select the arbitrator was null and void according to Article (44) of Evidence Law, which prohibits the court from adjudicating on the validity of the agreement, and the subject of the dispute in one judgment.
Such merits were accepted by the Court of Appeal, which then ruled on the nullification of the First Instance judgment
Lastly, the purpose of this article is to highlight that, although the judgment ruling on the appointment of an arbitrator is final and cannot be challenged by any method of appeal according to Arbitration law, if the appointment procedures are found to be invalid, the judgment may be challenged according to the Egyptian Civil and Commercial Proceeding Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.