Paris Court of Appeal, No. 06/17901

Paris Court of Appeal, 19 June 2008, No. 06/17901

THE GOVERNMENT OF THE ARAB REPUBLIC OF EGYPT

vs.

MALICORP

The Government of the Arab Republic of Egypt appealed on 16 October 2006 against an exequatur order, issued on 9 August 2006 by the President of the Paris Trial Court, of Award No. 382/2004 pronounced in Egypt on 7 March 2006 under the auspices of the Cairo Regional Arbitration Centre by Messrs. Mr. B C and Mr. Gabr, arbitrators, Bernardo Cremades, president, who, ruling on the basis of the arbitration clause of a concession contract signed between the Egyptian Civil Aviation Authority and the British company Malicorp for the construction of an airport in the Sinai, said that:

1. The arbitral tribunal is competent for all claims arising from the concession contract, and in particular the claims of the claimant in the present arbitration proceedings against the Arab Republic of Egypt, The Egyptian Holding Company for Aviation and The Egyptian Airport Company;

2. The parties to the Concession Agreement are the Applicant and the Arab Republic of Egypt. Consequently, the claims against The Egyptian Holding Company for Aviation and The Egyptian Airport Company are rejected;

3. The concession contract is an administrative contract governed by Egyptian domestic law. It is also an international contract involving a State and is subject to the principles applicable to such contracts;

4. The concession contract was annulled for error. The arbitral tribunal also recognized that the Arab Republic of Egypt was entitled to annul the concession contract and did so on 12 August 2001;

5. In lieu of reinstatement to its original position before the signing of the concession contract, the Arab Republic of Egypt shall pay the claimant the sum of USD 14,773,497 (fourteen million seven hundred and seventy-three thousand four hundred and ninety-seven US dollars) as damages;

6. The Claimant on the one hand and the Respondents on the other hand shall each pay half of the costs and expenses of the arbitration (which amount to a total of 366,0000 (three hundred and sixty-six thousand) US dollars). Consequently, the Defendants are expressly ordered to pay the Claimant the sum of USD 147,050 (one hundred and forty-seven thousand and fifty US dollars), the Defendants' share corresponding to half of the costs and expenses already paid by the Claimant. Each party shall pay its own legal and attorney’s fees;

7. The Claimant shall be entitled to interest at the rate of four per cent per annum on damages from 28 April 2004 until the date of payment and on costs and expenses from the date of this final award until the date of payment.

The Government of the Arab Republic of Egypt raises three grounds in support of its appeal, the irregularity of the composition of the arbitral tribunal (art.1502-2 CPC), the breach of due process (art.1502-4 CPC), the violation of international public policy by the enforcement of the award (art1502-5 CPC). It concluded that Malicorp should be ordered to pay the costs and the sum of €100,000 pursuant to Article 700 of the Code of Civil Procedure.

Malicorp, a company incorporated under English law, seeks confirmation of the enforcement order and an order that the Arab Republic of Egypt, in addition to paying the costs, pay the sum of €115,000 pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH:

On the breach of due process (article 1502-4 of the code of civil procedure):

The Government of the Arab Republic of Egypt says that the Arbitral Tribunal relied on alleged rules of Egyptian law which were neither raised nor debated by the parties. The parties had explained the principles of contractual responsibility under Article 221 of the Egyptian Civil Code, but the court raised the error ex officio and awarded damages to the offending party for loss of profits on a basis which it created from scratch on the basis of Articles 120 (application for annulment for error), 121 (bases for annulment for error) and 142 (principle of restitution in the event of annulment for error) of the Egyptian Civil Code which were not disputed by the parties.

Considering, as the respondent points out in its pleadings, that although the arbitrators are indeed not obliged to submit their reasons to a prior adversarial discussion, they must respect the principle of contradiction;

That the arbitral tribunal, however, without an adversarial discussion, based its decision on the non-invoked provisions of Articles 120, 121 and 142 of the Egyptian Civil Code, that the arbitrators did not thus motivate their award by applying their reasoning to the elements discussed by the parties;

That the exequatur order is overturned without the need to examine other pleas, as the award cannot be upheld in France;

On costs and Article 700 of the Code of Civil Procedure:

Whereas Malicorp shall bear the costs and pay the Government of the Arab Republic of Egypt a sum of € 100,000 pursuant to Article 700 of the Code of Civil Procedure;

FOR THESE REASONS:

Overturns the exequatur order,

Says that award n°382/2004 cannot be accepted or enforced in France,

Condemns the company Malicorp to pay the government of the Arab Republic of Egypt a sum of €100,000 under Article 700 of the Code of Civil Procedure,

Rejects all other requests,

Condemns Malicorp to pay the costs and admits the SCP Monin d’Auriac de Brons, avowed, to the benefit of the right provided for in Article 699 of the Code of Civil Procedure.