In corporate deal-making, the arbitration clause is often called the “Midnight Clause.” It is the final paragraph copy-pasted at 2:00 AM just before signatures, often from an old template that doesn’t fit the deal.
This is a fatal error.
At Consortio Law Firm, we have seen multimillion-dollar awards annulled in the Cairo Court of Appeal not because the case was weak, but because the clause was “pathological” (defective).
If you want your future award to be enforceable, you must get the drafting right today.
1. The “Pathological Clause”: What to Avoid
A “pathological clause” is one that is contradictory or ambiguous, making it impossible to execute. When a clause fails, the arbitration is void, and you are dragged back into the slow-moving local courts.
Common Examples of “Dead” Clauses in Egypt:
❌ The “Floating” Seat: “Arbitration shall be held in Egypt.”
Why it fails: It is too vague. Is it Institutional? Ad Hoc? Under what rules?
❌ The “Dual” Jurisdiction: “Disputes shall be settled by the Cairo Economic Court or Arbitration.”
Why it fails: You cannot have optionality. You must strictly exclude the state courts.
❌ The “Dead” Institution: “Arbitration under the rules of the Alexandria Arbitration Center.”
Why it fails: If that center no longer exists (which happens), your clause is dead.
2. The “Safety” Checklist: 5 Essentials
To ensure your clause survives a “Nullity Action” in the Egyptian courts, it must explicitly state these five elements:
A. The Institution (Rules)
Do not reinvent the wheel. Choose a recognized institution. For Egypt-based disputes, we recommend the Cairo Regional Centre for International Commercial Arbitration (CRCICA).
Why: Their rules are modern (based on UNCITRAL), and they provide administrative support that “Ad Hoc” arbitration lacks.
(Not sure why we recommend CRCICA over the ICC? Read our cost-benefit analysis here: [CRCICA vs. ICC: The Cost of Prestige in Egyptian Disputes])
B. The Seat (Crucial)
This determines the “Nationality” of the award and which court handles annulment.
Write: “The Seat of Arbitration shall be Cairo, Egypt.”
Effect: This grants jurisdiction to the Cairo Court of Appeal for any annulment or enforcement proceedings.
C. The Language
If you don’t specify, you might end up arguing about whether to translate 5,000 pages of English technical specs into Arabic.
Write: “The language of the arbitration shall be English.”
D. The Governing Law
This is the law the arbitrator applies to the dispute (e.g., Egyptian Civil Code or English Law).
Warning: Do not confuse the “Law of the Contract” (Substantive) with the “Law of the Arbitration” (Procedural).
E. The Number of Arbitrators
Sole Arbitrator: Faster and cheaper. Good for contracts under $1M.
Three Arbitrators: Slower and more expensive, but safer for complex, high-value disputes ($10M+). It reduces the risk of a single “rogue” decision.
3. The Gold Standard: The CRCICA Model Clause
If you are using CRCICA, start with their standard wording. Do not improvise.
Standard Text: “Any dispute, controversy or claim arising out of or relating to this contract, its interpretation, execution, the termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of Arbitration of the Cairo Regional Centre for International Commercial Arbitration.”
⚠️ WARNING: The “Standard” Clause is Not Enough
Many investors simply copy-paste the standard model clause above. This is a mistake. The standard clause is silent on the critical details (Language, Seat, Tribunal).
Get the “Enhanced” Clause Template
Don’t risk a defective clause. We have drafted an Enhanced CRCICA Template that includes the standard text PLUS the essential protective language for the Seat, Language, and Tribunal structure.
We do not post this publicly.
To request a copy for your legal team, please email us directly: 📧 info@consortiolawfirm.com (Subject: Request Enhanced Arbitration Clause)
4. The “Authority” Trap (Specific to Egypt)
In Egypt, agreeing to arbitrate is considered a “special act of disposition.” This means the person signing the contract needs specific legal authority to waive the company’s right to go to court.
⚠️ CRITICAL WARNING: The Signatory Risk
The General Manager: Usually has this power by default.
The “Project Manager” or “Branch Manager”: Usually DOES NOT.
The Fix: Always check the signatory’s Commercial Register or Power of Attorney (POA) before signing. If the POA does not explicitly say “The authority to agree to arbitration,” the entire clause is void.
Summary
A solid clause is the only way to ensure the final award is actually paid.
The Strategy: Should you choose CRCICA or ICC? Read our comparison: [CRCICA vs. ICC]
The Result: See how the enforcement process works in our guide: [Getting Paid: The “Payment Order” Route & The 5 Phases of Execution]
The Master Guide: Return to the full overview of arbitration in Egypt here: Arbitration in Egypt: A Foreign Investor’s Guide
