Brief: Construction Arbitration in Egypt — Global Arbitration Review
This is a comprehensive legal guide published by Global Arbitration Review covering the key principles and rules governing construction arbitration in Egypt. It is co-authored by legal practitioners and serves as a practical reference for parties involved in construction disputes under Egyptian law.
Egypt is a civil law jurisdiction, with its Civil Code (No. 131 of 1948) rooted in French civil law. In the absence of legislation, courts may draw on custom, Islamic law principles, and natural justice. Laws are published in the Official Gazette and may, in limited cases, apply retrospectively.
Construction contracts do not require a formal written agreement to be valid, though written contracts are essential as evidence. A contractor’s tender constitutes an offer, and a letter of intent or award carries contractual effect upon receipt. Egyptian law permits broad contractual allocation of risk to contractors, including for unforeseeable events, subject to mandatory protections such as Article 147(2) on exceptional incidents and hardship. Relief for force majeure is available only where performance becomes truly impossible, not merely difficult, and courts have discretion to rescind or adjust contracts in exceptional, unforeseeable circumstances.
Egyptian law does not formally regulate Extensions of Time. Courts identify the dominant cause of concurrent delay and apportion liability accordingly. Liquidated damages are enforceable but may be reduced or challenged where actual loss is minimal or absent. Employers may terminate for convenience under Article 663, subject to full compensation of the contractor, while termination for breach typically requires court intervention unless the contract expressly provides otherwise.
Contractors bear mandatory strict liability for structural defects appearing within ten years of handover under Article 651, a protection that cannot be excluded by contract, with claims to be brought within three years of discovery. Egypt’s Arbitration Law governs arbitral proceedings, with the Cairo Court of Appeal handling arbitration-related court matters. State entities require ministerial approval before agreeing to arbitrate, and attachment of state assets is prohibited.
Subcontractors may claim directly against employers up to the amount owed by the employer to the main contractor, and third parties may acquire rights under construction contracts by law upon property transfer. Notably, the concept of “without prejudice” is not recognized under Egyptian law, while legal professional privilege applies to both external and in-house counsel.
This guide is an essential reference for legal practitioners, in-house counsel, and construction professionals operating in Egypt or entering into contracts governed by Egyptian law, particularly those using FIDIC-based contracts.
https://globalarbitrationreview.com/insight/know-how/construction-arbitration/report/egypt