Egypt

Hazim Rizkana
Rizkana & Partners, Egypt
hazim.rizkana@rizkanapartners.com

Salma El-Nashar
Rizkana & Partners, Egypt
salma.elnashar@rizkanapartners.com

References to FIDIC clauses are references to the 1999 Red and Yellow Books, unless otherwise indicated.

1. What is your jurisdiction?

The Arab Republic of Egypt.

2. Are the FIDIC forms of contract used for projects constructed in your jurisdiction? If yes, which of the FIDIC forms are used, and for what types of projects?

Yes, the FIDIC forms of contract are used in construction projects in Egypt, particularly for mega, industrial and infrastructure projects. The most common forms used are the 1987 and 1999 editions of the Red and Yellow Books, and previously the 1977 Red Book. The Silver Book is used for engineering, procurement and construction (EPC) and turnkey projects. However, some limitations exist in cases where the New Procurement Law No 182 of 2018 (governing contracts concluded by public authorities) applies, and where the FIDIC clause incorporates common law concepts that are incompatible with the civil law system in Egypt.

FIDIC contracts have been used in the execution of the Cairo Metro project, the Damietta Port Development project, and the Kafr El-Sheikh Wastewater Treatment Plants, among others.

3. Does FIDIC produce forms of contract in the language of your jurisdiction? If not, what language do you use?

While FIDIC produces its suite of contract forms in Arabic, the English language is used more in Egypt given the international nature of the construction sector, which mostly involves foreign parties. Nonetheless, where a dispute is examined by a local court, all documentation shall be submitted in the Arabic language.

It is worth noting that the 2017 FIDIC contract forms are translated into five major languages, among which is the Arabic language.

4. Are any amendments required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are required?

There are no specific amendments that are required for the FIDIC Conditions of Contract to be operative in Egypt. However, FIDIC conditions that conflict with rules enshrined in Egyptian legislation are automatically overridden by domestic provisions that include mandatory rules which parties cannot derogate by agreement.

5. Are any amendments common in your jurisdiction, albeit not required, in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are common in your jurisdiction?

FIDIC Conditions of Contract are frequently altered in favour of the employer. For example, the contract conditions are often amended to lump-sum (fixed price) so the employer avoids the risk of variation in the quantities, along with keeping fluctuation clauses that grant the contractor the right to adjust prices, whether upward or downward, to reflect changes in the cost of labour, materials or other costs.

It should be noted that Egyptian law grants additional rights not contemplated under the FIDIC Conditions of Contract. For instance, Article (662) of the Civil Code permits subcontractors to directly request the employer to pay outstanding amounts, to the extent that such amounts are payable by the main contractor at the time of the claim. The Civil Code also imposes strict liability on the contractor and the engineer in respect of defects arising in a building or structure for a period of ten years. This is called decennial liability and is a matter of public order.

6. Does your jurisdiction treat Sub-Clause 20.2.1 of the 2017 suite of FIDIC contracts as a condition precedent to employer and contractor claims?

The 2017 suite of FIDIC contracts are not yet commonly used in Egypt but, generally speaking, there are no clear court precedents and interpretations in this context, except in scholars’ studies.

7. Are dispute boards used as an interim dispute resolution mechanism in your jurisdiction? If yes, how are dispute board decisions enforced in your jurisdiction?

Yes, dispute boards are used by parties in Egypt as an interim dispute resolution mechanism, following the Engineer’s Determination. Although resorting to the dispute board is often a mandatory step prior to commencing arbitration proceedings, its decisions are not enforced in many instances. The dispute board model typically used in Egypt is the ad hoc Dispute Adjudication Board (DAB), rather than the standing DAB.

8. Is arbitration used as the final stage for dispute resolution for construction projects in your jurisdiction? If yes, what types of arbitration (ICC, LCIA, AAA, UNCITRAL, bespoke, etc) are used for construction projects? And what seats?

Yes, arbitration is widely used in construction disputes. Commonly, contracts provide for arbitration under the auspices of the International Chamber of Commerce (ICC) or the Cairo Regional Centre for International Commercial Arbitration (CRCICA). The seat of arbitration is Cairo in most cases.

9. Are there any notable local court decisions interpreting FIDIC contracts? If so, please provide a short summary.

Generally, Egyptian courts interpret provisions and articles set out in the Civil Code, or other legislations, applicable on construction matters but do not particularly tackle FIDIC clauses in terms of interpretation. Yet, a decision issued by the Cairo Court of Appeal in 2012 ruled that the non-compliance with the requirement to submit a claim to the engineer, prior to initiating arbitration proceedings, renders the claim inadmissible, being a procedural precondition agreed upon between the parties in the standard terms of the contract (Cairo Court of Appeal, Circuit (63) – Commercial, Appeal No 9 of 127 JY). This might be considered as an indirect reference and interpretation of the FIDIC conditions.

It is worth considering that the Egyptian Civil Code does not regulate in detail the role of the engineer, employer or the contractor, nor regulate issues related to claims procedures, extension of time, foreseeable and unforeseeable risks, etc. The provisions are rather generic in the Civil Code and, accordingly, courts have no specific approach in this respect.

10. Is there anything else specific to your jurisdiction and relevant to the use of FIDIC on projects being constructed in your jurisdiction that you would like to share?

Private contracts and public works contracts are subject to a different set of rules in Egypt; consequently the application of the FIDIC Conditions on each type differs in terms of limitations and amendments.