Malicorp Ltd v Government of the Arab Republic of Egypt & Ors

Recognition of a foreign judgment setting aside an arbitral award should generally follow English private international law principles. Recognition may be refused only where the foreign judgment offends basic principles of honesty, natural justice or domestic public policy. A foreign judgment is not denied recognition merely because the English court considers it wrong. Allegations of judicial bias require positive and cogent evidence.

Under section 103(2)(c) of the Arbitration Act 1996, enforcement may be refused where an award grants relief on a basis neither pleaded nor argued. The essential requirement is that the affected party must have notice of the basis on which relief and its quantification may be awarded.

Malicorp sought enforcement in England under section 101(2) of the Arbitration Act 1996 of an award made in Cairo. The award granted damages after finding that a concession contract for the development and operation of an Egyptian airport was void for mistake.

Permission to enforce had been granted without notice under CPR 62.18. Egypt applied to set that order aside. Its principal grounds were that the award had been set aside by the Cairo Court of Appeal and that Egypt had been unable to present its case because the tribunal awarded damages under article 142 of the Egyptian Civil Code on a basis which had not been pleaded or argued.

1. Foreign set-aside judgment. The Cairo Court of Appeal decision was final for the purposes of English private international law, despite a pending appeal. Applying the preferred approach supported by Yukos Capital S.a.r.L v OJS Oil Company Rosneft [2014] EWHC 2188 (Comm), the court should give effect to the foreign decision unless it offended basic principles of honesty, natural justice or domestic public policy.
2. The assertion that the foreign judgment was wrong was insufficient. The determination of foreign law belonged to the foreign court. The evidence did not establish perversity. Allegations of pro-government bias required positive and cogent evidence, which was absent: Altimo Holdings and Investment Ltd v Kyrgz Mobil Tel Ltd [2011] UKPC 7, para 97, and Yukos Capital S.a.r.L v OJS Oil Company Rosneft (No 2) [2012] EWCA Civ 855, para 73.
3. Inability to present the case. The test under section 103(2)(c) required application of English principles of fairness and natural justice, not Egyptian procedural law: Cukurova Holdings AS v Sonera Holding BV [2014] UKPC 15, para 32. The character of the decision-making body and its procedural framework were relevant, but did not lessen the essential need for notice of the basis on which a remedy would be granted and quantified.
4. The tribunal rejected Malicorp’s pleaded claim for compensation for contractual breaches, accepted that the contract had been validly avoided, and nevertheless awarded damages under article 142 of the Egyptian Civil Code. There was no notice that such relief, an allocation of responsibility for mistake, or loss-of-profit damages in lieu of reinstatement was contemplated. The resulting surprise to Egypt constituted a serious breach of natural justice. Enforcement was therefore refused under section 103(2)(c).
5. It was unnecessary and undesirable to decide Egypt’s issue-estoppel argument or its remaining grounds. Egypt’s application to set aside the enforcement order was granted.

The judgment was a first-instance decision on Egypt’s application to set aside permission to enforce the Cairo award. The judgment records that the Cairo Court of Appeal had set aside the award, with an appeal pending to the Egyptian Court of Cassation, but no prior English appellate decision is stated.