Author: Ibrahim Shehata
This article will tackle the issue of contingency fees as well the framework of third-party funding in the Egyptian jurisdiction. Both issues are considered to be hot topics around the world and hence we must shed some light on the intricacies associated with both phenomena from an Egyptian perspective
[A] Contingency Fees:
The Egyptian Arbitration Law does not include any provisions relevant to contingency fees with respect to arbitration cases. However, the Egyptian Bar Association Law No. 17 of 1983 allows lawyers to receive contingency fees, and therefore allows them to enter into alternative fee arrangements with their clients. At the time of enacting the Bar Association Law, the margin that could be agreed upon between the lawyer and his client was between 5% to 20% of the outcome of the case.
However, the 5% minimum was declared unconstitutional by the Supreme Constitutional Court later on.[1] Accordingly, there is no currently a minimum threshold as a matter of Egyptian law. Furthermore, the Supreme Constitutional Court ruled that alternative fee arrangements between client and counsel cannot be based on the client’s solvency.[2] In arbitration practice, it must be noted that contingency fees and alternative fee arrangements are quite popular and are frequently used by several top-tier law firms in Egypt.
[B] Third Party Funding:
Akin to the contingency fees and alternative fee arrangements, the Egyptian Arbitration Law is silent on the issue of third-party funding. It must be noted that the Egyptian Arbitration Law is similar to most UNCITRAL Model Law-based jurisdictions on this front. Further, it seems that there are some active third-party funders in the Egyptian market.[3]
Until 2018, there has not been any mention of third-party funders in Egyptian case law. The year 2018 showed us that third-party funders might be actually active in the Egyptian arbitration market. In this respect, the Al-Kharafi case has featured a request by a third-party funder who asked to be joined to the annulment proceedings of this USD 1 Billion investment-treaty arbitral awards.[4] The Court, in this case, did not get much chance to discuss the framework of third-party funding; the Court ruled in this instance that the case is inadmissible and hence there was no merit to review the request advanced by the third-party funder in this case (i.e., Financiére CER). Moreover, the same third-party funder has re-requested to join the annulment proceedings in 2020 and his request was blatantly rejected this time without having the Court delve into a deep analysis of the framework of third-party funding from an Egyptian perspective.[5] In conclusion, the Egyptian judiciary did not have the chance to thoroughly discuss the contentious issues that might be associated with the phenomenon of third-party funding. However, this judicial attitude does not preclude, per se, arbitration tribunals from embracing this increasingly much-needed practice.
Moreover, it must be noted that the phenomenon of third-party funding is perfectly legal from a Sharia perspective. As a matter of fact, third-party funding agreements could be easily anchored in several nominate agreements under Islamic Sharia.[6] Furthermore and as mentioned above, Egyptian law permits contingency fees and alternative fee arrangements between lawyers and their clients. Accordingly, it would be very hard to argue that typical third-party funding arraignments could run afoul of Egyptian public policy. However, certain best practices are ought to be followed in this context. For instance, although there is no express requirement of disclosure of the existence or identity of third-party funders, non-disclosure might raise conflict of interest issues for arbitrators and so it is highly recommended that disclosure is made by the third-party funder as a matter of best practice in Egypt. [7]
[1] Supreme Constitutional Court, Case No. 22/Judicial Year 14, Hearing dated 12 February 1994.
[2] Supreme Constitutional Court, Case No. 22/Judicial Year 14, Hearing dated 12 February 1994.
[3] Ismail Selim, International Arbitration Comparative Guide: Egypt, last accessed at 25 December 2020. Available at: https://www.mondaq.com/litigation-mediation-arbitration/786672/international-arbitration-comparative-guide
[4] Cairo Court of Appeal, Challenge No. 39/Judicial Year 130, Hearing dated 6 August, 2018 (the 2nd Appeal).
[5] Cairo Court of Appeal, Challenge No. 39/Judicial Year 130, Hearing dated 3 June 2020 (the 3rd Appeal).
[6] Dr. Abdelrahman El-Zeir & Dr. Faris El-Qorny, Third-Party Funding in Arbitration: An Islamic and Legal View, Islamic University Journal of Sharia Sciences – Issue 193 – Part Two,
[7] Mohamed Abdel-Wahab, GAR Insight: Commercial Arbitration in Egypt, https://globalarbitrationreview.com/insight/know-how/commercial-arbitration/report/egypt
