EGYPT Law and Practice Contributed by: Inji Fathalla, Salma Nasreldine, Haya El Samra and Ismaël Sedky, Shahid Law Firm
8. Damages and Valuation 8.1 Remedies
parties’ claims and appointing independent experts if needed. 8.3 Recovering Interest and Legal Costs As explained in 8.1 Remedies , parties are entitled to claim interest on the amount in dispute, within the statutory cap of 7% per annum. While the EAL is silent on costs, reference may be made to Article 184 et seq of the CCCP, which rec- ognise that the unsuccessful party bears the costs of the proceedings (including attorney fees) as a mat- ter of principle, following a costs-follow-the-event approach. That being said, the CCCP provides an exception to the above principle, whereby the successful party may be ordered to bear all or part of the costs if the right was undisputed (ie, the unsuccessful party did not contest the right, and the successful party still brought proceedings), the successful party caused unnecessary expenses, and/or if decisive evidence was withheld. Finally, the CCCP envisages the scenario where each of the parties fail in some of their claims; in that case, the court (and accordingly, an arbitral tribunal) has the discretion to order each party to bear its own costs, or apportion costs in the manner it deems fit, namely by ordering one party to bear all costs. 8.4 Mitigation of Damages The EIL does not impose any explicit statutory obliga- tion on investors to mitigate their losses. However, the principle of mitigation of losses is recognised under the Egyptian Civil Code, specifically Article 221 (1), which applies to investors as contracting parties. Under this provision, an investor’s entitlement to com- pensation is contingent upon demonstrating that the harm suffered was the natural consequence of the opposing party’s conduct, and that such harm could not reasonably have been avoided through the inves- tor’s own efforts.
Under Egyptian law, arbitral tribunals are constrained by Egyptian mandatory public policy, as prescribed in legal provisions or case law, when awarding damages. Most significantly, tribunals may award by default sim- ple interest within the legal cap of 5% for commercial matters (and 7% per annum maximum for agreed- upon simple interest – Article 227 of the Egyptian Civil Code (ECC)); awards granting interest above this cap, or compound interest, will not be enforced. This limitation is in line with Egyptian public policy, which restricts remedies to compensatory measures, hence restricting the award of punitive financial remedies (unless specifically authorised by statute). The Egyptian legal system does not recognise conse- quential damages. As for injunctive relief, there is no express statutory limitation on arbitral tribunals’ power to order injunc- tions under Egyptian law. In practice, however, the power to grant injunctions is generally exercised in the context of interim measures (see 5. Preliminary and Interim Relief ), and the issuance of injunctions as part of a final award is rare. Egyptian law does not expressly prohibit injunctions as a remedy, but courts generally do not render such injunctions, and their issuance remains unregulated and uncommon. 8.2 Methodologies for Quantum Assessment In investor–state arbitration involving Egypt, tribunals typically employ a range of valuation methodologies to quantify damages, depending on the asset and case specifics. The discounted cash flow (DCF) method is widely used, especially for ongoing businesses with predictable future cash flows, such as in the energy sector. Market value approaches, including compa- rable transactions and publicly traded comparables, are applied when reliable market data exists. Cost- based approaches, such as replacement or net book value, may be used as a floor value, particularly when other methods are impractical. Ultimately, tribunals exercise discretion to select, combine, or cross-check methods, often considering the reasonableness of the
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