WHAT IS HAPPENING WITH FIT ARBITRATION? Our friends at Zulficar & Partners reached out to us to explain the changes to the arbitration clauses for phase 2 of the FiT programme. They tell us the contracts and the arbitration for phase two of the feed-in tariff (FiT) projects continue to be subject to Egyptian law and this has not changed. Arbitration specifically is subject to the rules of the Cairo Regional Centre for International Commercial Arbitration (CRCICA); Cairo remains the venue in which arbitration will take place, and the arbitration award is final and not subject to appeal. The Egyptian Electricity Holding Company (EEHC)’s note gave FiT phase-one investors three options: a) reach financial closure under the terms of the phase one agreement, with arbitration in Egypt 85% of financing to be procured from foreign sources (for solar projects; wind projects need to source 70% of their financing from abroad); b) move to phase two of the programme, subject to the new tariffs shown in EEHC’s note, with solar producers needing 70% foreign financing and wind needing 60% — and the venue of arbitration would be in Cairo, but the seat of arbitration abroad, c) withdrawing from the programme altogether while being able to recoup all amounts paid under the cost-sharing agreement without deducting termination fees.

For investors who agree to move to phase two of the programme, having the seat of arbitration outside Egypt means only that a competent court in the country in which that seta resides would have to hear a claim for nullity of any arbitral award made by either party. Nullity is a basic procedural challenge, not an appeal on the merits, and relates to matters like the existence of the arbitration clause or agreement, notification of the parties, representation by lawyers, amongst others.

Shahid Law Firm issued a note on Tuesday clarifying the difference between the “seat” and “venue” of arbitration. They say “Egyptian Law seems to recognise the distinction between seat and venue and its effect on the jurisdiction of Egyptian courts” adding that the distinction is also recognised by the CRCICA arbitration rules. However, Shahid believe that the question now is “whether the Cairo Court of Appeal would maintain this position where the seat of arbitration is outside Egypt while the venue is in Egypt,” as could be the case in a dispute under the FiT phase two agreements.