In Egypt’s fast-growing construction sector, contracts are the backbone. The majority of major projects adopt FIDIC-based contracts, tailored to Egyptian law. These contracts govern everything from risk allocation and variation procedures to delay penalties and payment terms. Without precise drafting and strict compliance with these mechanisms, disputes are nearly inevitable.
Table of content:
Key legal pain points in construction projects often include:
Tiered Dispute Resolution Under FIDIC and Arbitration in Egypt
The Importance of Well-Drafted Dispute Resolution Clauses
Key legal pain points in construction projects often include:
- Delays and Extensions of Time (EOT): Claims for EOT must be backed by proper notices and evidence of causation. Failing to meet contractual time bars often invalidates otherwise legitimate claims.
- Variations and Scope Changes: Disputes frequently arise from variations executed without proper instructions, approvals, or agreed valuation. FIDIC’s procedures offer a pathway, but only if followed precisely.
- Payment and Cash Flow: From interim payments to final accounts, ensuring alignment between contractual entitlements and actual performance is crucial, especially when subcontractors and suppliers are affected.
- Regulatory Compliance: Public projects must adhere to Law No. 182 of 2018 on public procurement, in addition to urban planning regulations, environmental clearances, and safety codes. Non-compliance can void tenders or delay execution.
Tiered Dispute Resolution Under FIDIC and Arbitration in Egypt
Dispute resolution under FIDIC is typically tiered, starting with Engineer’s decisions, escalating to Dispute Adjudication Boards (DABs), and ultimately leading to arbitration, the preferred mechanism in Egypt for resolving construction disputes. Many contracts refer disputes to the Cairo Regional Centre for International Commercial Arbitration (CRCICA) or provide for ad hoc arbitration under UNCITRAL rules. Arbitration offers procedural flexibility and technical expertise, but it also imposes procedural obligations, especially around notice, claim submission, and limitation periods.
The Importance of Well-Drafted Dispute Resolution Clauses
Well-drafted dispute resolution clauses are not boilerplate; they determine whether parties resolve conflicts efficiently or spend years in proceedings. In a high-stakes sector like construction, law isn’t a post-incident remedy, it’s a proactive discipline embedded into the lifecycle of the project. When legal foundations are weak, even the most ambitious projects become vulnerable.
