Egypt
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes, freezing orders are available as interim Court measures under Egyptian law. They have the effect of restraining a party from disposing of domestic movables or funds referred to in the freezing order for a specific period of time.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No.
3. Briefly what is the relevant legal test?
Pursuant to Articles 316 and 319 of the Civil and Commercial Procedures Law No. 13 of 1968 (“Procedures Law”), the applicant must demonstrate to the Court that there is a due and undisputed debt, that the circumstances are likely to threaten the recovery of such a debt and that there is a risk of damage being caused if the order is not granted. If the debt amount is not quantified, the applicant can request that the Court temporarily determine its amount. In addition, the applicant has to establish that the respondent has identifiable movables or funds.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
According to the Procedures Law, an application must be submitted to the Court in ex parte proceedings, setting out the grounds on which the relevant test is met. The Court has discretionary power in this respect and notice is not required at this stage. If the freezing order is issued by the enforcement Court, the respondent must be notified by the order within eight days of its execution, pursuant to Articles 319 and 320 of the Procedures Law. If the freezing order is not issued, the applicant has the right to submit a petition to the Court within ten days following the rejection, in which case it shall be examined through normal Court proceedings.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Egyptian law does not entail the provision of any form of security. However, the Court may request the applicant to pay a fine not exceeding EGP 800, along with any other suitable compensation as the Court may deem appropriate according to Article 324 of the Procedures Law if the order is deemed null or invalid. The right to request compensation is subject to the general rules set out in the Civil Code, which require the existence of fault, damage and causation in order for the respondent to be entitled to compensation.
6. Can it be sought against third parties?
Yes, a third party to the proceedings may be made a party to interim measures where there is good reason to suppose that the debtor’s properties or debts that are in the possession of a third party are in fact the properties of the respondent in the underlying dispute or will be available to the respondent to meet a judgment or arbitral award.
7. What assets are covered by a freezing (or equivalent) order?
Tangible and intangible movable assets belonging to the debtor and located in Egypt can be subject to a freezing order. Immovable assets cannot be subject to precautionary measures, unless for enforcement purposes.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage, including prior to commencing Court proceedings or following judgment or arbitral award to assist with enforcement.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Any assets subject to the freezing order cannot be disposed of by the respondent or a third party. However, some assets cannot, in principle, be subject to a freezing order, such as:
(i) immovable assets;
(ii) ordinary and reasonable living expenses and legal expenses;
(iii) wages and salaries, which can only be subject to seizure up to a quarter of the amount in question;
(iv) state-owned properties;
(v) planes and ships in certain circumstances.
12. What happens after a freezing (or equivalent) order is granted?
The applicant will typically notify third parties (such as banks holding the respondent’s assets) of the freezing order and must notify the respondent within eight days of obtaining and executing the order, at which time the latter may challenge the order. When the freezing order was obtained ex parte, the applicant must file the substantive claim within eight days of it being obtained, unless the freezing order was sought in support of other Court proceedings.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The applicant pays the administrative costs of obtaining the freezing order.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
Once a third party is notified of the freezing order, it owes a duty to the Court to abide by it. There are no protections envisaged for third parties subject to a freezing order apart from the right to recover any reasonable expenses incurred in connection with the order. However, if a third party has rights over the assets subject to seizure, it may request the Court to lift the precautionary seizure or redeem the assets. Also, if any asset is perishable, the party may request permission from the Court to sell it and impose seizure on the equivalent sale amount.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent or third party in breach of a freezing order may be held liable. Criminal sanctions, including imprisonment, may also be imposed on the custodian of the assets subject to the freezing order in case of breach.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
There are no provisions under Egyptian law that refer to such a duty of care.
17. Can a freezing (or equivalent) order be enforced abroad?
There are no restrictions in Egyptian legislation in this regard. It is therefore subject to the laws of the relevant jurisdiction and applicable treaties on mutual judicial assistance.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
In general, no, except for enforceable documents (such as Court sentences or orders which have become enforceable, arbitral awards and mediated settlements) subject to the relevant applicable conventions and treaties on mutual judicial assistance.
Contact
Hazim Rizkana Managing Partner Rizkana & Partners Giza, Egypt hazim.rizkana@rizkanapartners.com www.rizkanapartners.com Amr Ibrahim Counsel Rizkana & Partners Giza, Egypt amr.ibrahim@rizkanapartners.com www.rizkanapartners.com Salma El Nashar Senior Associate Rizkana & Partners Giza, Egypt salma.elnashar@rizkanapartners.com www.rizkanapartners.com Assem Mahmoud Associate Rizkana & Partners Giza, Egypt assem.mahmoud@rizkanapartners.com www.rizkanapartners.com
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