Southern Pacific Properties v. Arab Republic of Egypt

In 1974 Southern Pacific Properties Limited (SPP) (plaintiff) and the Egyptian General Organization for Tourism and Hotels (EGOTH), a public-sector entity of the Arab Republic of Egypt (defendant), entered into two agreements for the development of two international tourist complexes in Egypt. The first agreement, which was signed by the minister of tourism on behalf of Egypt, did not contain an arbitration clause. The second agreement, which was supplementary to the first agreement, recited that the agreement was between SPP and EGOTH. However, the signature of the minister of tourism for Egypt appeared on the last page, followed by the words “approved, agreed and ratified by the Minister of Tourism, His Excellency Mr. Ibrahim Naguib.” The second agreement contained an arbitration clause. A dispute arose, and SPP commenced arbitration proceedings against both EGOTH and Egypt. The arbitral tribunal rejected Egypt’s objection to the tribunal’s jurisdiction over it, and the tribunal issued an award of $12.5 million in favor of SPP. Egypt sought to have the award against it annulled in the Paris Court of Appeal on the ground that Egypt was not a party to the second agreement that contained the arbitration clause. The Paris Court of Appeal agreed, ruling that Egypt was not bound to the arbitration. SPP appealed to the France Court of Cassation, arguing that the arbitral tribunal—not the court—had the power to determine whether Egypt was bound by the arbitration agreement.