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) (defendant), 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. SPP sought recognition and enforcement of the award in the Netherlands by filing an action. Egypt argued, among other things, that the award was unenforceable under Article V(1)(a) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) because Egypt was not a party to the supplementary agreement and, therefore, was not bound by the arbitration clause.