In 1996 the case between Arab Republic of Egypt v Chromalloy Aero services brought a new debate to the international arbitration world. Chromalloy Aero services (“Chromalloy”), an American corporation, entered into a military procurement contract with the Air Force of the Arab Republic of Egypt (“Egypt”) to provide parts, maintenance, and repair for helicopters.
A dispute arose and Chromalloy commenced arbitration proceedings on the basis of the arbitration clause in the contract. An arbitral tribunal found for Chromalloy. Egypt filed an appeal with the Cairo Court of Appeals, seeking nullification of the award, and filed a motion with the United States District Court for the District of Columbia to adjourn Chromalloy’s petition to enforce the award.
The Cairo Court of Appeals suspended the award and Egypt filed a motion in the United States filed a motion in the District Court to dismiss Chromalloy’s petition to enforce the award. Subsequently, the Cairo Court of Appeals issued an order nullifying the award. On the contrary, Chromalloy had already opened a file for enforcement of the award. Paradoxically, the court said that the arbitral award is enforceable because:
1. recognizing the decision of the Egyptian court would violate United States public policy in favor of final and binding arbitration of commercial disputes;
2. according to art 5(1)(e) of the NYC, the court has a discretion to to enforce the award that “has ... been set aside ... by a competent authority of the country in which, or under the law of which, that award was made”; and,