Middle East and North Africa Overview

Transcription

1 Middle East and North Africa Overview Diana Hamadé Introduction 2018 is officially the international arbitration year par excellence, as far as the MENA region is concerned. The region has set a record in the development of the practice in an unprecedented way as far as laws, rules and centres are concerned. Two of the Gulf States which have been known for their arbitration scrutiny have finally issued arbitration laws, and the two most prestigious English and French international arbitration centres in the world, the LCIA and the ICC, have recently set up in the MENA region. What was said by many practitioners, about the long road ahead of Middle Eastern countries to establish one or more truly global arbitration centres, or even embrace arbitration as an alternative to the natural jurisdiction of the courts, has been proven simply naïve. The MENA countries may not have been, until lately, among the most preferred locations for international arbitrations, like Paris, London, New York and Geneva, because of their less developed legal systems, but this status is changing rapidly. The arbitration laws issued in most countries of the MENA region are based on the UNCITRAL Model Law on International Commercial Arbitration of Most MENA countries are also signatories of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), except for Iraq and Libya. The global economic crises has resulted in a sharp rise in international arbitration cases in the past two decades, which, according to the latest statistics by the International Chamber of Commerce (ICC), involved parties from North Africa accounting for more than onethird of all African parties and the overall number of Middle Eastern parties accounting for approximately one-third of Asian parties. It is obvious that the governments of the MENA countries have come to realise, despite, or because of, the political restlessness, among many other reasons, that a modern international arbitration regime is critical for foreign investment. The investment-savvy countries in the region, especially the Gulf States, whose governments are eager to diversify their economies and end their dependence on oil and gas revenues, are taking serious steps in the direction of international arbitration. Middle Eastern countries have launched legislative initiatives towards becoming more arbitration-friendly to respond to the increasing demand of foreign investors for arbitration as a dispute resolution mechanism. The experiences of the MENA countries in arbitration may be diverse but the United Arab Emirates (UAE) is increasingly becoming a model to follow in international arbitration in the region. It is fair to say that the UAE is competing with regional and international cities in offering arbitration services to regional investors. According to statistics, the UAE was among the 10 most frequently listed nationalities of parties worldwide and a very attractive seat for international arbitrations in the region. UAE Federal Arbitration Law No. 6 of 2018 Until June 14 th, 2018, arbitration in the UAE was governed by articles 203 to 218 of the Civil Procedures Code of 1992 (CPC). Other than these articles, there was no arbitration law; nonetheless, arbitration in the UAE thrived. Various drafts of a Federal Arbitration Law had been under discussion since 2008 and many were expected to be passed but nothing materialised until May 3 rd, 2018 when Federal Law No. 6 of 2018 was issued and came into force on June 14 th following its publication in the Official Gazette on May 15 th. The new Law is broadly based on the UNCITRAL Model Law and, in consistency with its provisions, provides for limited grounds to annul an arbitral award and grants the arbitral tribunal the authority to rule on its own jurisdiction. The previous weakness of the arbitration regime caused by the courts nullifying arbitral awards on procedural technicalities, which caused serious delays and expenses, is dealt with now in the new Law, with specific grounds to challenge an arbitral award, inspired by article 34 of the UNCITRAL Model Law, and procedures to enforce an arbitration award filed directly before the UAE Federal or local Court of Appeal, not before the Courts of First Instance, as before. The Arbitration Law also includes several provisions designed to promote efficiency in arbitration and to prevent significant delays. As to the scope of its application, the Law refers to both international arbitration and domestic arbitration, granting international arbitration the recognition it lacked previously. It also granted the arbitral tribunal extended powers within and according to the parties agreement. Articles 3 to 8 of the Law are aimed at enabling the UAE to become a seat in international arbitrations Amendment to Article 257 of the Penal Code Among the latest regulatory initiatives in relation to arbitration, the UAE legislator decided to make a change to the UAE Penal Code No. 3 of 1987, amended by Federal Decree Law No. 7 of 2016, adding arbitrators to experts and translators in article 257, where criminal liability is imposed on those who issue decisions and opinions in contradiction with their duties of impartiality and neutrality. There has been widespread criticism of this step, calling it a draw back for international arbitration. While many practitioners are not concerned with the said amendment (confident that such a criminal 370

2 liability will not be a threat), the UAE legislator has refrained from commenting thereon. The New York Convention, Procedure and Public Policy The New York Convention is one of the key instruments in international arbitration. The UAE became a signatory to the New York Convention in The UAE judiciary has since then come a long way in its compliance to embrace and uphold treaty obligations. Following years of applying the outdated and sometimes irrelevant conditions for enforcement listed in the CPC to enforcement actions, disregarding the pro-enforcement bias enshrined in the New York Convention, a series of decisions which commenced in 2010 and culminating in the Court of Cassation s decision No. 132/2012 in Airmech Dubai LLC v Macsteel International LLC affirmed the primacy of the New York Convention to the enforcement of foreign awards and the lack of relevance of the CPC. Since then, the primacy of the New York Convention has been reaffirmed by all levels of the Dubai judiciary, including the Court of Cassation. In the case of Al Reyami Group LLC v BTI Befestigungstechnik GmbH & Co KG, which concerned the enforcement of an ICC award seated in Stuttgart, the Dubai Court of Cassation upheld the decision of the Court of Appeal that the New York Convention was embedded in UAE domestic law by Federal Decree No. 43 of 2006 and article 125 of the UAE Constitution, and rejected any grounds for challenge that fell outside the scope of article V of the New York Convention. The DIFC Law and Courts The Dubai International Financial Centre (DIFC) is a financial freezone set up in Dubai in 2004 and promotes itself as a leading arbitration hub. Its courts have adopted a strong pro-arbitration stance. The DIFC Law No. 1 of 2008, amended by DIFC Law No. 6 of 2013 (the Arbitration Law) is based on the UNCITRAL Model Law. In 2015, the DIFC Courts devised a method by which parties can agree to have a DIFC Courts judgment converted into an arbitral award, which can then be enforced in 152 states around the world, including the UAE, under the New York Convention, acting as a host for onshore enforcement (Practice Direction No. 2). The use of the DIFC Courts as a conduit court for enforcement in onshore UAE became possible following the DIFC Court of Appeal in DNB Bank ASA v Gulf Eyadah Corporation (2015) DIFC CA 007, but the authorities in the UAE and following an appeal to the Supreme Court of the UAE decided to limit the potential conflict of jurisdiction created between DIFC Courts and Dubai courts by setting up a (Joint Judicial Tribunal) under Decree No. 19 of 2016 From its very first decision, Cassation No. 1/2016 (Judicial Tribunal) Daman Real Capital Partners Company LLC v. Oger Dubai LLC, until the latest decision, and in almost half of such decisions, the Judicial Tribunal has determined that it will not prevent the DIFC Courts from serving as a conduit jurisdiction for the onward enforcement of a domestic arbitral award in mainland Dubai, if there are no parallel proceedings before the Dubai courts involving the same parties on the same subject matter. Since the setup of the Chamber of Commerce in Dubai, and since arbitration was introduced through the ICC involvement with the General Secretariat of the UAE Chambers, other chambers followed suit so almost every emirate now has its own arbitration institution. The DIAC The Dubai International Arbitration Centre (DIAC) was established by the Dubai Chamber of Commerce as a centre for commercial arbitration to replace the former Conciliation and Commercial Arbitration Centre of Dubai set up in The DIAC, which was officially inaugurated in May 2003, is currently the largest and busiest arbitration centre in the Gulf region. It went through some significant modifications in 2007, which included the issuing of its own Arbitration Rules, which have been amended recently by the new DIAC 2018 Arbitration Rules. The New Rules were launched in 2018 aimed at filling the gaps in providing extra protections addressing loopholes in the previous rules. The DIFC, as the default seat of arbitration, was one of the highlights of the amendments, in addition to measures increasing procedural efficiency and avoiding delays (e.g., emergency arbitrator, expedited proceedings and power to sanction counsel conduct). The DIFC LCIA Located in the DIFC and in collaboration with the London Court of International Arbitration (LCIA), the DIFC-LCIA Arbitration Centre, which offers itself as a credible modern alternative to a seat located in onshore UAE, was established in February The Centre was closed due to conflict and other administrative problems, subsequently addressed by the amended Arbitration Law of 2014 aimed at restructuring the DIFC so that the technical objections to the DIFC-LCIA would be put to rest. For parties doing business throughout the Gulf and MENA region, the pro-arbitration jurisdiction of the DIFC is now made available. Its objectives are to promote and to administer effective, efficient and flexible arbitration and other ADR proceedings. With the relaunch of the DIFC-LCIA, the DIFC Courts, the curial courts for arbitrations and the Rules of the DIFC-LCIA (largely modelled on the LCIA Arbitration Rules), a perfect hub for international arbitration has been created. The ADGM ICC The ADGM ICC Centre is Abu Dhabi s answer to the DIFC. In July of last year, the ADGM announced the establishment of its arbitration hearing centre by early This development acts as a supplement to the recent agreement with the International Court of Arbitration of the International Chamber of Commerce (ICC Court), who have launched their Middle East representative office in the ADGM. In addition to its provision of arbitration and mediation services, the centre also seeks to provide high-quality in-class training in dispute resolution services. What will make this centre stand out is its modern, pro-litigation framework that has been modelled on the UNICTRAL Model Law with a series of contemporary modifications to accommodate the needs of users in the MENA region. Bahrain Among the Middle East and North Africa jurisdictions, Bahrain has long been the most welcoming to arbitration, having acceded to the New York Convention in 1988 and having adopted parts of the UNCITRAL Model Law in the original International Commercial Arbitration Act (ICAL) of The Bahrain Chamber for Dispute Resolution was set up in 2009 in partnership with the American Arbitration Association (BCDR-AAA). Bahrain designated a specialist tribunal comprising two judges from Bahrain s highest jurisdiction and a third member chosen from the BCDR-AAA s roster of neutrals, rather than trial by its local courts, as the primary dispute resolution mechanism in large cases involving licensed financial institutions or international commercial disputes involving either foreign parties or a significant foreign nexus

3 The Bahrain Chamber for Dispute Resolution, a dispute-settlement institution based on a joint venture between the Bahrain Ministry of Justice and the American Arbitration Association, launched the new Arbitration Rules to bring the centre in line with the best practices of arbitration. The new Bahrain Chamber for Dispute Resolution Arbitration Rules came into effect in October 2017, following substantial revisions to the previous law in Bahrain, the ICAL of 1994, including full incorporation of the UNCITRAL Model Law. The centre s amended 2017 Rules reflect best practices and incorporate the latest developments in arbitration. The amendments provide the centre with a modern and advanced set of Arbitration Rules, which make it attractive to international parties and signals a commitment to establishing itself as a major arbitration centre in the region. Bahrain, in fact, boasts one of the most innovative and arbitrationfriendly legislative regimes in the Middle East, supported by a modern, well-run institution in the form of the BCDR-AAA. Qatar Qatar has become significantly receptive to international arbitration within the last 15 years. Qatar assented to the New York Convention in 2002 without declarations or notifications. The country then went onto establish the Qatar Financial Centre (QFC) in This was a separate jurisdiction along the lines of the DIFC in Dubai; and in 2006, it launched the International Centre for Conciliation and Arbitration (QICCA). Both the QFC and the QICCA have adopted rules based upon the UNCITRAL Model Law. Qatar adopted a new arbitration law (Law No. 2 of 2017) promulgating the Law of Arbitration in Civil and Commercial Matters (the Qatar Arbitration law). This new law supersedes the arbitration chapter contained in Qatar s Code of Civil and Commercial Procedure and is largely based on the UNCITRAL Model Law, which is internationally recognised and widely used by many states as the basis of their own arbitration law. Additionally, the ICC holds its regional office for the MENA region in Qatar. Previously, both domestic and international arbitrations were subject to the Civil and Commercial Procedure Code, which provided for appellate review of arbitral awards on the merits and nullification on procedural grounds. This proved challenging for parties seeking enforcement of their awards in Qatar, whether domestic or foreign. In the well-known decision in International Trading and Industrial Investment v DynCorp Aerospace Technology, the Qatari Court of Cassation set aside a Paris-seated ICC award on the merits, as if sitting in direct appeal from the arbitral tribunal rather than as an enforcement proceeding. In 2012, the Qatari Court of Cassation held that arbitral awards are null unless issued in the name of His Highness the Emir of Qatar, thus treating arbitral awards as indistinguishable from, and so subject to the same procedural requirements as, national court judgments. However, in 2014, the Court of Cassation reversed several lower court decisions in which similar findings had been made, claiming they had improperly applied Qatari law. Of particular interest are Qatar Court of Cassation Appeals Nos. 45 and 49/2014, which found that, while Qatari law would normally require a domestic arbitral award to be issued in the name of His Highness the Emir of Qatar, the Doha-seated award in that case should be treated as foreign and thus subject to the New York Convention, owing to the parties choice of the ICC rules. Saudi Arabia Saudi Arabia has taken a serious interest in international arbitration, pursuing its political and strategic initiatives by encouraging investments and business from international companies within the Kingdom. In 1958, awards were issued by the tribunal in Saudi Arabia v Arabian American Oil Co, which refused to apply Shariah law to a dispute over Aramco s exclusive oil concession in Saudi Arabia and decided in Aramco s favour, causing the Saudi government to take the step to bar its ministers and agencies from agreeing to arbitration without the prior approval of the president of the Council of Ministers or permission from a legal enactment. An arbitration law was issued in 1983 and the Kingdom acceded to the New York Convention in 1994, but for many years its arbitration law gave Saudi courts wide discretion over merits, procedure and enforcement, including a requirement that arbitration agreements be judicially approved prior to the commencement of arbitral proceedings. By 2012, the Saudi government appeared to shift its policy, enacting a new arbitration law based, in part, upon the UNCITRAL Model Law. This new law eradicated the requirement of judicial pre-approval, offers guidance for determining the validity of an arbitration agreement, loosens the arbitrator qualifications, and permits parties to choose procedures, substantive law and seat, provided they do not violate the public policy of Saudi Arabia or Shariah law. Perhaps most critically, the new law circumscribes the supervisory powers of the Saudi courts over enforcement of arbitral awards. Where previously a court could, and frequently did, reconsider the merits during enforcement proceedings, the new law prohibits the inspection of the facts and subject matter of the dispute. The Saudi Centre for Commercial Arbitration has been formed by the Council of Saudi Chambers (CSC), in consultation with the Kingdom s justice, commerce and industry ministries, and in coordination with the governor of the Saudi Arabian General Investment Authority. The CSC, which is the official federation for the 28 Saudi chambers of commerce and industry, acts as an umbrella organisation for the centre. The centre has a board of nine directors who serve a three-year term and is empowered to exercise arbitration both inside and outside Saudi Arabia on commercial disputes. Iraq While Iraq has not yet acceded to the New York Convention, the Iraqi courts have taken the task of fitting international arbitration into Iraqi law upon themselves. In Iraqi Ministry of Finance v Fincantieri-CantieriNavaliItalianiSpA, the Baghdad Commercial Court openly declared that Iraqi law was outdated and vague, and referred to the UNCITRAL Model Law and the New York Convention (despite neither applying in Iraq) in deciding that the Iraqi Civil Procedure Code applied to international arbitrations. This permitted the court to stay its proceedings pending the decision of a French court on the validity of an arbitral award, signalling that the Iraqi courts possess a certain degree of discretion in this arena. The decision was upheld by the Iraqi Court of Cassation. In March 2014, in keeping with the recent creation of specialised commercial courts, the Iraqi government reportedly began organising workshops for senior judges on arbitration and other private dispute resolution mechanisms. However, the climate in Iraq remains uncertain as its government struggles to address other priorities. Iran Arbitration in Iran is governed by articles 454 to 501 of the Iranian Code of Civil Procedure and international arbitration (defined as arbitration proceedings where at least one of the parties was not Iranian when the arbitration agreement was concluded) is governed 372

4 by the Law on International Commercial Arbitration of 1997 (LICA), which is based on the UNCITRAL Model Law. Iran also boasts two arbitration centres, the Tehran Regional Arbitration Centre and the Arbitration Centre of Iran Chamber. Article 139 of the Iranian Constitution continues to restrict referral to arbitration of disputes involving public and governmental property where one party is foreign, unless prior approval of the Council of Ministers and of Parliament is obtained. Despite a little drop in the use of arbitration in Iran in recent years due to economic sanctions, following the Joint Comprehensive Plan of Action agreed on July 14 th, 2015 between Iran and the P5+1 countries, the lifting of sanctions is expected to open Iran to much needed foreign investment in a variety of industry sectors, including the oil and gas and automotive sectors, as well as the civil aviation industry. This will undoubtedly renew interest in arbitration in Iran. With a legislative framework already in place and with the hope of foreign investments, Iran will soon feature prominently in the region s arbitration landscape. Egypt Egypt was one of the very early signatories of the New York Convention. Egypt also signed the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention ) on February 11 th, 1972, which entered into force in Egypt on June 2 nd, The different successive regimes in Egypt considered arbitration an effective means to attract foreign investment, which necessitated successive amendments to the Egyptian Investment Law No. 156 of As a result, the Egyptian Investment Law was amended three times during the 1970s to provide the necessary legal framework for investment under the then nationwide open-door policy. The Cairo Regional Centre for International Commercial Arbitration (CRCICA) was set up as an independent non-profit international organisation. Pursuant to the Headquarters Agreement, the Cairo Centre and its branches enjoy all the privileges and immunities of independent international organisations in Egypt. The total number of arbitration cases filed before CRCICA until June 30 th, 2016 reached 1,109 cases. In the second quarter of 2016, 23 new arbitration cases were filed compared to 12 cases filed in the same quarter in Morocco Both foreign and domestic arbitration proceedings and enforcement of awards are governed by the Moroccan Code of Civil Procedure, Law No of September 28 th, 1947, as completed and modified by Law No of November 30 th, 2007 (the Civil Procedure Code). The provisions of the Moroccan Code on Civil Procedure relating to arbitration are loosely based on, and are generally in conformity with, the UNCITRAL Model Law. One of the key institutions is the Moroccan Court of Arbitration within the International Chamber of Commerce of Morocco. Other notable arbitration institutions in the country include the Euro-Mediterranean Centre for Mediation and Arbitration and the Moroccan Centre on Mediation and Arbitration in Rabat. In accordance with Moroccan law, there are various instances in which the court may intervene in arbitration proceedings. Parties to an arbitration agreement may also have recourse to the courts in order to obtain interim or conservatory measures, before or during arbitration proceedings. Furthermore, court intervention is also required for enforcing arbitration awards. Foreign arbitration awards are recognised in Morocco but only if they are properly established and if such recognition is not contrary to Moroccan or international public policy. An order that refuses to recognise or enforce a foreign award is subject to appeal, while an order that decides to recognise or enforce the foreign award may be appealed on a limited number of grounds (e.g., the arbitral tribunal was irregularly constituted or the recognition or enforcement is contrary to public policy). Morocco acceded to the New York Convention in Lebanon Arbitration is not a new concept in Lebanon, having been recognised by the legal system since the first Code of Civil Procedure of The Lebanese Code of Civil Procedure (CCP), which was enacted by Decree Law 90/83, with amendments resulting from Law No. 440 of July 29 th, 2002, devotes an entire chapter to arbitration with a distinction being made between domestic arbitration (articles 762 to 808 of the CCP) and international arbitration (articles 809 to 821 of the CCP). However, the provisions of the Lebanese arbitration law are not based on the UNCITRAL Model Law. Lebanon is also a signatory to the New York Convention and has been since In principle, all disputes can be submitted to arbitration in Lebanon. Article 762 of the CCP provides that contracting parties may insert in their commercial and civil contracts a clause providing that all disputes which rise from the validity, performance or the interpretation of their contracts will be settled by way of arbitration. There is no specialist arbitration court in Lebanon. The Court of First Instance will hear requests for the appointment of arbitrators when the need arises. There are several arbitration bodies relevant to international arbitration in this country: the Lebanese Arbitration Centre of the Chamber of Commerce and Industry and Agriculture of Beirut and Mount Lebanon, which was founded in 1995: the function of the Lebanese Arbitration Centre is to settle national and international disputes through arbitration or optional conciliation. The Centre has its own set of Rules of Conciliation and Arbitration; the Lebanese National Committee of the ICC of Paris to which the ICC Secretariat reverts in some cases to designate arbitrators; the Chartered Institute of Arbitrators, which operates in Lebanon through its local branch; and the Lebanese and International Arbitration Centre of the Beirut Bar Association (LIAC-BBA). These bodies can act as appointing authorities if so designated by the parties or upon the request of a foreign arbitration. Conclusion North African and Middle Eastern countries, predominantly sought by investors in the resources and infrastructure sectors, have been involved, in recent years, in international disputes referred to international arbitration. Because of this increase in arbitrations, and as part of a wider vision for states in this region to bolster their standing as global financial and trading hubs, many have set up their own arbitral institutions and upgraded their arbitration laws and regulations to the standards of international best practice. As more disputes from the Middle East and North Africa are referred 373

5 to arbitration, having a preferred seat for arbitration in the region is becoming ever more relevant. High-profile cases are also calling for participants in the arbitration process, be they institutions, arbitrators or counsel, to understand the laws and their implications on arbitration proceedings, and to be ready to address them. References united-arab-emirates. 76f7-43e b92c4bd9a2ad. d098-42eb-9dc1-55cf8de121fe Diana Hamadé Office 603, Maze Tower Sheikh Zayed Road Dubai United Arab Emirates Tel: diana@ials.ae URL: Diana Hamadé is a lawyer with rights of audience before all UAE Courts, including the DIFC Courts, and undertakes international commercial arbitration work as counsel and arbitrator. She has been involved in setting up the two arbitration centres in Dubai and has been involved in a number of the draft laws of arbitration in the UAE. Diana has been hosted as a speaker on arbitration locally and internationally. Diana is also involved in trainings and developing the arbitration practice as a contributor to many publications including The National, Arbitral Women, ICLG, Lexis Nexis, Thomson Reuters and Creative Word. Diana was recognised by Thomson Reuters as the Most Influential Female Lawyer in the UAE and as the Best Legal Writer by The National. She was presented the Arab Woman Legal Award and the Author Excellence Award by Lexis Nexis. Founded in 2008, (IALS) is a leading law firm in the region offering a one-stop shop of legal services with its team of consultants and litigators. IALS focuses on high-end cross-border litigation in Corporate, Civil and Estate law with a focus on family business and family law. Our members of the International Arbitration team have worked with leading International Law firms and have a breadth of experience in International Arbitration, dedicated to representing corporations in large scale and complex international and domestic arbitrations