Editorial - Arbitration in the Middle East: Expectations and Challenges for the Future
Article from: TDM 2 (2015), in Editorial
Any discussion of arbitration in the Middle East will inevitably elicit a great number of varied and contrasting opinions. At one end of the scale are comments based on the fact the Middle East has a strong tradition of private out of court dispute resolution dating back thousands of years. The Prophet Mohammed arbitrated disputes and even used "takhim" (the Arabic word for arbitration) in his conflict with the tribe of Banu Qurayza. At the other end of the scale are fears that arbitration, or at least what most TDM readers would consider to be arbitration, is a European or Western process, not suited to (or not trusted for) the settlement of disputes in the Middle East. People at this end of the spectrum may point to the infamous comments of Lord Asquith in Petroleum Development Limited v The Ruler of Abu Dhabi, where, when asked to consider the law of Abu Dhabi, he said "The Shekih administers a purely discretionary justice with the assistance of the Koran; it would be fanciful to suggest that in this very primitive region there is any settled body of legal principles applicable to the construction of modern commercial instruments".
As with many things in life, reality lies somewhere between the two extreme positions. However, despite the contrasting opinions and perceptions, one thing is certain; arbitration is becoming ever more significant in the Middle East and the parties are increasingly willing to have disputes addressed within the region rather than relying on French, English or Swiss seats. Regional arbitral centres are proliferating and States are updating (or creating) arbitration laws.
It was the increasing use of arbitration in the Middle East, and in particular the increasing use of Middle East seats, that prompted us to issue the Call for Papers for this TDM Special. Despite the widely broadcast good news stories of new arbitration centres, updated statutory regimes to support arbitration and national courts recognising and enforcing arbitral awards, there continue to be reports, some no doubt apocryphal, of courts assuming jurisdiction in spite of arbitration clauses and arbitral awards not being enforced for what appear to be minor procedural defects, such as, a witness not giving evidence under oath, a copy of the arbitration agreement not being appended to the award, or the award not being issued in the name of the local Emir. This in turn led us to ask the question: "what are the expectations and challenges for the future of arbitration in the Middle East?"
This Special consists of eighteen papers, which between them discuss the arbitral regimes in Bahrain, Egypt, Iran, Iraq, Jordan, Lebanon, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Syria, Turkey and the United Arab Emirates (UAE), together with investment treaty arbitration and general trends in the MENA (Middle East and North Africa) region. There are, of course, no definite answers to the question of what are the expectations and challenges for the future, but we do hope that these papers show that there are a number of themes which resonate across the region:
- The enactment of legislation to support arbitration based on the UNICTRAL Model Law is
increasing. Bahrain, Egypt, Jordan, Oman and Syria all have arbitration laws influenced by
the Model Law. Saudi Arabia enacted a new arbitration law in 2012 and Palestine and the UAE
are both considering new Model Law based arbitration laws, although it is fair to note that
the gestation period for some of these laws has been considerable. One paper in this Special
even considers whether there is a case for a uniform arbitration law across the Gulf
Cooperation Council (GCC) States.
- The courts of the region are increasingly willing to recognise and enforce arbitral
awards, not only under the New York Convention, but also under a number of the regional
enforcement treaties, in particular the Riyadh Convention and the GCC Convention. Nonetheless, there are still bumps along the road, for
example the Canal de Jonglei case from the UAE in 2013 where the UAE courts refused
recognition of an ICC award from Paris on the basis the UAE courts did not have
jurisdiction, given neither party was domiciled in the UAE and the subject matter of the
dispute was to be performed outside the UAE.
- The use of arbitration by Arab parties appears to be increasing. Arbitral centres
continue to open in the region and case numbers are increasing. This is reflected not only in private arbitration, but also
in the fact that Arab parties are now resorting to arbitration under MENA regional
investment treaties, particularly when more traditional bilateral investment treaty
protection may not be available to the Arab investor.
- Public policy still plays a major role in any discussion about arbitration in the Middle
East. The unruly horse of English public policy has been renamed an "Unruly Arabian
Horse" and also a
"Unruly Camel" , but
the fear remains that once you are astride the unruly animal you never know where it will
carry you. Some Middle Eastern courts still appear quick to rely on public policy as a
reason to defeat an arbitration clause.
- Support for arbitration can be found in the shari'a principles that underpin the legal systems in almost all Arab states, but arbitral users and practitioners in the Middle East must ensure they understand and respect these principles if commercial arbitration is to continue to grow in the region.
The past decade has seen incredible change and there can be little doubt that the future will bring continuing evolution. The growth in Islamic finance, for example, is likely to see an increased demand for arbitrators versed in Islamic principles and arbitral centres and rules that can deal with Islamic finance, such as the i-Arbitration Rules at the Kuala Lumpur Regional Centre for Arbitration (KLRCA). The Arab world could even lead the way in the evolution of global arbitral principles if the Dubai International Financial Centre (DIFC) is to press ahead with its innovative plans to refer disputes concerning the enforcement of court judgments to arbitration so that the underlying court judgment will then be converted into a DIFC arbitral award that can be enforced around the world under the New York Convention.
Overall, while many challenges remain, the future for arbitration in the Middle East looks promising and certainly dynamic. We hope that this Special can contribute in some small way to discussions on the development and growth of arbitration in the region, and are grateful to all the authors for their papers and to the TDM editorial team and the publisher for their support in putting together this Special.
 Abdul Hamid El-Ahdab, Arbitration with the Arab Countries (2nd Edition, 1999); see also Libyan Am.Oil Co (LIAMCO) v Libyan Arab Republic (1977) 20 ILM 1, 41 (1981)
 Petroleum Development Limited v The Ruler of Abu Dhabi 18 I.L.R. 144 (1951); see also Howard Stovall - Arbitration and the Arab Middle East: Some thoughts from a commercial lawyer (Chicago International Dispute Resolution Association ("CIDRA") at its meeting on 22 September 2009); Reza Mohtashami - Banishing the Ghost of Lord Asquith's Award: A Resurgence of Arbitration in the Middle East (BCDR International Arbitration Review 1, no 1 (2014) 121-124 (Kluwer))
 Dubai Court of Cassation Petition No. 503/2003
 Dubai Cassation Appeal No. 14/2012
 Qatar Court of First Instance Decision No. 2216 of 2013 (although the arbitral award in question was subsequently re-instated by the Qatar Court of Cassation in Civil Challenge Nos. 45 and 49 of 2014)
 See Jean-Pierre Harb - What to expect when arbitrating in the Kingdom of Saudi Arabia
 See Lubna Katbeh - Palestine Moving Ahead - New Draft of the Arbitration Law
 See Dykun, ibid
 See Dr Ahmed Almutawa and Professor Munir Maniruzzaman - Problems of Enforcement of Foreign Arbitral Awards in the Gulf Cooperation Council States and the Prospect of a Uniform GCC Arbitration Law: An Empirical Study
 The Riyadh Convention on Judicial Cooperation between States of the Arab League of 1983
 The Gulf Cooperation Council (GCC) Convention for the Execution of Judgments Delegations, and Judicial Notification of 1996
 See Gordon Blanke, The Role of the New York Convention in the Enforcement of Foreign Awards in the UAE: Expectations and Challenges or the Tale of the Ugly Duckling
 See Christina Dykun Dubai - A promising ICA Oasis Stifled by an excess of public policy
 See Meriam Al-Rashid and Leonardo Carpentieri - The Revival of Islamic and Middle East Regional Investment Treaties: A new way forward?
 Burrough J. in Richardson v Mellish (1824), 2 Bing. 252
 See Mohamed S Abdel Wahab and Samaa Haridi - The Public Policy Exception under the New York Convention: The Unruly Arabian Horse in the MENA Region
 See Blanke ibid
 See Florentine Sonia Sneij and Ulrich Andreas Zanconato - The role of shari'a law and modern arbitration statutes in an environment of growing multilateral trade: Lessons from Lebanon and Syria
 See Faris Shehabi - Resolving Shariah Disputes - Navigating the Governing Law
 DIFC Practice Direction No. 2 of 2015 - Referral of Judgment Payment Disputes to Arbitration