In this guest column, Roland Ziade, a member of the ICC International Court of Arbitration and an arbitration practitioner with extensive experience in the region, reflects on these innovations and their impact on arbitration in the MENA.
Today, entities with contractual relations in or connected with the MENA region increasingly select arbitration over litigation to resolve their disputes – with parties more often choosing an Arab country as the seat of arbitration.
ICC statistics show that their cases involving parties from the area have steadily and significantly increased from 540 parties for arbitrations initiated during the period 2005 to 2009, to 1,003 parties during the period 2010 to 2014 (an 85.7 % increase). In 2014, Northern African parties accounted for approximately one-third of African parties and Arab parties accounted for over one-quarter of Asian parties. Algeria, Egypt, Jordan, Lebanon, Morocco, Oman, Qatar and the United Arab Emirates (UAE) were among the seats of arbitration chosen by the parties or the Court in proceedings initiated over the past five years – with the UAE chosen over a hundred times during that timeframe.
This important growth in the use of arbitration in the MENA region has been taking place at a time when international arbitration has been perceived as becoming increasingly complex and “judicialized.” Indeed, there has been concern that some of the traditional advantages of arbitration, such as rapidity and costs, are threatened and a greater focus on transparency of the process and accountability of its actors is required.
Arbitration practitioners involved with the region, like their colleagues around the world, are sensitive to these developments and to the transparency and efficiency concerns. Along with the increase in the use of this type of dispute resolution, the region has also seen a proliferation of local arbitration centres with their own sets of rules, as well as a growing awareness among practitioners of ethical considerations bearing on arbitral proceedings.
In recent months, ICC has announced a series of new measures and guidance rules directed at improving transparency and efficiency. It may be anticipated that these measures, especially the two measures discussed below that have been included in the latest ICC Note to arbitrators and parties on the conduct of ICC Arbitration, will have positive repercussions for the development of arbitration in the MENA and elsewhere.
For cases registered after 1 January 2016, the Court will publish on its website (without naming the parties) the names of the arbitrators, their nationalities, their method of appointment and which arbitrator is the tribunal chairperson. The Court will maintain such lists, updating them over time to reflect whether a particular case is pending or closed and whether there was any change in the composition of the tribunal.
One of the goals of this initiative is to help promote greater diversity in appointments of arbitrators, in particular, as regards to nationality. Access to such a database of individuals who are and have been acting as arbitrators in ICC cases may lead parties and their counsel to consider appointing as arbitrators individuals with whom they might not otherwise have been familiar. This may both help raise the international profiles of MENA-based individuals who serve as arbitrators and give parties and their counsel in the MENA new ideas as to individuals who might be considered for appointment to cases in which they are involved.
This initiative is among the recent measures taken by ICC to promote transparency, in particular as regards arbitrators and constitution of tribunals. In October 2015, ICC announced a new practice under which, if requested by all parties to a case, it would communicate to the parties the reasons for ICC decisions notably on challenges and replacement of arbitrators. In February, ICC issued guidance on conflict disclosure, setting out in its Note to arbitrators and parties the situations a prospective arbitrator or arbitrator ought to consider disclosing to the parties as potentially giving rise to a question about his independence or impartiality.
One can hope that such efforts to promote transparency will lead not only arbitration practitioners but also users of ICC Arbitration in the MENA and elsewhere to have even greater trust in the process.
In January 2016, the Court emphasized in an announcement that ICC arbitral tribunals are expected to submit their draft awards to ICC for scrutiny within certain defined periods of time and that the Court may sanction unjustified delays in doing so through reduction of the fees paid to the arbitrators. At the same time, the Court may consider increasing the arbitrators’ fees if they have been particularly expeditious in the conduct of the arbitration. The novelty is that the Court now states clearly and precisely what the impact is likely to be if the arbitrators do not submit a draft award to the Court within three months (two months for a sole arbitrator) following the last hearing or last submission. The Court may reduce the remuneration of arbitrators from five to beyond 20% depending on the extent of the delay.
This new policy may be seen as a logical extension of ICC’s various initiatives over the past years to encourage parties and arbitrators to employ various techniques to control time and costs. In particular, in December 2015, ICC published a Report on Decisions on Costs describing current approaches and practices and aimed at showing how arbitrators may use their costs powers to promote effective and efficient conduct of the arbitration proceedings. It certainly constitutes a further incentive for arbitrators to expedite proceedings.
For parties in the MENA – and elsewhere – considering various types of dispute resolution and various arbitral institutions, this initiative on the part of ICC provides further evidence of the institution’s responsiveness to cost and efficiency concerns expressed by users of arbitration and of its determination to address such concerns.
There is a strong tradition of using arbitration in the MENA, as arbitration was practiced even before Islamic times and is a recognized means of dispute resolution under Shari’a law. The recent transparency and accountability policy changes at ICC can only help give even greater legitimacy to arbitration in the region. That said, if certain MENA countries, like the UAE, aspire to promote their status more effectively as arbitration-friendly jurisdictions, legislative reforms are necessary. Further, more consistency and predictability are expected from the judiciary in the region, which too often still continues to alternate between liberal decisions and more restrictive or even regressive rulings. However, this leads to a different topic that requires a full discussion of its own.