Guest blog: Current challenges and opportunities for arbitration in MENA

  • 17 February 2020

The 8th edition of the ICC MENA Conference on International Arbitration is currently underway in Dubai. With the evolution and expansion of international arbitration in the region, Roland Ziade and Andrew Plump of Linklaters take the opportunity to discuss current challenges facing international commerce and the opportunities presented for MENA participants in international arbitration in their latest guest blog for the International Chamber of Commerce (ICC).

Roland Ziade and Andrew Plump of Linklaters

In January of this year, ICC announced that it had registered its 25,000th arbitration case in its history. Notably, the case involved parties from the Middle East and India and is being administered through the ICC Secretariat’s case management office in Singapore. The case serves as a useful symbol of the evolution of international arbitration in general and ICC arbitration in particular. The nationality of the parties illustrates that all roads no longer “lead to Rome” or, more particularly, to Europe or even North America, when it comes to the participants in international commercial contracts and projects and the disputes arising from them—with the centre of gravity increasingly moving towards emerging markets. With case management offices in Hong Kong, New York, Brazil and Singapore, as well as representative offices in Abu Dhabi, Panama, Shanghai and Tunisia, ICC’s global footprint is a reminder of its important efforts in recent years to bring the institution closer to worldwide users.

It is not mere coincidence that one of the parties to that 25,000th case is from the Middle East. While ICC has not yet released its full statistics for 2019, its annual numbers for 2018 had shown increases of almost 15% and 17% in the number of cases involving parties from, respectively, Central and West Asia (including the Middle East) and North Africa. As the participants in the ICC MENA Conference are gathered in Dubai, it also bears noting that ICC’s 2018 statistics revealed that the United Arab Emirates (UAE) had entered the top 10 of nationalities of origin for parties in ICC arbitrations.

Challenging times, with arbitration as a positive force

It goes without saying that the news these days is dominated by both natural and man-made circumstances posing serious challenges for international commerce. The Coronavirus outbreak is the latest such natural event, a dramatic reminder of the inter-connectedness of today’s global economy and of possible limits on human ability to control natural forces. The current business news features the associated concerns about impacts on global supply chains and cancellations of international trade events, with the legal press focusing on questions like the invoking of contractual force majeure by manufacturers and suppliers located, for instance, in China. Today, news cycles are also focused on nationalism, confrontational trade policies and other manifestations of scepticism about the efficacy of certain multi-national relationships and organisations.

Are MENA actors in international arbitration the proverbial late arrivals to the “party”—here the international commercial order—whose best times are behind it? We clearly do not think so. Notwithstanding the current challenges and new or renewed questions about financial implications, it is not being seriously argued that cross-border contracts and industrial, commercial and financial relations should be curtailed or ended. Moreover, international arbitration can serve as a beacon of positive energy in more unsettled times. Indeed, when there might be concern about a rise in nationalistic impulses, the international arbitration ecosystem—which features independent arbitrators as decisionmakers and “merchants of peace” as well as a virtually worldwide ability to enforce arbitral awards via the New York Convention—arguably has even greater importance.

It is not surprising that 97% of respondents to the 2018 Queen Mary University of London (QMUL) International Arbitration Survey indicated that international arbitration is their preferred method of resolving cross-border disputes—either stand-alone or in conjunction with other ADR methods. “Enforceability of awards” and “avoiding specific legal systems and national courts” were most highly valued. For its part, ICC announced in January that it had registered a record total of 851 new arbitration cases in 2019, after having registered a total of 842 new cases in 2018.

Current trends translate into opportunities for arbitration in MENA

Certain current trends in arbitration are particularly significant for the MENA. About 40% of ICC’s new caseload in 2018 was comprised of construction, engineering or energy disputes—two sectors of major importance in the region. This dovetails with the responses to the QMUL Survey, singling out the energy, construction, infrastructure, technology, and banking and finance sectors for most growth in use of international arbitration in the coming years.

Arbitration users increasingly support the greater use of technologies to make arbitration, including hearings, more efficient. We can see that physical location may, in the future, be relatively less important with techniques like video-conferencing and even “virtual hearing rooms” gaining favour and many arbitrators and counsel seeking to move away from paper documents and instead take advantage of tools for electronic storage, management and display of documentation and information. All of this increases the chances for MENA to be even closer to the centre of action in the international arbitration community.

We can also say that there has been a steady increase in recent years in younger jurists and lawyers from the MENA region looking to enter the world of international arbitration. While the major push for gender diversity among arbitrators, including the Equal Representation in Arbitration Pledge initiative, has started to produce tangible results, less than a third of the QMUL Survey respondents believed that progress had been made in terms of geographic, age, cultural and ethnic diversity of international arbitrators. The latter is a particular concern for MENA, which has historically been under-represented in the ranks of international arbitrators. It can also be seen as an opportunity, since the anticipated growth in use of arbitration in sectors of importance in MENA may serve as leverage with stakeholders to expand and diversify the pool from which they select arbitrators. In turn, this would further foster the legitimacy of arbitration as the preferred mechanism for resolution of international disputes.

*Disclaimer: The content of this article does not reflect the official views of the International Chamber of Commerce. The opinions expressed are solely those of the authors and other contributors.