Guest blog: An update on arbitration in the MENA region
With the 5th ICC MENA Conference on International Arbitration currently underway in Dubai, Linklaters partner Roland Ziade, who is a member of the ICC International Court of Arbitration, takes us through various recent developments involving the region.
The number of parties involved in ICC Arbitration in the MENA region continues to be on the rise. Between 2014 and 2016, the number of parties from North Africa increased by almost 50%, accounting for more than one-third of all African parties. 2015 saw a higher-than-ever number of parties from Oman, Qatar and Yemen, and further still, between 2014 and 2016, the overall number of Middle Eastern parties accounted for approximately one-third of Asian parties. According to the latest ICC statistics, the United Arab Emirates (UAE) was among the 10 most frequently listed nationalities of parties worldwide.
ICC’s commitment to transparency and increasing diversity in international arbitration already seems to have started showing results, as reported by the most recent numbers, and especially with regards to the MENA region. Figures for 2015 showed a decrease in the predominance of arbitrators from Europe. Between 2014 and 2016, the number of appointments of arbitrators from the MENA region increased by approximately one-third with, notably, 24 arbitrators from Lebanon and 16 from Egypt appointed in 2016. Furthermore, practitioners in the MENA region seem to have become more sensitive to the diversity trend. For instance, in 2016, the Saudi administrative Court of Appeal in Dammam approved the appointment of the first Saudi female arbitrator in the field of commercial disputes. “Diversity” was also the theme of the MENA Young Arbitrators Conference in Dubai last November.
We also see continuing modernisation of the rules of MENA-based arbitral institutions and national arbitration laws. These institutions have followed the trend of other major institutions, including ICC, which have recently updated their arbitration rules. The amended ICC Rules—in force since 1 March 2017—provide, in particular, expedited procedures applicable to claims not exceeding 2 million euros (unless the parties opt out) and to claims of a higher amount if the parties opt in. This is a bold and quite novel response to the users’ legitimate expectation to increase the efficiency of arbitral proceedings. In October 2016, the Dubai International Financial Centre – London Court of International Arbitration (DIFC-LCIA) arbitral institution also updated its arbitration rules. The Dubai International Arbitration Centre (DIAC), the other main Dubai arbitral institution, launched a consultation on draft revisions to its rules in August 2016. The revised rules would include most of the new features recently adopted by other arbitral institutions, such as emergency arbitrator procedures and provisions for expedited proceedings.
Qatar’s new arbitration law (Law No.2 of 2017 on Arbitration in Civil and Commercial Matters) is an example of on-going modernisation. It was issued in February 2017 and will come into force on 13 April 2017. The law, inspired in part by the UNCITRAL Model Law, will replace provisions of the Qatari civil code, some of which were very problematic (in particular, allowing for appeal of arbitral awards on the merits). The new law can be seen as taking a number of positive steps, including recognising the principle of competence-competence, giving the arbitral tribunal the power to issue interim measures or preliminary awards, clarifying to some extent the role of the courts in relation to arbitration and limiting the grounds for annulment of awards. It also limits the liability of arbitrators—except in circumstances of bad faith, connivance or gross negligence. However, there are some less positive and even problematic features of the new law. For instance, one provision on the appointment of arbitrators provides, on the one hand, that parties should appoint arbitrators from a list issued by the Ministry of Justice, but on the other hand, permits the appointment of persons not on that list who meet certain conditions. Other problematic aspects include provisions conferring various powers on the courts to intervene in the arbitration process and surprisingly detailed provisions on the arbitral procedure itself. The law also contains a rather unusual and potentially worrisome feature: it specially requires an arbitral tribunal to send an electronic copy of its award to the Ministry of Justice within two weeks of the date of issue.
While Qatar has been moving to attempt secure its position as one of the most frequently chosen places of arbitration within the region, developments in the UAE—the most-chosen MENA seat over the last five years—have been mixed. For instance, a recent amendment to the UAE’s penal code provides that anyone who issues a decision in the capacity of arbitrator in contravention of the duty of neutrality and integrity shall be punished by temporary imprisonment. Despite the goal of discouraging improper influences on arbitral decisions, this measure, with far-reaching consequences, has led some arbitrators to decline appointments or even sometimes to resign appointments. Certain court decisions on enforcement have also caused concern—even though the most problematic ones have usually been reversed by a higher court. As a notable example, in June 2016, the Dubai Court of Cassation rightly reversed a much-criticised Dubai Appeal Court decision that had refused to enforce a London-seated ICC tribunal’s award in favour of an American company on the basis that there was no evidence that the United Kingdom had signed the New York Convention.
It remains to be seen whether the much-awaited UAE federal arbitration law will eventually be issued and whether the judiciary will adhere more clearly to an arbitration-friendly and liberal approach in decisions as opposed to alternating between such an approach, on the one hand, and restrictive or even regressive rulings, on the other. Assuming the UAE federal arbitration law takes a modern approach, (and assuming the new amendment to the criminal law is repealed), it would afford greater legal certainty and predictability to the users and contribute to promoting Dubai as an arbitration hub for the MENA region in general.