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International Arbitration in the MENA Region

International Arbitration in the MENA Region

In the Middle East and North Africa (MENA) area, the use of international arbitration is growing as more companies choose it over litigation. Arbitration is growing at a rate never seen in the Arab Middle East, with the United Arab Emirates and Qatar setting the standard for selecting arbitration venues. Due to increased awareness of the benefits and the need in some jurisdictions for choosing the MENA area as the arbitration seat, the region is becoming a major centre for international arbitrations. Arbitration is likely to become more common in the construction, oil and gas, and Islamic finance industries; by 2018, the Islamic finance market is predicted to be valued at $3.4 trillion. To become more "arbitration friendly," some states have passed significant legislation; some of them have even adopted the UNCITRAL Model Law on International Commercial Arbitration 1985. Certain countries have designed their arbitration rules based on foreign international arbitration laws. Examples of these jurisdictions include the international arbitration laws of Iran, Saudi Arabia, and Lebanon. The goals of these advancements and procedures are to draw more investors to the area and foster an atmosphere that is supportive of arbitration.

With global hubs like the Dubai International Arbitration Centre and the Cairo Regional Centre for International Commercial Arbitration, the number of arbitration institutions in the Middle East and North Africa (MENA) area has increased. Legal certainty and little court interference are features of special arbitration zones such as the Dubai International Financial Centre, Abu Dhabi Global Market, and Qatar Financial Centre. Nonetheless, there are pragmatic concerns to take into account, such as how Islamic Sharia affects local legislation and whether rewards can be enforced. In several Arab nations, especially in Qatar and the United Arab Emirates (Dubai), arbitration is still seen as an extraordinary method of resolving disputes. The practical concerns surrounding the unique requirements of arbitral proceedings in certain areas, to which local courts may be especially sensitive, should be taken into account by arbitrators operating in these locations. In many countries, it is necessary to have a specific power of attorney to submit matters to arbitration; otherwise, the arbitral award might be voidable. When it comes to the issuance of arbitral judgements, the UAE has taken a very formalistic stance, requiring the arbitrator to sign each page of the decision. In addition, while testifying orally at a hearing, witnesses are required in several Middle Eastern jurisdictions to take an oath. Under the New York Convention, public policy is one of the primary reasons for annulment of an arbitral ruling; arbitral awards may become unenforceable if these factors are not met. With Egypt ranking as the fifth most frequent state, the Middle East and North Africa (MENA) area has led the world in signing bilateral investment treaties (BITs). The member states of the Gulf Cooperation Council, such as Qatar and Oman, have a large capital exporting role in Asia, which has made them more likely to sign BITs. A rising number of "South-South" BITs involve MENA nations as parties, and some of these involve the International Centre for Settlement of Investment Disputes (ICSID) processes. Typically, these BITs include clauses about fair treatment, complete protection and security, non-discrimination, and compensation in the event of expropriation.

MENA investors have found regional forums for settling conflicts with neighbouring governments. One important agreement that governs inter-Arab investments and promotes the free flow of Arab wealth is the Unified Agreement for the Investment of Arab Wealth in Arab Countries 1980. Since its establishment in 1985, the Arab Investment Court has only rendered a small number of rulings, all of which have favoured the Arab host nations. Given that it is mentioned in many BITs with Arab nations, the court could hear additional cases in the future. 2013 saw several important revisions to the Unified Agreement that improved investment safeguards. The new agreement added unqualified fair and equal treatment criteria, broadened the pool of potential investors, and contained a most favourable-nation condition. Additionally, it acknowledged the ability to transfer funds in the original investment currency or an IMF-approved convertible currency. It is unclear, nonetheless, if the modified agreement would offer a competitive substitute for established investor-state dispute resolution mechanisms in the Middle East. Many claims about ad hoc arbitration have been based on the OIC Agreement, which has been signed by 36 member nations. Should investment arbitration occur inside the region, it needs to be overseen by the already-established regional arbitration organisations. To increase trust in the Arab world, regional institutions can also take steps like improving their comprehension of political situations, selecting arbitrators who have a thorough grasp of the area, and enacting internal reforms to remove conflicts of interest.

  • International arbitration is rapidly gaining popularity over litigation in the MENA region, particularly in countries like the UAE and Qatar.
  • MENA nations are enacting legislation and adopting international arbitration laws to create a more arbitration-friendly environment and attract investors.
  • Challenges remain, including navigating Sharia law, ensuring enforceability of awards, and addressing procedural nuances unique to the region.

BY : Vaishnavi Rastogi

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