28 Issue 38 • FEBRUARY 2015

OpInIOn/Arbitration

Arbitral Multiculturalism

In many respects the Middle East represents the perfect landscape for the development of International Arbitration. For centuries the region has been a trading hub and in recent decades has become seen as the centre of the global energy

and infrastructure industries. The period since the Global Financial Crisis has also seen a significant growth in the number and scale of disputes many of which have been international in character and which have therefore required a method of resolution which enabled decisions to be enforced in places other than those where the decision was rendered.

ArbItrAtIon on the rIse This has led to the rapid expansion of the region’s various arbitration centres, in particular, DIAC; ADCCAC, the Qatar Chamber of commerce and the Bahraini Centre for Dispute Resolution. Each of those

With arbitration on the rise in the Middle East region, Nick Carnell of Taylor Wessing elaborates on one of its key strengths – adaptability.

institutions has set itself the goal of providing a fair effective and efficient framework for the resolution of disputes. Additionally a quick tour of each of the institutions’ websites will show a general commitment to increasing levels of awareness of arbitration and the possible methods by which disputes can be resolved through arbitration. While published data is perhaps to be treated with care – the mere fact that a particular number of disputes may have been referred to a particular institution is not of itself indicative of anything. The anecdotal evidence suggests strongly that the volume of business and the size and complexity of the disputes which are being referred is on the increase.

In addition, the legislative framework in much of the region is being strengthened. The most high profile example is the new Saudi Arbitration Law published by decree no M/34 in April 2012 and ratified in June of that

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OpInIOn/ Arbitration

year. That law which is substantially based upon the Uncitral Model Law marks a significant advance on its predecessor because it significantly reduces the degree of oversight which courts in the Kingdom can maintain over the arbitral process. It is also likely to ease the process of enforcement of arbitral awards within the Kingdom albeit that time will tell whether this proves to be the case.

Further, the last few weeks have seen further discussion of a new Procedure Law in the UAE. Whether this will provide a more comprehensive regime for arbitration than what is prescribed within articles 203-218 of the existing Procedure Law remains to be seen. Elsewhere, the Abu Dhabi Commercial Conciliation and arbitration centre has published a new set of procedural rules while the BCDR has formed an association with the American Arbitration Association.

regIonAl ArbItrAtIon Centres – A neCessIty? All of this suggests that arbitration is on the rise in the region. However, the question might be asked whether any of this was actually necessary – in circumstances where institutions such as the ICC and

LCIA still command the lion’s share of the international arbitration market, why are regional arbitration centres necessary – indeed is there actually a place for them at all? The answer is undoubtedly yes.

The starting point is historical – traditionally arbitration has developed as the means whereby merchants have resolved their disputes without recourse to

the courts. In the Middle East, the use of the majlis as a means to settle differences has meant that arbitration has always been an easy concept to assimilate.

However, the wish to keep out of court does not of itself mean that parties will wish their dispute to be dealt with in an entirely neutral venue – indeed this is not going to be possible in most instances. For a start, the parties will doubtless provide that the laws of a particular country will govern their contract. Secondly, they will provide that if a dispute is to be referred to arbitration the seat of that arbitration – that is to say the procedural laws governing the conduct of the arbitration will be a particular place. Thirdly, they will provide a language in which the

arbitration will be conducted.In practice this often produces the slight paradox

that while the governing law might be that of a GCC country and the seat a city in the region, the language will be English simply because that is the linguafranca of the parties (or at any rate that in which they communicate and in which the documents have been written).

There will also undoubtedly be local legal or procedural considerations which will require at least a measure of familiarity on the part of the tribunal. To take an example of each – while no doubt such things can be easily learned, a conceptual familiarity with provisions of Art 390(2) concerning the court’s discretion to amend a pre-agreed level of damages – a concept which will be quite alien to many lawyers from a Common Law background – may be helpful.

ACCept loCAl ChArACterIstICsSimilarly, the importance in a UAE Arbitration of ensuring that all witnesses are sworn and that witnesses of fact are excluded from the hearing prior to giving evidence may be unfamiliar to practitioners from outside the region where such requirements are not mandatory. Additionally, certain differences arise in practice. In certain parts of the region, it is thought quite permissible to telephone one’s party appointee without prior notice to one’s opponent. Against a background where the legal and particularly the arbitral communities in much of the reason will comprise a fairly small number of people most known to one another a measure of informal dialogue probably does very little harm although it is suggested that caution should always be exercised.

The theme is that many disputes will have particular local characteristics and it will be of benefit to the parties to appoint tribunals or administering bodies who are familiar with those procedures. Indeed a failure to appreciate those features may be dangerous – there are a number of instances where what might seem to – say – an English lawyer to be a trivial procedural infraction will be sufficient to render the award unenforceable.

In short, one of the strengths of arbitration is that it is adaptable – it can be made to suit the particular requirements of the parties, the place and the dispute without sacrificing its particular attraction namely that of providing a means of resolution which can be enforced internationally.

The theme is that many disputes will have particular local characteristics and it will be of benefit to the parties to appoint tribunals or administering bodies who are familiar with those procedures.

Text by: Nick carNell, construction partner, Taylor Wessing LLP