International dispute resolution in the Middle East and North Africa (MENA)

Transcription

1 Asia international dispute resolution webinar series International dispute resolution in the Middle East and North Africa (MENA) Presentation by Sami Tannous Freshfields Bruckhaus Deringer LLP

2 Dispute resolution in MENA Introduction 1. General economic trends in MENA 2. Commercial arbitration in MENA 3. Investment arbitration in MENA 1

3 Dispute resolution in MENA Introduction 1. General economic trends in MENA - Recent trends in MENA - Forecasts - Economic ties between Asia and MENA 2. Commercial arbitration in MENA (risks and improvements) 3. Investment arbitration in MENA (risks and improvements) 2

4 General economic trends in MENA Recent trends in foreign direct investment Levels of foreign direct investment into the GCC (USD in millions) Saudi Arabia UAE Qatar Oman, Bahrain Kuwait Source: United Nations Conference on Trade and Development (UNCTAD) Stat 3

5 General economic trends in MENA Recent trends in foreign direct investment Levels of foreign direct investment into MENA (USD in millions) Egypt Lebanon Tunisia Libya Source: United Nations Conference on Trade and Development (UNCTAD) Stat 4

6 General economic trends in MENA Recent annual average GDP growth ( ) in MENA Regional Average Sources: Standard Chartered, Global Research, Divided, disconnected but growing, 2013 World Bank data: 5

7 General economic trends in MENA Large-scale infrastructure projects 6

8 General economic trends in MENA Forecasts: more large-scale infrastructure projects to come The Kingdom Tower Jeddah, Saudi Arabia Qatar to Bahrain Bridge Linking Bahrain and Qatar 7

9 General economic trends in MENA Recent major deals in MENA Sumitomo Chemical, South Korean GS Engineering and Construction and Saudi Aramco in a contract for constructing four petrochemical plants and other facilities in Saudi Arabia - US$1.80bn as part of US$3.20bn project for petrochemical complex in Jeddah (2012) The Riyadh Subway Construction Project between Samsung C&T, FCC of Spain, Strukton of the Netherlands, and Freyssinet of Saudi Arabia for the design, construction, and commission aspects of the project. Overall project worth US$10.8bn (2013) Central Bank of Kuwait, China State Construction Engrg. Corp.(Middle East) (L.L.C), overall project worth US$406m (2013) Oil refinery contract from the Iraq government a consortium of South Korean firms, led by Hyundai Engineering & Construction, overall project worth US$6.04bn (2013) Hotel development on the Palm Jumeirah: Skai Holdings, China Estate Construction Engineering Corporation (CSCEC), overall project worth US$6.04bn (2013) 8

10 General economic trends in MENA Forecasts Standard Chartered provides the following projections: GCC - Slower growth, but smarter growth: UAE has projected 3.3% growth in 2014; Qatar is projected to grow by 4.9% - Asset bubbles have burst, and unsustainable credit booms have ended - Elevated oil prices will continue to buoy GCC governments MENA - Political stability required to rekindle tourism sector - Growth in Jordan and Egypt will be more fragile - Jordan is attracting capital inflows from the GCC, and there are negotiations for Jordan to join the GCC Standard Chartered, Global Research, Divided, disconnected but growing,

11 General economic trends in MENA Asian ties to MENA - Well known that GCC countries are adopting a look East policy - GCC-Asia trade almost doubled from $480 billion in 2008 to $814 billion in

12 Dispute resolution in MENA Introduction 1. General economic trends in MENA 2. Commercial arbitration in MENA 3. Investment arbitration in MENA 11

13 Commercial arbitration in MENA Four key factors Choose the law Choose the seat/place Choose the rules Choose the place of enforcement 12

14 Commercial arbitration in MENA Choosing the governing law Should be internationally respected/understood: - available jurisprudence Should be compatible with: - contractual expectations of the parties - procedural regime at the arbitration venue/seat - mandatory laws of host country English law is most commonly adopted for major financing or infrastructure agreements But certain government entities mandated to opt for national law 13

15 Commercial arbitration in MENA Choose the law Choose the seat/place Choose the rules Choose the place of enforcement 14

16 Commercial arbitration in MENA Choosing the seat/place Legal environment: local courts not unduly interfering or restrictive; will enforce arbitration agreement; and respect finality of awards Enforceability of award: signatory of New York Convention to benefit from reciprocity provisions; a necessary condition but not a sufficient one Neutrality and convenience: location does not favour either party or inconvenience one more than the other Availability of arbitrators: sufficient pool of experienced, qualified candidates Logistical support: adequate facilities and services for arbitrators, parties and advisers The Good, The Bad and The Ugly Venues: statistical and anecdotal evidence 15

17 Commercial arbitration in MENA Choosing the seat/place Place of Arbitration in ICC Arbitrations Country Total Bahrain Egypt Jordan Kuwait Lebanon Morocco Oman Qatar UAE Source: ICC Court Bulletin 16

18 Commercial arbitration in MENA Influence of the UNCITRAL Model Law across MENA Legislation based on the UNCITRAL Model Law on International Commercial Arbitration as adopted in 1985 has been enacted in: - Saudi Arabia (Law of Arbitration of 2012) - DIFC Arbitration Law (DIFC Law No. 1 of 2008) - Bahrain (Bahrain International Commercial Arbitration Law) - Egypt (Arbitration Law No. 27 of 1994) - Iran (Law on International Commercial Arbitration) - Jordan (Commercial Arbitration Law of 2001) - Oman (Act on Arbitration in Civil and Commercial Matters of 1997) - Tunisia (Law of 1993) - Turkey (Turkish Law on International Arbitration) - United Arab Emirates: draft legislation in circulation since

19 Commercial arbitration in MENA Risk 1: Procedural impediments Example: UAE arbitrations are subject to Articles of UAE Civil Procedure Code (the CPC). Article 209 permits vexatious allegations of forgery to halt the proceedings: If during arbitration a primary matter is submitted being beyond the arbitrator s jurisdiction or an objection is filed against a forged paper or penal proceedings are taken[,] the arbitrator shall cease his job until a final judgment has been rendered therein. 18

20 Commercial arbitration in MENA Risk 2: Technical grounds for the annulment of arbitral awards - Defect in the power of attorney: it is not enough to have a general power of attorney to agree to arbitration Court of Cassation, 13 September Adequacy of the arbitrator s signature: signatures must be on both the reasoning and the dispositive, otherwise the award is considered void Court of Cassation, 13 January Strict adherence to pre-conditions to arbitration Dubai Court of Cassation, 16 September Emphasis on formalism in witness oath-taking Bechtel Co. Ltd. v. Department of Civil Aviation, Dubai Court of Cassation, 15 May Timeliness of the award: the Tribunal is under a duty to render an award within 6 months (waivable) Article 210 UAE CCP Court of Cassation of Bahrain, 17 November

21 Commercial arbitration in MENA Risk 3: Interventionist courts - Awards that conflict with public policy or public order of the State may be annulled - UAE Court of Cassation judgment: timely registration of SPAs for off-plan sales of real estate is a matter of public order and is therefore not arbitrable - Saudi Arabian courts will require compliance with shari a law - Possible appeal on the merits of the dispute: Qatari courts set aside a Paris seated ICC award finding that the tribunal improperly applied Qatari law International Trading and International Industrial Trading and Investment Company v. Dyncorp Aerospace Technology et al. - Saudi courts used to enjoy the power of a retrial on the merits of the dispute. Emaar PJSC v. Jadawel New Saudi Arbitration Law should prevent this from happening again. 20

22 Commercial arbitration in MENA New Saudi Arabian Arbitration Law - Royal Decree (34/M) This law represents a significant development in Saudi arbitration law; resembling the UNCITRAL Model Law in several important ways: Party autonomy - Parties may select an institutional set of rules (such as the ICC or LCIA) - Parties have more control over the choice of arbitrators Efficiency - Tribunals may rule on their own jurisdiction - Tribunals may continue with arbitral proceedings notwithstanding allegations of forgery or related criminal proceedings - No further need for court approval of arbitration agreement Enforcement - Exhaustive list of grounds for annulment and non-enforcement of awards - Review of the merits is excluded 21

23 Commercial arbitration in MENA Dubai International Financial Centre (DIFC) An autonomous offshore jurisdiction adopting the common law Independent courts modelled on the English commercial court with expatriate judges DIFC Law No. 1 of 2008: adopts the UNCITRAL Model Law Decree No 16 of 2011 permits easy enforcement of arbitral awards between onshore Dubai and the DIFC But be clear about the seat: a seat in Dubai is not the same as DIFC Injazat Capital Ltd. v. Denton Wilde Sapte LLP, DIFC Courts [2012] 22

24 Commercial arbitration in MENA Choose the law Choose the seat/place Choose the rules Choose the place of enforcement 23

25 Commercial arbitration in MENA Choosing the rules What rules of procedure will govern the dispute and who will administer the case? Tailor-made or ready-to-wear? In international arbitration, the parties have the choice to pursue institutional arbitration or ad hoc arbitration Institutional arbitration is most commonly adopted in MENA ICC, LCIA most commonly used international rules 24

26 Commercial arbitration in MENA The growth of regional arbitral institutions - Arbitral institutions now found throughout MENA - International partnerships between arbitral institutions: DIFC-LCIA, BCDR-AAA - Certain institutions have modelled rules on established precedents: DIAC Arbitration Rules 2007 based on ICC Rules CRCICA (Cairo) Rules based on UNCITRAL Arbitration Rules (2010) CRCICA TCCA CCA/CACI LAC AIADR BCDR-AAA QICCA DIAC ADCCAC YCCA 25

27 Commercial arbitration in MENA DIAC: Number of cases registered 26

28 Commercial arbitration in MENA Choose the law Choose the seat/place Choose the rules Choose the place of enforcement 27

29 Commercial arbitration in MENA Effective international instruments for the enforcement of foreign arbitral awards The GCC Convention on the Execution of Judgments, Delegations and Judicial Notifications (concluded in 1995) Global Strategies Group (Middle East) FZE v Aqeeq Aviation Holding Company LLC (2010): UAE order for service effected in Kuwait Farooq Al Alawi v Lloyds TSB Bank PLC and Credit Suisse: first enforcement of foreign judgment by DIFC Courts under the GCC Protocol Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) the New York Convention Over 146 signatory States, including every GCC country The Inter Arab Convention on Judicial Cooperation (1983) the Riyadh Convention All Arab League members are signatories, including Iraq, Yemen and Libya 28

30 Commercial arbitration in MENA Signatories to the New York Convention MOROCCO 1959 ALGERIA 1989 TUNISIA 1967 LEBANON 1998 SYRIA 1959 JORDAN 1980 KUWAIT 1978 IRAN 2002 BAHRAIN EGYPT 1959 SAUDI ARABIA 1994 UAE QATAR 2003 OMAN 1999 Date of Entry into Force Only Iraq, Libya and Yemen remain non-signatories 29

31 Dispute resolution in MENA Introduction 1. General economic trends in MENA 2. Commercial arbitration in MENA 3. Investment arbitration in MENA 30

32 Investment arbitration in MENA Investment risks Political instability Unpredictable or rapidly changing laws Civil unrest Discriminatory judicial or administrative systems 31

33 Investment arbitration in MENA Political Risk and ICSID Signatories MAROCCO ALGERIA TUNISIA LEBANON ISRAEL EGYPT SYRIA JORDAN SAUDI ARABIA KUWAIT YEMEN BAHRAIN UAE OMAN QATAR Iran, Iraq, and Libya, are not signatories to the ICSID Convention 32

34 Investment arbitration in MENA ICSID claims against MENA States No of Claims Country * Note: Figure refers to ICSID arbitration only. It excludes all arbitrations conducted under UNCITRAL rules or at other institutions. 33

35 Investment arbitration in MENA Recall that investments may be structured to benefit from BITs between two other countries: South Korean company Investment in a MENA state Netherlands Investment Protection Treaty with a MENA State Dutch B.V. (special purpose vehicle) 34

36 Investment arbitration in MENA MENA BITs Bahrain Bilateral Investment Treaty with France Bilateral Investment Treaty with the Netherlands Bilateral Investment Treaty with the United Kingdom 35

37 Investment arbitration in MENA Necessary due diligence for BITs in MENA When structuring investments in MENA, consider the following issues: 1. In force? Many BITs in the region have been signed but are not ratified, calling into question their effectiveness and a government s commitment to the BIT network more generally 2. Availability of international arbitration? A number of older BITs in the region fail to provide access to international arbitration, but offer only diplomatic avenues for dispute resolution Certain BITs offer recourse to quick access to international arbitration (France-UAE BIT), whereas others mandate a lengthy cooling-off period or local court proceedings to be pursued first 3. Substantive protections 36

38 Conclusions MENA economies are varied, and becoming increasingly sophisticated: - Capable of exceptional growth, with demonstrable resilience - Large variations between economies in the region International arbitration in MENA: - Requires local knowledge and careful foresight - Is becoming increasingly reliable and efficient as a dispute resolution mechanism - Attention must be paid to drafting and procedural details to avoid unnecessary delay and costs Local advice can help parties identify: - Laws that support and uphold the arbitral process - Experienced judges and arbitrators - Regional tips to avoid procedural traps 37

39 Questions? Sami Tannous Dubai T E sami.tannous@ freshfields.com 38

40 This material is for general information only and is not intended to provide legal advice. Freshfields Bruckhaus Deringer LLP