International arbitration and the MENA region
26 July 2023 | 3 minutes
Arbitration has become the preferred means for the resolution of inter-regional disputes in the MENA region. Notably, the MENA region represented the third highest proportion of parties involved in arbitrations before the London Court of International Arbitration ('LCIA') in 2022. The UAE for example, was the second most represented country involved in LCIA arbitrations, after the UK.1 The MENA region also represents a notable proportion of parties involved in International Chamber of Commerce ('ICC') arbitrations. Parties from the UAE, Saudi Arabia and Qatar involved in ICC arbitrations in 2020 were ranked 6th, 11th and 17th in the ICC worldwide nationality ranking.2 The ICC's published preliminary figures for 2021 reinforced the increasing trend, with the UAE going up to 4th place in the ICC worldwide nationality ranking.3
The majority of cases are linked to infrastructure and construction related disputes. However, the MENA region has seen a growth in recent years in disputes in a variety of other sectors being referred to arbitration, including in corporate and commercial matters, as well as in the real estate, banking and finance, and tourism and hospitality sectors.4
Why resolve disputes in the MENA region through international arbitration
The rise of cross-border investment and trade involving the MENA region (both inbound and outbound) has led to an increase in complex commercial relationships between multinational businesses, investors and States / State entities. In entering into these relationships, parties need to consider from the outset the best means to resolve future disputes that may arise. Parties will often prefer not to submit to the jurisdiction of another party's local courts.
International arbitration provides parties with a binding, independent and effective means of resolving disputes. Parties have the flexibility to choose the law to govern their dispute, the rules applicable to their arbitration process, the seat of arbitration, as well as arbitrators with relevant expertise to determine their type of dispute. Parties also benefit from a facilitated process for enforcing their arbitration awards under the New York Convention on the recognition and enforcement of foreign arbitral awards of 1958, a multinational treaty endorsed by 172 countries to date.5
Where to arbitrate: The growth of sophisticated arbitration institutions and hearing centres in the MENA region
The options for a reliable and effective seat for the conduct of arbitrations were once limited to a few arbitration-friendly seats such as London, Paris, New York and Geneva, where some of the oldest and most popular arbitration institutions are based. Whilst these seats and arbitration institutions remain prevalent, parties now also have the option to conduct their arbitrations locally through institutions and hearing centres in the MENA region. A few of these arbitration institutions and centres include: 6
- The Saudi Centre for Commercial Arbitration ('SCCA'): Established in 2014, the SCCA operates under modern arbitration rules which have further been updated in May 2023. In line with many other arbitration institutions, the SCCA established an independent SCCA Court (composed of arbitration experts from 12 jurisdictions) which is empowered among other things, to scrutinise and approve all SCCA arbitration awards. The SCCA also recently established an office in the Dubai International Financial Centre ('DIFC'), offering users the DIFC as a possible seat with access to the delocalised English common law DIFC Court as the supervisory court over their SCCA arbitration.
- The Dubai International Arbitration Centre ('DIAC'): Launched in 1994, the DIAC has, since the issuance of UAE Decree No. 34 of 2021 in November 2021, become a centralised commercial arbitration centre in Dubai with a new set of rules. Parties may now choose the DIAC to administer arbitrations seated in onshore Dubai, or offshore DIFC. In the absence of an express agreement, the new DIAC Rules provide for the DIFC as the default seat, allowing parties to benefit from access to the DIFC Court as the default supervisory court over their DIAC arbitration.
- The Abu Dhabi Global Market ('ADGM') Arbitration Centre: Created in 2018, the ADGM Arbitration Centre is an arbitration hearing centre in offshore Abu Dhabi. Although not an institution that administers arbitrations, parties can physically conduct their arbitration in the ADGM, regardless of the institution they choose to administer their arbitration and whether the legal seat of their arbitration is inside or outside the ADGM. With the opening of an ICC case management office in the ADGM which began operating in 2021, parties can for example conduct their ICC arbitrations in the ADGM. Should parties select the ADGM as the seat of their arbitration, they would benefit from access to the ADGM's delocalised English common law Court system for support with their arbitration process.
How we can help
Withers has extensive experience in dealing with high-value international arbitration matters on behalf of multinational corporations, investors and States in disputes involving the MENA region. Our multilingual team can assist with the entirety of the arbitration process, from initial case analysis through to successful enforcement of arbitral awards. We are currently representing clients in a number of pending confidential institutional and ad hoc commercial arbitrations related to the MENA region, seated in different jurisdictions and governed by various laws, working with local counsel where appropriate. These arbitrations arise from disputes in a wide range of sectors, including in the construction and infrastructure, industrial, energy, technology and banking and finance sectors.
We have experience for example of conducting arbitrations in the context of a civil war in the MENA region. The team also successfully represented Italian construction company, Gemmo S.p.A, in a multi-million ad hoc arbitration seated in Libya governed by the Libyan Code of Civil and Commercial Procedure.7
2ICC, "ICC Dispute Resolution – Statistics 2020 Statistics", 2021.
3ICC, "ICC unveils preliminary dispute resolution figures for 2021".
4See F Hernandez, T McKenna and R Meghames, "Damages in the Middle East and Africa: Trends from recent cases and some challenges", GAR, 29 April 2022 available at https://globalarbitrationreview.com/review/the middle-eastern-and-african-arbitration-review/2022/article/damages-in-the-middle-east-and-africa-trends recent-cases-and-some-challenges#footnote-030. See also statistics of regional arbitration institutions: SCCA
Annual Report, 2021; DIAC Annual Report 2022; CRCICA Annual Caseload Reports, 2022.
5See UNCITRAL, Status on the New York Convention, available at https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2.
6The list is illustrative only. There are other prominent arbitral institutions such as the Cairo Regional Centre for International Commercial Arbitration ("CRCICA"), which was the first arbitration institution established in the MENA region in 1979 with UNCITRAL based arbitration rules. CRCICA continues to administer commercial arbitrations brought under contracts and bilateral investment treaties. There is also the Qatar International Centre for Conciliation and Arbitration ("QICCA") which is expected to issue new conciliation and arbitration rules to stay in line with international best practice; and the Oman Commercial Arbitration Centre which was recently created in 2018 with new arbitration rules issued in November 2020 modernising arbitration in Oman to align it with international standards.
7See further, J Jacobsen, "Libya-seated panel rules with court support", GAR, available at https://globalarbitrationreview.com/article/libya-seated-panel-rules-court-support.