Le Recours en Annulation des Sentences Arbitrales dans les Pays Arabes

Dr. Zeina Obeid

Foreword by Ibrahim Fadlallah

Editions A. Pedone, 2017; 662; 978-2-233-08845-9

Summary and context

The landscape of arbitration law in the Arab world is changing. Several key developments are contributing to this change. New arbitration laws are being promulgated, and new arbitration centers are seeing the light. In addition, we are witnessing the establishment of legal free zones leading to the coexistence of on-shore and off-shore legal systems borrowing from the civil and common law traditions within a single jurisdiction. These developments are hailed as reflective of a wide-ranging support for arbitration in Arab countries. But in order to evaluate whether these changes are indeed leading towards more arbitration-friendly approaches in the Arab world, one must take an in-depth look at the judicial review of arbitral awards by local courts. It is indeed through the lens of this review, in the context of applications for annulment, that a more precise assessment of the level of acceptance of arbitration in the Arab world can be undertaken.

This book, which is the doctoral thesis of Dr. Zeina Obeid (Associate at the Obeid Law Firm in Beirut) seeks to examine, by looking at ten MENA jurisdictions (Egypt, Lebanon, Syria, Jordan, Iraq, United Arab Emirates, Saudi Arabia, Qatar, Kuwait, and Bahrain), the procedural framework for requests for annulment of awards, its coexistence with other remedies available under local laws, and the various grounds for annulment relied upon by parties in applications to set aside arbitral awards or for exequatur. The book also provides a helpful comparative study of the rules and regulations of the various regional arbitration centers, which is essential to a proper understanding of the arbitral landscape in the Arab world.

Dr. Obeid’s doctoral thesis is divided into two parts: the first covers the procedure for annulment of awards, and the second focuses on the various available grounds for annulment.

1.1 The legislative approach to the annulment process

Arab countries have long been engaged in a modernization process for their arbitration laws, to keep up with an increasingly global ecosystem and the influx of foreign investment into their territories. The UNCITRAL model law forms the basis of all arbitration laws in the Arab world (with the exception of Lebanon). Notwithstanding this commonality, divergences exist in the legislative approaches to arbitration. Lebanon, for example, adopts a dualist approach to arbitration, clearly distinguishing between domestic and international arbitration, with the latter offering more flexible procedures. Other Arab countries, such as Saudi Arabia, Bahrain, Egypt, Syria, Qatar, adopted a monist system with a single framework for domestic and international arbitration. Finally, another group of Arab countries, such as Saudi Arabia, and Kuwait, adopted a unique approach to international arbitration. Sharia is the predominant source of law in Saudi Arabia, while Kuwait distinguishes between voluntary and judicial arbitration.

The thesis then focuses on the various procedures available for set aside of arbitral awards. For most Arab countries, the annulment procedure remains the principal route to challenge an arbitral award. But some jurisdictions like Kuwait allow this procedure to coexist with other remedies such as appeal, revision or cassation procedures.

1.2 The institutional approach to the annulment process

Many Arab countries have undertaken a reform of their arbitration laws, and have seen an increase in the development of local or regional arbitration centers. Therefore, in addition to the lex arbitri that is developing through these arbitration laws, the various institutional rules play an important role in shaping arbitration proceedings in the Arab world. Many of these institutional rules are promulgated through legislative action, therefore allowing these institutional rules to gain a status equally important to that of the lex arbitri itself. This may explain why institutional (as opposed to ad hoc) arbitration, is more popular in the Arab world. The new arbitration centers that are being established in the Arab world are facing competition from relatively new centers in off-shore jurisdictions in countries like the United Arab Emirates, where dual (civil and common law) systems coexist. But the competition is seen as healthy, as it encourages the various centers to provide case management services of the highest quality, and the respective jurisdictions where they reside aim to ensure that the judiciary provides maximum support towards maintaining the integrity of the arbitral process

2. Comparative jurisprudential study of available grounds for annulment

Due to the limited availability of precedent involving annulment of awards emanating from off-shore jurisdictions, this study focuses primarily on annulment grounds relied upon in on-shore jurisdictions. The legislations of Arab countries only include a limited list of grounds for annulment of arbitral awards, much similar to that found in Western jurisdictions. Those grounds can be divided into two categories: (i) those related to the agreement to arbitrate itself, including the absence of consent to arbitrate, the irregular constitution of the arbitral tribunal, or incapacity of one of the parties; and (ii) those pertaining to the arbitral procedure and the award, such as due process or public policy violations, and arbitrators deciding matters beyond the scope of the submission to arbitration.

Some jurisdictions have, through their own jurisprudence, made room for additional annulment grounds. For instance, Syria (for domestic arbitration) require that awards be rendered in the name of the supreme authority of the country. We have witnessed such recent decisions, including one emanating from Qatar, annulling an award that was not issued in the name of His Highness the Emir of Qatar, but such decision was overturned on appeal following some pressure by the international community to minimize the imposition of such local law hurdles to the recognition and enforcement of awards.

The thesis also undertakes an in-depth analysis of the treatment of arbitral awards by national courts within the context of requests for annulment, including what happens to an award after an annulment decision is issued. This often requires a parallel review of applications for exequatur, which are intricately tied to set aside requests. Indeed, some jurisdictions, such as Iraq, require that an exequatur application be submitted before a court can review an annulment request, with a frequent review of these two concurrent applications by the same judge. In some instances, a dismissal of the annulment request is equivalent to granting enforcement of the award, with no additional steps needed.

Some on-shore jurisdictions specifically provide for the consequences of a possible annulment decision by the national judge: (i) remand of the award to the arbitral tribunal (United Arab Emirates, Bahrain, Qatar); (ii) award of jurisdiction to the national judge to decide the merits of the dispute (Kuwait, Lebanon (for domestic arbitration)); or (iii) alternative outcomes depending on the option between the prior two procedures (Iraq).

Conclusion

Following the rich presentation described above, the doctoral thesis provides a number of helpful recommendations, including possible legislative reform, to ensure the continued viability of arbitration as a reliable and trusted mechanism for the settlement of international commercial disputes in the Arab world.

Many of the court decisions that are cited in the book are not accessible to the public, hence the importance of this important contribution to the field.

This study makes it possible to determine the perception of arbitration in Arab countries and the reforms that must be undertaken with a view to promoting arbitration as a streamlined way of resolving international trade disputes.