Introduction Chapter: Judicial Review of Arbitral Awards on Public Policy Grounds Lessons From the Middle East

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Middle East Dispute Resolution

JUDICIAL REVIEW of ARBITRAL AWARDS on PUBLIC POLICY GROUNDS: LESSONS FROM the MIDDLE EAST

The objective of this work is to conduct a judicial review of arbitral awards on public policy grounds and specifically in terms of lessons from Middle East. This thesis is confined to public policy as an exception to the enforcement of arbitral awards, which is know as the public policy exception. The proposed research in this study will be of the nature that examines the theoretical underpinning and practical application of public policy within the context of international arbitration. This research will examine public policy in countries in the Middle East. Public policy is a concept that is vague and impossible to define and experiences variation from state to state.

Background

Alec Stone Sweet, in the work entitled "The new Lex Mercatria and Transnational Governance" published in the Journal of European Public Policy in August 2006, states that the medieval law merchant "appeared between the eleventh and twelfth centuries "comprised a relatively comprehensive, relatively efficient, legal regime for trade beyond 'local' borders. This legal system was operated by traders and their agents. The MLM is stated to make provision for merchants to escape conflicts arising between "various customs and rules, and to avoid submitting to the authority of judges attached to pre-existing jurisdictions (the courts of feudal manors, city states, local gilds, the Church)." (Sweet, 2006) According to Sweet the MLM "governed virtually all long distance trade in Europe…" (2006) Sweet states that the MLM regime as of the nature that it was "properly produced, properly adjudicated, and voluntarily enforced." (Sweet, 2006) Certain constitutive principles are contained in this regime including: (1) good faith; (2) reciprocity; (3) non-discrimination between foreigners and locals at the site of exchange; (4) third party dispute settlement and (5) conflict resolution favoring equity settlements. (Sweet, 2006)

Sweet states that the function of dispute resolution "was not so much to declare a winner of punish a loser" but instead its function is the resuscitation of the contractual agreement and to cajole the parties to get on with their business, using norms of 'fairness' between the parties. (Sweet, 2006)

The Law Merchant is stated by Sweet (2006) to make provision of "the institutional underpinning for most long-distance exchange in the trading world. Governments of states are stated to have "by the thirteenth century in England…sought consciously…to emulate the main features of the MLM…[and]…"to subordinate the merchants' regime to state control." (Sweet, 2006)

I. Arbitration Awards & Enforcement in Foreign Countries

The work of Kazutake (nd) entitled: "Confirmation, Annulment, Recognition and Enforcement of Arbitral Awards" states that the enforcement of arbitral awards in foreign countries is "assured by multilateral conventions or bilateral treaties with the only exception to be refused to enforce on the grounds provided by convention or by treaty." (Kazutake, nd) the arbitral award is held to be valid as a court judgment however, this award requires court support for enforcement against the losing party that has not complied under the award. In contrast, following an arbitral award the same may be subject to court annulment in countries where the award "was rendered, upon request by either party if it does not conform to due process of law, non-arbitrarily of the subject matter of the dispute or conflicts with the public policy of the State." (Kazutake, nd) Annulment or setting aside of an award makes the award invalid prior to enforcement in another jurisdiction against the party who lost in the arbitration process. The confirmation of the award is reported to have the same force and effect as does a judgment and claim and issue preclusion, known as (res judicata) and collateral estoppel respectively. (Kazutake, nd) Therefore, the parties are reliant upon the court to support the arbitration and for enforcement of the arbitral award.

II. Recent Developments in Arbitration Law

Dispute resolution in the Middle East region of the world has been historically, problematic as the enforcement of legal rights has been as best "unpredictable, and there was a lack of uniformity." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) the procedures for dispute resolution were not aligned with international standards or best practices and the "need for improvement and change has been recognized for many years." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) That change is finally taking place and is stated to be due to incoming Western construction and engineering firms coming into the country and it is noted that these firms all have "…well-developed notions and expectations about basic fairness and transparency in the resolution of construction diputes." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009)

III. Establishment of Regional Arbitration Institutions

The perception of arbitration on the international level as a method of dispute resolution in the Middle East has been supported by the regional arbitration institutions being established which includes the Cairo Regional Centre for International Commercial Arbitration ("CRCICA"), the Abu Dhabi Commercial Conciliation and Arbitration Centre, the Bahrain Arbitration Centre and the Dubai International Arbitration Centre ("DIAC")." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) in addition, it is reported that the "…accession of several Middle Eastern states to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") also demonstrates a shift in the region's arbitration culture." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) it is important to note that countries in the Middle East have attempted to enact new arbitration provisions that are reported as being "more progressive, accessible, transparent and familiar to foreign entities doing business in the area." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) Information on the commitment of the UAE to become a "significant force in the international economy" is well disseminated with the UAE reported to be the "…138th state to adopt the New York Convention." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009)

There are three significant developments that took place in 2008 which included the following developments: (1) the UAE federal government drafted a new arbitration law, which has been published for comment; (2) the Dubai International Financial Centre enacted a comprehensive and jurisdictionally inclusive new arbitration law; and (3) the Dubai International Financial Centre and the London Court of International Arbitration partnered to create the DIFC -- LCIA Arbitration Centre. (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) it is reported that these three events have greatly bolstered the position of Dubai in its initiative to become an international arbitration center.

IV. The Middle East -- Overview of Arbitration

It is necessary to gain an understanding of the arbitration systems utilized in the Middle East and toward this end, one must understand the primary role of religion in Middle Easter law and its society. It is related that one scholar stated: "Islamic law pervades the commercial world, as well as a Muslim's way of life. Islam is a complete way of life: a religion, an ethic and a legal system all in one." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) Islamic law or the 'Shariah' is stated to be that which forms the basis for the laws of various Middle Eastern countries to include those of:

(1) Syria;

(2) Egypt;

(3) Kuwait;

(4) Yemen;

(5) Bahrain;

(6) Qatar; and (7) the UAE. (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009)

In fact, the constitution of Saudi Arabia in the Shariah enacted into law. It is stated within the Omani Basic Law that "the religion of the State of Islam and the Islamic Shariah is the basis of legislation." Since the Shariah constitutes the very foundation of Islamic Middle Eastern law and culture, it is not surprising that the Shariah plays a significant role in the region's arbitration processes." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009)

V. The Middle East and Arbitration

Arbitration is reported to have been practice in the Middle East since the very early days of Islam and as well it is reported that the Koran and Sunna of the Prophet which are the primary sources of the Shariah both make reference to the arbitration process and that there has been a great deal of effort in the Middle East to bring about harmonization of the ancient tests of the Shariah and the expectations of foreign investors in the region. (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) There has been a great effort in the Middle East to "harmonize the ancient tenets of the Shariah with the modern expectations of the regions growing number of foreign investors." (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) Bifurcation of the religious and civil codes in some countries evidences the attempt to remnant adherent to Islamic Law while simultaneously "responding to the needs of an ever-shrinking commercial world…" (Weinberg, Wheeler, Hudgins, Gunn and Dial, 2009) the example stated in the work of Weinberg, Wheeler, Hudgins, Gunn and dial is that of Yemen, Jordan and Kuwait's attempt to bring about modernization to their arbitration rules through a requirement on arbitrators to apply the law which is chosen by the parties to the arbitration and… [END OF PREVIEW]

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"Judicial Review of Arbitral Awards on Public Policy Grounds Lessons From the Middle East."  Essaytown.com.  March 16, 2010.  Accessed November 17, 2019.
https://www.essaytown.com/subjects/paper/judicial-review-arbitral-awards-public/647.