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Guide to Regional Arbitration (volume 5 - 2017)

Worth a Closer Look: Middle East & Africa

02 November 2016

The Middle East and African region is also home to some other providers that, for matters that fall in their sweet spot, are well worth considering.

ABU DHABI COMMERCIAL CONCILIATION AND ARBITRATION CENTRE (ADCCAC)

Why's it worth watching?

The ADCCAC is a very significant organisation, with 74 new cases in 2014, though more recent statistics haven't yet been published. It's one of those centres that plays the role that should be played by local courts.

So a lot of small real estate stuff then?

Yes, but it has the occasional large case too – about power projects, infrastructure, joint-venture agreements, etc.

How come the mix?

Well, it has some very loyal followers: the Abu Dhabi government and some of the senior Abu Dhabi-based companies who impose it on their business partners. In the past, it was the centre's outmoded arbitral procedure, rather than its case numbers, that held it back.

What was wrong with its procedure?

Until 2013, the ADCCAC hadn't updated its rules since 1993, making arbitration there a bit like stepping back in time.

How so?

For example there was no scale of fees. So every part of the financials for a case, for arbitrator and institution, had to be negotiated from scratch. And all fees were non-refundable, even if the case settled.

It was also fairly unclear how you actually started an arbitration – the sequence of exchanges – or what should happen if one side failed to show up. On top of that, the arbitrators had very little flexibility about approach – a certain number of sessions were always required to be held. Thankfully, all that's a thing of the past.

How come?

The ADCCAC has new rules, and all of those eccentricities have been ironed out. They came into force on 1 September 2013 and have completely replaced the old rules.

How do you completely replace old rules?

Well, the old rules weren't merely replaced, they were "repealed". So now, all new arbitrations, no matter when the clause dates from, will occur under the new rules. There can't be any confusion.

What are the new rules like?

They're patterned on the UNCITRAL model (and a few other well-known institutions), with a couple of extra (region-specific) features.

What are those features?

One rule says that if you're aware that one of the centre's rules is being ignored and you don't mention it, you can't raise the matter later. You've waived that right.

Why is that useful?

It stops sides storing up procedural "errors" to use as the basis of a challenge later (which is something of a local sport). The rules also fill in some other gaps: such as adding a confidentiality provision and immunity for arbitrators and the institution. Even so, things aren't perfect.

What's less than good?

Chiefly, the range of arbitrators available. Parties have the freedom to appoint whoever they wish, but the ADCCAC must appoint from its own list – and, while it's nearly 500 names long, it's not well stocked with experienced international types. That isn't a surprise when you look at the requirements for inclusion.

What are the requirements?

First, it costs around US$400 a year to be on the list, plus 15 per cent of any fees you earn. More importantly, you have to supply an authenticated "no criminal convictions" certificate from your place of origin or residence. The hassle alone is enough to deter most.

Are there any other pitfalls?

It's not quite a pitfall, but be aware the final award will be delivered in Arabic – even if the language of the arbitration was English. The centre's administration also leaves something to be desired. But, overall, this centre now seems headed in the right direction.

Is it popular with users?

It doesn't get great reviews from international users. The revised rules remain problematic, and the case-handling can be hit and miss. On the other hand, it retains the loyalty of the government and state-owned entities, and therefore there are times when it's difficult to avoid. It's thought the centre would like to do more to modernise, but problems at the level of ownership get in the way. It's owned by the state through the Chamber of Commerce, any major reform would threaten certain vested interests.

What happens to it if the Abu Dhabi Global Markets initiative adds a DIFC–LCIA type arbitral institution?

Then it faces some serious competition. So far the ADGM hasn't announced such a step, though there are credible reports that it is considering it.

BAHRAIN CHAMBER OF DISPUTE RESOLUTION

What is it?

A partnership between the Bahrain Ministry of Justice and the American Arbitration Association, launched in 2010. It operates in an "arbitration free-zone".

What's that?

Parties can nominate the law of any country to govern their arbitration, thereby creating a virtual seat. It means awards can't be challenged before the local courts.

Who runs the show?

Nassib Ziadé took over as CEO in 2013 after a stint with DIAC in Dubai. He's a former executive secretary of the World Bank Administrative Tribunal, who commands respect.

Why is it only "one to watch"?

It hasn't gone on the main list because, quite simply, it's early days and all a bit unproven. On the plus side, the centre is guaranteed work: it has automatic jurisdiction over any local disputes that exceed US$1.3 million in value, if they feature either a licensed financial institution or an international party.

DUBAI INTERNATIONAL ARBITRATION CENTRE (DIAC)

Why's it in the Worth a Closer look section?

The centre's had some difficulties of late but it is still a well-known organisation, overseen by a board that's stocked with big international arbitration names. During good times it receives hundreds of new cases a year.

Where do those cases come from?

There's little public confidence in the UAE's courts, and DIAC pretty much fills in the gap. That means it gets quite a variety of work: everything from local, low-value, real estate disputes, including landlord–tenant matters, to international stuff. But the bulk of its work is domestic.

Sometimes it's almost too busy. In 2009–2010, shortly after the financial crisis hit, DIAC had 478 new claims, which was almost too many for it at the time. It responded well: by heading out into the international transfer market, to steal a footballing analogy, and getting a big-name manager in.

Who was that?

Nassib Ziadé, formerly of ICSID at the World Bank. Unfortunately, he's since gone (to the Bahrain Chamber of Dispute Resolution) and the DIAC is again starting to attract complaints.

What sorts of complaints?

Arbitrators not being paid on time, or not being paid the right amount; problems with the rules (there are gaps in them, and the English and Arab versions not matching up); key decisions – mainly the constitution of tribunals – taking a long time. Systems needing an upgrade. They all tend to share a common theme. They're the sorts of things that need high-level attention – and at the moment there's nobody in overall charge.

Why is the DIAC taking so long to appoint a new head?

That's the million-dollar question. It's thought to have come close twice (most recently attempting to promote an internal candidate, a counsel, who sources say has been de facto running the place), but each time something went wrong. The suggestion is, it's down to money. The centre is owned by the Dubai Chamber of Commerce, and anecdotally it has been less than helpful. The problem is that the longer things go on, the more the scale of the challenge increases and the more likely key people are to leave (such as the counsel who failed to get the top job, and then went).

Are there any positive signs?

The DIAC is going to open a branch in the DIFC-free zone for those who want to avoid some of the problems with the UAE as a seat. It's also worth noting that despite the overall angst towards the institution, people have nothing but good things to say about the DIAC counsel level and other staff.

Any other pitfalls to be aware of?

Dubai has some curious rules requiring arbitrators to be physically present to sign the award (and initial it on every page). Locals think this is partly to boost the revenue of Emirates Airways. Arbitrators used to have to hold hearings in the emirate too. That's no longer the case, but the issue can still blow up at the enforcement stage, if the judge is a bit out of touch.

LCIA–MIAC

What is it?

It's a joint venture between the London Court of International Arbitration (LCIA), the government of Mauritius and the Mauritius International Arbitration Centre.

It was named GAR's regional arbitration centre of the year in 2015.

What's advantageous about Mauritius?

Africa has few decent arbitration regimes. Mauritius wants to fill that gap.

Could it?

It's got a lot going for it. It's bilingual (French and English), has good courts and is home to a burgeoning offshore financial business. Many investments from Asia into Africa are routed through it.

It's also written itself one of the most state-of-the-art arbitration laws yet seen in the region.

What's so state-of-the-art about the law?

The drafters really went to town – doing a number of things that hadn't been seen before. For example, the law expressly considers treaty arbitration and makes sure it's on a sound footing. It also, in a common law system, embraced the negative effect of competence-competence (no court shall touch an arbitration matter until an arbitrator has ruled). And it made the Permanent of Court of Arbitration (PCA) in The Hague a backstop for the system.

How does it do that?

The law makes the PCA the default appointing authority – a very international move – rather than local courts. The PCA now has a permanent representative there.

And how are things going?

Promotional efforts are in full swing for both Mauritius as a seat and for the LCIA–MIAC. After hosting two huge international conferences in the past four years, the island hosted ICCA in 2016. It has also given its courts some additional powers.

What can the courts do now that they couldn't?

They can give arbitration cases more timetabling priority, useful for interim measures requests and the like. And they can make more parts of cases private. Perhaps most importantly, there's now a special panel of six judges in place, which will handle everything to do with arbitration.

Is the LCIA–MIAC busy?

It's so far handled three arbitrations – all of them international and worth more than US$1 million. In one it provided administration of the whole case, in the other two it provided certain specific services requested by the parties to arbitrations which were otherwise ad hoc, or administered by another body.

So it's still early days, but the signs are positive.

How is the LCIA–MIAC related to the LCIA?

They share the LCIA court and rules, but are intended to be separate entities. Adrian Winstanley, the ex-director general of the LCIA said this is symbolised by the fact the LCIA–MIAC logo has been adjusted to include indigenous Mauritian birds.

The LCIA–MIAC has its own registrar, Ndanga Kamau, and an excellent website (www.lcia-miac.org) with frequently asked questions. The LCIA–MIAC is busy amending its rules at the moment to reflect the changes in new LCIA rules now in force (as of October 2014).

QATAR INTERNATIONAL CENTRE FOR CONCILIATION AND ARBITRATION (QICCA)

Why haven't I heard of it?

It's still early days. Although it's been around since 2006, QICCA hasn't done much to promote itself internationally. That started to change in 2010 when Minas Khatchadourian joined, as deputy secretary general. Since then he's done more to spread the word abroad.

Why is GAR putting it as Worth a Closer look?

Even before Khatchadourian's arrival, QICCA was a popular choice for Qatari government entities in international contracts. It is the only institution in the Gulf states that uses UNCITRAL Rules, and is capable of delivering a high-level service. A source who's had several first-hand experiences with the Centre describes its work as "very impressive".

Is it busy?

About 40 to 50 new cases per year – and increasing.

Is it doing anything to grow its appeal beyond Qatar?

Khatchadourian was an Egyptian professor and a respected regional arbitrator when he took the job, and he's done a number of things to grow the centre's international profile since taking the job. He's updated the rules, been a frequent visitor to international events on behalf of the centre, and taken steps to make QICCA more palatable to outsiders, such as expanding QICCA's roster of arbitrators to bring in more international figures.

Is there a but?

There is. While QICCA isn't short of local buy-in, foreigners remain wary of Qatar as a seat. There have been a number of arbitration-unfriendly decisions, which, even if corrected on appeal indicate that a case there might go less than smoothly. In one recent example, an arbitration award was set aside for failing to reference that it was "made in the name of Emir Sheik Tamim bin Hamad Al Thani (the ruler)" a requirement for court decisions, but not for arbitration awards. The centre has made efforts to improve the arbitral literacy of the judiciary, but there are still hiccups like this.

Is it non-profit?

Yes. It sits within the Qatar Chamber of Commerce and Industry.

Can I appoint whoever I want as arbitrator?

Parties have a free hand. In reality, given the nature of the contracts that select it, the arbitrator will probably need a good knowledge of GCC laws, but the rules don't curb party autonomy in any way. For those needing help the centre maintains a list of 150 individuals but it is "indicative only".

And will international arbitrators like the rate of pay?

Fees are similar to other regional centres. That means, for a substantial case, it shouldn't be too hard to obtain an international name. Smaller matters might be problematic. But some think locals should handle such cases anyway, as it builds the local arbitrator pool.

How big is the secretariat?

Three case managers and a full-time secretary. They can work in English and Arabic, while the director is fluent in French.

Aside from problems with the local courts, are there any downsides?

The website (www.qatarchamber.com) could be more informative. Also Qatar has rules that require the arbitrators to be physically present for all hearings and similar acts of authority and to initial every page of the award in the kingdom.

THE TUNIS CENTRE FOR CONCILIATION AND ARBITRATION (CCAT)

When was it founded?

1996, as a non-profit organisation.

Why haven't I heard of it?

The centre is active, but "woefully underfunded" according to one knowledgeable source. The most recent available statistics place the number of total cases received at 17 – the first in 2001. It now registers one to two new cases per year, mostly from Tunisians.

Why don't international firms use it?

Mostly because of the funding issues. The centre can't really afford to pay arbitrators the going rate. Therefore it focuses more on being an outlet for domestic work.

Are there any limits on who can be appointed as arbitrators?

Aside from the practicalities of payment, no. The "scientific council", its version of an internal expert oversight body, will assist if the parties fail to appoint.

Might it get bigger?

It would like to. The centre runs training programmes and conferences, and a few years back put on an international event with IFCA and the ICC. It plans to modernise its rules soon (the current rules are UNCITRAL-based) and it hopes that more public corporations will start to insert its clause when writing contracts.

Common Court of Justice and Arbitration (CCJA) (Abidjan, Côte d'Ivoire (established by OHADA)

Why's it worth a closer look?

The CCJA is one of the main institutions in Africa and the institution for OHADA law disputes. The CCJA itself is the supervisory court for OHADA, so as well as confirming and appointing arbitrators and administering OHADA rules arbitrations, it also acts as the supervisory court for arbitrations conducted under its banner.

What's it like?

It's not the ICC but it's not a start-up either.

Any pitfalls?

The arbitration centre uses the same physical space as the OHADA court when it's sitting. So panels have to schedule themselves around its schedule. Arbitrations often take place elsewhere than Abidjan for that reason. It's also a very francophone organisation – not always comfortable working in English, and the staff aren't as responsive always as they could be. They need a few more. But the big issue is probably arbitrators' fees.

What's the problem with arbitrator fees?

The CCJA's arbitrator rates are phenomenally low, for the type of work they receive. The fee scale hasn't changed in 15 years. It was this mismatch that recently led to the Getma affair, where the CCJA set aside an award after the tribunal refused to accept the fees it set for the case: €60,000, which the tribunal dismissed as "charity". That led the tribunal to negotiate a side-deal with the parties in defiance of a court order, which created the setting for the later problems in the case.

Is OHADA aware of the problem?

It is, and the Getma decision has given its attempts to move into the modern world more impetus.

When would it be particularly suitable?

The CCJA is a creature of the OHADA system – a set of business laws adopted by 17 west and central African countries with the aim of harmonising commercial law across the continent. So it would be a natural choice for an OHADA law dispute. A number of OHADA states now write CCJA clauses into their commercial contracts. So there are times that it will be imposed.

How busy is it?

Some of those are the size that would be found at the LCIA and ICC.

Kigali International Arbitration Centre (KIAC)

Why's it worth a closer look

Rwanda is seeking to establish itself as business capital of East Africa. Kigali is the local arbitration institution. People who've used it say it works well, and is a decent option for the right case.

Is it busy?

It has around 39 cases on – a third of them international.

Who goes there?

The most common type of international case includes a Rwandan state entity, as the government writes KIAC into contracts. But it is also getting work from around the east Africa region – Uganda, Kenya, Burundi, Tanzania. If you have a case with an African party who is nervous of going to a European institution, Kigali is somewhere that will do the job okay.

Is it independent of the government?

It's a private institution and the government has also lost cases there.

Any pitfalls?

So far the government has complied voluntarily with all awards against it. It will be interesting to see what happens if someone has to enforce such an award in the local courts. But that's not really a problem with the centre itself.