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Guide To Regional Arbitration (volume 4 - 2016)

Ones to Watch: Middle East and Africa

03 November 2015

The Middle East and Africa is home to a handful of institutions that are on the way up. We suggest keeping an eye on the following.

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. 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 plenty of large cases 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 international firms. 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.

Examples?

Well, 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. Never easy. 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Well, the old rules weren’t merely replaced, they were “repealed”.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.

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.

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 hardly 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.

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, and a big name.

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.

LCIA–MIAC

What is it?

It’s a joint venture between the London Court of International Arbitration and the Mauritius International Arbitration Centre, in the mould of the DIFC–LCIA.

It was named GAR’s regional arbitration centre of the year at our most recent awards ceremony.

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 will receive ICCA in 2016. The fine-tuning of the regime continued with an amendment package in 2013.

What’s been adjusted?

Its status under the New York Convention; there’s no longer a reciprocity requirement. And how the courts can deal with certain cases.

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.

Why did they make those changes?

There had been a few cases, and also feedback offered by visitors to the conferences.

Is the LCIA-MIAC busy?

It has provided administration one ad hoc case, and helped with certain specific services requested by the parties to arbitrations in a further two.

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, Duncan Bagshaw, 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).

What else is new?

A new, state-of-the-art hearing centre is planned, and will be opened in late 2015.

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 contracting.