International Arbitration

Streamlining, While Competition Heats Up

Similarly, in a 2009 decision, the Korean Supreme Court held that public policy should be interpreted narrowly when enforcing international awards, so that enforcement should be refused only if the actual consequences of recognition or enforcement would be against good moral and social order (Majestic Woodchips, Inc. v Donghae Pulp Co. Ltd, Case No. 2006Da20290).

In another pro-arbitration decision, the Singapore High Court held that it is generally inappropriate to conduct any substantive examination of the documents filed in support of an application to enforce a foreign arbitral award; the court’s task is largely formalistic (Strandore Invest A/S and others v Soh Kim Wat [2010] SGHC 174). If the relatively basic requirements of Singapore’s International Arbitration Act for enforcement are met, the foreign award should be enforced without further review.

THE MIDDLE EAST

A number of the Gulf States which make up the Gulf Co-operation Council (GCC) have tried to improve both the image and the reality of arbitration within their jurisdictions during the last five years. A lack of confidence by foreign investors in court systems perceived as antiquated and inefficient, coupled with doubts about commitment to the enforcement of arbitral awards, have had to be addressed in order for the Middle East to compete with other regions.

United Arab Emirates

Progress has recently been most marked in the United Arab Emirates (UAE), where Dubai has taken the lead. The Dubai International Arbitration Centre (DIAC) is the best known regional arbitration centre in the UAE. Its revised arbitration rules came into force in May 2007.

In addition, the Dubai International Finance Centre (DIFC), a separate jurisdiction based on common law, with its own arbitration law based on the UNCITRAL model law, has formed a relationship with the London Court of International Arbitration (LCIA) (the DIFC-LCIA centre). In 2008, the DIFC-LCIA centre introduced its LCIA-based arbitration rules. However, the DIFC court, while much heralded, is likely to find its impact diminished by its decision, published in March 2010, in Hardt and Hardt Trading FZE v Damac (DIFC) Co Ltd, which indicates that the court’s jurisdiction will be limited to disputes involving the DIFC-LCIA centre, its members or related transactions (DFI 036/2009). There is no prospect of other parties in the region opting in to the court’s jurisdiction.

The UAE’s reputation for arbitration has been enhanced by recent decisions on recognition and enforcement. In April 2010, the Fujairah Federal Court of First Instance ordered the enforcement of two awards in shipping disputes made by a London arbitrator and, in October 2010, a court in the DIFC recognised for the first time an award issued by the DIFC-LCIA centre. The Dubai Court of First Instance also enforced a London arbitration award in January 2011. In 2009, the Ruler of Dubai established the Dubai World Tribunal to deal with disputes arising from the well-publicised economic difficulties of the Dubai World development, drawing on DIFC judiciary, to maintain the confidence of the international financial community.

There are further signs that the UAE is determined to be fully received as a member of the international arbitration community. The absence of dedicated arbitration legislation has been an impediment: UAE arbitration law is based not on the UNCITRAL model law but on certain sections of the UAE Civil Procedure Code, published under a 1992 federal law. This is now being addressed and an UNCITRAL-based draft federal law on arbitration and the enforcement of arbitral awards is currently under consideration. When enacted, it is unlikely to be a panacea; there remain uncertainties about its relationship with the DIFC jurisdiction, as well as important procedural issues, such as challenge and enforcement. However, it is rightly seen as indicative of the UAE’s move, albeit not an overnight one, to embrace modern international dispute resolution systems and practices.

Qatar and Bahrain

In some respects, at least, Qatar and Bahrain have been ahead of the UAE. Bahrain has been a signatory of the New York Convention since 1988 and Qatar since 2002, whereas the UAE only joined the list of signatories in August 2006. In addition, Bahrain implemented the UNCITRAL model law in 2004. Although Qatar’s Code of Civil and Commercial Procedure (1990) do not follow the UNCITRAL model law, the Arbitration Regulations of the Qatar Financial Centre (QFC), introduced in 2005, do follow it. The QFC is, in this respect, comparable to the DIFC. In 2009, the QFC Civil and Commercial Court and Regulatory Tribunal heard its first cases, applying common law principles. Qatar hopes that this court may attract disputes from elsewhere in the region, although it is too early to estimate the likelihood of this.

Bahrain has also taken steps, by its legislative decree of 2009, to reform its arbitration procedure and, as part of its wider joint initiative with the AAA, set up the Bahrain Centre for Dispute Resolution in January 2010 (Bahrain Centre). The Bahrain Centre offers a form of statutory adjudication for international disputes over a threshold value of approximately $1.3 million.

Whether the Bahrain Centre, the QFC court, or the DIAC (or, less probably, Abu Dhabi’s Commercial Conciliation and Arbitration Centre, which is of some significance for its formal promotion of conciliation as a precursor to arbitration) becomes the acknowledged leader among the regional arbitration centres of the Gulf States remains to be seen.

RUSSIA

Historically, Russian courts have accepted the grounds for refusal of enforcement (under Article 5 of the New York Convention) more readily than the courts of other jurisdictions (see also box “Russian legal framework for arbitration”). For example, where an English court would adopt a narrow interpretation of public policy for the purpose of refusing enforcement, the Russian courts have tended to opt for a much wider interpretation. Russian courts have refused enforcement on grounds ranging from the invalidity of arbitration agreements and lack of proper notice, to non-arbitrability, procedural irregularities and violation of public policy. This practice has led to some concern that enforcing foreign arbitral awards in Russia is difficult, if not impossible.

The issue of interim relief in support of arbitral proceedings has also caused much anxiety to those wishing to protect their ability to enforce against assets situated in Russia. In theory, interim relief has been available since 2002; however, there have been no successful applications and it remains unclear whether it would be granted in support of foreign arbitration proceedings where the seat of arbitration was outside Russia.