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Wed 3 Jul 2019 03:50 PM

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Developments in international arbitration in the Middle East

Over recent years, the landscape for arbitration in the Middle East has changed considerably, making the region more attractive as a home for arbitration

Developments in international arbitration in the Middle East

Confidentiality is one of the oft-cited advantages of international arbitration which distinguishes it from court litigation. However, and perhaps contrary to popular belief, there is no one size fits all standard of confidentiality which applies to all arbitrations.

Rather, the level of confidentiality that will be attached to both the arbitral proceedings themselves and any award issued by an arbitral tribunal will depend on the law of the seat of arbitration, the arbitration rules adopted by the parties, the arbitration agreement itself and possibly also any terms of reference agreed between the parties and the tribunal.

The position in the Middle East is no different – there can be a considerable difference between seats and rules used in the region as to the requirements of confidentiality. For example, the legal framework of an arbitration seated in the Dubai International Financial Centre (DIFC) under the DIFC-LCIA Arbitration rules will impose greater confidentiality obligations than an arbitration seated in Oman under the International Chamber of Commerce (ICC) 

Arbitration rules

Of course, the issues debated in the arbitration community generally as to whether confidentiality duties should be relaxed in international arbitration apply equally in the Middle East. There are many arguments for maintaining confidentiality; for example - confidentiality is one of the key features differentiating international arbitration from courts which must be upheld, particularly where issues in dispute involve politically and commercially sensitive issues which may be even more prevalent in the Middle East.

Likewise, the problems which a softening of confidentiality obligations will potentially help solve can actually be addressed in other ways without piercing the veil of confidentiality.

Arguments for increasing transparency include a desire to help develop a consistency in the application of law in arbitration which could both serve to avoid future disputes by allowing people to learn from mistakes and also could allow for the development of precedents across key areas such as infrastructure and energy disputes. 

The Middle East dispute arena could well benefit from greater transparency of arbitral decisions and the applicability of laws and rules to specific circumstances particularly given the absence of an extensive body of court precedents. 

Gender diversity

It continues to be a debated topic which isn’t specific to the legal industry or arbitration. While there is a general acceptance around the world that the arbitration industry is weaker for not having more female arbitrators and steps should be taken to improve the situation, it is generally accepted that progress has been unfortunately slow.

The position in the Middle East is reflective of the position elsewhere but perhaps more so with very few tribunals including women arbitrators. This may be because parties continue to use arbitrators who they have dealt with previously or require a “known name”.

There is unfortunately also a lack of support generally for new arbitrators, which of itself further impacts the ability for women to penetrate the market. While there is no quick fix and it is always important to ensure that parties’ ability to choose appropriately qualified arbitrators is not fettered, it is possible to improve the statistics by ensuring that women arbitrators are appropriately represented on shortlists and institutions play their part when required to appoint either sole arbitrators or Chairmen/women. 

Indeed, this is something which the newer arbitral institutions in the region could advocate as they take the opportunity to develop their own characteristics.  

Positive development?

Another topic which is particularly relevant in the Middle East is whether the recent proliferation of regional arbitration centres is a positive development in the arena of International Arbitration or whether it would be better to concentrate arbitration in the historic centres such as London, Paris, Geneva, and Hong Kong.

In my view, regional arbitration centres, particularly in the Middle East, have many advantages and may therefore be a better choice for regional disputes. Cost is an obvious advantage – the cost of transporting both parties and the legal teams to either London, Geneva or Paris for a two week hearing cannot be underestimated.

Access to arbitration centres and seats in the locality, on the same time zone and who understand the local nuances cannot be underestimated. While the Middle East is still developing its offerings in the world of international arbitration, it also has an opportunity to take the lead on some of these areas for potential change and assist in promoting a brighter future for international arbitration.  

Michelle Nelson is Partner at Reed Smith law firm

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