Dispute Resolution in Middle East

One of the consequences of globalization and enhancement of international trade and transactions had been renewing the procedures of traditional settlement of dispute and breaking the guard of the states in enforcing their local laws and regulations.

The traditional procedure of dispute settlement has been litigation and referral before the courts as the authority for enforcing justice and fairness.  While this practice could not match with the new demands of the modern world further to which alternative procedures for dispute resolution have been chosen and effected by States.  Such  process is provided with global welcome from one hand but from the other hand is different from country to country per the crave of enforcement of sovereignty.

In this article, we shortly review the methods of dispute resolution in Middle East, namely countries like United Arab Emirates (UAE) and Iran.

Arbitration

In the UAE, domestic arbitration proceedings are governed by the provisions of the UAE Civil Procedure Code.  The UAE is also a party to the International Convention for the Settlement of Investment Dispute (ICSID) and UAE also became a party to the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards on 16 November 2006.  

Dubai International Arbitration Centre (DIAC) is Dubai’s leading arbitration institution that had jurisdiction to hear disputes where the parties have agreed in written to submit their future or existing disputes to DIAC.  This agreement commonly takes the form of an arbitration clause in a contract.

DIFC/LCIA Arbitration Centre was established in February 2008 and is based in Dubai International Financial Centre (DIFC).  The Centre is a partnership between the London Court of International Financial Centre (LCIA) and the DIFC.

An interesting point in respect of the DIFC is that the Centre falls outside of the federal court system.  The DIFC Court operates on the basis of the Common Law, rather than the Civil Law and the language of the court is English and it has its own set of Procedural Rules.

Abu D’ahbi Commercial Conciliation and Arbitration Centre (ADCCAC) is Abu Dhabi’s main arbitration institution.  ADCCAC has jurisdiction to hear disputes where the parties have agreed to submit their disputes to this Centre commonly through an arbitration clause.

In the Civil Code of Iran dated April 10, 2000, some articles in respect of referral of dispute to arbitration have been stipulated.  According to relevant provision in this Act, parties could refer their dispute to arbitration even if their dispute has been raised before the court.  Referral to arbitration could take place through a condition in the contract or separate agreement of the parties. Although in specific matters, referral of dispute to arbitration would be subject to agreement of the Board of Ministers and information and/or approval of the Islamic Parliament of Iran.

Arbitration is not subject to the civil procedures but is subject to the arbitration rules as have been stipulated in the Civil Act of Iran.

The International Commercial Arbitration Act of Iran has been ratified in September 17, 1997 based on the UNCITRAL rules through which in the claims that one of the parties would be a foreigner, a reference could be made to this Act.  By considering that the arbitration rules mentioned in the Civil Code of Iran are commonly considered in local claim, the International Commercial Arbitration Act provides an opportunity for referral of the claims that at least one of the parties is foreigner.

The International Centre of the Commercial Chamber of Commerce and the Tehran Regional Arbitration Centre and the Arbitration Centre of the Bar Association are among the centers in Iran that are in charge of dispute resolution in the form of arbitration.

Iran has joined the New York Convention 1958 on recognition and enforcement of the foreign arbitration awards on April 10, 2001 through which the international arbitration awards are enforceable in Iran.  However, in terms of enforcement of the provision of the New York Convention, the practice of the Iranian courts has not yet been harmonized. Although the local courts still guard against issuance of judgments in favour of enforcement of an foreign tribunal award, it is hoped that this procedure come along with more success in the future. 

Meditation

Whilst mediation is extremely common in the United Kingdom and United States, it has recently gained popularity in Dubai and the UAE.  In particular, international companies familiar with the additional costs and time incurred in proceeding to arbitration or other legal processes are moving towards mediation as a viable option.  The success of mediation does, however, rely on the skills of a mediator to successfully negotiate a resolution and the commitment of parties to settle their conflicts.

The Government of Dubai identified property disputes as an area which could benefit from mediation and such a “Special Judicial Committee” was established by law in 2007 to resolve real estate disputes.

Although Mediation in Iranian law has been recognized but there is no official centre in Iran to be in charge of application of mediation rules.  In other words, disputing parties can amicably resolve their dispute through a mediator (non-official) and enforce the decision of the mediator per their agreement.  In the event that the parties do not agree on enforcement of the decision, each of them could request for its enforcement before the courts. 

ADR

The Centre for Amicable Settlement of Disputes has been established in September 2009 in Dubai after publication of the “ADR” Law in Official Gazette of Dubai.  The ADR Law establishes new centre which is to operate as an affiliated body of the Dubai Courts.

ADR Law will apply to cases which commenced after it came into force.  This Law is expected to apply to civil and commercial matters and will not apply to certain categories of cases including those involving the Governments.

ADR in Iran is new. After ratification of the Article 189 of the Third Economic, Cultural and Social Development Plan in Iran, a considerable change has taken place in the judiciary system of Iran though which the Reconciliation Council has been invented. These Councils are in charge of considering specific types of claims and have limited scope of authority for consideration of the cases.  The main purpose of creation of such centers is for decreasing the volume of referrals to the public courts.

Encyeh Seyed Sadr
LLM – Attorney at Law

Bayan Emrooz International Law Firm
No.3 (Unit22), West Second St., 
Hosseini St., Karimkhan Zand St.
Tehran, Iran – 1585697389
Tel: (+98 21) 8884 3458 / 8884 3403
Fax: (+98 21) 8884 1735
Email:encyeh.sadr@bayanemrooz.ir
Web: www.bayanemrooz.ir