The key features of international arbitration, which is the preferred method for resolving cross-border commercial disputes for firms operating in Kuwait and the broader Middle East, came up for discussion at a recent webinar.
The webinar, organised by ABCK-AmCham Kuwait, addressed the key elements that should be included when drafting arbitration clauses in commercial contracts and an overview of the arbitral process itself.
Organised in collaboration with Al Tamimi & Company on the topic of ‘GCC-Regional Arbitration Updates’ with the support of AmCham Abu Dhabi and AmCham Bahrain, the event was opened by Thomas R Snider (Partner, Head of Arbitration at Al Tamimi & Company).
He provided participants with an introduction on international arbitration and spoke about the reasons why it is used. Arbitration is a form of dispute resolution based on the parties’ consent, as it required agreement between both disputing parties.
Disputes are resolved by neutral, non-governmental decision-makers chosen by or for the parties, and arbitration produces a binding award, which is capable of international enforcement through national courts and is more readily enforceable internationally than a court judgment.
Snider mentioned that some reasons for using arbitration include enforceability, neutrality, ability to choose decision-maker, procedural flexibility, confidentiality, etc.
Snider moved on to talk about benefits or arbitration through the ‘New York Convention’ which allows international arbitration to work effectively. Kuwait ratified this Convention in 1978, as the two primary obligations placed by The New York Convention on state parties were to recognise/enforce arbitration agreements and recognise/enforce foreign arbitral awards, subject only to limited exceptions.
Snider explained that over 80 countries have adopted some version of the Model Law, including several leading trade and investment countries, however, Kuwait is yet to adopt the adopted version of the UNICITRAL Model Law, instead, Kuwait arbitration law was contained in various provisions of the civil procedure code.
Next, Philip Kotsis (Partner, Head of Office - Kuwait Al Tamimi & Company) spoke about Kuwait’s specific considerations. As a signatory, Kuwait courts regularly enforce the agreement of the parties to arbitrate and Kuwait courts retain jurisdiction under certain circumstances (failure to properly assert, non-binding, choice of arbitration or courts, etc.).
However, agreeing to arbitration was not considered a normal act/decision under the Kuwait Companies Law (Art. 46). Kotsis explained that proper corporate authorisation had to be obtained to include an arbitration clause (coupled with R&W). Kotsis noted that Kuwait would recognise and enforce arbitration awards if the procedural requirements are met.
Snider moved on to speak on the Seat or Place of Arbitration as he mentioned that it determines things such as if the New York Convention applies, the procedural law of the arbitration, which courts have supervisory jurisdiction over the arbitration, and the jurisdiction in which the award may be annulled.
He also explained the difference between an Arbitration in both Ad Hoc and Institutional cases. Snider suggested that for the most part, entities should opt for institutional arbitration as they can benefit from an institution providing more clarity and guidance during the arbitration process. Snider then provided a list of different International Arbitral Institutions with which entities can work with.
Lastly, the speakers spoke about the new Decree No. 34 of 2021 was explained which was issued by the Government of Dubai for the Dubai International Arbitration Centre” (the “Decree”) on September 14, 2021.
The Decree abolished the DIFC Arbitration Institute (DAI) and the Emirates Maritime Arbitration Centre (EMAC). It was further explained that the DIFC-LCIA was a joint venture between DAI and the LCIA and that the operation of the DAI and EMAC was transferred to DIAC, along with the ownership of their property, assets, and funds, employees, and lists of registered arbitrators, conciliators, and experts.
This decree came into force on September 20, 2021 and was supplemented by The Statute of Dubai International Arbitration Centre, which sets out the DIAC’s objectives, governance, and the formation of the Court for Arbitration.
Lastly, speakers further discussed the impact of the Decree on Existing Disputes and mentioned that Arbitral tribunals that had been formed by DAI and EMAC (as well as DIAC) at the date must now enter into force of the Decree, as it continues in accordance with their respective rules and procedures, unless otherwise agreed by the parties and for all practical uncertainty that remains – further clarification may be forthcoming by the end of the Decree’s six-month transition period (which expires on March 20, 2022). -- TradeArabia News Service
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