INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 43
LIBYA: A HOSPITABLE ENVIRONMENT FOR ARBITRATION?
PROS AND CONS Enforcing foreign arbitration awards in Libya can be even more problematic and time-consum- ing, as the country is not party to the New York Convention. Therefore, before an award can be enforced in Libya, it must first be ratified by the country’s courts; and, on being served with notice of ratification proceedings, it is common practice for the respondent to make a counter-application to annul the award. More promisingly, Libya is a signatory to the Amman Arab Convention on Commercial Arbitration, a 1987 treaty between 14 Arab states that provides that the courts of contracting states may only refuse enforcement of an award when it is contrary to public policy. An award issued by the Arab Centre for Commercial Arbitration (an institution established by the Amman Convention in Rabat, Morocco) should therefore be enforceable in Libya. However, arbitrations and awards must be in Arabic, which may be a drawback for non-Arabic speaking parties. ALTERNATIVE RESOLUTION MECHANISMS Perhaps a more viable method of dispute resolution, although only available to members of the Arab League, is under the Unified Agreement for the Investment of Arab Capital in the Arab States: this is an investment treaty concluded in 1980 between the members of the Arab League, which includes an integrated dispute settlement mechanism between the investor and host country. The Unified Agreement provides that disputes may be settled by conciliation, arbitration or the Arab Investment Court (AIC). The AIC is headquartered in Cairo and its judgments are final, binding and enforceable against each of the contracting parties. Very few cases have yet gone under the auspices of the Unified Agreement. However, on 22 March 2013, in the case of Al-Kharafi & Sons Co. v Libya, an ad-hoc tribunal constituted under the auspices of the Unified Agreement ordered Libya to pay USD 935 million in damages to Kuwaiti investor Al-Kharafi & Sons, as a result of Libya’s breach of contract for the building of a seafront resort. This case signifies the first known successful set of arbitration proceedings under the Unified Agreement and indeed may, going forward, prompt investors from the Arab League States to seek redress through the Unified Agreement. To date, Libya has entered into 33 bilateral investment treaties (BITs), 17 of which are in force. However, while most BITs provide for dispute resolution by arbitration under the auspices of the International Centre for Settlement of Investment Disputes (ICSID), Libya is not a signatory to the ICSID Convention. Nonetheless, it is worth checking whether Libya has concluded a BIT with your home country and, if so, considering its provisions relating to dispute resolution. PROGRESS IN SIGHT? Despite all this, progress is on the horizon. It is hoped that Libya’s new government will accede to both the ICSID Convention and the New York Convention, which will greatly enhance the en- forceability of foreign awards and improve the outlook for investors. If Libya succeeds in bringing its arbitration laws in line with international standards, it has great potential to be a successful international arbitration centre. A version of this article was first published in Global Arbitration Review, March 2014
BY HIBA MAHMUD, ASSOCIATE AT CLYDE & CO LLP
As Libya’s security situation improves and its economy rebuilds, opportunities for investment in new infrastructure projects and the oil and gas sector are growing. We consider whether the country is a hospitable venue for arbitrating the commercial disputes that are likely to follow. THE STORY SO FAR Libya does not have an arbitration law per se; nor is it a party to the New York Convention, but arbitration remains a popular method of dispute resolution. The country is home to a number of arbitration centres, including the recently-opened Libyan International Arbitration Commercial Centre (LIACC) in Tripoli, and the Civil and Commercial Procedure Code 1954 sets out some 32 provisions on arbitration. As such, Libya has implemented some of the necessary infrastructure for arbitrating disputes. Nevertheless, arbitration in Libya is often a complex and intricate process for foreign investors to navigate: strict time limits, contractual nuances, language restrictions and other formalities all need to be considered and, in some cases, planned for at an early stage. For example, unless agreed otherwise between the parties, awards must be issued within three months of the arbitra- tors’ appointment. Where complex disputes are a possibility, parties are therefore advised to stipulate a longer period for the issuance of the award in the arbitration clause. Furthermore, there is a right to appeal the award unless the parties explicitly waive this right.
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