INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 43
L IBYA : A HOSP I TA BL E EN V I RONMEN T FOR A RB I T R AT I ON?
PROS AND CONS Enforcing foreign arbitration awards in Libya can be evenmore 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 servedwith notice of ratification proceedings, it is common practice for the respondent tomake 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 statesmay only refuse enforcement of an awardwhen 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 awardsmust be in Arabic, whichmay be a drawback for non-Arabic speaking parties. ALTERNATIVE RESOLUTION MECHANISMS Perhaps amore viablemethod of dispute resolution, although only available tomembers 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 themembers of the Arab League, which includes an integrated dispute settlement mechanismbetween the investor and host country. The Unified Agreement provides that disputesmay 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 fewcaseshaveyet goneunder theauspices of theUnifiedAgreement. However, on22March 2013, in the caseof Al-Kharafi &Sons Co. v Libya, anad-hoc tribunal constitutedunder theauspices of theUnifiedAgreement orderedLibya topayUSD935million indamages toKuwaiti investor Al-Kharafi &Sons, as a result of Libya’sbreachof contract for thebuildingof a seafront resort. This case signifies the first knownsuccessful set of arbitrationproceedingsunder theUnifiedAgreement and indeedmay, going forward, prompt investors fromthe ArabLeagueStates to seek redress through theUnifiedAgreement. To date, Libya has entered into 33 bilateral investment treaties (BITs), 17 of which are in force. However, whilemost 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, whichwill 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, A SSOCIATE 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 lawper 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, awardsmust be issuedwithin threemonths 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 explicitlywaive this right.
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