Al-Rai publishes full details of the new arbitration law

From a single legislative framework and fixed deadlines to electronic arbitration, procedural confidentiality, and the restriction of appeals to a single track, the new Arbitration Law fundamentally reorganizes the system. It establishes clearer and faster rules for resolving disputes, regulates arbitration centers, strengthens guarantees of neutrality and oversight, and sets specific guidelines for contracts involving state entities.

Arbitration is a legal mechanism for resolving disputes outside the courtrooms. Under it, the parties to a legal relationship agree to submit any dispute arising between them to a single arbitrator or a panel of arbitrators chosen from among those with expertise and impartiality, who then issue a final and binding award with the force of a judicial judgment. Arbitration is distinguished by the speed of resolution, the specialization of the decision-makers, the confidentiality of proceedings, and the flexibility of the process to suit the nature of commercial transactions.

Example: A dispute arises between a contractor and a project owner regarding the conformity of the work with the specifications. Instead of going through multiple levels of litigation, the parties submit the dispute to an arbitral tribunal comprising an engineer and legal experts in construction contracts, which resolves the matter within a few months and in complete confidentiality.

Article (6): Matters in which settlement is not permitted, such as personal status issues and criminal offenses, are not subject to arbitration. However, arbitration is permitted for financial rights arising from such matters.

If a party files a lawsuit despite the existence of an arbitration agreement, the court shall rule that it lacks jurisdiction if the opposing party raises this objection at the outset. Filing a lawsuit does not suspend the arbitration proceedings.

Articles (14) and (15): If the parties fail to agree on the arbitrator within 15 days, the President of the Court shall appoint one from the register of accredited arbitrators within an additional 15 days.

Whereas the appointment process previously took nearly a year, it now takes no more than one month, and the appointment decision is not subject to appeal.

A request for the recusal of an arbitrator may be made for a serious reason, within short timeframes, and without suspending the arbitration proceedings, so that such a request cannot be used as a means of delay.

An award issued after the expiration of the prescribed period is null and void unless the parties agree otherwise.

What is submitted in arbitration and the deliberations conducted therein are confidential, and the award shall not be published without the written consent of all parties. Anyone who discloses arbitration secrets shall be punished with imprisonment or a fine.

Articles (67) to (70): The award shall be deposited with the court, and its President shall issue an order for its enforcement after merely verifying that it does not violate public policy or contradict a previous judgment. The judge does not re-examine the merits of the dispute.

Article (30): The parties must disclose the sources of funding for arbitration costs, to prevent a hidden party with an interest that could affect the arbitrators' neutrality from financing one of the parties.

Articles (72) to (77): The sole avenue for challenging an award is an action for nullity before the Court of Appeal within thirty days, and only for exclusively specified reasons, such as the absence of an arbitration agreement or the award being based on fraud or forgery.

Article (79): If the Court of Appeal rules the award null and void, it shall itself decide on the merits of the dispute. The parties shall not be sent back to the beginning of the litigation after years of arbitration.

Articles (80) to (86): An arbitration center may not be established without a license from the Ministry of Justice and the approval of its bylaws and fee schedule, with a decision on the application to be made within sixty days.

Anyone who establishes a center without a license or impersonates an accredited arbitrator shall be punished with imprisonment for up to one year and a fine of up to thirty thousand dinars.

Article (3): Arbitration is optional for state entities; they are not compelled to adopt it, and may not include it in their contracts unless after consulting the Legal Opinion and Legislation Department and obtaining the approval of the Council of Ministers or the relevant minister, depending on the type of contract.

Once a contract concluded by a state entity includes an arbitration clause, jurisdiction over the dispute is vested exclusively in the judicial arbitral tribunal, and the dispute shall not be referred to ad hoc or institutional arbitration.

• A tribunal of three judges and arbitrators chosen by the parties, sitting at the Court of Appeal, shall issue its award within six months.

• It is the sole option in disputes over state entity contracts that include an arbitration clause, as well as in disputes between state entities and their wholly owned subsidiaries, and among such subsidiaries.

The new law grants every market participant—whether a merchant, contractor, project owner, or investor—four clear guarantees in the event of a dispute:

2. Specialized expertise: The arbitrator is selected from among experts in the field of the dispute, ensuring that the decision is made by someone who understands its details and the nature of the transactions involved.

3. Confidentiality of transactions: Commercial secrets are not disclosed in public sessions, and the award is not published without the consent of the parties.

4. Procedural simplicity: Remote hearings, electronic documentation, and a single avenue for appeal instead of three levels of litigation.

For those who prefer to have their dispute resolved by the judiciary, the law retains the system of judicial arbitration, in which the dispute is adjudicated by a panel chaired by a judge and comprising judges and arbitrators selected by the parties. This combines the trust in the judiciary with the speed of arbitration.