Why do investors prefer arbitration?
Through the question posed in the title, I can state that arbitration enjoys a distinguished status, thanks to advantages it possesses that public courts often lack. These advantages can be summarized in the following points:
Speed and Fixed Timeframes: Arbitration bodies are bound by short, specific time limits for resolving disputes (for example, the Kuwaiti Code of Civil Procedure sets a six-month deadline for ordinary arbitration if the parties fail to specify one), thereby preventing the prolongation of litigation.
Specialization and Technical Expertise: Arbitration allows parties to choose arbitrators with precise expertise in the subject matter of the dispute (engineers, financial experts, oil specialists), a qualification not always available to a general judge.
Confidentiality: Unlike public court hearings, arbitration hearings and awards are strictly confidential, thereby protecting companies’ commercial reputations and financial data.
Procedural Flexibility: Parties enjoy the freedom to choose the applicable law, the seat of arbitration, and the language used in the proceedings.
Despite the advantages of arbitration outlined above, there are obstacles that may arise during arbitral proceedings, as well as judicial oversight. Although arbitration is independent, it does not exist in isolation from the general judiciary; the judiciary remains the “protective pillar” of the arbitral process. This relationship manifests in two main aspects:
1. Obstacles to Proceedings (Suspension and Stay of Proceedings): An arbitral tribunal may encounter interruptions while hearing a case, such as the death of a party, or due to a preliminary issue that falls outside its jurisdiction and legal authority (such as a claim of document forgery or a criminal matter). In such cases, the “stay of arbitral proceedings” appears as a procedural obstacle. The tribunal suspends the proceedings and refers the parties to the competent judicial court to rule on that preliminary issue, after which it resumes its work.
2. Enforcement and Enforcement Format: An arbitral award does not inherently possess “compulsory enforcement power” upon issuance. To become enforceable like judicial judgments, it must be submitted to the president of the competent court to obtain the enforcement format. Judicial oversight in this context is limited to verifying the formal integrity of the award and ensuring it does not contravene public policy in the country.
Arbitration law is not merely procedural law; it is the lifeblood of modern trade and investment. It provides a secure environment for investors, ensuring swift, competent, and confidential dispute resolution. As countries continue to update their laws and join international conventions (such as the 1958 New York Convention), arbitration proves day by day to be a fundamental partner to the general judiciary in achieving final justice and stabilizing financial transactions.
Omar Abdulaziz Al-Mashaiib
College of Business Studies – Law Major
