In recent years, the Arab Middle East and India have made strides in arbitration law, aligning more with international standards, while navigating regional challenges. This Post reviews recent changes and key obstacles, and offers insights for effective enforcement in these markets, helping practitioners and stakeholders to anticipate hurdles and strategize for success.
I. Legal framework
The legal system in the Middle East and North Africa [“MENA”] and India diverge to a certain extent.
The majority of Arab Middle Eastern countries are based on civil law. However, some Gulf Cooperation Council [“GCC”] countries have adopted a dual legal system where civil law courts, known as “on-shore” courts cohabitate with common law courts known as “off-shore” courts. This is the case in Dubai, Abu Dhabi and Qatar, where the legal system of the country is divided into two bodies of rules. One can find common law courts which are the DIFC courts [“Dubai Financial Center”] in Dubai, ADGM courts [“Abu Dhabi Global Market”] in Abu Dhabi and QFC Courts [“Qatar Financial Center”]in Qatar. The Kingdom of Saudi Arabia [“KSA”] is currently thinking about implementing such a system. India, on the other hand, follows a common law system across its territory, including within the Gujarat International Financial Tec-City [“GIFT City”], a financial and IT services hub in Gujarat which is deemed to be an International Financial Services Centre.
II. Arbitration Framework
In the spirit of modernising and harmonising national arbitration laws, many countries in the Middle East have embraced, to varying degrees, the UNCITRAL Model Law on International Commercial Arbitration [“UNCITRAL Model Law”] as a basis for sound reform in keeping with best international arbitral practices. This is further reflected in reforms to the arbitration laws of the KSA (2021), Qatar (2017), the United Arab Emirates [“UAE”] (2018 as amended in 2023), Bahrain (2015) and Jordan (2018).
In Saudi Arabia for instance, the Saudi Justice Minister Walid Al-Samaani stated that: “[t]he Saudi appellate courts and panels have dealt with more than 4000 arbitral awards recission claims, and they have confirmed 90% of these awards.”
India too has modelled the Arbitration and Conciliation Act, 1996 [“Arbitration Act”] on the UNCITRAL Model Law. Further, the Arbitration and Conciliation (Amendment) Bill, 2024 [“Amendment Bill, 2024”] which is currently at the stage of receiving comments from the public, is set to transform the arbitration framework in India. Moreover, both, the Arab Middle Eastern Countries and India are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards [“New York Convention”].
On the institutional level, in addition to well established centres such as the Cairo Regional Centre for International Commercial Arbitration [“CRCICA”], the Dubai International Arbitration Centre [“DIAC”] and the Bahrain Chamber for Dispute Resolution [“BCDR”], new arbitration centres such as the Abu Dhabi International Arbitration Centre [“arbtirateAD”] in Abu Dhabi and the Saudi Centre for Commercial Arbitration [“SCCA”] in Saudi Arabia have emerged. Further, the arbitration rules of these centres have been updated to not only reflect the modern requirements of the present times, but to also compete with leading institutions around the world.
India’s growing interest in institutional arbitration and recent developments. including the Amendment Bill, 2024 which is aimed at reducing reliance on ad hoc arbitrations, have led to the setting up of multiple arbitration centres including the Mumbai Centre for International Arbitration [“MCIA”], the Delhi International Arbitration Centre [“DIAC”], and the International Arbitration and Mediation Centre, Hyderabad [“IAMC”].
III. Enforcement
On the enforcement level, courts in the Middle Eastern region have been consistently applying the New York Convention with respect to foreign awards. In the context of annulment proceedings, courts recognise the principle of non-revision of the merits of the award when assessing the grounds for annulment. This is an admitted principle now, and has been upheld by many courts from different jurisdictions.[1] This positive trend in the enforcement of awards is reflected below with some example of recent court decisions rendered in different jurisdictions.
In Egypt, the Cairo Court of Appeal, Circuit (7) in Case No. 44 of 143 dated 9 May 2019 held that interim measures ordered by an arbitral tribunal and issued through a procedural order can be enforced on the basis of the New York Convention, provided that: (i) the interim order is final; (ii) the interim order is issued based on a valid arbitration agreement; (iii) both parties were offered the opportunity to present their case in the arbitration; and (iv) the interim order does not violate Egyptian public policy.[2] Moreover, the Court of Cassation in Cases No. 2698, 3100 and 3299 dated 13 March 2018, held that an arbitration clause may be extended to a non-signatory in the event of the existence of a group of companies or a group of contracts, or in the event of universal succession, such as a merger.
In the UAE, the DIFC courts in particular ensure straightforward enforcement without the need for assets within the DIFC. It often also serves as a conduit jurisdiction, making enforcement proceedings straightforward. Notably, enforcement of Indian awards in the DIFC does not require additional conditions, unlike the enforcement of UAE-based awards in India. With the modernisation of the UAE Arbitration Law, parties can also directly seek enforcement before the Dubai-onshore courts. These proceedings are similar to those in the DIFC and are generally straightforward.
In India, enforcement involves a two-step process starting with the submission of an execution petition. Initially, the Court assesses whether the arbitral award complies with the requirements under the Arbitration Act. If deemed enforceable, the award is treated and executed as a decree of the court. This process at the institutional arbitration level is positioned to revolutionise itself if appellate arbitral tribunals as provided in the Amendment Bill, 2024 come into force.
Objections to the enforcement of foreign awards in India require consideration in terms of Section 48 of the Arbitration Act, which include – power to annul an arbitral award lies solely with the courts at the seat of arbitration, which have primary jurisdiction over the award;[3] a decision by the seat of arbitration to reject a challenge to the award is not binding under Section 48 of the Arbitration Act but may be considered in enforcement proceedings;[4] public policy grounds under Section 48(2) for resisting enforcement of foreign awards are limited to narrow, internationally recognised standards, unlike broader grounds for domestic awards under Section 34;[5] only fundamental principles of morality or justice can be grounds for bias claims;[6] courts can also note if a challenge was not raised at the seat court; even when grounds under Section 48 are met, the enforcement court retains discretion on whether to refuse enforcement or not.[7]
IV. Enforcement Challenges
Despite the advancements in the Middle Eastern region and India, there have been instances where the enforcement of foreign awards has faced challenges.
A. In the Arab Middle East
i. Jurisdictional Limits in Enforcing Foreign Awards
The Dubai Court of Cassation has refused enforcement because of the absence of domicile of the award debtor in the UAE. In the 2013 Canal de Jonglei case (Dubai Court of Cassation Petition No. 156 of 2013), the court applied the provisions of the Civil Procedure Law rather than the New York Convention, refusing exequatur to three Paris-seated awards because the Sudanese government ministry involved was not domiciled in the Emirates. Another notable decision is from 2022 (Dubai Court of Cassation Petition No. 790 of 2022), where the court reiterated that for the enforcement of a foreign judgment or award, the domicile of the judgment debtor must be within the territorial jurisdiction of the Dubai Courts.
ii. Legal Cost Challenges in the UAE
Initially, under the 2007 DIAC Rules, awards were partially set aside if they ruled on legal fees without the express authority of the parties. This situation was remedied by Article 36(1) of 2022 DIAC rules. Despite this improvement, theDubai Court of Cassation, Case No. 821 of 2023, dated 5 February 2024 partially set aside an award on the basis that both, Article 46(1) of the UAE Arbitration Law and Article 38(1) of the 2021 ICC Rules provide for a limited list of “arbitration expenses” and “costs of the arbitration” respectively, which do not include legal fees. Fortunately, in a recent decision rendered on 19 November 2024, the Dubai Court of cassation in appeal no. 860/2024, reversed the decision and stated that the legal costs, which include the lawyers' fees paid by the parties to their legal representatives during the arbitration proceedings, are considered reasonable costs. These costs are therefore deemed part of the arbitration expenses, which the arbitral tribunal evaluates and rules upon pursuant to Article 38 of the ICC Rules
iii. Witness and Experts to take Oath
An important issue that practitioners in the region need to be aware of is the requirement for witnesses and experts to take an oath, failing which the award could be set aside or refused enforcement. This is the case in Jordan, UAE, and Syria. For example, in Case No. 96/2022 (Civil) dated 2 June 2022, the Dubai Court of Cassation annulled an award rendered under the 2007 DIAC Rules because the witnesses had not taken an oath. As a recent trend, the Dubai courts appear to exclude the requirement for Tribunal-appointed experts to take an oath. This shift stems from the Dubai Court of Cassation's decision in Case No. 1406 of 2023, dated 28 November 2023, which held that Tribunal-appointed experts are not obligated to take an oath. However, for party-appointed experts, the Court maintained its position, and the requirement to take an oath remains in effect .
iv. Power of Attorney
Another important issue that is often undermined by counsel is the requirement of a duly certified special power of attorney authorising a counsel to act in arbitration proceedings, failing which the award will be set aside. This requirement is found in the following jurisdiction: UAE [Article 61(2) of CPC], KSA [Article 484 of Civil Transactions Law], Bahrain [Article 43 of CCP], Lebanon [Article 381 of CCP], Syria [Article 68 of Civil Code], Qatar [Article 721 of CCP], Jordan and Oman.
v. Notion of seat of arbitration
The Dubai Court of Cassation, in Appeal No. 860/2024 dated 19 November 2024, delivered a widely welcomed decision that clarified the notion of the seat of arbitration. The Court emphasized that the fact that the arbitration was conducted under ICC Rules and that the ICC has offices in the Abu Dhabi Global Market (ADGM) does not affect the determination of the seat of arbitration. Since the parties had agreed that Dubai was the seat of arbitration, the Dubai Courts were deemed to have jurisdiction to hear any annulment proceedings, not the ADGM courts.
This decision is particularly significant and welcomed, especially in light of a contrasting judgment by the Abu Dhabi Court of Cassation in Case No. 1045 of 2022 dated 18 January 2023. In that case, the Abu Dhabi Court, when dealing with a challenge to an ICC award, held that it did not have jurisdiction to hear the dispute on the basis that the ICC had offices in the ADGM, which it considered to be the place of arbitration
vi. Recent Trends in Awarding Interest in Qatar
The question of awarding interest by arbitral tribunals has not been a contentious issue in recent years in Qatar. Onshore Qatar courts have consistently enforced arbitral awards that include interest. Arbitral tribunals commonly rely on Article 268 of the Qatar Civil Code to justify the award of interest.
However, a recent decision by the Qatar Court of Appeal has introduced an unexpected shift in this well-established approach. In Case No. 1856 of 2022, dated 20 March 2023, the court set aside an arbitral award on the grounds that the tribunal’s decision to award interest constituted a violation of public policy. This decision marks a departure from previous rulings, raising concerns about the consistency of judicial interpretation regarding interest awards in Qatar. It is hoped that the Court of Cassation will reverse this decision.
The position is different in offshore courts i.e. the courts of the Qatar Financial Centre (QFC). In a decision issued by the Civil and Commercial Court of the QFC on 5 May 2024, Case B.v C., the court rejected a set-aside action brought under the QFC Arbitration Regulations 2005 against an arbitral award that included interest. The party filing the set-aside action relied on the aforementioned Court of Appeal decision of 20 March 2023 to support its position. Nevertheless, the QFC court dismissed the challenge, holding that the award of interest is not a matter of Qatari public policy. In doing so, the court relied on earlier decisions by the Qatari Court of Cassation, such as Case No. 171/2020, and the Qatari Court of Appeal, Case No. 31/2019, which support the enforcement of interest awards in arbitration.
B. In India
i. Public Policy Challenges
Both Section 34 and Section 48 of the Arbitration Act provide that an arbitral award may be annulled if it contravenes the public policy of India. The Arbitration and Conciliation (Amendment) Act, 2015 [“2015 Amendment Act”], introduced Explanation 1 to Section 34 and Section 48 in the hopes to clarify the ambit of public policy and limit its application to, i) award induced or affected by fraud or corruption or in violation of section 75 or section 81 of the Act, ii) in contravention with the fundamental policy of Indian law, or iii) in conflict with the most basic notions of morality or justice. From Renusagar Power Co. v. Gen. Elec Co to Vijay Karia v. Prysmian Cavi E Sistemi SRL, India’s enforcement landscape has evolved, becoming more pro-arbitration as the definition of public policy has narrowed. With the Amendment Bill, 2024, Section 34(2-A) is sought to be introduced which allows for partial setting aside of the award on the grounds of public policy or patent illegality. Under the proposed Section, the ground of patent illegality which was limited to the setting aside of domestic awards will now extend to foreign awards as well.
ii. Emergency Arbitration
In India, the legal status of emergency arbitration remains somewhat uncertain, but may be clarified with the proposed Section 2(1)(ea) to the Arbitration Act, which provides a formal definition of an emergency arbitrator under the newly proposed Section 9-A. Further, the Supreme Court in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. clarified that interim orders by emergency arbitrators are enforceable in India just like those issued by arbitral tribunals. Therefore, the Supreme Court’s current position on the enforcement of emergency arbitration decisions in India-seated arbitrations is that an emergency arbitrator qualifies as an arbitral tribunal under Section 2(1)(d) of the Arbitration Act. With the emergence of the proposed Section 9-A , an arbitral institution may appoint an emergency arbitrator before the constitution of the Arbitral Tribunal, specifically for the purpose of granting interim measures as provided under Section 9 of the Arbitration Act and an order passed by an emergency arbitrator shall be enforced in the same manner as an order passed by the Arbitral Tribunal under Section 17(2) of the Act.
iii. Automatic Stay on Awards
Initially, under Section 36 of the Arbitration Act, an arbitral award could not be enforced while a petition to set it aside under Section 34 was pending. This created an automatic stay upon filing a challenge. However, the 2015 Amendment Act did away with the automatic stay provision and instead required the award debtor to apply for a stay.
V. Key Takeaways
A. Limited Judicial Interference
Middle Eastern courts have adopted a non-intrusive approach, minimising interference in arbitral awards by refraining from reviewing their merits. This practice reinforces judicial respect for arbitral autonomy, aligning with the global arbitration standard. India could benefit from a similar commitment to limited judicial scrutiny, particularly concerning merit-based reviews, to further its pro-arbitration stance and encourage international investment. The Amendment Bill, 2024 does to a certain extent address this concern by introducing expedited timelines under Section 8, 9, 11, 16 and 37. Further the proposed Section 7(6) empowers the Council to draft a model arbitration agreement that parties can adopt in their contracts. When implemented effectively, this provision has the potential to significantly minimize interpretational disputes.
B. Public Policy Scope and Consistency
Certain Middle Eastern jurisdictions such as Lebanon apply narrowly defined public policy exceptions, aligning with international standards that favour enforcement. In contrast, in some jurisdictions within the GCC countries such as UAE and Qatar, public policy is often used as a broad, "catch-all" ground to refuse enforcement or annul an arbitral award. For example, as noted above, the requirement for the debtor to be domiciled in the UAE to enforce an award demonstrates such use of public policy. In addition in the UAE federal arbitration law no.6 of 2008 as amended, refers in Article 53 to “morality” as a ground for annulment of the award in addition to public policy.
It is also worth mentioning that in offshore courts, the arbitration regulations in the DIFC, for example, refer in Article 41(2)(b)(iii) (grounds for setting aside) and Article 44(1)(b)(iii) (grounds for refusing recognition or enforcement) to the “public policy of the UAE.” There is, therefore, no distinction between the public policy of the DIFC and that of the UAE. In contrast, the QFC Arbitration Regulations of 2005 refer in Article 43(1)(b)(ii) (grounds for refusal of enforcement) and Article 41(2)(b)(ii) (grounds for setting aside) to the “public policy of the QFC and/or the State.”
The notion of "public policy of the QFC" has raised questions about its scope and meaning. However, the QFC Civil and Commercial Court, in its decision of 5 May 2024 referred to above, clarified that these terms should be interpreted as synonymous. The court further noted that it is difficult to conceive of a scenario where the interests of the QFC and the State of Qatar are not aligned or identical.
India’s narrowed public policy scope following the 2015 Amendment Act is a step in this direction, but continued refinement and uniform application of these standards could help avoid arbitrary enforcement obstacles and make India more arbitration-friendly.
C. Emergency Arbitration
Middle Eastern jurisdictions, particularly the UAE, have incorporated modern arbitration rules that cater to emergency arbitration [See: DIAC Arbitration Rules].[8] India too has recognised emergency arbitrators through its various institutional frameworks. IAMC for instance provides for a detailed framework in Article 22 read with Schedule I of its Rules.
[1] Dubai Court of Cassation Case No. 1162 of 2021 dated 9 February 2022; Cairo Court of Cassation, Civil and Commercial Circuit, case no. 12262 of 90, dated 24 June 2021; Abu Dhabi Court of Cassation Case No. 753 of 2023 dated 14 September 2023; Qatar Court of Appeal Case no. 22/2019 dated 17 June 2019; Beirut Court of Appeal, First Chamber Case No. 301/2008 dated 21 February 2008.
[2] This decision has been criticized by some scholars and is currently subject to appeal before the Court of Cassation.
[3] Union of India v. Vedanta Ltd. (2020) 10 SCC 1 ¶83.11; See also Mercator Ltd. v. Dredging Corpn. of India Ltd., 2024 SCC OnLine Del 3075
[4] Id. ¶94; Cruz City 1 Mauritius Holdings v. Unitech Limited (2017) SCC OnLine Del 7810 ¶50.
[5] Avitel Post Studioz Limited v. HSBC PI Holdings (Mauritius) Limited Id. ¶20.
[6] Id. ¶25
[7] Cruz City 1 Mauritius Holdings v. Unitech Limited (2017) SCC OnLine Del 7810 ¶28.
[8] DIAC Arbitration Rules, 2022, Appendix II, art. 2, available at:https://www.diac.com/wp-content/uploads/2023/05/DIAC-2022-Rules-EN.pdf; CRCICA Arbitration Rules 2024, art. 26, available at: https://crcica.org/rules/arbitration/cr_arb_rules_en.pdf; Saudi Center for Commercial Arbitration (SCCA) Rules, 2016, Appendix III, available at: https://sadr.org/assets/uploads/download_file/Arbitration_Rules_2023_En.pdf.
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