An Overview of Arbitration in Syria
Arbitration has been a feature of Syrian law for decades. It was initially governed by Articles 506-534 of the previous Civil Procedure Code, which was enacted back in 1953. However, it was given an overhaul with the passage of the Arbitration Law in 2008. The Law seeks to adopt international practices by relying on the UNCITRAL Model Law on International Commercial Arbitration.
In keeping with UNCITRAL standards, the Arbitration Law adopts business-friendly provisions. The liberalized approach provided by the Law in this respect was interpreted as an attempt to target potential foreign investors before the conflict in Syria broke out in 2011. It is difficult to judge how arbitration in Syria would have developed since the current conflict erupted only three years after the enactment of the Law.
The Law governs any arbitration conducted in Syria and any international commercial arbitration administered abroad if the parties agree to apply its provisions. The parties to an agreement are free to determine the law that the arbitral tribunal shall apply. Moreover, the law of another country may be followed, which means its substantial rules may be applied during proceedings. The parties are also free to determine the procedures that the tribunal will adhere to and the location whether in Syria or abroad where proceedings will take place. Contracting parties in practice usually do not opt for any arbitral institution and instead resort to an ad hoc arbitral process. They mainly choose to conduct arbitration under the rules provided for in the Arbitration Law. Arbitral awards are considered final and not subject to appeal unless there is evidence of procedural irregularities or public order violations during the arbitral process.
It is worth pointing out that provision is made in the Arbitration Law for the establishment of private arbitration centers in Syria. Up to 54 aspiring arbitration centers sought licenses to operate following the passage of the Law but none are functioning at the present time due to the conflict. The Ministry of Justice and the Syrian Investment Agency are however studying plans for the establishment of international arbitration centers to consider the claims of Syrian investors who are based overseas. Moreover, potential amendments to the Arbitration Law are expected to consider international practices in the operation of arbitration centers, which failed to accumulate experience since foreign investment was driven outside Syria during the past six years.
On the international and investment arbitration side, Syria acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Syria was one of the first countries to ratify the New York Convention back in 1959. Syria is also a member of the International Centre for Settlement of Investment Disputes (ICSID). The ICSID Convention of 1965 entered into force in Syria in early 2006. More recently in 2015, Syria signed the Mauritius Convention on Transparency in Treaty-based Investor-State Arbitration of 2014.
Domestic arbitral awards are easier to enforce than foreign arbitral awards despite the fact that Syria is a member of the New York Convention. With the exception of a few conditions such as no conflicts with Syrian court judgments or the public order, foreign arbitral awards should be enforceable in Syria. While the Convention is applied satisfactorily, there is still room for improvement.
Arbitration returned to the spotlight in early 2016 when Syria’s Public-Private Partnership Law was enacted after a five-year delay due to the ongoing conflict. Article 78 of the Law deals specifically with the resolution of disputes and provides options for parties to settle them by reference to domestic and international arbitration.
Despite the fact that Syrian law has catered for arbitration for several decades and parties do include arbitration clauses in their contracts, it is not a common method of dispute resolution. Domestic arbitration is resorted to oftentimes but not regularly and international arbitration is rare. In spite of the progress made in arbitration on the legislative front in recent times, these shortcomings are related to the fact that Syria still lacks a real culture of arbitration so to speak. As such, a special committee has already been formed to look into possible amendments to the Arbitration Law.
One issue that has been debated is the role of arbitral tribunals alongside the courts as opposed to supplanting the latter in the dispute resolution process. There is a general consensus that the courts view arbitral tribunals as competing with their authority. The committee is seeking to develop this relationship so that both these bodies complement each other. The Ministry of Justice for its part is lobbying for more use of arbitration as a credible alternative to litigation. Furthermore, the controversial exclusion of public contracts from the Arbitration Law is also being reconsidered.
The Ministry of Justice has affirmed that amendments to the Arbitration Law will take into account global legislative standards. It acknowledged that Syria is seeking a modern law that incorporates high standards in an attempt to meet the needs of reconstruction. In this respect, the focus on the development of arbitration is being shaped to an extent by the prospective requirements of the upcoming reconstruction phase.
For its part, the Damascus Securities Exchange– the country’s only stock market– wants to make use of arbitral proceedings to settle potential disputes that may arise on the stock market. In disputes involving the Damascus Securities Exchange, new strategies are being considered with the goal of promoting arbitration instead of litigation.
The Damascus Chamber of Commerce is also attempting to shed light and draw attention to the state of arbitration in Syria. In this respect, it is hosting lectures and seminars to discuss how to develop a culture of arbitration and alternative dispute resolution methods that Syrian businesses can resort to when settling trade disputes. The Damascus Chamber of Commerce recently joined the Damascus Center for Studies and Research for a seminar on legal and practical perspectives on commercial arbitration.
How arbitration in Syria develops remains to be seen. While on paper Syria made considerable progress in establishing a modern alternative dispute resolution regime before the current conflict broke out, the opportunity to test it soon afterwards was lost. The progress of arbitration will now have to be seen through the lens of Syria’s reconstruction. Whether the government can use the present time to help foster a culture of arbitration that is not perceived as a competitive force challenging the courts may go a long way to preparing the ground for possible foreign investments in post-war Syria.