Winter 2008] Enforcement of Arbitral Awards in the Middle East 1 Public Policy Concerns Regarding Enforcement of Foreign International Arbitral Awards in the Middle East Mark Wakim* I. Introduction A crowd of international and regional conventions has emerged to address the problems created by globalization and international commerce.1 States increasingly acknowledge the importance of rapid and equitable resolutions to cross-border business disputes.2 Although it has been said that the “Islamic Middle East has not fully embraced” the modern arbitral sys- tem,3 a more positive view contends that this attitude toward international arbitration is “pro- 1. See Volker Behr, Development of a New Legal System in the People’s Republic of China, 67 LA. L. REV. 1161, 1173– 74 (2007) (demonstrating the role of United Nations conventions in encouraging international commerce and globalization in the People’s Republic of China); see also Surya Deva, Human Rights Realization in an Era of Glo- balization: The Indian Experience, 12 BUFF. HUM. RTS. L. REV. 93, 97, 132 (2006) (expressing that human rights in India were protected by international conventions during the era of globalization); Maria Angela Jardim de Santa Cruz Oliveira, Recognition and Enforcement of United States Money Judgments in Brazil, 19 N.Y. INT’L L. REV. 1, 1, 7 (2006) (commenting that international judicial cooperation became crucial in dealing with busi- ness-related disputes arising from the growth of globalization and international commerce in Brazil). 2. See, e.g., Ernest-Ulrich Petersmann, Justice as Conflict Resolution: Proliferation, Fragmentation, and Decentraliza- tion of Dispute Settlement in International Trade, 27 U. PA. J. INT'L ECON. L. 273, 358 (2006) (depicting that an increasing number of businesses have resorted to international arbitration and mediation to resolve disputes); see also 48 C.J.S. International Law § 60 (2007) (noting the Charter of the United Nations calls for arbitration in resolving international disputes). Christopher R. Drohozal, New Experiences of International Arbitration in the United States, 54 AM. J. COMP. L. 233, 233 (2006) (noting international arbitration proceedings have nearly doubled between 1993 and 2003). 3. Arthur J. Gemmell, Commercial Arbitration in the Islamic Middle East, 5 SANTA CLARA J. INT’L L. 169, 169 (2006). See Marshall J. Breger & Shelby R. Quast, International Commercial Arbitration: A Case Study of the Areas Under Control of the Palestinian Authority, 32 CASE W. R ES. J. INT’L L. 185, 243 (2000) (stressing that some Middle Eastern countries do not always enforce international arbitration decisions); see also Charles N. Brower & Jeremy K. Sharpe, International Arbitration and the Islamic World: The Third Phase, 97 AM. J. INT’L L. 643, 656 (2003) (commenting that Middle Eastern states have only recently begun “fully to embrace arbitration’s classic international manifestation”). * Associate, Commercial Litigation Group, Reed Smith LLP; B.S., Physiological Science, 2001, University of California, Los Angeles; J.D., 2007, Emory University School of Law. 2 New York International Law Review [Vol. 21 No. 1 gressively reversing.”4 In recent years, Middle Eastern countries have increasingly valued foreign confidence in their domestic judicial systems.5 The modernization of arbitration laws in a number of Middle Eastern countries,6 the growing number of Arab states that have ratified the New York Convention of 1958,7 and the establishment of arbitration centers throughout the region8 demonstrate that international arbitration is gaining favor.9 “Knowing the law” is only one of the necessary requirements to understanding the nature of dispute settlement in the Middle East.10 Failing to acknowledge the religious substructure 4. Walid John Kassir, The Potential of Lebanon as a Neutral Place for International Arbitration, 14 AM. REV. INT’L ARB. 545, 549 (2003). See Faisal Kutty, The Shari’a Factor in International Commercial Arbitration, 28 LOY. L.A. INT’L & COMP. L. REV. 565, 593 (2006) (explaining that Middle Eastern countries have adopted “arbitration- friendly” laws and established international arbitration centers); see also Draft UAE Arbitration Law Requires More Sophistication to Provide Investor Security, MIDDLE E. & N. AFR. BUS. REP., May 13, 2007, available at 2007 WLNR 9068263 (noting that a leading Middle Eastern law firm hosted a convention to address the progress of the New York Convention in the Middle East). 5. One Saudi official explained accession to the New York Convention of 1958 as a “curative remedy for a problem affecting Saudi foreign trade relations.” See Saudi Arabia’s Decision on New York Convention Praised, RIYADH DAILY, Feb. 8, 1994; see also Kassir, supra note 4, at 545 (reporting that Lebanon was a pioneer among the Arab and Middle Eastern countries in adopting favorable international arbitration legislation); Kristin T. Roy, Note, The New York Convention and Saudi Arabia: Can a Country Use the Public Policy Defense to Refuse Enforcement of Non-Domestic Arbitral Awards?, 18 FORDHAM INT’L L.J. 920, 936–37 (1995) (commenting that Kuwait, which highly values arbitration as a method of dispute resolution, acceded to the New York Convention in 1978). 6. See Christopher R. Drahozal, Regulatory Competition and the Location of International Arbitration Proceedings, 24 INT’L REV. L & ECON. 371, 371 (2004) (pointing out that the purpose behind modernizing arbitration laws was to make them more appealing to users); see also Amy J. Schmitz, Consideration of “Contracting Culture” in Enforc- ing Arbitration Provisions, 81 ST. JOHN’S L. REV. 123, 123 (2007) (highlighting that private dispute resolution and the technique called “partnering” have been successfully used on projects in the Middle East). 7. See Michael S. Greco & Ian Meredith, Feature, Getting to Yes Abroad: Arbitration as a Tool in Effective Commercial and Political Risk Management, BUS. L. TODAY, Apr. 16, 2007, at 23 (discussing that 138 countries, including the United Arab Emirates, have widely accepted the New York Convention); see, e.g., Roy, supra note 5, at 936– 37 (noting Syria and Kuwait have acceded to the New York Convention); see also DIAC Keen on Curbing Com- mercial Disputes, GULF NEWS, Sept. 25, 2006, available at 2006 WLNR 21760550 (emphasizing that after join- ing the New York Convention, several Middle Eastern countries established arbitration centers). 8. See Brower & Sharpe, supra note 3, at 647 (noting that Middle Eastern nations have increasingly established international and national arbitration centers); see also Anoosha Boralessa, Enforcement in the United States and United Kingdom of ICSID Awards Against the Republic of Argentina: Obstacles That Transnational Corporations May Face, 17 N.Y. INT’L L. REV. 53, 54 n.7 (2004) (recognizing that regional arbitration centers have been established in developing parts of the world); Amr A. Shalakany, Arbitration and the Third World: A Plea for Reas- sessing Bias Under the Specter of Neoliberalism, 41 HARV. INT’L L.J. 419, 421 (2000) (discussing that during the 1990s, regional arbitration centers were established in the capitals of numerous developing nations, including those in the Middle East). 9. See Efforts to Increase Use of Arbitration in Middle East, WORLD ARB. & MEDIATION REP., Aug. 1998, at 212 (reporting the Saudi Chamber of Commerce and Industry and the Gulf Chambers of Commerce recently met to promote arbitration in the region); see also U.N. Comm’n on Int’l Trade Law, Status, 1958—Convention on the Recognition and Enforcement of Foreign Arbitral Awards, available at http://uncitral.org/uncitral/en/uncitral_texts/ arbitration/NYConvention_status.html (listing the countries that adopted the New York Convention). 10. See Gemmell, supra note 3, at 169 (quoting “knowing the law” is essential to understanding dispute settlement in the Middle East); see also Doing Business in the Middle East: A Guide for U.S. Companies, 34 CAL W. INT’L L.J. 273, 273 (2004) (emphasizing the necessity of understanding Middle Eastern values to comprehend regional economic systems); Clark B. Lombardi, Islamic Law in the Jurisprudence of the International Court of Justice: An Analysis, 8 CHI. J. INT’L L. 85, 85 (2007) (depicting modernist approaches to interpreting law employed by some Middle Eastern countries). Winter 2008] Enforcement of Arbitral Awards in the Middle East 3 supporting commercial arbitration in that part of the world will shroud the process of dispute settlement in ambiguity and uncertainty.11 Despite the history and tradition of arbitration in the Arab region, the practice of international dispute resolution in the Middle East, in recent history, has been summarized as a “troubled” or a “‘roller coaster’-like experience.”12 In the Islamic Middle East, religious considerations play a principal role in the acceptance and successful functioning of international commercial arbitration.13 The “religious variable” may affect either substantive or procedural analyses. As arbitrators interpret public policy, cal- culate limitation periods, or determine interest awards, cultural particulars may influence the result.14 National laws, international conventions, and institutional arbitration rules form the backbone of the legal system governing commercial arbitration.15 Transnational treaties func- tion in combination with other sources of law, including the national law governing the parties’ 11. See Fatima Akaddaf, Application of the United Nations Convention to Contracts for the