16 CONSTRUCTION LAW INTERNATIONAL Volume 12 Issue 2 June 2017

16 CONSTRUCTION LAW INTERNATIONAL Volume 12 Issue 2 June 2017

Qatari courts are empowered to stay enforcement of the award. Where a stay is granted, the party seeking enforcement can request that the party resisting enforcement provides adequate security pending resolution of the annulment proceedings.

Comment and conclusions

In conclusion, the Qatari Arbitration Law is a major step forward for Qatar-seated arbitrations. In parallel, but outside the scope of this article, Qatar has been developing a new Procurement Law and an Engineering Law. Taken together, these laws should give international contractors substantial confidence in concluding Qatari- based construction contracts and agreeing to arbitrate construction disputes in Qatar.

Note 1 The Qatari Arbitration Law does not

provide any guidance as to how costs are to be awarded by the arbitral tribunal.

Ghada M Darwish is Managing Partner of the Ghada M Darwish Law Firm in Doha, Qatar. Ghada can be contacted on gdarwish@gdarwish.com

SAUDI ARABIA

Enforcement of arbitration awards in the Kingdom of Saudi Arabia Henry Quinlan, Amer Al-Amr & Hannah O’Donovan

P roblems with the o ld arbitration and enforcement regime in KSA

The recognition and enforcement of foreign arbitral awards in the Kingdom of Saudi Arabia (KSA) have been fraught with difficulty for some time. While foreign arbitral awards have been recognised and enforced in the KSA sporadically in the past, the process has generally been very difficult and the KSA has long been regarded as one of the most problematic New York Convention signatory countries. As a result, contracting with Saudi parties with no identifiable assets outside of the KSA has always involved an added layer of risk.

The problems surrounding arbitration and enforcement in the KSA were largely attributed to the 1983 Saudi Arbitration Law, which was lacking in detail and did not contain limits on the scope of judicial review of awards. Under the old regime, parties had to bring applications for the enforcement of foreign judgments and arbitral awards before the Board of

Grievances (the ‘Board’). The Board would undertake a full review of the merits of each award to ensure compliance with Shari’ah principles and public policy, as well as reciprocity between the KSA and the country where the award was rendered. As a result, enforcement of foreign judgments or awards could be lengthy and there would be a risk of an effective retrial of the dispute by the Board.

This was demonstrated in the case of Jadawel International v Emaar Property, a case in which Jadawel started arbitration proceedings before a tribunal seated in the KSA claiming US$1.2bn in damages for a breach of a joint venture agreement by Emaar. The arbitral tribunal dismissed Jadawel’s claim and ordered them to pay Emaar’s legal costs. However, when the award was submitted to the Board for enforcement, the Board re- examined the merits of the case to ensure compliance with Shari’ah principles and reversed the award, ordering Emaar to pay more than US$250m in damages to Jadawel. However, the new arbitration and enforcement laws in the KSA reduce the risk of such scenario being repeated in the future.

The new arbitration and enforcement laws

The KSA has revamped i t s arbitration and enforcement laws to more closely reflect international standards via the passing of the new Law of Arbitration (‘Arbitration Law’), which came into force on 9 July 2012, and the new Enforcement Law, which came into force on 27 February 2013.

The introduction of these new laws and the changes that they implement has prompted the hope that the KSA might become a more arbitration-friendly jurisdiction as it seeks to diversify its economy and encourage more foreign investment. These developments should be of significant interest to those in the construction industry

UPDATES FROM AROUND THE WORLD

This article focuses on some recent cases, which have been decided in light of the new Arbitration Law and Enforcement Law enacted a few years ago in the Kingdom of Saudi Arabia (KSA).

CONSTRUCTION LAW INTERNATIONAL Volume 12 Issue 2 June 2017 17

who do business in the KSA or with KSA entities and who typically will have arbitration clauses in their contracts.

Arbitration Law

The Arbitration Law applies to arbitrations (both domestic and international) conducted in the KSA and is largely based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, which has received global recognition as model legislation and arbitration best practice. In accordance with the Arbitration Law, parties are free (subject to mandatory provisions) to choose the institutional rules that will apply to their arbitration such as the International Criminal Court or London Court of International Arbitration (LCIA) Rules. The parties can also nominate the arbitrators to determine their dispute.

The procedural requirements for making an enforcement application for a domestic award are set out in Article 53 of the Arbitration Law, and include: (1) providing the original award (or an attested version); (2) a true copy of the arbitration agreement; (3) an accredited Arabic translation of the award; and (4) proof of the deposit of the award with the competent court within 15 days from its issuance.

Article 55(2) of the Arbitration Law mandates that before an order for the enforcement of the domestic award will be issued, the court must be satisfied that the award: • is not in conflict with a judgment

issued by a court, committee or commission that had jurisdiction to decide the dispute;

• does not violate Shari’ah law or public policy; and

• has been properly notified to the party against whom it is sought to be enforced.

Enforcement Law

The enforcement of arbitral awards now comes under the pro- enforcement provisions in the new Enforcement Law. Enforcement proceedings must now be brought before the Enforcement Court (where special enforcement or execution judges have been appointed for this purpose), rather than the Board. This legislative change is very advantageous to award creditors, as Article 6 of the Enforcement Law provides that the decision of the enforcement judge is deemed to be final (except for judgments on execution disputes and claims on insolvency).

In order to confirm the enforceability of an award, an enforcement judge has to satisfy himself of the conditions specified in Article 11 of the Enforcement Law, namely that: • in relation to foreign awards,

the country in which the award was rendered will reciprocate in enforcing awards rendered in the KSA (for example, by reference to the award-rendering country’s accession to the New York Convention);

• the Saudi courts do not have jurisdiction to hear the underlying dispute (which will be the case where this is a valid arbitration clause in the relevant contract);

• the award was rendered following proceedings which complied with due process;

• the award is in f inal form according to the law of the seat of the arbitration;

• the award is not inconsistent with a judgment or order issued in relation to the same subject by a judicial authority of competent jurisdiction in the KSA; and

• the award does not contain anything that contradicts Saudi public policy (and in particular Saudi law).

The powers of the Enforcement Court under Articles 46 and 47 of the Enforcement Law are significant. If the award debtor fails to pay the sum owed or fails

to disclose property sufficient to satisfy the award within five days of notification of the execution order, it is deemed to be procrastinating and the enforcement judge can: • ban the award debtor from travel (in

the case of a company, its general manager or board of directors);

• suspend the award debtor’s ability to issue powers of attorney either directly or indirectly in relation to its assets;

• order disclosure of the existing assets of the debtor and any future revenues in an amount sufficient to satisfy the award, seize such assets and take all actions permitted by the law to execute the award against them;

• order disclosure of the licences and records of the commercial and professional activities of the award debtor; and/or

• notify credit agencies and similar organisations that the award debtor has failed to satisfy an award, which will result in them being added to a credit blacklist.

Landmark enforcement decision of 2016

In 2016, in the first decision of its kind that the authors are aware of, the Enforcement Court in Riyadh confirmed that a US$18.5m ICC award rendered in London will be enforced in the KSA against a Saudi-domiciled award debtor. This is a decision that has brought much cause for optimism in relation to the development of the arbitration landscape in KSA.

The key facts, in summary, are that, in late 2011, a UAE subsidiary of a Greek telecommunications company (the ‘Claimant’) obtained an ICC arbitral award totalling circa US$18.5m from a London-seated tribunal of three experienced arbitrators. The Claimant (for whom DLA Piper acted) succeeded in its claims against a Saudi data communications service provider, and was also successful in defending counterclaims totalling circa US$350m. The Claimant then

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sought recognition and enforcement of the award in the Saudi courts.

During the course of the enforcement proceedings, the KSA passed the Arbitration Law and the Enforcement Law. As a result of this change, the Claimant transferred its proceedings from the Board to the Enforcement Courts. Just three months later, the enforcement judge stamped the award (thereby confirming that the award is recognised and will be enforced in the KSA and also effectively converting the award into an executable Saudi court judgment). As stated above, there is no possibility of appeal against this decision.

It must be noted that enforcement proceedings in the KSA require a deep understanding of local law. It is clear from our involvement in this case that it is crucially important for any parties involved in proceedings against Saudi entities to ensure that they obtain proper advice from the outset about the pre-requisites to enforcement under Saudi law. There are particular requirements and practical steps that must be undertaken during the process which it is important for parties to understand.

In addition, the KSA is a party to a number of international arbitration treaties and conventions that should be considered in the event of any enforcement of arbitral awards. In addition to the New York Convention discussed above, the KSA is also party to the Arab League Convention (which deals with the enforcement of judgments and arbitral awards in the KSA and other members of the Arab League) and the Riyadh Convention. As international contractors often operate in the KSA through local subsidiaries who are incorporated in the region, local law advice in relation to these treaties should be sought in the event of any enforcement proceedings (whether initiating or resisting an award).

Conclusion

Although foreign arbitral awards have been recognised and enforced in the KSA sporadically in the past, the process has generally been a difficult one and of uncertain outcome. The above-mentioned landmark enforcement decision of 2016 was the first practical example of recognition and enforcement of a foreign award since the promulgation of the KSA’s new arbitration and enforcement laws.

While the authors are not aware of any further published case law developments from the Enforcement Court since last year’s decision, it is hoped that the Arbitration Law and the Enforcement Law will enable the recognition and enforcement of foreign awards on a more consistent basis in the future.

UPDATES FROM AROUND THE WORLD

Henry Quinlan is a partner, Amer Al-Amr is a partner and Hannah O’Donovan is a legal consultant at DLA Piper Middle East. They can be contacted at henry.quinlan@ dlapiper.com, amer.alamr@dlapiper.com and hannah.o’donovan@dlapiper.com

ISRAEL

Constructing Israel’s rail infrastructure Sharon Adler

Vision and reality

The concept of having modern rail and light rail infrastructure in Israel had, for many years, been nothing more than an unrealised vision of an emerging nation. Still,

the dream was very much alive. In 1936, Israeli poet Nathan Alterman put into verse the public’s notions of the unrealised and illusive dream of having a metro in Tel Aviv after the idea had been abandoned owing to a lack of financing. The ‘underground dream’ of the new city, he wrote, had ‘evaporated’.

Yet, as the nation rapidly grew, by the end of the millennia it was faced with overcrowded and congested roads and outdated public transport systems.

In the late 1990s, the Israeli government decided to give greater emphasis to the promotion of much-needed improvement to the country’s infrastructure to allow the fulfilment of growth potential in the Israeli market. The decision also called for the transfer of certain activities to the private sector, in particular those related to transport infrastructure, thus achieving greater efficiency and allowing for new sources of finance.

It was finally time to make the dream a reality.

Realising the vision

The first step in the materialisation of this vision was the Jerusalem Light Rail Transport (JLRT) project (Red Line), which was completed and began commercial operations in the summer of 2011. This was the first light rail transport project in Israel. It included the construction of a twin set of light rails spanning 14 kilometres, connecting the southern and northern parts of Jerusalem, and the operation of 46 LRT vehicles for a period of 27 years. It was also the first Israeli build-operate-transfer (BOT) project constructed in the heart of a busy urban environment and it involved the Ministries of Finance and Transportation as well as the Jerusalem Municipality. The project was constructed and is operated by a consortium of Israeli and foreign companies. The project integrated many cutting-edge technologies for the first time in Israel, such as a traffic signalling system with

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