Mediating Commercial Disputes in the Arab World

In this article, barrister, Peter Smith, considers the good prospects for mediating commercial disputes in the Arab world, particularly considering the new 2020 Singapore Mediation Convention.

What is mediation?

Mediation is a voluntary process for discussing and resolving disputes. It improves the efficiency of dispute resolution and offers flexibility to commercial parties, who drive the process. The mediator’s role is not to decide, but to facilitate discussions between disputants to arrive at a mutually acceptable solution. The mediator is chosen by the parties by mutual agreement, and then meets at a convenient time with parties together and individually to hear their side of the story and to facilitate the testing of both side’s positions.

Why do it?

Good mediators can solve conflict early. The earlier the mediation can take place, the greater the saving in terms of costs both of time and legal fees and the best chance will be provided to maintain a good relationship between the parties.

The Singapore Mediation Centre, a leading mediation hub, reports that 90 per cent of disputes referred to its centre were settled within one day. Whilst mediation requires parties and their advisors to expend time and energy preparing for and attending the mediation and paying for the costs of the mediator, a successful mediation is usually far cheaper than the alternatives of litigation or arbitration.

As a result, the nature of the process promotes the preservation of relationships between the parties. The mediation process is flexible, confidential, and, in many instances, more cost and time efficient than other dispute resolution processes such as litigation and arbitration. For States, the process can help relieve pressure on national court systems.

Mediations can take place in any language (such as English, French or Arabic), and can be virtual or in person (the latter is preferred). Specialist mediators, trained and accredited by mediation institutions, are often available.

What about the enforcement of a mediation agreement?

A successful mediation will lead to a compromise agreement that settles the dispute on agreed terms and should dispose of the underlying dispute process.

However, until recently an often-cited challenge to the use of mediation in commercial disputes was the lack of an efficient and harmonised framework for cross-border enforcement of settlement agreements resulting from mediation.

The Singapore Convention on Mediation entered into force at the United Nations Convention on International Settlement Agreements Resulting from Mediation in 2020. The Mediation Convention was expressly developed and adopted by the UN to overcome the problem of enforcement and to provide an efficient and harmonised framework for the cross-border reliance on mediated settlement agreements. The Mediation Convention is thus cross-border tool in the same box as the 1958 New York Convention on the Recognition and Enforcement of Arbitral.

The Mediation Convention was finalised in mid-2018 and opened for signature in Singapore on 7 August 2019, attracting 46 signatories that day, including the world’s two largest economies (the United States and China) as well as three of the four largest economies in Asia (China, India, and South Korea). Another 24 countries attended the signing ceremony in Singapore to show their support for the Convention.

Mediation in the Arab world

The Mediation Convention has had a high take-up amongst GCC countries.

In Saudi Arabia, Royal Decree 96/2020, gives effect to the Convention. The decree implements Saudi Arabia’s obligations, with international mediation settlement agreements falling within the scope of the Convention directly enforceable in the courts of the Kingdom of Saudi Arabia from 5 November 2020 unless the settlement agreement in question relates to the Kingdom of Saudi Arabia itself, any of its governmental agencies, and any persons acting on behalf of those agencies.

Saudi Arabia has taken other steps to promote mediation domestically. The Commercial Courts Law, issued through Royal Decree 93/2020, reorganized and empowered the country’s commercial courts and included provisions encouraging the use of alternative dispute resolution. In particular, the law imposes mandatory conciliation and mediation under certain circumstances provided in the Commercial Courts Regulations, issued through Ministerial

Resolution No. 8344/2020. They include disputes valuing between SAR100,000 and SAR1million arising out of commercial contracts, or disputes which contain contractually agreed pre-claim mediation provisions.

The Saudi Ministry of Justice (MoJ) has promoted mediation in other ways with the express intention of increasing the percentage of successfully mediated cases, for instance through the following: the launch of the Taradhi platform, which allows online, remote provision mediation services from the filing of the claim through to settlement without any visit to the court; and the launch of the MoJ’s own Conciliation Centre alongside the empowerment of notaries to notarize mediated settlement agreements. Once the Conciliation Centre recognises a settlement agreement, it becomes an instrument enforceable through the court system.

In Qatar, Emiri Decree 79/2020 ratified the Singapore Mediation Convention. In late December 2021, Qatar published the Mediation Law (Qatar Law No. 20/2021 on the Issuance of the Law on Mediation in the Settlement of Civil and Commercial Disputes) containing procedures and methods of mediation, conditions to be met by the mediator, provisions for stay of proceedings, and settlement agreement procedures.

In May 2022, Qatar’s Investment and Trade Court began operation, with express provisions for certain types of mediation in its rules. Qatar’s common law court, the Qatar Financial Centre Civil and Commercial Court, also expressly makes provision for alternative dispute resolution and has specific rules for mediation. ADR bodies in Qatar have also issued rules in support of mediation: the Conciliation/Mediation Rules of the Qatar International Center of Conciliation and Arbitration (QICCA) were issued in 2012, for instance; a revised set of rules which takes into consideration the application of the Singapore Convention was issued in 2021.

In March 2022, the United Arab Emirates announced it was to join the Singapore Convention. The UAE will be the 56th signatory to the Singapore Convention and will begin implementing a framework for the enforcement of settlement agreements resulting from mediations in international commercial disputes. The UAE’s common law courts (the Courts of the Dubai International Financial Centre and Abu Dhabi Global

Market) both already expressly provide for mediation in their court rules.

Bahrain took another key step towards the development of its ADR Framework in 2019 with the promulgation of the mediation law for dispute resolution under (the Mediation Law (Decree 22/2019). Bahrain’s Mediation Law gives mediation settlements the status of an executable document; mediation settlements made in Bahrain are now directly executable with the court without the need for filing a claim on the merits. Cross-border settlement agreements still require the bringing of a claim; claims brought for this purpose are perceived as a formality and the jurisdiction of the court is limited to checking that all requirements stipulated within the Mediation Law are met, without going into the subject of the settlement itself, akin to the procedures of enforcing an international arbitration award under the UNCITRAL Model Law for arbitration.

The Future

Other countries with substantial commercial relations with the Arab world have also implemented the Singapore Mediation Convention, including Kazakhstan and Turkey.

However, at present the UK is not a party to the Convention. The UK’s Ministry of Justice ran a consultation in early 2022 and is currently considering its response to the consultation.

There is a strong likelihood that the UK will accede to the Convention. An indicator of this was the announcement in July 2022 that civil claims under £10,000 brought in England and Wales would be diverted to mediation automatically, for a free mediation of up to one hour with a professional mediator provided by the court. The plan was expressed to be part of wider efforts to promote the use of mediation and help people resolve their disputes away from the courtroom.

Nonetheless, the advent of the Singapore Mediation Convention and other amendments to domestic legislation in the UK and key Arab states makes mediation an increasingly viable form of international commercial dispute resolution.

Peter Smith is a barrister at Outer Temple Chambers, working in Dubai. He frequently acts in domestic and international disputes for businesses in disputes across the GCC.