Our Litigation lawyers at Al Tamimi & Company discuss the Enforcement of international arbitral awards in Jordan and provide updates on the latest trends
Hala Qutteineh Senior Associate, Dispute Resolution
Omar AlJuneidi Trainee Lawyer, Dispute Resolution
The recognised enforcement of international arbitral awards as enforceable legal instrument constitutes a remarkable benchmark in the development of judicial and legal systems in Jordan. Many firms and states today tend to resolve their prominent disputes through arbitral centres. Arbitration, being a form of alternative dispute resolution, without resorting to litigation. This method of dispute resolution offers the advantage of being confidential and discrete in nature; whilst continuing to afford a legally binding and enforceable award before the courts. It is noted that the use of arbitration as a mechanism to resolve disputes is gaining popularity; however, a continuing theme is the enforcement of foreign arbitral awards locally.
The main legislation governing arbitration in Jordan is the Law of Arbitration No. 31 of 2001 (the “Arbitration Law”) and the Law of Enforcement of Foreign Awards No. 8 of 1952 (the “Enforcement Law”) which governs the enforcement of foreign judgements including arbitral awards.
The procedure of enforcement of arbitral award depends on whether the award is issued nationally or internationally. If it is a national arbitral award, the arbitration Law would be applicable. On the contrary, the Enforcement Law would apply in connection with enforcing an international arbitral award.
Jordan has ratified several important bilateral and multilateral treaties concerning the enforcement of arbitral awards. One of the main treaties that Jordan is a part of is the New York Convention the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the “NY Convention”). The NY Convention provides for the enforcement of arbitral awards in more than 150 countries worldwide, subject only to limited defences set out in the aforesaid NY Convention. Although the NY Convention does not stipulate direct and express conditions or requirements to recognize and enforce foreign arbitral awards; Article (3), nonetheless, stipulates that that each contracting state shall recognize awards as binding and enforce them in the same manner as if it was the recognition or enforcement of a domestic arbitral award.
Rather, the New York Convention defines circumstances in which recognition and enforcement of the foreign award may be refused, at the request of the party against whom it is invoked. A court is entitled to refuse enforcement in the following circumstances:
The parties to the arbitral agreement lack capacity or the arbitral agreement is not valid under its governing law.
The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case.
The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.
The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Likewise, Jordan is a party to the Riyadh Convention on Judicial Corporation 1983 (the “Riyadh Convention”), which addresses the enforceability of international/foreign arbitral awards of participating states. Article (37) of the Riyadh convention illustrates that the judgments of arbitrators shall be recognized and implemented by any of the contracting parties as stipulated in this chapter bearing in mind any legal codes and provisions.
The Enforcement Law stipulates under Article (2) thereof a judgment is considered foreign when it is rendered in a court outside the Hashemite kingdom of Jordan thus including awards in arbitral proceedings. As a requirement to enforce foreign arbitral awards in Jordan, the judgment must be final and not to be subject to any objection in the country where it was rendered. The enforcement of arbitral awards is administered by competent courts, who would apply the Jordanian Code of Civil Procedure No.24 of 1988 to the litigation procedures. In order to enforce an arbitral award, an application shall be submitted to the Court of First instance for the recognition of the foreign arbitral award. The Court of First instance role is only limited to execution of the arbitral award without hearings (it reviews the matter ex parte).
Furthermore, Article (7) of the Enforcement Law sets out certain conditions that would allow the refusal of enforcing a foreign arbitral award. The first condition being the court issuing the foreign arbitral award must have competent jurisdiction to do so. In Jordan, the defendant must have his place of business or be a resident in an area under the jurisdiction of the court to satisfy the jurisdictional requirement. The award is not enforceable in Jordan if the defendant did not have his place of business or he was not resident in an area under the jurisdiction of the court; or if the defendant has not attended the court by his own choice and or acknowledged its jurisdiction.
Secondly, the condition of notification should be satisfied. Jordanian courts have the power to refuse enforcement of an award, if the defendant is not served with notice to attend court that issued the judgement; despite the fact that the defendant has a place of business or is a resident in the area.
Thirdly, the foreign arbitral award should be final, binding and enforceable in the country in which it was issued.
Fourthly, the foreign arbitral award should not be obtained through fraudulent means.
Fifthly, is that the enforcement of the arbitral award should not infringe on public morals and orders, Jordanian laws and court precedence provide a wide definition of public order, and as such, awards which are not in line with mandatory law are less likely to be enforceable and may effectively include a merit review.
Lastly is a condition in relation to the principle of reciprocity, in which a Jordanian court has the right to refuse the enforcement of a foreign arbitral award if the issuing country does not enforce Jordanian awards.
It is evident that the scope and the use of arbitration as an alternative dispute resolution mechanism is gaining popularity. It is noted that an international arbitral award is of no less importance than an arbitral award that is issued nationally. A international arbitral award recognized in Jordan, upon the fulfilment of all the conditions highlighted above becomes an authoritative award that is enforced in a similar manner to national awards enforced by Jordanian courts. It could be argued that that the recognition and enforcement of international arbitral awards by Jordanian courts is a modern and secure mechanism to attract investors to invest and fuel the country’s economy by assuring them that their rights are protected through multiple outlets.
For further information, please contact Hala Qutteineh.
Published in August 2022
