The Future of Investment Arbitration in Iraq

Subject: Finance
Pages: 7
Words: 6241
Reading time:
23 min
Study level: College

Introduction

Investment arbitration is usually instigated by local or international investors on issues encompassing the settlement of disputes regarding investment treaties. Usually, such arbitrations are governed by investment laws, bilateral treaties, and multilateral treaties (and regulations) which are often referenced in times of problem-solving. Common arbitration procedures often occur between two or more local firms; or at other times, between a foreign investor and a host country. In international investment arbitration, existent laws are usually stipulated by the 1965 Washington Convention (ICSID Convention). These laws are usually clear on bilateral investment agreements and multilateral treaties, such as the Energy Charter Treaty and the North American Free trade Agreement (NAFTA) treaty which were developed to govern state investors operating in foreign lands. Alternatively, the Arbitration Rules of the International Centre for Settlement of Investment Disputes (ICSID) can also be adopted to govern bilateral and multilateral investment treaties across various states.

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The biggest problem noted by foreign investors wishing to invest in foreign lands is the lack of an effective remedy in times of problem-solving. Most of the time, foreign investors take a diplomatic approach by requesting their home countries to intervene in solving investment disputes. However, their home countries fail to deliver, since the practicalities of involving a host country in foreign investment disputes are usually difficult and complex (therefore many investors fail to get the remedy they need in solving investment arbitrations). Therefore, to protect foreign investments, many countries have created investment treaties such as those described above (NAFTA treaty and the Energy charter treaty ECT). These treaties are aimed at providing the investors with a given set of standard treatment regarding how their investments should be treated in foreign lands (failure to which, specific punitive rules stipulated by the treaty take effect).

Different countries are therefore bound by different investment treaties and most of them often differ from each other. For instance, the laws of the Association of Southeast Asian Nations (ASEAN) differ from the laws governing the North American States, stipulated by the NAFTA treaty. Because of this difference, various studies have tried to focus on specific treaties binding various countries (while at the same time analyzing the difference in those treaties). There is already enough existing literature on investment arbitration in the Western world but not much is known on investment arbitration in the Middle East. From this understanding, this study seeks to explore investment arbitration in Iraq as an example of a Middle Eastern nation on its path to growth.

Iraq has been experiencing a change in legislation since the ousting of its long-time ruler, Saddam Hussein, and the subsequent takeover of the British and American allied forces in 2003. In this regard, new laws have been created and many old ones discarded or amended. After the fall of Saddam Hussein’s regime and the occupancy of American and British forces in Iraq, there has been a continuous change in Iraqi investment laws in particular. Some laws were first amended by the United States Civil Administration which oversees the operations of American and British operations in Iraq, while others were amended by the Iraqi government. For instance, US civil administrator, Paul Bremer has been at the forefront in repealing existing commercial and civil laws, such as order no. 7 which exempts all foreign nationals working in Iraq from the country’s civil and penal laws. The new legislation, both issued by the US Civil Administration Authority and those enacted by the Iraqi government, have brought liberalization of commercial rules, foreign investments, arbitration, and the entire business environment. It is important to note that these new changes to Iraqi laws are significant to the way arbitration is carried out in the country. However, such changes to legislation haven’t lacked their fair share of controversy, considering some have been identified to be in contravention to international laws.

For instance, Saleh notes that:

“Under international law, the provisions of the related Geneva Conventions of 1929, 1949, and 1985, such as Articles 64, 65, and 67 of the fourth Geneva Convention of 1949, the occupying Authority has no legal power to change or issue new laws, except for the purpose of maintaining orderly government and safeguarding public order in the occupied country”.

Nonetheless, Iraq’s transition in commercial and civil laws has greatly transformed the business environment and completely liberalized its economy, foreign investments, and business operations as well. New investment laws in Iraq will therefore make a big change in the way arbitration is undertaken; in addition to improving the economic development of the country (through investment capital that will come into the country as well as foreign experience; both of which will ultimately lead to the growth of the country’s infrastructure and economy). This new legislation will also help meet the needs of the country, which entails the lack of investment capital to be used for reconstruction and development. Some observers note that these changes are justified because previous existing laws were repugnant to justice; in that, they hindered foreign nationals (except Arabs) from investing in Iraq, either directly (in shares, equities bonds, and the likes) or indirectly (in terms of partial or complete ownership of local firms). Some of the few common changes in the law are like the repealing of order no. 21 of 1997 which has been recently changed to allow foreign nationals to invest (either directly or indirectly) in Iraq’s equities bonds and shares or to totally or partially own Iraqi firms. Banking and insurance laws have also been changed to allow foreign nationals to trade in the banking and insurance sectors. Such changes in legislation have been coupled with many others.

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Notwithstanding such new changes, Civil Code no. 40 of 1951 and the Code of Civil Procedures no. 83 of 1969 (which stand at the focal point of all Iraqi civil legislation rules) remain unchanged and the arbitration law (which is the subject of this study), is still governed by the code of civil procedures, often referred to as the “CCP”. Articles 251-276 of the said code are clear on the arbitration rules governing the country and therefore this study seeks to outline these rules as stipulated under the act. In this manner, we will also explain how new investment laws have revolutionized Iraqi arbitration systems and the potential advantages they pose to the parties taking part in the arbitration process. In addition, we will analyze any terms or concepts from Iraqi legislation or moral philosophies which are likely to be obscure to mainstream European legal scholars who’ve written on the same topic. However, after a comprehensive understanding of investment arbitration in Iraq, this study points out that new arbitration laws encompassing investment arbitration and the enforcement of foreign awards ought to be implemented to forecast a brighter future for investment arbitration in Iraq.

Literature Review

Even though Iraq has its own unique set of arbitration laws, it is important to note that the country is majorly under the influence of Muslim law. It is therefore in order, to say that Islam is one of the primary legislative sources of law for the country (although some form of Roman Jurisprudence has found its way into the country’s legislative composition as well). Any arbitration proceedings taking place in the country is normally considered a domestic issue (even though it may involve a foreign party – according to articles 251-276 of the country’s civil laws), but with the recent changes in legislation, foreign nationals or parties can decide to choose foreign arbitration if they so wish.

Iraq is an active member of the Arab League of nations and in this light; the country is often governed by stipulations from the 1985 Riyadh Convention which provides a common framework through which member states enforce their laws (including arbitration laws). Most states across the globe are common signatories to the New York Convention on the recognition and enforcement of arbitrary awards but Iraq failed to be a signatory to such an agreement and is therefore excluded from the New York Convention. Despite the fact that Iraqi officials have indicated that they are going to sign the New York convention treaty, its failure to do so means that if a foreign national or company is to obtain an arbitration award against an Iraqi company (or individual), it will have to enforce it through the courts.

However, under Iraqi arbitration law, arbitration can be applied in almost all future and existing arbitration cases but provisions to arbitrate are normally included as a separate clause in most investment contracts. This means that the additional arbitration clause is often optional. However, in insurance cases, the insurance clause is often mandatory. The inclusion of the arbitration clause is normally done like any other contractual clause and therefore any dispute arising from the contract is arbitral. Regardless, only disputes which seem to have the potential of compromising the two parties are subject to arbitration, but those which don’t meet such magnitudes are often solved using other mechanisms.

Matters deemed compromising under Iraqi arbitration laws are however well defined under article 704 of Iraqi arbitration laws which stipulate that:

“matters which are capable of being compromised are those, which are capable of being disposed of for valuable consideration, and they must be defined or known. Matters related to public policy or criminal acts may not be subject to arbitration in case of a dispute. But, financial consequences or damages arising from criminal acts or from personal matters may be subject to arbitration”.

At times, many cases arise where a contractual agreement is deemed null and void and an arbitrary clause is still in effect, leading to a conflict of interpretation on whether arbitration still stands valid or is invalid like the contractual agreement. The law is however short of providing a clear framework for analyzing such a dispute because it is blind to such conflicts. However, Saleh notes that it is often assumed by many parties that the arbitration clause is independent of the contractual agreement and therefore it does not die if the contract is rendered invalid. Saleh bases his argument on Article 139 of the Iraqi civil code which stipulates that “in case of an invalidity of a provision of a contract, such invalidity does not affect the rest of the contract unless the invalid provision was the basis of the agreement”.

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With regards to the appointment of arbitrators, there is no clearly defined framework through which arbitration judges are appointed, but certain universal benchmarks (such as the appointed officer must be impartial and versant with relevant laws) are applied. As a recent development in Iraqi law, the country does not forbid the inclusion of foreign arbitrators because there is no such provision in its laws. According to new investment laws, foreign parties have the liberty to choose international arbitration laws to govern their contracts. Section 251 of the Code of Civil Procedures explains that an arbitral agreement can be made in relation to an existing dispute, or in relation to future disagreements that may arise from an investment contract. An arbitration accord may be included in the contract as a section, or in the case of an insurance policy, as a different contract. In both cases, the contract should be in written form, like any valid contract. It should however be noted that only disputes of a compromising nature can be arbitrated. Such matters are described by the Iraq civil code of 1951 as “those which are capable of being disposed of for valuable consideration and they must be defined or known”. This means that matters related to criminal acts or public policy are not subject to arbitration (however, financial damages resulting from criminal acts are subject to arbitration).

The new investment laws introduced in Iraq have changed the country’s arbitral systems because they have changed former arbitral statutes to resemble international arbitral laws. The attitude among Iraqi nationals in 1970 to1980 was to resist taking up international laws in their arbitral processes; however, despite the negative attitude, the country’s economic development led to the use of international law in many contracts binding foreign companies and those operating in Iraq. Consequently, a new arbitration law that covers international arbitration and the enforcement of arbitral awards is now a requirement in Iraqi arbitration law. In turn, foreign investors now have the liberty to choose international arbitration in other foreign jurisdictions to settle their disputes.

After new investment laws are fully implemented in Iraq, parties in dispute now have the liberty to choose an impartial person who has the full legal capacity as an arbitrator. The laws do not contain any provision that excludes the appointment of non-Iraqis as arbitrators; meaning, foreign arbitrators can now preside over arbitral cases in the country. Evidence of the inclusion of international arbitration laws was noted from a case between an already dissolved reconstruction council of Iraq and the Iraqi construction company (which still operates to date) where the two parties referred their arbitration case to a foreign party; after which the decision arrived at, was respected by both parties and compliant by the law (it was however appealed by one of the parties but ultimately approved by the Court of Cassation).

From an independent analysis, the unwillingness of both parties to have their case decided by a local tribunal may have been motivated by the tribunal’s failure to be impartial, and therefore its likelihood of giving an unfair judgment was high. Another reason could be that, since the parties had the liberty to choose an arbitrator, they wanted to choose a person they could trust (who they knew was competent, impartial, and available at the time required). New investment laws have therefore improved this situation, in the sense that, the additional provision of international arbitration laws has made arbitration processes fairer, and increased the level of arbitrator impartiality.

Usually, the number of arbitrators appointed to listen to a specific arbitration case is usually determined by the parties, but often at times, the total number is usually an even number to represent equal interests of both parties. The law stipulates that if one of the parties fails to appoint an arbitrator, such matters may be referred to the Iraqi court, which will ultimately carry out the function instead. When the court makes such a decision on behalf of the party, none of the parties has the right to challenge the court’s decision; majorly because they had an opportunity to choose the correct candidate but failed to do so.

However, in cases where a party feels that the other has appointed a wrong arbitrator (probably on the basis of the same grounds they would use in challenging the appointment of a judge), he/she may request the court to revoke such appointments.

Such grounds for disqualification are summarized by Saleh who refers to:

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“Article 93 of the CCP which provides that an arbitrator can be disqualified by the court for reasons such as the existence of an employment relationship, or if there is a friendship or enmity between the arbitrator/judge and the party concerned, or if the arbitrator/judge has already rendered an opinion on the case, or has accepted presents or payment”.

However, an arbitrator’s appointment can still be revoked under the stipulations of article 91 of the CCP which notes that in case one of the parties has a blood or marriage relationship with the arbitrator, the arbitrator’s appointment may be revoked. Another basis of impartiality, such as an arbitrator should have no interest whatsoever in the case or he/she should not be an agent of any of the parties often apply and therefore, all parties are bound by such stipulations. New arbitration laws in the country have however changed the appointment of arbitrators by making the process more acceptable in international circles. One of the advantages of the new arbitration laws is that it ensures arbitrators have specialized competence which ultimately leads to improved quality of arbitral awards. As opposed to judicial procedures where the judges may not have specialized training and knowledge about the issue in dispute, new arbitration rules ensure that experienced professionals who’ve presided over arbitration procedures before being chosen as arbitrators. Moreover, the parties are at liberty to verify the expertise of the arbitrator at the onset of the case.

In cases where a party feels wronged by a court’s decision to disqualify an arbitrator, he/she may still appeal such a decision (according to article 261 of the CCP act). In cases where an award is already stipulated or a decision is arrived at, and the basis of the arbitrator is later found to be wrong, the award or decision can be revoked on the same grounds. Article 260 of the CCP defines the dismissal or resignation of arbitrators by stipulating that an arbitrator cannot resign (unless sufficient and valid reasons are provided) or be dismissed by a single party.

Even though arbitrary decisions are weighty on both parties, they are never usually deemed part of the Iraqi public order and therefore not bound by laws and regulations governing public policy. Since the powers of the Iraqi courts is extensive and virtually cover all disputes in the country, it is difficult (if not impossible) for parties under an arbitrary dispute to totally disregard the decision of the courts when settling for an amicable solution. However, like most common arbitration processes across the world, there is normally a contention regarding the power of the courts in solving arbitration cases and the power of the arbitration courts when acting independently. Saleh explains that under Iraqi law:

“Arbitration is an exception to the jurisdiction of the court and the court does not by itself enforce an arbitration agreement, if one party to an arbitration agreement refers the dispute to the court unless the other party challenges the jurisdiction of the court at the first hearing on the ground of an existing arbitration agreement. In such an event, the court must suspend the proceedings until an arbitration award is rendered”.

Usually, if the aggrieved party does not challenge the decision of the court during the first session of the case, the arbitrary decision is normally deemed null and void, after which the court will thereafter proceed with its work without compromise. Apart from Iraq being a signatory to the Arab league convention on judicial cooperation, it is also a signatory to the Geneva protocol on arbitration and from these treaties, the provisions (similar to article 253) are enforced because it provides for the stay of the proceedings (under the same conditions as explained in the previous paragraph).

Under Iraqi arbitration laws, procedural law is used as one of the applicable laws in arbitration. In accordance with article 265 of the CCP, all arbitration proceedings should be undertaken according to the procedural laws set out in the same act, unless the parties decide otherwise (meaning that the parties are at liberty to choose other procedural rules, such as the UNICITRAL arbitration rules). Other procedural regulations defined under the CCP, but of an optional nature may also be avoided by the parties, so long as they do not contravene the moral philosophy of the country.

Substantive law is also another applicable law under Iraqi arbitration proceedings which majorly defines the applicable law to be used in any given arbitration dispute. Disputes between two Iraqi parties are usually solved under Iraqi law but the major bone of contention arises when arbitrating foreign disputes in Iraq. Article 25 of the Iraqi civil code bears the answer to this question and it stipulates that:

“The contractual obligations shall be governed by the law of the state wherein lies the domicile of the contracting parties if they have a common domicile; where they have different domiciles the law of the state within which the contract was concluded will be applied unless the contracting parties have agreed otherwise or where it would be revealed from the circumstances that another law was intended to be applied”.

From the above analysis, we see that the Iraqi arbitration law allows for the use of foreign laws when one of the parties is out of the country. However, the application of such a law is subject to the moral philosophies of the country; in that, it shouldn’t go against moral provisions. This means that foreign laws are applicable in arbitration cases if they are not contrary to public order and Iraqi social morals. Majorly, these morals and public orders are defined by the Islamic and Sharia laws.

In the declaration of awards, the Iraqi arbitration court often stipulates that the arbitrators give an award in due time, as stipulated by both parties and current arbitration laws. When parties fail to provide the arbitrators with a specific time period to do so, the arbitrators are usually bound by law to give an award within six months of the commencement of the case. The arbitrators are however limited to offering interim remedies during the course of arbitration (especially regarding cases to do with forgery and other criminal cases). Their powers are also limited; in that, they cannot give any specific punishment to any of the parties who fail to show up for the proceedings. However, in cases where such situations are experienced, the arbitrators have the option of stalling the proceedings and recommending that the parties seek legal redress to any outstanding issues (outside their mandate).

Nonetheless, when giving out an award, the arbitrators must usually come to a unanimous decision, but in instances where their number of arbitrators is uneven, the majority takes the day. Such awards should be written and referenced almost like a court ruling because like other arbitration awards in other countries, the Iraqi arbitration law recognizes awards with the same seriousness it does conventional judicial rulings.

In most cases, after an award is given, the parties take the liberty of enforcing it, although in rare cases (especially if one of the parties is dissatisfied), this may fail to happen. If this fails to happen, the court usually takes the mandate of examining the arbitrary award in a thorough way, to determine the form and laws applied in arriving at the award. Most of the time, this situation comes about when one of the parties is trying to buy time so as not to enforce the award. From this analysis, we note that Iraqi arbitration awards are unique; in that, they must be first confirmed by the court before any enforcement is done. In fact, Saleh affirms that for purposes of awards enforcement, one of the parties must apply to the court for confirmation. Upon confirmation by the court, the award is usually subject to enforcement and it becomes final and binding to all the parties so long as none of them appeals.

Article 274 of the CCP gives the court the power to accept the arbitrary award or reject it in totality or partiality, based on the evaluation of the form and nature of laws used. In instances where the court rejects the award (either in totality or partiality) the court usually recommends that the arbitrators rectify the rejected parts, or issue a new ruling instead. In rare cases, the court may also decide to adjudicate the case, but any decision it makes (either to accept or reject the award) is usually subject to appeal, according to the stipulations of the CCP. This is one avenue through which the arbitration process is frustrated in Iraq because the enforcement of the award is usually extensively delayed. This beats the purpose of arbitration in the first place.

However, from a repeal of international arbitration laws in Iraq, the speed of arbitration proceedings has also been tremendously increased. This is because arbitral awards are not subject to appeals, unlike in previous times where arbitral awards had to be ratified by the courts (which were characterized by long procedures for the same process). The new procedures also take a shorter time as compared to court cases because the arbitrators are more flexible in their schedules as compared to court judges who only work during office hours.

New investment laws have made it cheaper for arbitral cases to be concluded because arbitral awards are not subject to appeals which are usually costly (due to their lengthy procedures). The costs are also reduced because it is simpler and therefore cheaper to enforce an arbitral award obtained through international arbitration processes (now stipulated in Iraq’s arbitral procedures) since international arbitral awards are more acceptable globally.

Confidentiality is also an improvement to Iraqi’s arbitral procedures. If parties want to keep the dispute and its resolution confidential, they will choose arbitration because the proceedings are private, unlike court proceedings which are often highly publicized. Another addition to Iraqi’s arbitral laws is the ability to choose a location where the arbitration is to be done and the language to be used in the arbitration procedure is determined. This is a convenience that the additional statute on international arbitration has given to foreign companies in Iraq. This decision should be initially made in an arbitration agreement because it is easier to agree on a particular place that is convenient before the onset of a dispute. The decision regarding the place of arbitration is not only based on convenience but also on how accommodative (or arbitration) a place is.

With new arbitration laws in place, court procedures are more flexible in handling arbitration cases because the parties are at liberty to design the arbitration process to suit their schedules and preferences. The reason behind this is that, with the exception of some general requirements regarding the location of the arbitration, no particular procedural rules are applicable to international arbitration. From the procedural point of view, therefore, new investment laws providing for international arbitration make Iraqi arbitral proceedings more flexible than the courts.

Another advantage of the new arbitration laws is that the inclination towards new arbitral laws is going to make existent arbitral proceedings informal. This serves as an advantage because the parties are more comfortable and confident to speak frankly about the matter in dispute. This is evidently different from a case heard in court (in a country governed by civil law) where there are already laid down procedures on how the proceedings will take place. In addition, the parties may feel intimidated in such a formal setting and may hold back or emit some information.

In enforcing the arbitrary award, there is usually no time stipulation for the parties to seek approval or rejection of the award by the court. The CCP however has its own stipulations regarding the grounds which the court many annul a given award. Some of the reasons stipulated under article 273 (regarding the annulment of an award) are the invalidity of the arbitration agreement, arbitrators acting beyond their scope of jurisdiction, lack of authentic documentary evidence, and a contravention of the public order of mortality.

Moral philosophy and public order are sometimes vague in definition but the law tries to explain them through examples. These examples are explained under article 130.2 of the CCP procedures. Another major fault noted with Iraq’s definition of moral philosophy and public order is its lack of differentiation between international and local public order. However, other grounds through which the court may annul awards are the detection of an error in coming up with the award (because it will affect the validity of the award); if the arbitrations fail to observe specific rules outlined in the CCP procedures; if there is enough reason (such as the falsification of evidence) to justify the re-hearing of the case or if there is reason enough to challenge the competence of the arbitrators (as stipulated in the above paragraphs).

In as much as the courts have extensive power over the arbitration process, new investment laws touching on arbitration have a significant impact on the enforceability of arbitrary awards. The new arbitration laws are especially characterized by a lack of appeal which can be viewed as an advantage to the winning party. This is true because most often than not, appeals delay the arbitration process extensively, such that, the arbitration process is defeated in the long run (because of slow enforcement of laws). However, the parties can minimize the risk of being dissatisfied by an arbitral ruling (by choosing at least three arbitrators) since an award given by three arbitrators is more accepted than one given by a single arbitrator.

Enforcing is also a key advantage of the new intercession laws because it is not hard to enforce an arbitral award (issued in Iraq) in another country. This is particularly important because the winning party has to enforce the award given to them in another country where the losing party possesses assets. An individual who has agreed to enter into an arbitration accord should ensure that the state in which the other party has property, is signatories to the New York Convention. For instance, foreign parties in Iraq can enforce foreign arbitral awards in the country.

In evaluating the entire Iraqi arbitration process, it is correct to note that the court has extensive power in the entire arbitration process. This is the reason why the arbitration process is not considered conclusive until the process is approved by the court. However, Saleh notes that there are enough reasons why the court is prominent throughout the entire arbitration process (because of the shortcomings which may be experienced in coming up with the award as noted above). Nonetheless, the decision of the court to accept or annul a given award is subject to appeal, but this process has been faulted by many researchers as frustrating the arbitration process and therefore its main aim of solving disputes in an efficient and precise manner is compromised.

With regards to international arbitration in Iraq, any arbitrary process which takes place in Iraq has normally considered a domestic dispute as stipulated by the CCP. However, there are no existent laws in the country concerning international arbitration and this implies that there are no laws barring foreign arbitration either. However, in previous years (during the 70s and 80s) there was a general attitude among Iraqis and the government to resist any attempts to include clauses for foreign arbitration in government contracts because it was perceived retrogressive to the country’s quest to uphold sovereignty. At the same time, such a move was perceived to undermine the local courts. Nonetheless, during this time, Iraq experienced tremendous economic growth brought about by the increase in global oil prices which forced the government to slowly accept clauses of international arbitration in its contracts. Saleh affirms that:

“In this respect, it is pertinent to note that both Iraqi government standard conditions of contracts, namely the General Conditions for Contracts of Civil Engineering Works and the General Conditions of Contracts for Electrical and Mechanical Process have laid down special provisions for dispute resolution, according to which disputes between the parties are referred to national arbitration (subject to the provisions of the CCP)”.

Even though Iraq does not recognize the New York convention in the ratification of arbitrary awards, it still takes part in the judicial ratification of awards of member states participating in the Arab league Riyadh convention, where it is required to enforce awards issued among member states (a responsibility especially defined by law no. 30 of 1928, under the CCP).

Results and Discussions

Iraq’s arbitration laws are somewhat repugnant to the rule of natural justice because of the superiority it gives to the courts. This may ultimately cause sabotage of the entire arbitration process. The international arbitration process of the country is especially wanting but at the same time, the enforcement of foreign awards is equally poor. However, it is a positive move that foreign arbitration is allowed in the country and foreign nationals have been allowed either to choose foreign arbitration or local arbitration laws.

Iraq has in the past had a history of resistance to any foreign influence in its laws. This is probably the reason why it is still hesitant in signing the New York convention. Most of the country’s laws are still retrogressive and not in conformance to the flexibility needed in the 21st-century implementation of laws. For instance, even though the laws of the country allow for foreign legislation, they still give the local courts the final implementation powers of implementing the awards. The courts are also fixed on Islamic jurisprudence (and reliant on Islamic precedence) so the implementation of arbitrary awards becomes a hard task to effect in Iraq. This fact is likely to discourage foreign investments because the dynamism of Iraqi’s arbitration laws is more attractive in theory than in practice.

Perhaps perfected by Saddam’s regime, the country is still slow in adopting international arbitration procedures, which are fair to all and nonbureaucratic at the same time. As noted in previous articles, the biggest problem in the implementation of arbitration awards is the excessive power given to courts to approve arbitration procedures. This avenue is especially risky and quite slow for most investors because conventionally, court proceedings are very bureaucratic and frustrating. This means that the arbitration process equally gains the same attributes. There is therefore a strong need to give arbitration its own independence (from the judiciary) to make the system fast, efficient, and reliable.

Another major problem observed with the Iraqi arbitration process is its subjection of arbitrary awards to moral philosophies of the land. This means that arbitration awards can be considered null and void if they contravene the moral philosophies of the land. Even though this process acts as a big obstacle in making the arbitration process smooth and unbiased, the biggest problem lies in the fact that the moral philosophies of the land are not clearly defined. This means that awards are usually subjected to a variable system of determining moral justice. From the above analysis, we realize that the CCP procedures and laws define such moral philosophies by example and not by text. This creates a lot of “grey areas” in the application of the law, and it may equally prove problematic to the overall implementation of awards. In some cases, such loopholes may be used by unscrupulous people if they want to interpret the law in their own favor. The situation may be further aggravated when one of the parties is a foreign company (or individual) because they may not be versant with such moral philosophies (especially if the law doesn’t define it clearly enough).

However, in as much as Iraqi arbitration laws are counter-progressive, the transition to new laws poses a number of advantages; more so to investors. The transition into new investment laws actually shows Iraq’s commitment to attracting foreign investment as well as improving and developing international trade. In detail, after the enforcement of new arbitration laws, foreign companies can operate with confidence and take up investment areas opened up. These laws have been hailed by many researchers for ‘sweeping ‘away what has been termed as bureaucratic obstacles to foreign investment. “True to these words, foreign investors are slowly streaming into Iraq to invest. However, such developments are said to be subject to future orders. New investors can also soon start to repatriate the initial capital they brought into Iraq, as well as the profits they derive from their investment projects.

In addition, the issue of land leasing which is a pertinent problem for most new investors in Iraq is going to be made more favorable to investors once new investment laws in Iraq take effect. This will mean that foreign and local investors will now lease land for the entire period of the project they undertake. However, they should not exceed the law’s fifty years stipulation. They will also have the guarantee that their completed projects will not be seized or nationalized, except where a court order has been issued. The investors will also have the liberty to ensure their properties with registered local or foreign insurance companies once new arbitration laws take root.

Conclusion

For Iraq’s arbitration laws to be in line with international arbitration laws (for international acceptance in operations), it is required to take up some new measures. For starters, Iraq should strive to understand international arbitration procedures which lead to dispute resolution arising from contracts between Iraqi companies and foreign investors. International arbitration laws have a good impact on foreign investments since they give autonomy to the parties involved and this will solve the dependency Iraqi arbitral processes have on local courts. This will be a major milestone in repealing Iraqi laws. New arbitration laws are highly preferred since parties have the liberty to design the arbitration contract in ways they deem fit for their operations in the country. These new investment rules will define the optimistic vision towards arbitration in Iraq.

However, comprehensive reforms need to be undertaken on Iraq’s investor arbitration laws because they are bureaucratic and slow in keeping up with international arbitration laws. There is especially a strong need to repeal the laws to make them more efficient and fair. This is true because current legislation is more favorable for Arabic investors who understand Islamic jurisprudence (which Iraqi laws stem from). However, other investors from non-Islamic countries may find it difficult to invest in the country because of the difficulty in getting a quick remedy for solving investment disputes. The government is also seen to incline more towards upholding moral philosophies which may not be well understood by all investors (except for Investors hailing from parts of the Islamic world).

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