Arbitration and court claims are the principal formal mechanisms for the resolution of supply chain disputes in Iraq. The choice between them engages substantive strategic considerations, including the cross-border or domestic character of the dispute, the prospect of enforcement, the desire for confidentiality and procedural flexibility, and the cost and duration considerations. The framework for arbitration is established principally by the Iraqi Civil Procedure Code No. 83 of 1969 at Articles 251 to 276, supplemented by Iraq’s accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) effective in 2022. The framework for court proceedings is established by the Civil Procedure Code and the substantive law applicable to the dispute.
Iraqi Arbitration Framework
The Iraqi arbitration framework is established by Civil Procedure Code No. 83 of 1969, which addresses:
- The agreement to arbitrate, including the form requirements and the matters that may be submitted to arbitration
- The appointment of arbitrators, including the qualifications and the procedure for appointment
- The conduct of arbitral proceedings, including procedural arrangements and the application of substantive law
- The making of the award, including the form requirements and the publication of the award
- Recourse against awards, including the grounds for setting aside
- The enforcement of awards before the Iraqi courts
The framework continues to be supplemented by the application of the Civil Code provisions on the enforcement of agreements and by international arbitration practice.
Iraq’s Accession to the New York Convention
Iraq deposited its instrument of accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 4 November 2021, with the Convention entering into force in respect of Iraq on 2 February 2022. The accession is a substantial development for international supply chain dispute resolution involving Iraqi counterparties, as the Convention provides for the recognition and enforcement of arbitral awards between contracting states subject to limited grounds for refusal. Operators with cross-border supply chain relationships involving Iraqi counterparties may now structure their arbitration arrangements with substantially greater confidence in the cross-border enforceability of awards. The accession does not affect awards rendered before the entry into force date, the enforcement of which proceeds under the prior framework.
Arbitration Agreements
The arbitration agreement is the foundational instrument of arbitration, conferring jurisdiction on the arbitral tribunal and excluding (subject to defined exceptions) the jurisdiction of the courts. Under Iraqi law, the arbitration agreement must satisfy:
- Form requirements, including, in general, that the agreement be in writing
- Substantive requirements, including the capacity of the parties to agree to arbitration and the arbitrability of the matters submitted
- Definitional requirements, including sufficient identification of the matters submitted, the arbitral tribunal or the mechanism for its appointment, and the procedural framework
The drafting of arbitration clauses in supply contracts should be undertaken with care, as defective clauses may engage subsequent disputes on the validity and scope of the agreement, with delay and cost implications for the substantive resolution.
Drafting Considerations for Arbitration Clauses
Substantive arbitration clauses in supply contracts engaging Iraqi counterparties should address:
- The scope of arbitration, including the matters submitted and any carve-outs
- The arbitral institution or, in the case of ad hoc arbitration, the rules applicable
- The seat of arbitration, which determines the procedural law and the supervisory courts
- The number and method of appointment of arbitrators
- The language of the arbitration
- The substantive law governing the merits of the dispute
- Provisions on confidentiality and on emergency relief
- Provisions on costs
The interaction between the arbitration clause and the broader contract, including provisions on the assignment of the contract, on joinder of related parties, and on the consolidation of related arbitrations, should be addressed expressly where the matters are material.
Arbitral Institutions
Arbitral institutions engaged in arbitrations involving Iraqi supply chain disputes include:
- The International Chamber of Commerce (ICC) International Court of Arbitration, for substantial international disputes
- The London Court of International Arbitration (LCIA), for disputes with UK or international connections
- The Dubai International Arbitration Centre (DIAC), for disputes with UAE or regional connections
- The Cairo Regional Centre for International Commercial Arbitration (CRCICA), for disputes with regional connections
- The Bahrain Chamber for Dispute Resolution (BCDR), for disputes with GCC connections
The choice among institutions engages considerations of the institution’s experience with disputes of the relevant type, the predictability of the institution’s rules and practice, the prospect of enforcement of awards rendered under the institution’s auspices, and the cost considerations of the institution’s fee scales.
Seat of Arbitration
The seat of arbitration determines the procedural law applicable to the arbitration and the supervisory courts. Common seats for arbitrations involving Iraqi parties include:
- Iraqi seats including Baghdad, where Iraqi procedural law applies and the Iraqi courts exercise supervisory jurisdiction
- Regional seats including Dubai (under DIAC rules with the DIFC or onshore procedural law), Abu Dhabi (under ADGM procedural law), Cairo, and Manama
- Major international seats including London, Paris, Geneva, and Singapore, each offering a developed arbitration framework and a substantial body of supportive jurisprudence
The choice of seat is one of the most consequential drafting decisions in the arbitration clause and should be made with substantive attention to the supervisory framework and the enforcement implications.
Iraqi Court System
The Iraqi court system engages multiple tiers, with civil and commercial supply chain disputes proceeding through:
- The Court of First Instance, which addresses substantive civil and commercial matters at first instance
- The Court of Appeal, which addresses appeals from the Court of First Instance
- The Federal Court of Cassation, which provides the highest level of review on questions of law
- Specialised commercial chambers within the Courts of First Instance in major cities, which support more substantive handling of commercial matters
- Administrative courts for disputes engaging Iraqi public entities and administrative law matters
The Iraqi court system continues to develop, with reform discussions ongoing regarding judicial efficiency, specialised expertise, and broader modernisation.
Court Proceedings
Civil and commercial court proceedings in Iraq engage the procedural framework established by the Civil Procedure Code No. 83 of 1969. The typical procedural progression includes:
- Filing of the statement of claim with supporting documentation and payment of court fees
- Service of the claim on the defendant
- Exchange of pleadings between the parties
- Presentation of evidence including documentary evidence, witness testimony, and expert reports where engaged
- Oral hearings before the court
- Judgment of the court
- Enforcement proceedings before the enforcement directorate of the court
Substantial commercial disputes commonly engage multi-year resolution timelines through the trial and appellate stages.
Enforcement of Foreign Arbitral Awards
Following Iraq’s accession to the New York Convention, foreign arbitral awards rendered after the entry into force date are enforceable in Iraq under the Convention framework, subject to the limited grounds for refusal of enforcement under Article V of the Convention. The procedure for enforcement engages an application to the competent Iraqi court, the presentation of the authenticated award and the arbitration agreement, and the conduct of any opposition proceedings on the limited grounds of refusal. The framework offers substantially greater predictability than the prior position, which engaged enforcement on the basis of reciprocity and broader principles.
Enforcement of Foreign Court Judgments
The enforcement of foreign court judgments in Iraq engages a substantively different framework from the enforcement of foreign arbitral awards. The framework is based on principles of reciprocity, bilateral treaties for the recognition of judgments, the conformity of the foreign judgment with Iraqi public policy, the jurisdiction of the foreign court assessed under Iraqi standards, the finality of the foreign judgment, and the absence of procedural defects in the foreign proceedings. The framework offers materially less predictability than the Convention framework for arbitral awards, with the consequence that parties anticipating enforcement in Iraq commonly favour arbitration over foreign litigation.
Strategic Selection
The strategic selection between arbitration and court proceedings for Iraqi supply chain disputes should engage:
- The cross-border or domestic character of the dispute, with arbitration favoured for cross-border disputes by reason of enforcement considerations
- The prospect of enforcement of the eventual decision, with the New York Convention framework substantially supporting arbitration in cross-border contexts
- The desire for confidentiality, with arbitration generally confidential and court proceedings generally public
- The desire for procedural flexibility and arbitrator expertise
- The cost and duration considerations, which favour arbitration in some contexts and court proceedings in others
- The availability of interim and provisional measures
- The relationship to broader proceedings, including parallel proceedings and group disputes
How We Can Help
Etihad Law Firm represents parties in the resolution of Iraqi supply chain disputes through arbitration and court proceedings, including the drafting of arbitration clauses and dispute resolution provisions in supply contracts, the conduct of arbitral proceedings before the principal international institutions and in ad hoc arbitration, the conduct of court proceedings before the Iraqi courts at all levels, the enforcement of arbitral awards under the New York Convention and the enforcement of court judgments, and the conduct of provisional and interim measures.