Iraq has been taking solid actions to adopt laws and policies that foster investment-friendly economic development intending to end systematic corruption, diversify its oil-dependent revenue and better serve its people. UNDP in Iraq has been working closely with the Government and relevant stakeholders to support the country`s economic reform agenda. Specifically, under its Anti-Corruption and Arbitration Initiative Funded by the European Union UNDP has been supporting the government in developing a modern, efficient, and reliable legislative framework aligned with international standards, which can foster foreign investment. 

This includes support for the adoption of the new Law on Arbitration and for the effective implementation of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards or 1958. By facilitating consultation meetings, workshops and discussions with public officials, members of the parliament, judiciary, members of the Bar, students, private sector and civil society, UNDP supports capacity building, knowledge increase, and mainstreaming of arbitration practices across the country.

The Importance of Arbitration for Iraq

An important aspect of safe and robust environment that facilitates flow of capital is the presence of a trusted and efficient forum for resolving disputes that may arise between investors, on the one hand, and local private or public entities, on the other hand. International arbitration and mediation precisely offer this, providing both parties with a neutral and efficient system for managing and resolving disputes. Arbitration is the means of private adjudication between foreign investors and local parties. If a dispute arises, instead of relying on the national courts in the country of any of the parties, the parties refer a dispute to “neutral” international arbitrators who will conduct the process pursuant to the rules of arbitration chosen by the parties. This way the parties have the possibility to choose arbitrators specialized in a specific domain related to the subject-matter of a dispute, conduct the proceedings in an efficient manner and obtain an arbitral award which will be final and legally binding upon them. 

The recognition and enforcement of foreign arbitral awards is secured by the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958. The Convention sets a robust and predictable framework for enforcement of arbitral awards across 172 countries signatories to the Convention. With this effect, the New York Convention is the backbone of the international arbitration system. The Convention entered into force for Iraq in February 2022. 

The new draft Law on Arbitration

Presently Iraq does not have a modern legislation regulating commercial arbitration. The Iraqi Civil Procedure Code (No. 83) dated 1969 contains provisions related to arbitration in its Book III, Chapter 2 which do not take into account the regulations of the New York Convention and best international practices. Since 2021 UNDP is supporting the Government of Iraq in drafting a new Law on Arbitration which will provide modern, robust framework for conduct of arbitration proceedings in Iraq. The new Law will also secure the implementation of the New York Convention. The new Law is expected to be submitted to the Council of Ministers for approval in 2023, after which the Draft will be submitted to the Council of Representatives for review and adoption. Alongside of the drafting efforts, UNDP is organized workshop to build awareness and capacity on the New York Convention and on the best practices of international commercial arbitration among lawyers, judges, students and representatives of businesses.