Despite a common misconception, the Unified Agreement for
the Investment of Arab Capital in the Arab States (the Arab
Investment Agreement) still applies with regard to investment
guarantees and protections in the region.
An amendment to the Arab Investment Agreement was signed in
January 2013 (the Amended Agreement). However, only five Arab
states have ratified this. These are: Iraq; Jordan; Kuwait;
Oman and Palestine (the ratifying states).
As of April 24 2016, the Amended Agreement will enter into
force between the ratifying states. The Arab Investment
Agreement will continue to govern investment guarantees and
protections in most Arab states until the League of Arab States
is notified of further ratifications.
According to the agreements, an Arab investor is an Arab
citizen (natural or juridical person) who owns capital which he
invests in the territory of an Arab state of which the Arab
citizen is not a national.
The agreements provide Arab investors with most of the
investment protections and guarantees available under public
international law. These include: national treatment,
non-discrimination and most-favoured-nation treatment;
protection against expropriation; provision of fair and
equitable treatment; full protection and security; prohibition
of performance requirements; and the free movement of capital
and revenues, the Arab investors and their families.
Both agreements also provide a way to resolve disputes
between the Arab investor and the host state, its public or
local institutions or authorities, with respect to the
application of the agreements. The Arab Investment Court (AIC)
has jurisdiction, by default, over these disputes. The AIC is
seated in Cairo.
However, the parties are free to submit their investment
dispute to the national courts of the host state. In so doing,
they should be mindful that the Arab Investment Agreement and
the Amended Agreement include a so-called fork in the road
provision, which prevents a party who submits the dispute to
one forum from submitting it to the other.
In making their choice, parties to the dispute should
consider the relative speed and effectiveness of litigation
procedures before the AIC and the national courts of a host
Procedures before national courts usually include several
levels of jurisdiction before a judgment becomes final.
Specific procedures have to be followed thereafter before a
judgment becomes enforceable. Procedures before the AIC are
relatively quick and final. In practice, most of the AIC's
available judgments were rendered less than two years from the
initiation of a case.
The fast resolution of disputes submitted to the AIC,
coupled with the finality of its judgments, may give this forum
an advantage over resorting to national courts.
In fact, according to the Arab Investment Agreement and the
AIC statutes, the AIC's judgments are final and enforceable in
states that are party to the Agreement as if they were final
and enforceable judgments issued from national courts.
The only way to challenge an AIC judgment is through a
so-called request for reconsideration to be made before the
AIC. A challenge will only be accepted on a limited number of
(i) severe violations of the Arab Investment Agreement and
the AIC statutes;
(ii) fraud or forgery; or
(iii) the emergence of new events that may have a
substantial effect on the judgment.
Although quick, procedures before the AIC are two-fold. The
first stage consists of submissions, and possibly hearings.
These take place before the AIC commissioner. The second stage
consists of hearings, and possibly submissions, before the AIC
The AIC commissioner concludes his mission by submitting an
opinion to the AIC judges on the dispute. This means, under the
AIC procedures, parties to the dispute are able to evaluate the
strengths and weaknesses of their case while retaining the
ability to amend their pleadings and submit other memorials
before the AIC judges.
Used properly, these two-fold procedures provide parties to
a dispute with a tool to refine and improve their arguments.
This should lead to a more satisfactory resolution of the
In light of the above, the AIC seems to emerge as one of the
best ways to settle investment disputes between Arab investors
and the Arab states hosting their investments.