Iraq Law update: Accession to The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Middle East

The Parliament of the Republic of Iraq ratified on 4 March 2021 the long-awaited law on the accession of Iraq to The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) and the law (the “New York Convention Law”) was published in the Iraqi official gazette on 31 May 2021 (the “Date of Entry into Force”).

Back in February 2018, the Iraqi Cabinet had endorsed Iraq’s accession to the New York Convention, in an effort to affirm to the international community Iraq’s intention to provide legal protection to foreign investors. Full accession however had remained subject to ratification by the Parliament. Article 12 of the New York Convention states that the Convention enters into force for a State acceding to it on the ninetieth day after the State deposits its instrument of accession. On 23 March 2021, an announcement was published on the official website of the New York Convention which read that "Iraq becomes the 168th State Party to the New York Convention" and that "the Convention will enter into force for Iraq once the law is published in Iraq’s official gazette".

The Law was published in the Iraqi Official Gazette on 31 May 2021 and provides that it enters into effect upon publication.

The Law as published in the Iraqi Official Gazette states that Iraq accedes to the New York Convention with the following reservations:

  1. The Convention’s provisions are inapplicable towards Iraq on arbitral awards rendered prior to the Date of Entry into Force (non-retroactivity exception)

  2. The Convention is inapplicable in relation to recognition and enforceability of awards rendered in other Member States unless other Member States recognize and enforce arbitral awards rendered in Iraq. (condition of reciprocity)

  3. The Convention is inapplicable by the Republic of Iraq except on conflicts arising from contractual and non-contractual relations which are considered commercial under Iraqi Law. (condition of commercial relations)

The arbitration procedures applicable in Iraq are governed by the Civil and Commercial Procedures Law of 1969 (the “CCP”). Arbitral awards are enforceable before the relevant Iraqi execution authorities only when the competent (local) court accepts the award, based on request by one of the parties to the arbitration. According to the relevant provisions of the CCP, parties to the arbitration may plead for the annulment of the arbitral award, or the competent court may do so on its own, in the following instances:

  1. If the arbitral award was not made in writing or the arbitral agreement is invalid;

  2. If the arbitral tribunal exceeded its agreed-upon powers;

  3. If the arbitral award violates public policy and morals, or provisions of the arbitration law found in the CCP;

  4. If reasons for retrial have emerged; or

  5. If there was a material error in the arbitral award rendered or in the arbitral proceedings and this material error affects the validity of the arbitral award. 

Application in the Kurdistan Region of Iraq

It is worth noting that the Iraqi New York Convention Law is a legal instrument of federal Iraq, and it remains to be seen whether foreign arbitral awards would find their way to local enforcement in the Kurdistan Region of Iraq based on Iraq’s accession to the New York Convention. Article 110.1 of Iraqi Constitution provides exclusive authorities to the Federal government in ratifying international treaties. Furthermore, Article 115 of the Constitution can be understood to mean that the Kurdish government can only legislate in two respects:

  1. in areas not exclusively committed to the federal government (as listed in Article 110 of the Constitution); and

  2. in areas over which authority is shared between the federal and regional governments (those "shared" areas are listed in Articles 112 to 114 of the Constitution).

For additional information, contact: Malek Takieddine.