The North African legal situation
In transportation affairs, an involvement in legal disputes cannot always be avoided. For this reason, it is even more important to know how the acknowledgment of foreign legal decisions and arbitration awards is handled in North African countries where the Arab Spring took place. Legal expert Eckhard Boecker provides an overview of the current situation and the expected trends.
Being in the right and receiving justice are two completely different matters. The following overview will show to what extent foreign legal decisions and arbitration awards are recognised and enforced in some of the countries in the Arab League. Whether Islamic law will attain greater importance in North African legal systems in the wake of the Arab Spring cannot yet be predicted. If yes, then this could also affect economic laws in the region, which are largely based on the French model.
An attempt to capture the legal reality in every country in the Arab League would go beyond the scope of this article. For this reason, the following discussion focuses on the North African countries of Tunisia and Morocco. A brief glimpse over the borders is provided and the most import aspects of the legal situation in Libya, Algeria, Mauritania and Sudan are discussed.
The situation in Tunisia
A bilateral agreement is the decisive legal basis for recognising a legal verdict reached in a foreign country, and the ability to enforce it. Bilateral agreements exist between Tunisia, which is also a member of the Euro-Mediterranean Association Agreement, and Germany and Switzerland, for example as well as with other countries. However, the winner of a foreign court proceeding must consider that a verdict is not sufficient per se in order for it to be recognised in Tunisia.
More prerequisites must be met for a foreign verdict to be acknowledged in Tunisia. This includes the requirement that the verdict must be binding, that is to say legal means such as an appeal can no longer be filed by the losers. In addition, the recognition of the verdict must not contradict the so-called public order.
The decision must also have been made in a constitutional country, meaning to say that the verdict was not won through fraudulent actions. A legal dispute in Tunisia may also not be pending in a foreign country if, for example, a lawsuit has already been filed elsewhere against a Tunisian company. If the foreign legal decision is not compatible with verdicts handed down in Tunisia, then the foreign verdict is not recognised. This is also the case if a Tunisian company defending itself was not legally summoned and/or not summoned in the time stipulated in the foreign country, and thus could not join the court proceedings as a consequence.
Recourse to a court of arbitration
In international contracts, contractual partners ever more frequently agree to allow various contractual concepts to be rectified in a court of arbitration, such as those based in London, Paris or Singapore. This means that regular courts will not assess or decide on a legal dispute.
For the recognition and enforcement of foreign arbitration awards in Tunisia, the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (subsequently referred to as the New York convention herein) is of particular significance. This convention regulates the recognition and enforcement of arbitration awards that are made in a foreign country. Libya and Sudan have incidentally not joined the New York convention.
No rule without an exception
Tunisia has accepted the New York convention, with the reservation that the acknowledgment be based on reciprocity. As a result of the principle of elastic reciprocity, no foreign verdict can be accepted in Tunisia if a Tunisian judgment would not be likewise accepted in the relevant country. This practice also applies in Morocco.
In addition, only commercial arbitration awards are acknowledged in Tunisia. It is therefore especially difficult to push through foreign arbitration awards when a legal dispute involves public authorities. In this case, article 7 of the Tunisian arbitration act of 1993 limits the acceptance and implementation of foreign arbitration awards. The subjective arbitrability of state-run companies was subsequently limited, with the result that a dispute can only be subject to arbitration with the consent of specific committees or persons (agency head, minister, cabinet).
Recommendations for Tunisia
In Tunisia, it is generally possible to implement ordinary court decisions and arbitration awards from foreign countries if the prerequisites are met. In light of the fact that 148 countries had already signed the New York convention by March 2013 it is likely that an arbitration agreement can be reached when logistics transactions are conducted with Tunisian companies. Consequently, the ordinary courts are excluded.
The Moroccan legal situation
There is bilateral recognition between Morocco and France. With some European countries, however, there is no treaty on the recognition and implementation of national court decisions. A case winner, that is a foreign business partner, therefore only has, for the enforcement of claims, recourse to Moroccan law, which regulates the recognition of foreign court decisions in Article 430 and 431.
Even here there are similar requirements to those in Tunisia to be noted if the civil verdict is to be acknowledged. There are some commonalities. The defending Moroccan company must be notified of the court case and be represented, the verdict must be handed down properly (not in a so-called rogue state) and the tone of the verdict must not violate the so-called public order in Morocco either.
Contrary to Tunisia, the deciding foreign court must, however, be objectively responsible for the relevant legal dispute against Moroccan logistics and transport companies. In addition, Moroccan law does not require a guarantee of reciprocity for the recognition of foreign civil law judgments. This means that the recognition of a foreign civil verdict is not prohibited if another country does not recognise and enforce a Moroccan court verdict. In Morocco, the court of first instance at the headquarters of the company against whom enforcement is sought is objectively responsible for enforcing civil verdicts in the country.
Moroccan authorities generally recognise and enforce foreign arbitration awards. However, this North African country does not accept the decision of courts of arbitration from countries that have not signed the New York convention. Given that 148 countries have signed the convention, this point will probably play a very minimal role in practical application.
Algeria: rules for investors
For many countries there are not international agreements on the recognition and enforcement of legal verdicts. Algeria is part of the New York convention and generally acknowledges foreign verdicts of courts of arbitration. Prerequisites require that no trade dispute exists, that the acceptance of the New York convention has been completed and that the public order is not impaired by an arbitration award. The guarantee of reciprocity is, from the Algerian point of view, a prerequisite for acceptance.
In Algeria, the verification of public order is of special significance, as the participation of foreign investors in Algerian businesses as well as the movement of capital to and from Algerian companies has been strictly regulated and limited since 2009. It can therefore be assumed that an Algerian court will keep a close eye on the observation of these restrictions before recognising a foreign arbitration award.
Mauritania has only a few international treaties with foreign countries. Therefore, the recognition and enforcement of a verdict is only possible through Mauritanian law.
Over and above this, Mauritania is a member state of the New York convention.
The special cases of Sudan and Libya
In Sudan, foreign verdicts can similarly be recognised only in the framework of Sudanese law if there is no international treaty with the country of consignment for a foreign freight forwarder or logistics company. Sudan is not a member of the New York convention.
Likewise, in Libya there are few international treaties with foreign countries. For example, there are no agreements with the USA or Germany, to name just two nations. There is only the possibility of reaching a legal objective via Libyan civil court proceedings. Libya is also not a member of the 1958 New York convention.
Remain realistic in practice
The examples above show that there are possibilities to enforce foreign court verdicts or arbitration awards in the countries of North Africa. However, it also follows that wherever the acknowledgment of a foreign arbitration award is guaranteed by the rules of the New York convention, the enforcement falls to the local authority concerned. The effectiveness of the legal action can therefore vary. Not every enforceable judgment can be successfully enforced in the end. Legal enforcement in foreign countries is generally very time and cost-intensive, and the outcome is unpredictable. The recognition process brings with it risks on the part of the company.
The Union for the Mediterranean, which has focused on continuing the Barcelona process since 2008, has shown up a new perspective. Mediterranean littoral states have also defined cooperation on a legal level (execution of contracts, enforcement of decisions, etc.) as an objective in the constitutive act. However, implementation is still pending.
Given the great difficulties discussed here in the enforcement of ordinary legal verdicts with regard to contractual partners located in the Arabic countries, transport and logistics companies should consider whether or not an arbitration clause should be preferred to an ordinary legal process.