IRAQ Law and Practice Contributed by: Buraq Al-Hamdy, Waddah Hamed, Sajida Ankouni and Mohammad Jaber, Basrah Obelisk Law Firm Ltd
1. Dispute Resolution Methods 1.1 Main Dispute Resolution Methods In Iraq, commercial disputes are primarily resolved through litigation before the civil courts, which constitute the general jurisdictional framework for civil and com- mercial matters. The court system operates under a civil law structure and remains the default mechanism where no alternative dispute resolution clause is agreed. Arbitration is also recognised under Iraqi law as a con- tractual dispute resolution mechanism. It is available where parties expressly agree to submit disputes to arbi- tration, and it is commonly incorporated in commercial contracts as a parallel private adjudicatory process. In addition to litigation and arbitration, parties may also rely on amicable settlement mechanisms such as negotiation or contractual escalation procedures. These mechanisms are not standalone judicial pro- cesses but are frequently incorporated within com- mercial agreements as preliminary steps before formal dispute resolution. 1.2 Choice of Dispute Resolution Method The choice of dispute resolution mechanism in Iraq is primarily driven by the nature of the transaction, the profile of the contracting parties and the level of contractual sophistication. In purely domestic transactions, parties typically rely on litigation due to familiarity with court procedures and the absence of complex cross-border enforce- ment considerations. This is particularly the case in lower-value commercial relationships where proce- dural cost and accessibility are key factors. In contrast, in cross-border and internationally struc- tured transactions, parties generally opt for arbitra- tion, particularly where foreign investors or multina- tional corporations are involved. The decision to adopt arbitration is typically influenced by considerations of neutrality, enforceability in multiple jurisdictions and perceived procedural flexibility. Amicable settlement mechanisms are commonly includ- ed as a contractual risk-management tool rather than as a standalone choice. They are typically used to preserve
ongoing commercial relationships and to avoid escala- tion into formal proceedings where possible. 1.3 Key Dispute Resolution Trends Gradual but Uneven Shift Towards Arbitration in Cross-Border Transactions In Iraq, there is a gradual but uneven shift towards the use of arbitration in cross-border and high-value commercial contracts. This trend is most visible in sectors such as oil and gas, EPC and infrastructure, where international counterparties consistently seek arbitration clauses to mitigate perceived uncertainties associated with domestic court proceedings. How- ever, this shift remains selective rather than systemic, as arbitration is still primarily confined to contracts involving foreign investors or internationally structured transactions. Continued Structural Reliance on Court Litigation Despite the increased inclusion of arbitration clauses in sophisticated contracts, litigation before the Iraqi civil courts continues to serve as the primary dispute resolution forum in practice. This is largely due to the absence of arbitration agreements in many domes- tic contracts and the established role of the courts in resolving commercial disputes. The judiciary there- fore remains the central enforcement and adjudicatory mechanism within the Iraqi legal framework, particu- larly for purely local disputes. Growing Sophistication in Dispute Resolution Drafting A clear trend is the increasing sophistication of dis- pute resolution clauses in commercial contracts. Par- ties are more frequently adopting structured, multi- tiered mechanisms combining negotiation, amicable settlement, and arbitration or litigation. This reflects a more risk-conscious contracting approach, particular- ly in long-term projects where maintaining operational continuity is a priority. Enforcement and Predictability as Key Drivers of Forum Selection Forum selection is increasingly influenced by enforce- ment strategy and predictability concerns rather than purely procedural preference. Parties are giving great- er attention to the enforceability of judgments and arbitral awards, both within Iraq and internationally.
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