IRAQ Law and Practice Contributed by: Buraq Al-Hamdy, Waddah Hamed, Sajida Ankouni and Mohammad Jaber, Basrah Obelisk Law Firm Ltd
3. Arbitration 3.1 Prevalence
Restitutionary Relief Courts may order restitution where one party has been unjustly enriched. This typically arises in cases involv- ing invalid contracts, overpayments or transactions lacking legal basis. Declaratory and Ancillary Relief Courts may issue declaratory judgments confirming legal rights and obligations. Ancillary orders may also be granted to give practical effect to the judgment, particularly in enforcement contexts. 2.8 Damages In Iraq, damages are assessed on the basis of proven loss directly resulting from the wrongful act or breach of contract. The courts generally require a clear caus- al link between the breach and the claimed damage, supported by documentary and, where necessary, expert evidence. Compensatory Nature Damages are primarily compensatory rather than punitive. The objective is to place the injured party in the position it would have been in had the breach not occurred, rather than to penalise the breaching party. Assessment Methodology Courts assess damages based on actual and direct loss. Claims for indirect or speculative loss are typical- ly not accepted unless clearly substantiated. Expert reports are frequently relied upon in commercial dis- putes, particularly in cases involving financial loss, construction or technical valuation. Mitigation of Loss The injured party is generally expected to take reason- able steps to mitigate its loss. Failure to do so may reduce the amount of recoverable damages, depend- ing on the circumstances of the case. Judicial Discretion While the legal framework is structured, courts retain discretion in quantifying damages where precise cal- culation is not possible. This is particularly relevant in complex commercial disputes where valuation depends on market or operational factors.
In Iraq, arbitration is recognised as an alternative dis- pute resolution mechanism and is increasingly used in commercial contracts, particularly in cross-border and investment-related transactions. It is most commonly adopted in sectors such as oil and gas, construction and international trade. Arbitration is primarily contractual in nature and depends on an express agreement between the parties. As a result, domestic litigation remains the default forum for resolving commercial disputes, with arbitration used mainly in international or high-value contracts. 3.2 Restrictions on Use of Arbitration Arbitration is permitted in commercial disputes pro- vided there is a valid written arbitration agreement. However, disputes involving public policy, criminal matters or rights that cannot be waived by agreement are not arbitrable. In addition, arbitral awards may be refused enforce- ment if they conflict with Iraqi public policy, includ- ing principles derived from Islamic law or mandatory statutory provisions. 3.3 Advantages of Arbitration The perceived advantages of the use of arbitration as a dispute resolution mechanism in Iraq include: • recognition of party autonomy to select arbitration through written agreement; • flexibility in procedural rules, language, applicable law and seat of arbitration; • ability to resolve international disputes under neu- tral frameworks, supported by Iraq’s accession to the New York Convention; • availability of specialised decision-makers in com- plex commercial disputes; and • potential for more adaptable procedures compared to court litigation. 3.4 Disadvantages of Arbitration The perceived disadvantages of the use of arbitration as a dispute resolution mechanism in Iraq include:
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