SUDAN Trends and Developments Contributed by: Omer Ali Abdelrahman, Omer Ali Law Firm
follow. Invalidity would be limited to the interest only and would not extend to the principal debt. However, under the recent legislation referred to above, which is designed to make conventional bank - ing permissible side by side with Islamic banking (which was, prior to this legislation, the only banking system permissible in Sudan), Section 110 has been amended to exclude “financial and banking business in accordance with the conventional system” from the application of this Section. It could be argued that this exclusion should extend to cases of enforcement of arbitration (or at least international arbitration) awards in Sudan, so as to make it permissible to enforce arbitration awards, including interest. However, one should expect counter-arguments on the basis that allowing interest would constitute a violation of Islamic law, which is considered a primary source of law in the country, and that it was not a wise step by the transi - tional government to open the door for exclusions in the first place. Potential Trends of International Arbitration If the political crisis and the ongoing war are resolved in a positive manner, and if any future government succeeds whether in terms of economic reform, regu - latory reform and political stabilisation of the country, the expectation is that Sudan will witness a gradual flow of international investors. Sudan is rich in natural resources, and the potential is high for foreign invest - ments in certain areas such as agriculture, livestock, tourism, mining, and oil and gas. Furthermore, the country was in dire need of developing its poor infra - structure even before the current war; huge damage was caused to infrastructure by the war, as well as to its banking and financial service sector and other areas of economic activities, all of which could be tar - gets for foreign investments. The aforementioned laws are mainly designed to encourage the flow of foreign investments into these and other industries. Typically, contracts with foreign investors provide for dispute resolution through international arbitration. The Investment Act provides for the settlement of dis - putes involving foreign investors under one of a host of international and regional treaties to which Sudan is a signatory. The Act provides that, in the case of a dispute regarding an investment, such dispute shall
be referred to a specialised court, unless the parties agree to refer it to arbitration or reconciliation. This applies except for disputes governed by one of the following treaties to which Sudan is a signatory: • the Unified Agreement for the Investment of Arab Capital in Arab States 1980; • the Agreement for Settlement of Investment Dis - putes among Arab States 1974; • the Agreement for Settlement of Investment Disputes between States and Nationals of Other States 1965; • the General Agreement for Economic, Technical and Commercial Co-operation among Member States of the Islamic Conference 1977; and • any other agreement to which Sudan is party. Recently, Sudan acceded to the 1958 New York Con - vention on the Recognition and Enforcement of For - eign Arbitration Awards, and thus became the 159th Contracting State to this Convention. Sudan is also a Contracting Party to the Riyadh Arab Agreement for Judicial Cooperation 1983, which regulates recogni - tion and enforcement of arbitration awards and court judgments among Contracting Parties. This Conven - tion is signed by 18 Arab countries. Local Law: a Case for Reform? The fact that Sudan is party to the aforementioned international and regional agreements – all of which adopt international arbitration as the main mechanism for resolution of disputes involving foreign investors, whether as regards arbitration proceedings or enforce - ment of international arbitral awards – is a welcome development. However, a question that may be asked is: are the rules of the Sudanese domestic arbitration law sufficient to give foreign investors the comfort they seek when planning to invest in Sudan? It can be argued that there are certain areas where Sudanese domestic arbitration law is less favourable to foreign investors compared with the UNCITRAL Model Law on International Commercial Arbitration, such as: • the limited scope and the uncertainty regarding preliminary measures before Sudanese courts in arbitrations conducted outside Sudan;
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