Arbitration is a form of alternative dispute resolution, where parties to a dispute may appoint arbitrators to resolve a matter outside the judiciary. This method has become highly favorable worldwide as it provides a more efficient and speedy resolution, especially for businesses looking to cut the cost of judiciary procedures wherein the time it takes to resolve a matter may incur expenses higher than the cost it requires to undergo arbitration. Moreover, Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions.

The rules and regulations regarding Arbitration in Libya have been previously specified in the Code of Civil and Commercial Proceedings (the “Code”), but in light of Arbitration being an evolving and ever-changing method of dispute resolution that requires new terms to complement the current world industries, a New Arbitration Law has been proposed. Below are the major points and differences noted in the new law.

The first major difference is seen in the way the stipulation of arbitration can take place. The Code has stated one requirement for this stipulation, wherein it can only be established if its written. The new law, however, expands on this condition wherein the written agreement to arbitrate may be “formal, customary, traditional, or electronic.” Further, it is established that any clear reference to a model contract or international convention, or any document containing arbitration clause shall be considered an agreement to arbitrate. In regard to electronic arbitration, the new law contains a separate chapter detailing its terms and its validity. 

The new law also emphasizes that the condition to arbitrate shall be separate from the main contract in terms of validity of the contract, wherein if the contract is not valid it does not affect the legitimacy of the arbitration agreement. An exception to this condition is if the contract is wholly null and void (i.e. if it is conducted with a minor), then the condition to arbitrate shall also be null and void.

Regarding the arbitration award, the Code specifies that the award may only be enforced by an order issued by the judge of urgent matters of the court in whose clerk’s office the original award was deposited, based on a request from one of the interested parties, after reviewing the award, agreeing to the arbitration agreement, and verifying that there is nothing preventing its enforcement. The enforcement order shall be placed at the end of the original award. However, the new law stipulates that an arbitral award has the force of res judicata if it is issued in Libya. The competent court must append the arbitral award with the enforcement stamp upon request from one of the parties, and the award shall be enforceable automatically by the parties or compulsorily with the permission of the President of the Court of Appeal in whose jurisdiction the seat of arbitration is located.

Another notable addition to the Arbitration procedures in Libya is the enforcement of foreign arbitral awards. The new law stipulates the implementation of foreign arbitration awards in Libya according to the principle of reciprocity, based on a written request submitted to the President of the Court of Appeal, and the President of the Court must issue an order to implement the arbitration award and append it with the executive stamp.A noteworthy addition to the new law is the recognition of arbitration centers as an institution, as a legal entity, deriving its legitimacy from a decision issued by the Minister of Justice and published in the Official Gazette. This cancels the need for intervention by the judiciary in terms of location of dispute, as it allows the parties to resort to a legitimate institution that provides the required services to efficiently finalize the matter.