by Sujoy Sur
Iraq has finally acceded to ICSID, and the sigh of finality is resounding because it is the first globally recognised and followed international arbitration framework to which it has acceded to. The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) was signed today on behalf of the Republic of Iraq by H.E. Dr. Sami Raouf Al-Araji, Chairman of the National Investment Commission.
Iraq has been an unfriendly Investment destination because of its non-accession to any of the major Investment Arbitration Settlement mechanisms. Iraq clearly was not interested in ratifying the UNCITRAL mechanism, but in 2013 there were talks about the Iraqi parliament passing a law permitting Iraq’s ratification of the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States of 1965 (ICSID). ICSID was preferred over New York convention probably due to political and practical reasons.
Iraq on an international level had previously ratified 4 conventions, 3 of them being regional. They were:
(i) The Arab Convention on the Enforcement of Foreign Judgments and Arbitral Awards of 1952 (Arab League Convention).
(ii) The Riyadh Convention on Judicial Cooperation of 1983 (Riyadh Convention).
(iii) The Arab (Amman) Convention on Commercial Arbitration of 1987 (Amman Convention).
(iv) The Geneva Protocol on Arbitration Clauses of 1923 (Geneva Protocol).
The Arab and Riyadh convention are strictly regional treaties, thus, having practically no relevance in the modern scheme of global investment and trade. Plus, they have become practically inoperative as most of the parties either have ceded from it or have acceded to UNCITRAL or ICSID conventions, participating actively as a part of their mechanism; while the Ammam convention never became operative in the first place. With respect to Geneva Protocol, Iraq had agreed to only recognise the “validity of an arbitration agreement”, as opposed to guarantee the enforcement of an award made pursuant to it, under Article 1. Under Article 3, it undertakes to “ensure the execution” of awards made on its territory only “in accordance with the provisions of its national laws”. 
Iraq’s hesitation to subscribe to a mechanism probably stemmed from factors such as : i) Lack of experienced arbitrators, ii) the presumed bias which the “West” might have against Iraqi laws or the bias against the western system of adjudication, as can be seen in the case of an often-cited case of Petroleum Development (Trucial Coast) Ltd v Sheikh of Abu Dhabi,1 where it was held that English law would prevail over Sharia Law, which was considered to be in violation to the parties agreement to apply Sharia law for dispute settlement. But with the growth of commercial hubs like Dubai, Abu Dhabi in the region, there is no dearth of arbitrators, firms or judges who would understand the case from a “non-western” point of view or who would not understand the Iraqi laws from a regional perspective. Plus, a leap into the globalized scheme of dispute settle was needed to encourage the development of international arbitration practice in Iraq.
Iraq has been attracting considerable investment in the past few years. The Government of Iraq (GOI) has publicly stated its commitment to attract foreign investment and plans to invest $357 billion in energy, building and services, agriculture, education, transportation, and communications sector projects under its five-year National Development Plan. In 2013 the Iraqi economy grew by 4.2% and investment expenditures in oil production reached $20 billion. Inward FDI grossed $2.5 billion in 2012. Real estate is the largest non-oil area of foreign investment in Iraq. Despite this, the world bank ranked Iraq ‘151’ out of 189 countries in “ease of doing business”. Iraq probably does not want to lose out on any future investment and opportunities, especially when it understands it needs to, as its sole focus would be to come out of its economic and humanitarian misery. Thus, in future one can probably see increased compliance of Iraq with the international scheme of trade and investment law, its compliance with ICSID being one such major move in that direction.