This second post of the Arbitration Proceedings in Yemen will be discussing the steps required to initiate arbitration proceedings in Yemen according to Yemen Arbitration Law and Yemeni Centre for Conciliation and Arbitration Rules (“YCCA Rules”).

1. By what means can a person be authorised to bind a company to an arbitration agreement? Does a corporate manager require a special power to agree to arbitration?

A person should be authorised to bind a company to an arbitration agreement either by means of his/her executive position within the company (i.e. Corporate Manager) or by a written Power of Attorney explicitly authorising a person to bind a company to an arbitration agreement.

2. Where both parties to a contract are Yemeni nationals, does the law restrict their right to arbitrate abroad?

The Arbitration Law is silent in the case of both parties being Yemenis, though it recognises the parties’ autonomy regarding arbitration. According to Article (7) of the Arbitration Law, the parties may freely choose the place of arbitration, governing law and language, if one or both were non-Yemenis.

Moreover, Article (3) of the Arbitration Law provides that “the provisions of this act shall apply to any arbitration taking place in the Republic of Yemen as well as to any arbitration taking place abroad, if the parties so choose”.

3. What are the mandatory requirements of an arbitration agreement?  Do special provisions need to be included in case a public entity is to enter into an arbitration agreement?

Article (15) of the Arbitration Law provides that arbitration agreement must be in writing, either in the form of an arbitration clause in a contract or as a separate agreement. An arbitration agreement may also be concluded by written communication such as letters, telex or any modern means of communication.

In respect of mandatory provisions, it seems to suffice that the agreement contains as simple wording as “The parties agree to refer any dispute to arbitration”.

Where a public entity wishes to agree to arbitration, the substantive law to be applied should be that of the Republic of Yemen.

4. Is the severability of the arbitration clause recognised by the law and the courts?

Article (16) of Arbitration Law provides that an arbitration clause within an agreement shall be considered a separate and valid provision despite the invalidity of the remaining provisions of the agreement.

5. Do the laws and regulations in Yemen exclude certain sectors from having any deriving disputes resolved through arbitration?

Arbitration does not apply to sovereign public sectors (defence, national security, etc.), diplomatic sectors (embassies, consulates, etc.) or any sector involving the Public Prosecution.

6. Can local government contracts provide for arbitration, and if so, what formalities or permissions are needed?

Government contracts may include arbitration subject to application of the substantive laws of Yemen. Except for the sovereign matters, arbitration may be chosen upon the prior permission of the concerned minister.

7. May parties to arbitration seated in Yemen agree to apply a foreign substantive law or a foreign arbitral law to their dispute?

Article (7) of the Arbitration Law states that “Without prejudice to the provision of this law, where one or both parties is a non-Yemeni national, the parties may choose the substantive and formal law to be applied, seat of arbitration and language”. This includes the application of a foreign substantive law or a foreign arbitral law to the dispute.

Despite the above, it is worth noting that Article (45) of the Arbitration Law carries some ambiguity regarding the law to be applied to arbitration. It starts by stating that “The tribunal must apply the legal principles agreed upon by the parties. If the parties agreed to apply a law other than Yemen law, the tribunal should adhere to the substantive principles therein. If the parties did not agree on the law to be applied, the tribunal shall apply the principles of conflict of laws in Yemen law”. So far the article is clear. However, it then goes on to state that “In all events, the tribunal should resolve the dispute based on Yemen law or the arbitration agreement of the parties”.

Using the wording “In all events” gives the tribunal the discretion to resolve the dispute in one of two ways, either based on Yemen law or based on the arbitration agreement of the parties. This conclusion seem to repeal all the freedom contained in the provisions preceding the conclusion of the article.

Although this Article is self-contradicting, it is clear from experience that other foreign laws may be applied in arbitration. This view is supported by the above mentioned Article (7) which clearly grants the parties the freedom to choose the applicable law provided that not both parties are Yemeni nationals and the chosen law does not violate Shari’a principles or public order.