Business Editors' Picks Legal Politics

Maldives Arbitration Center inoperative

Velanaage

The original Dhivehi article was published on Mihaaru.com website on 2nd May 2018

The following is a loose translation:

Some might even be baffled to hear that the Maldives also has an international arbitration centre. Because most are aware of only the internationally held arbitration cases. Since big commercial arbitration cases were also conducted overseas, most had come to believe that arbitrations are always done abroad.

The reality is that there is also an arbitration centre in the Maldives. After Maldives Arbitration Law came into effect in 2013, an arbitration centre in the name of Maldives International Arbitration Centre was established. However, averagely, very few people would know that such a centre has been opened in the Maldives. The reason is that, to this day, there has been no work seen to be done at the centre. In other words, it exists only for a name.

Arbitration is an internationally recognized standard of out of court settlement for business disputes arising between two or more parties, through an independent third party. Although big cases of projects conducted in the Maldives were done in overseas arbitration centres, the Maldives Arbitration Law does allow for such cases to be tried in the Maldives. The seat of arbitration is decided mutually between the parties when making the agreement.

Arbitrations work differently to that of court litigation. If a case is a lodged in court, the case will be probed by a court selected judge and the parties involved cannot choose their own tribunal. Whereas in an arbitration, the process will be conducted by an independent arbitrator and it may be conducted by a sole arbitrator or a panel. The parties involved will decide who the arbitrator will be.

Moreover, an arbitrator need not have a legal background but should have knowledge and expertise in the subject matter of the case. For example, if the case is related to insurance, then the parties have the right to involve an arbitrator having a background knowledge of insurance. However, the arbitration fees must be borne by parties involved.

In countries where arbitration system exists, the arbitration centre generally has a registry of arbitrators. This list will include a selection of people that possess a considerable amount of expertise, depth of knowledge and experience, as decided by a country’s arbitration centre. And the arbitration cases will be handled by arbitrators selected from the list by the parties.

Witness testimony and experts can be appointed in an arbitration similar to a court litigation. However, the upside of arbitration is that cases can be speedily processed. And if both parties agree, the arbitration can be completed by a certain deadline. Big businesses typically opt for this method, due to such advantages.

In conducting an arbitration, the arbitration centres’ role is to compile the principles and practice of arbitration, registry of arbitrators and to play a role as a facilitator in other ways as well. For example, in a case, if the time expires before an arbitrator is agreed upon by both parties, an arbitrator will be assigned by the arbitration centre.

Construction project in Maldives

A construction project in the Maldives

Despite arbitration being a process where major business-related cases can be reliably conducted by both parties, in the Maldives, this has not yet been facilitated. The arbitration law was brought into existence in the same way as other developed countries, to introduce an arbitration system in the Maldives. However, its target has not been achieved.

When the arbitration act stipulates that at once the law is ratified, an arbitration centre will also be established, to this day, the work of the centre has not been seen. Under the act, the related bylaws and rules were to be made within 6 months and was mandated to make it public, however, until now the bylaws were only made the high court, responsible for the appeal stage of arbitration cases. And there is no registry of arbitrators in the Maldives.

It is known that some appointments were made to the arbitration centre’s board which should consist of 3 board members. An office was also established, to administer the centre. But the centre’s work is not happening due to budget constraints.

There is another issue which arises due to lack of an active arbitration centre. According to the Arbitration Act, disputes that have to be settled through arbitration cannot be resolved through courts. And if such a case is filed in the court, and if it meets all the criteria of an arbitration case, the case should be stopped and the court must order the case to be filed in the arbitration centre.

Currently, there is no way to carry out arbitrations in the Maldives. Therefore, disputes that can be handled through arbitration, no matter how big it is, it is doubtful if there could be a solution to it through the legal framework.

Some legal professionals believe that the arbitration system is not properly introduced in the Maldives, due to the lack of responsibility by the state. Although the appointment of arbitrators is a self-initiative of the parties involved in a case, they believe the due process and making way to conduct an arbitration is the task for the arbitration centre.

‘If the Arbitration Act is not enforced, they have to reform it. But that also is not done. Prior to making the law, they should have known if there were no potential arbitrators in the Maldives,’ said a lawyer.

According to changing times, along with big investments, various types of businesses are also being introduced to the Maldives. Therefore, the arbitration system must work where commercial disputes are handled through a reliable and efficient system. The arbitration centre which is currently ineffective must also need to start working and we need to enjoy the benefits of the arbitration system.

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