The Prime Minister issued Decree no. 2592 of 2020, (published in the Official Gazette on December 9, 2020), prohibiting all governmental entities and state-owned companies from concluding any contract with a foreign investor or agreeing to any arbitral clause without first referring to the matter to the High Authority for Arbitration and International Disputes ("Authority").

The aforementioned Authority is headed by the Prime Minister, Minister of Justice, the Governor of the Central Bank, and a no. of other ministries and bodies' advisors.

The enacted new decree expands the powers of the Authority, (previously established by Prime Ministerial Decree no. 1062 of 2019), from merely considering arbitration cases and expressing opinions on them, to prohibiting any administrative body, including ministries, public bodies, governmental entities, and their affiliated bodies wholly or partially owned by the state, to conclude or amend any contracts with a foreign investor, sign any contract which includes an arbitral clause, or take any measure or action in relation to any arbitration dispute.

Another key thing to remember is that the Authority is the sole competent for the following:

  • Approval of offices with international experience and appropriate arbitrators based on the nature of each dispute and the law firms which will be assigned to defend the state in any arbitration dispute
  • Drafting contracts concluded by the state, whether they include an arbitral clause, or concluded with a foreign investor, in a manner that ensures a balance of rights between the parties
  • Assess the status of arbitration cases and the expected position of the judgments along with proposing an amicable settlement with other parties, if necessary.

To sum up, everything that has been stated so far, the enactment of this Decree represents a legislative evolution and a positive and much-needed step to prevent further arbitral losses in international arbitration cases resulting from ignorance of international arbitration procedures and related laws, as well as the absence of experienced professionals.

For all those reasons, the formation of an Authority, (headed by the Prime Minister and a no. of ministers and advisors), having the exclusive competence to be resorted to in the event of drafting contracts with a foreign investor, would likely create a balanced contractual relationship between both parties. Moreover, being granted the power to assess the status of arbitration cases along with proposing an amicable settlement with other parties would avoid burdening the state with further costs.

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