Sudan

Historically, arbitration in Sudan used to be regulated by a few sections of the Civil Procedures Act 1983 and its predecessors. The first legislation governing arbitration, whether domestic or international was the Arbitration Act 2005, which was repealed and replaced by the current Arbitration Act 2016.
In 2018, Sudan acceded to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and on 26 March 2018 the state deposited its instrument of accession to the Convention with the UN Secretary General.
So far, there have been few international arbitration cases in Sudan. Sudan was under severe US sanctions, and thus isolated from international trade and only limited investments were performed by Chinese, Malaysian and Indian companies in the oil industry. Recently these sanctions were lifted and there is potential for an increased number of foreign investors coming to the country.
Currently, Sudan is undergoing the restructure of economy, transitional Sovereignty Council of the Republic of the Sudan was set up introducing reforms, aiming to achieve stability in the country, more foreign investors are expected in the field of oil, infrastructure, mining and construction as these contracts are mainly with foreign companies which prefer to resort to international arbitration for dispute resolution. In Sudan there are no recognised institutions for international arbitration, and only a few small centres for domestic arbitration exist.
Hence, in case of influx of foreign investments in the county, a wider range of international arbitration institutions should be established for foreign investors in Sudan whether under various investment protection treaties to which Sudan is party, or under the Investment (Encouragement) Act 2021. Recently issued the Investment (Encouragement) Act, gives the foreign investor the option to refer any dispute regarding its investment in Sudan to a specialised court or to resort to whichever is applicable from the following investment agreements (to all of which Sudan is party):
the Unified Agreement for the Investment of Arab Capital in Arab States 1980;
the Agreement for Settlement of Investment Disputes among Arab States 1974;
the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965;
the General Agreement for Economic, Technical and Commercial Co-operation among Member States of the Organization of the Islamic Conference 1977; or indeed to any other relevant agreement to which Sudan is party.
Section 7 of the Sudanese Arbitration Act provides that arbitration is categorised as “international” if: (i) the main centres of the businesses of the parties to the arbitration are in two different countries; and (ii) the subject matter of the arbitration is related to more than one country. The definition of “international arbitration” is much narrower under the Sudanese Arbitration Act than in UNCITRAL Model Law (Article 1 (3)).
There are several areas where the Arbitration Act diverges from the UNCITRAL Model Law. Thus, the rules regarding interim measures are relatively restricted under the Arbitration Act compared with those under the UNCITRAL Model Law. The Arbitration Act simply refers to the domestic rules under the Civil Procedures Act 1983 without any elaboration. Also, the Model Law sets rules for recognition and enforcement of interim measures; there are no similar rules under the Sudanese Arbitration Act.
Also, the Model Law provides a high level of guarantee against intervention by local courts in the arbitration proceedings by limiting court interference to cases provided by the Law. There is no similar provision in the Sudanese Arbitration Act.
In case there is a challenge to an arbitrator, Article 13.3 of the Model Law provides that, pending the court ruling, the arbitral tribunal (including the challenged arbitrator) may continue the arbitral proceedings and make an award, whereas the Arbitration Act stipulates that the arbitration proceedings shall be suspended.
Under the Model Law, if there is a plea by a party that the arbitral tribunal does not have jurisdiction, the tribunal may rule on the plea either as a preliminary question or in an award on the merits, whereas the Sudanese Arbitration Act directs the tribunal to make its ruling before hearing the case.
The Model Law gives the arbitral tribunal the power to decide on the language to be used in the arbitration proceedings if the parties fail to agree, whereas the Arbitration Law makes the Arabic language the default language. According to Article 24 of the Sudanese Arbitration Act, “Arabic language is the language of arbitration, unless the parties agree upon another language, together with the possibility of existence of translation to such other languages, as the parties may request.”
For any arbitration agreement to be enforceable in Sudan, it must satisfy the basic requirements for enforceability of contracts, which are provided for in the Civil Transactions Act 1984, namely, capacity of the parties to the contract, validity of the contract, and compliance with any form required by law.
Under Section 42 of the Sudanese Arbitration Act, causes for annulment of an arbitration award include, inter alia, if the arbitration agreement is (i) non-existent, (ii) void, or (iii) voidable, (iv) its term has expired, or (v) a party was under incapacity under the law governing such party’s capacity.
Concerning arbitrability of the disputes, the Arbitration Act limits arbitration to civil transactions, whether contractual or otherwise; however, it excludes any matter regarding which no conciliation (sulh) can be made.
There are no rules regarding the appointment of emergency arbitrators in the Sudanese law and the Arbitration Act does not envisage group arbitration.
In Sudan, Section 110 of the Civil Procedures Act 1983 provided that a court in Sudan shall under no circumstance whatsoever make a decree ordering payment of interest on the principal sum adjudged,. thus, payment of interest shall not be made under any circumstance whatsoever, and this rule is a matter of public order. Any interest would be considered as usury (riba) disallowed under Islamic Shari'a rules. Invalidity would be limited to the interest only, and would not extend to the principal debt. However, a recent legislation introduced in May 2021 has excluded “financial and banking business adopting the conventional system” from this ban. Accordingly, if an award contains payment of interest, Sudanese courts would not enforce the part of the award on interest, except if the underlying transaction that is the subject of arbitration is regarding financial or banking business adopting the conventional, as opposed to Islamic, system of finance. Under Section 47 of the Arbitration Act if the award, or any part of the award, does not contain a matter contravening public order in Sudan; the court shall enforce the part of the award in compliance with public order and abstain from enforcement of the part in contravention with public order.
Regarding the execution of the arbitral awards, Article 46.1 of the Arbitration Act stipulates that “where the request of contest for nullity is based upon serious reasons, then the competent court may order stay of the execution.” Also, if an award has been set aside by the courts in the seat of arbitration, it cannot be enforced in the courts of Sudan, because one of the conditions for enforcement of foreign arbitration awards under Section 48 of the Arbitration Act is that the award must become final in accordance with the laws of the seat of arbitration. No application for enforcement would be accepted by the court pending a resolution of the proceedings at the seat of arbitration.
Article 48 of the Sudanese Arbitration Act stipulates that “no execution of the award of a foreign Arbitration Tribunal shall be made, before Sudanese courts, save after verifying the satisfaction thereby of the following conditions:
a. the award, or order is passed by an Arbitration Tribunal or center, in pursuance of the arbitration rules of jurisdiction of international arbitration, prescribed by the law of the country, in which it has been passed, and it has been final, in accordance with such law;
b. the opponents in the suit, in which the award has been passed, have been summoned and have been validly represented;
c. the award or order is not inconsistent with an award or order, which has been
previously passed by Sudanese courts in the same substantive issue of the dispute;
d. the award does not include what is inconsistent with public order, or morals in Sudan.
e. the country where the award is issued and requested to be executed, is executing
Sudanese courts judgments, centers and tribunal awards in its jurisdiction, or by the
judgments conventions ratified by Sudan.
In general, the approach of the Sudanese courts towards the recognition and enforcement of arbitration awards is positive and a main ground for refusing enforcement is the public policy ground. As under Article 47 of the Arbitration Act, one of the conditions for enforcement of an international arbitration award in Sudan is that the award shall not contain any matter which is contrary to public order in Sudan. Article 47 d stipulates that “the award, or part of it, is not contrary to public order in Sudan. The court shall execute what is compatible with public order while abstain the part contradicts with public order.” It is worth noting that the issue of public policy violation could be raised by the court on its own motion, as Article 42.3 of the Arbitration Act in Sudan stipulates that “the appeal court may adjudge the nullity of the award, of its own motion, if the award contravenes with public order in Sudan.”
Under the Sudanese Labour Code 1997, a dispute between an employer and all or a group of its employees (i.e, collective agreement) shall be referred to arbitration if such dispute could not be resolved through negotiation or conciliation. This is a special arbitration regime for which the Labour Code 1997 sets specific rules, thus, in accordance with the provisions of the Article 112 “if the dispute has not been settled amicably within the period referred to in Article 109, the dispute must be referred to an arbitral tribunal without the consent of the parties to the dispute to adjudicate it when it is necessary.”
Hence, there are reasonable grounds to conclude that the Sudanese legislator is introducing the best practices of international arbitration in order to accommodate the needs of the parties involved in the commercial disputes. In terms of government contracts, there is ban on introducing arbitration in such contracts except where there is extra necessity.
In seeking an interpretation to this ‘extra necessity’, the Ministry of Justice clarified that “it is where there is an important contract with a foreign entity.”(is it a Decree?)
We should also mention recent Investment (Encouragement) Act, 2021 which aims to prepare the investment environment to attract investments in line with the targets and priorities of Sudan, as well as increasing the economic growth rate, creating job opportunities, and exploiting natural and human resources which introduced arbitration as a means of a dispute resolution.
Article 34 (1) of the Chapter IX of the Investment (Encouragement) Act provides that “save for disputes governed by the provisions of the conventions, set out in Subsection (2), where any legal dispute, pertaining to investment, aroused, the same shall first be referred to the competent court, unless the parties agreed to refer it to the arbitration or conciliation.”