THE DISPUTES OF ADMINISTRATIVE CONTRACTS: THE POSSIBILITY OF USING ARBITRATION ACCORDING TO THE JORDANIAN ARBITRATION ACT 2001.

Author:Shibli, Farouq Saber Al-
Position:Report
 
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INTRODUCTION

Governments have a duty to continually upgrade the services that are delivered to people through joint government and private sector initiatives. In Jordan, administrative contracts are particularly important as it is a poor country and the involvement of private investors in its projects is vital.

Companies considering entering into government contracts in poor countries such as Jordan are often very eager to ensure that their investments would remain safe in the event of a dispute with the government in question. It is believed that arbitration is an attractive method of dispute resolution in these circumstances since it offers investors a neutral environment for settling any potential disputes of this kind. The existence of a well-developed system of arbitration in Jordan could therefore be a significant draw for private investors, who would generally rather avoid the possibility court action. However, at present Jordan is only beginning to develop in this regard and the feasibility of using arbitration in administrative contract disputes need to be investigated.

The Arbitration Act 2001, in ruling that 'the provisions of this law shall apply to every conventional arbitration conducted in Jordan and relate to civil or commercial disputes between parties of public or private law persons, whatever the legal relationship to which the dispute is connected, whether contractual or not' notably did not refer to administrative disputes (The Arbitration Act, 2001). In addition, since the introductions of the Arbitration Act in 2001, there have to date been no legal precedents concerning arbitration in administrative contracts. Whether or not the Act can be said to permit arbitration in administrative disputes, despite it not mentioning them specifically, is a controversial question. While Alshatnawi, for example, infers that administrative contracts cannot be arbitrated, Abdulhadi has argued that power has clearly been granted to public authorities in this regard. Abdulhadi's position appears to be stronger, although it may not be true to say the Arbitration Act 2001 was entirely clear.

In his book, "Arbitration in Administrative Contracts", Abdulhadi comprehensively studied the use of arbitration in administrative contracts in France and Egypt, but his assertion that the Jordanian Arbitration Act 2001 was clear in giving providing permission for Jordanian public authorities to arbitrate was not based on similarly thorough examination (Abdulhadi, 2005). Also, although Abdulhadi demonstrated the advantages of arbitration in general, it can be said his failure to counter any opposing arguments somewhat weakened his stance.

Since the Jordanian Arbitration Act 2001 is derived from the Egyptian Arbitration Act 1994, it is argued here by some Egyptian and Jordanian authors that the Arbitration Act 2001 does allow for arbitration to be used in settling the disputes of administrative contracts in Jordan (Sharaf, 1993; Nasar, 1997; Ibrahim, 1991; Alam, 1986; Aldori, 1985; Sari, 1999). This is because there was no specific prohibition of this in the Act, even though it may only have explicitly permitted arbitration as a means of resolving civil or commercial disputes. According to a basic principle of Jordanian law, actions are generally allowed rather that forbidden as long as they are in the public interest (1). In other words, consent to carry out an act that is ostensibly beneficial to the public, does not have to be explicitly provided by the law.

In order to add weight to the above argument, however, it is important to refute the claims of those who are inclined to disagree. The case against the use of arbitration in administrative contracts includes the arguments that it infringes on the obligatory nature of judicial jurisdiction, that it is not compliant with administrative contract theory, that arbitration does not provide legal and technical guarantees and that the Arbitration Act 2001 is in fact unconstitutional. All of these will be examined and refuted in the following sections.

The Application of Arbitration Act 2001 to the Disputes of Administrative Contracts

The Jordanian Government follows one of two approaches when it concludes any contract. In the first of these, the contracts grant the government exceptional powers (administrative contracts), such as in the case of public works contracts and supply contracts (2). In the second, contracts are arranged with private individuals in which the government is also treated as a private individual without privileges (civil or commercial contracts), such as in the case of contracts of sale/purchase and contracts of lease. According to the Arbitration Act 2001, commercial and civil disputes of government can be arbitrated, but the Act does not mention the possibility of using arbitration in administrative contracts (3).

However, existence a government (public person) as one of the disputing parties doesn't mean that all the disputes of government can be arbitrated as the Arbitration Act limited the kind of disputes that the Act governs in civil and commercial and non-administrative.

Arbitration therefore is not used in administrative contracts as there are doubts about its legality in this context since the Arbitration Act 2001 is unclear in this regard, only explicitly allowing the use of arbitration in commercial and civil, but not administrative, disputes.

According to Alshatnawi, the fact that the Arbitration Act 2001 only referred to disputes of civil and commercial contracts when stating which types of dispute it would apply to, was a deliberate attempt to limit its scope (Shatnawi, 2006).

However, it could be argued that the phrase 'civil or commercial dispute' laid down in the Arbitration Act merely mentions these two types of disputes as examples of the kinds of disputes which can be arbitrated. In other words, the act did not include an exhaustive list of disputes but rather examples of disputes where the 2001 Act might apply (4). It could be also concluded that the legislator did not intend to limit the types of disputes covered by the 2001 Act since administrative disputes are no less important than commercial and civil disputes.

Although the contracts concluded by the government which has exceptional powers and authorities are considered administrative contracts (5), but it is also argued that disputes arisen from the administrative contracts are actually civil rather than administrative in nature, since they do not fall within the jurisdiction of the administrative courts (6), which is the only authority for settling administrative disputes in Jordan (7). Because administrative contract disputes are not settled by the High Court, but rather by civil or special courts, the disputes can be seen to be civil.

The argument is strengthened further by the fact that the High Court of Justice also considers disputes arising from government contracts to be civil rather than administrative, as can be demonstrated by a number of its decisions. For example, it judged that the Formation Law of Civil Courts should outline which disputes the High Court had authority over and the disputes of administrative contracts were not among them (The High Court of Justice, 1982).

In another instance, the High Court of Justice ruled that 'the challenge of non-renewal of the Hashemite University Public Employment Contract as a government contract is considered an administrative decision which falls within the jurisdiction of the High Court of Justice irrespective of previous judgments' (The High Court of Justice, 2000).

Nevertheless, it may be that issues related to administrative decision-making which occurs prior to contracts actually being concluded, are ruled by the administrative court, although disputes arising after the contracts have been signed fall under the control of regular civil courts. The non-renewal decision examined in this case can clearly be considered an administrative decision and not related to the carrying out of the terms of the contract itself. In circumstances where the dispute concerned the latter, the case would be dealt with by the other courts.

Also, the wording of the above decision is interesting since the phrase 'irrespective of previous judgements' suggests that previous judgements had been made which were at odds with the above decision. In this regard, no contradictory judgement before this decision was made appears to exist.

In addition, the High Court of Justice has ruled that any dispute which arises whilst an administrative contract is being executed should fall under the jurisdiction of the civil or special courts (The decision of general council-The High Court of Justice, 1999). This is also true for any dispute concerning the carrying out or conditions of administrative contracts. In sum, the High Court of Justice is responsible only for administrative matters set out in the High Court of Justice 1992 S (9/A) and administrative contract disputes are not among those mentioned (The High Court of Justice, 1999).

Impossibility of Making an Analogy upon Arbitration for Resolving the Disputes of Administrative Contracts

The Arbitration Act laid down that 'the provisions of this law shall apply to every conventional arbitration conducted in Jordan and relate to civil or commercial disputes between parties of public or private law persons, whatever the legal relationship to which the dispute is connected, whether contractual or not' (The Arbitration Act, 2001).

The Cassation Court has decided in one of its judgments that 'Arbitration is an exceptional method of settling certain disputes between the disputing parties and therefore expanding the interpretation of the arbitration agreement to add new types of disputes which can be subject to arbitration is not allowed' (The Cassation Court, 2002).

According to this judgment, the Court of Cassation appears to hold the position that arbitration should only be used to...

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