Arbitration in Jordanian Law: What Companies Need to Know

When business people conclude a contract with a Jordanian or foreign partner, they often pause at a small clause at the end of the contract headed "Dispute Resolution." This is where the practical questions arise: do we go to the Jordanian courts or resort to arbitration? And what is the real difference between the two options in terms of cost, time, confidentiality and the possibility of challenge?

Jordanian law adopts a modern arbitration system based on Jordanian Arbitration Law No. 31 of 2001, derived from the UNCITRAL Model Law, one of the most developed arbitration statutes in the region. This guide gives a practical picture of how arbitration works in Jordan: when it is chosen, how its clause is drafted, how it proceeds, how its award is challenged, and how it is enforced.

1. What Arbitration Is and Why It Matters for Business

Arbitration is a means of resolving disputes in which the parties to a contract agree to refer the dispute to an arbitrator or arbitral tribunal instead of the courts, and both parties undertake in advance to accept the resulting award as binding and enforceable.

What distinguishes arbitration from ordinary litigation is the parties' control over its procedures: the language of the pleadings, the place of the arbitration hearings, the number of arbitrators, the law applicable to the subject of the dispute, and the duration of the proceedings. This flexibility is the essential reason it is common in investment contracts, construction, commercial distribution, oil and gas contracts, and major banking transactions.

2. When Is Arbitration Better Than the Courts? A Comparison Table

Criterion	Arbitration	Litigation before the Jordanian courts
Speed of decision	Usually 6–18 months to a final award	Ranges from two to four years in complex commercial cases across the three tiers
Financial cost	High upfront (arbitrators' fees + institutional administration + experts)	Low court fees, but they accumulate over the years of litigation
Confidentiality	Guaranteed by its nature; details of the dispute are not published	Hearings are public in principle
Technical expertise	An arbitrator specialized in the subject of the dispute can be chosen	The judge handles many types of cases
Possibility of challenge	Very limited; no challenge on the merits, only on exhaustively listed grounds for annulment	Appeal and then cassation, which prolongs the dispute
International enforcement	Benefits from the 1958 New York Convention in 170+ countries	A Jordanian judgment needs complex exequatur procedures abroad
Emotional investment	Calm, relatively amicable proceedings	More public and adversarial proceedings

Practical summary: Arbitration is preferable if the expected dispute is commercially complex, the other party is a foreign company, the subject requires technical expertise, or the two parties want to keep the details of the relationship confidential. Traditional litigation is preferable in simple disputes, or when one party's resources are limited and cannot bear the upfront fees.

3. Types of Arbitration in Jordanian Law

Arbitration in Jordan falls into several classifications depending on the angle:

By compulsion: voluntary arbitration (which the parties resort to of their own will) and compulsory arbitration (imposed by law in some administrative or collective labor disputes).

By administration: institutional arbitration administered through an accredited center, and ad hoc arbitration run directly by the parties and the arbitrators without an institution.

By the nature of the dispute: domestic commercial arbitration between Jordanian parties in a dispute within the Kingdom, and international commercial arbitration that crosses Jordan's borders through a party, its subject or the place of enforcement.

By the nature of the arbitrator: arbitration under law, in which the arbitrator is bound by the provisions of a specific substantive law, and arbitration in equity, in which the arbitrator decides according to considerations of reason and fairness without strict adherence to legal provisions. The latter requires the express agreement of the parties.

4. Arbitration Centers Available to Jordanian Parties

When choosing institutional arbitration, the parties can resort to a number of centers, the most prominent of which are:

• The Amman Chamber for International Commercial Arbitration, affiliated with the Amman Chamber of Commerce, a common local option for medium-sized commercial disputes.
• The International Chamber of Commerce (ICC), headquartered in Paris, the best-known option for large cross-border disputes.
• The Dubai International Arbitration Centre (DIAC) and the international dispute settlement centre (DIFC-LCIA), two common regional options for Gulf parties.
• The Cairo Regional Centre for International Commercial Arbitration (CRCICA) for disputes connected with North African countries.

5. The Arbitration Clause: Why Its Value Differs from One Contract to Another

The arbitration agreement is the cornerstone of everything that follows. It must be expressly in writing under Jordanian Arbitration Law No. 31/2001. But merely inserting an arbitration clause in the contract does not mean it is a sound clause or one fit to serve the party that relied on it when the dispute arises. Drafting a tight arbitration clause is far from copying a general template; it requires a careful balance between the choice of center, the number of arbitrators, the seat of arbitration (which determines the court competent to hear challenges to the award and to issue precautionary orders), the language of the proceedings, and the law applicable to the merits. Each of these choices opens or closes legal doors in any later dispute.

Many disputes begin with an arbitration clause that seemed a secondary detail at signing and later turned out to deprive one of the parties, in practice, of exercising its right, either because it refers to an unsuitable center, or because it is silent on the language of the proceedings or the applicable law so that the arbitrator chooses what they see fit, or because it sets a seat of arbitration in a jurisdiction that neither company knows. Ready-made templates, even those published by well-known arbitration centers, remain only a starting point and need to be adapted to the circumstances of the particular contract, the type of parties and the size of the mutual obligations.

Contractual sensitivity: Drafting a sound arbitration clause in your commercial contract is not something a borrowed template can handle, and drafting errors usually surface far too late to be corrected. The commercial cases department at Alabwini Law Firm drafts and reviews arbitration clauses according to the nature of each contract.

6. The General Framework of Arbitration Proceedings

Arbitration proceedings begin with a request for arbitration submitted by the claimant to the chosen center, containing a summary of the dispute and the nature of the claims. The other party responds within periods set in the center's rules, and the arbitral tribunal is formed by nomination of the parties, or by the center itself where agreement cannot be reached. The tribunal then holds a first procedural hearing in which it sets the timetable, the language of the proceedings, the place of the hearings and the dates for exchanging memoranda.

The proceedings move to their substantive phase through the exchange of memoranda and documents between the two parties under the tribunal's supervision, followed by hearings of witnesses and experts where needed, then closing memoranda. The arbitral award is issued within periods set in the center's rules, extendable according to circumstances. Unlike traditional litigation, each of these stages involves procedural choices that the lawyer builds according to the nature of the file, from the volume of documents to be disclosed, to the method of hearing experts, to the order of priority of the defenses.

7. Grounds for Annulment of the Arbitral Award

One of the most important features of the Jordanian Arbitration Law is that it limits the possibility of challenging the arbitral award and permits it only on exhaustively listed grounds, with the application for annulment filed before the competent Court of Appeal within very short time limits set by law. The most prominent of these grounds concern the validity of the arbitration agreement in the first place (its non-existence, its nullity when concluded, or the lack of capacity of one of its parties), the award's violation of public policy in Jordan, as well as fundamental defects in the formation of the tribunal, its exceeding the arbitration agreement, or in respect for the rights of defense.

Assessing whether the award issued falls within one of the grounds for annulment is a precise legal matter that differs from one file to another, and a general reading cannot cover it. When hearing an application for annulment, the court does not re-examine the merits of the dispute; it confines itself to verifying whether one of the grounds specified by law is present. This philosophy is what makes arbitration truly final, and it makes any flaw in drafting the clause or in managing the proceedings a decision with a lasting effect.

8. Enforcement of the Arbitral Award

Enforcement in Jordan follows two paths depending on the nature of the award:

A domestic arbitral award (issued within Jordan): Enforcement of a domestic award goes through exequatur procedures before the competent Court of Appeal, usually handled by the lawyer of the prevailing party, after which the award, once granted enforceability, is referred to the Enforcement Department like any other enforceable instrument.

A foreign arbitral award: Jordan is a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, which makes enforcing these awards in Jordan relatively easy. The court may refuse enforcement on exhaustively listed grounds, most prominently the nullity of the arbitration agreement, a breach of the rights of defense, or the award's violation of Jordanian public policy.

(For a deeper look at the procedures for enforcing judgments issued outside Jordan, see the guide on enforcement of foreign judgments in Jordanian law).

9. Matters That Cannot Be Arbitrated

Not every dispute is arbitrable. Jordanian law excludes a number of matters from the scope of arbitration, most prominently:

• Matters in which settlement is not permitted, such as personal status cases concerning legal capacity and paternity.
• Criminal penalties.
• Administrative disputes concerning the legality of an administrative decision.
• Administrative contracts, except with special permission.
• Some individual labor disputes concerning the employee's basic rights established by law.

10. Frequently Asked Questions

Is arbitration possible without a clause in the original contract?

Yes. The parties can agree on arbitration after the dispute arises by means of a written "submission agreement," which is a separate agreement specific to the particular dispute.

What is the average cost of arbitration in Jordan?

It is hard to give a single figure. Arbitrators' fees and center charges vary with the value of the dispute, the number of arbitrators and the center. Small disputes may cost a few thousand dinars, while large ones may exceed tens of thousands.

Can court proceedings be halted because of an arbitration clause?

Yes. If a lawsuit is filed before a Jordanian court on a matter subject to an arbitration agreement, the court must rule the lawsuit inadmissible once the defendant pleads the existence of the arbitration agreement before addressing the merits.

Can the arbitrator take precautionary measures?

Yes. The Arbitration Law permits the arbitral tribunal to take interim and precautionary measures. The parties are also entitled to apply to the competent court for urgent measures before the arbitral tribunal is formed.

Does the arbitrator have to be a lawyer?

No. The arbitrator may be an engineer, an accountant or an industry expert. What matters most is that the arbitrator is competent, independent and impartial toward the parties to the dispute.

Can arbitral awards be appealed?

No. The rule is that arbitral awards are final and are not subject to appeal in the traditional sense. The only challenge available is the application for annulment on the exhaustively listed grounds mentioned above.

Legal Consultation

Drafting the arbitration clause properly, choosing the right center, and managing the proceedings until the award is issued require specialist legal expertise. Alabwini Law Firm provides consultations on companies and commercial contracts and follows arbitration cases from the drafting stage to the enforcement stage. You can also refer to our guides on the corporate lawyer in Jordan, enforcement of foreign judgments and urgent proceedings in Jordanian law as a shortened judicial path whose conditions differ from arbitration.