Faith-Based Arbitration Clauses As A Global Alternative To Dispute Resolution

DynCorp International, LLC, a U.S. company, and Aramco, a Saudi-owned corporation, entered into a contract for a computer system which was to be manufactured in the U.S. and installed at Aramco’s facilities in Saudi Arabia. The contract contained a choice of law provision requiring the application of Saudi Arabian law even though the contract was entered into and significantly performed in the United States. The contract also contained an arbitration clause, requiring that any disputes be resolved using Sharia law as implemented through an arbitration panel. When a dispute over the ownership of funds arose, DynCorp attempted to bring the matter into the Texas judicial system. In its opinion in the matter (In re Aramco Servs. Co., No. 01-09-00624-CV, 2010 Tex. App. LEXIS 2069, 2010 WL 1241525, Tex. App. Houston 1st Dist. Mar. 19, 2010), the Texas court refused to take up the matter, and effectively upheld the arbitration clause. This paper explores the increasing use and enforceability of faith-based arbitration clauses in international contracts and transactions in light of the Aramco case. The paper concludes that global finance is augmented when parties learn about other faiths (in particular, Islam) so that they can effectively negotiate and, where appropriate, adopt such clauses as a way of making use of alternative dispute resolution.