What is the Organization of Islamic Cooperation?
Established in 1969, the Organization of Islamic Cooperation ("OIC") is the second largest intergovernmental organization by number of members after the United Nations. The OIC has 57 member states, including Turkey. The OIC aims to reinforce solidarity, and economic and trade cooperation among its member states. Turkey hosts the headquarters of the OIC's Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation ("COMCEC"), which tracks the implementation of the OIC's economic and trade resolutions. The COMCEC is chaired by the President of the Republic of Turkey, and it holds committee meetings in Turkey.
One of the most important instruments the OIC introduced is the Agreement on the Promotion and Protection of Investments between OIC Member States ("OIC Agreement"), in force since February 1988. The OIC Agreement is the second largest international investment protection agreement, currently ratified by 28 OIC member states. This agreement is a significant multilateral investment agreement for investor protection, and was designed as an alternative to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Convention").
Although the OIC Agreement has been in force since 1988, it was unused as a tool for investor-state arbitrations until 2012, when a Saudi national invoked it to initiate an investment arbitration against Indonesia. The arbitral tribunal determined that the OIC Agreement is applicable to the investor vs. state arbitration in addition to intra-state disputes regarding investment. In other words, an investor from an OIC member state investing in an OIC member state may rely on the OIC Agreement to initiate an investment arbitration against the host country.
The OIC recently took a further step to implement the OIC Agreement and promote the security of its member states' economic relationships by establishing the OIC Arbitration Center.
OIC Arbitration Center Established
During the 13th OIC Summit in 2016, Turkey proposed to establish an OIC Arbitration Center. Accordingly, in 2017, COMCEC resolved to establish an arbitration center in Istanbul, which will be hosted by Turkey and the Union of Turkish Chambers and Commodity Exchanges ("TOBB"), as an organ affiliated with the Islamic Chamber of Commerce and Industry and Agriculture ("ICCIA").
Following the COMCEC's resolution, TOBB and the ICCIA hosted several task force meetings with internationally renowned arbitration experts on establishing the ICCIA-affiliated OIC Arbitration Center. The task force agreed on the importance of a center that would serve the business community of the OIC member states.
Following these meetings, the Statute of the OIC Arbitration Center was approved at the 35th Meeting of the ICCIA General Assembly held on 3 and 4 March 2019.
The OIC Arbitration Center was established in Istanbul with the signing of the Host Country Agreement of the Center between Turkey and the ICCIA at the 35th COMCEC Session held on 25 to 28 November 2019 in Istanbul, Turkey. Turkey ratified the Host Country Agreement on 25 January 2020.
The OIC Arbitration Center will be a platform to resolve commercial and investment disputes. Considering its location in Istanbul, the OIC Arbitration Center will have the power to compete with other arbitration centers located in Europe and the Middle East. Further, it will play a crucial role in strengthening economic and trade relations among Muslim countries thanks to its affiliation with the OIC and ICCIA. Finally, further to the establishment of ISTAC, the establishment of the OIC Arbitration Center in Turkey will help Turkey to reach its goal to become an internationally recognized and preferred place of arbitration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.