Facts About Arbitration in UAE

Introduction

As per the Federal Law No. (6) of 2018, Arbitration is defined as “a procedure regulated by law which is dispute between one or more parties is submitted, by agreement of the parties, to an arbitral tribunal which makes a binding decision on the dispute.” (Article 1)

The UAE Arbitration Law is modelled on the UNCITRAL (United Nations Commission on International Trade Law), a model which portrays international best practices. Opting to prefer this arbitration process over the traditional litigation practice provides various advantages, such as confidentiality, choice of language, flexibility to select the number of arbitrators, procedures, etc.

Advantages / Disadvantages

Some advantages of arbitration over litigation include:

  • The proceedings are confidential (unless the parties agree otherwise).
  • Arbitrators with the requisite expertise can be appointed to deal with disputes involving technical subject matters.
  • Arbitrations can be conducted in English, or in any other language agreed to by the parties, whereas local court litigation is always in Arabic.
  • Oral evidence is permitted in arbitration, whereas only written submissions are generally permitted in the courts.
  • There are limited avenues for appealing awards and the merits of a decision cannot be challenged.

Some disadvantages of arbitration when compared to litigation include:

  • Arbitral proceedings are generally more costly, considering the tribunal and administrative fees.
  • Arbitration awards must be ratified by the courts to be enforceable. This can cause delays and extra costs in the enforcement of an award, although the position has improved with the introduction of the Arbitration law.

Let’s understand the common formalities required in the arbitration process followed in the UAE.

Preliminary Requirements

  • The Arbitration Agreement should be in a written format; otherwise, it will be considered null and void. (Article 7 (1))
  • An Arbitration Agreement can only be concluded by a natural person who has the legal capacity with the specific authority to arbitrate the same. (Article 4 (1))
  • The Arbitration Agreement can be concluded post a dispute, even if an action in this regard has already been presented before a court. In this case, the agreement must ascertain the matters which have been included in the arbitration. (Article 5 (2))
  • The Parties involved are free to agree or disagree on a procedure of appointing the arbitrator(s) and the method and time of appointment. (Article 11 (1))
  • The Parties are free to select a language for the arbitral proceedings. If no specific language is chosen, then the proceedings will be done in Arabic.

Appointment of Arbitrator

  • Sole Arbitrator
    • The parties can appoint a sole arbitrator with mutual consent. In cases where parties are not able to agree on one Arbitrator within 15 days after either party sends a written request to the other one for such appointment, the Arbitration center will appoint the Arbitrator, upon request of a party.
  • Arbitration with three arbitrators
    • In an Arbitration with three arbitrators, both parties are required to appoint one Arbitrator each, and the two arbitrators thus appointed will appoint the third Arbitrator. If a party is unable to appoint an arbitrator within 15 days from the date of receiving a request to do so by the other party, or when the two arbitrators appointed by the parties fail to agree on the third arbitrator within 15 days of the appointment of the last Arbitrator, then the concerned body (Arbitration Centre) will make the appointment, upon the request of a party. (Article 11 (3))

Interim and Partial Awards

According to Article 39 (1), the arbitral tribunal issues both interim and partial awards during the arbitration process before rendering the final award. Such interim awards may be rendered by the arbitral tribunal by the nature of the dispute for reasons, including preserving evidence, goods or other perishables or status quo, etc. (Article 21)

Time Frame

The Arbitral Tribunal will issue a final reward in a timeframe agreed between the parties. In an instance when there is no such agreement, the final reward is issued within six months from the date of the first hearing. However, the tribunal may extend up to six additional months unless the parties agree to a longer extension. (Article 42 (1))

Does the law prohibit any type of dispute from being resolved through arbitration?

Certain types of disputes are not arbitrable including but not limited to:

  • Labour disputes.
  • Disputes relating to registered commercial agencies.
  • Criminal cases.
  • Personal status cases for Muslims.
  • Matters relating to public policy.

The adoption of the Arbitration Law in the UAE signifies the country’s commitment to developing into an arbitration-friendly jurisdiction. So, if you have an arbitration case or require any further clarification, connect with Lawgical Group, the best arbitration law firm in Dubai.

Our team is experienced in handling arbitration cases, please do not hesitate to connect with us to discuss your arbitral needs today!

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