Arbitration Law in United Arab Emirates
The Arbitration Law in the United Arab Emirates (UAE) is a comprehensive legal framework that governs arbitration within the country, covering both domestic and international arbitration. The UAE has modernized its arbitration laws to align with international best practices, aiming to create a more attractive environment for arbitration as a method of dispute resolution.
Key Features of Arbitration Law in the UAE:
1. Legal Framework
- Federal Law No. 6 of 2018 on Arbitration (commonly referred to as the UAE Arbitration Law): The UAE's primary arbitration law is Federal Law No. 6 of 2018, which came into force in June 2018. This law is based on the UNCITRAL Model Law on International Commercial Arbitration (1985) with updates to reflect the specific needs and context of the UAE. It replaced Federal Law No. 11 of 1992, which had been in place before 2018.
- UAE Civil Procedure Code (CPC): Some arbitration-related matters, such as enforcement and judicial intervention, may also be addressed by the UAE Civil Procedure Code. However, most of the arbitration-specific provisions are now governed by Federal Law No. 6 of 2018.
- New York Convention: The UAE is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which means that foreign arbitral awards are enforceable in the UAE under the Convention’s provisions.
2. Arbitration Agreement
- Written Agreement: For arbitration to be valid in the UAE, there must be an arbitration agreement in writing. This can be either a stand-alone agreement or a clause within a contract.
- Scope of Arbitration: The arbitration agreement must clearly define the scope of disputes that will be referred to arbitration. The courts may intervene to determine whether a dispute falls under the arbitration agreement if there is uncertainty about the scope.
- Arbitration Clause: An arbitration clause is commonly included in contracts to specify how disputes will be resolved without recourse to the courts.
3. Arbitral Tribunal
- Composition of the Tribunal: The UAE Arbitration Law allows the parties to freely agree on the number of arbitrators, typically either one or three. If the parties do not agree on the number of arbitrators, the default provision of the law allows for the appointment of three arbitrators.
- Appointment of Arbitrators: Arbitrators are generally appointed by the parties themselves. If they cannot reach an agreement on the arbitrators, the law provides for the appointment of arbitrators by the court or an arbitral institution.
- Impartiality and Independence: Arbitrators must maintain independence and impartiality throughout the arbitration process. Parties can challenge the appointment of an arbitrator if they believe there is a conflict of interest.
4. Arbitration Procedure
- Party Autonomy: One of the key principles of arbitration in the UAE is party autonomy. This means the parties can choose the rules and procedures that will govern their arbitration, such as choosing between institutional or ad hoc arbitration and selecting specific arbitration rules (e.g., ICC Rules, LCIA Rules, DIAC Rules).
- Institutional vs. Ad Hoc Arbitration: The UAE allows both institutional arbitration, administered by bodies such as the Dubai International Arbitration Centre (DIAC) or the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC), as well as ad hoc arbitration, where the parties select the procedures and appoint arbitrators directly without the assistance of an institution.
- Arbitration Rules: If the parties have not agreed on specific rules, the UAE Arbitration Law provides a framework based on the UNCITRAL Arbitration Rules, but institutional rules (such as those of the DIAC) may be used in institutional arbitration.
- Interim Measures: The arbitrators in the UAE are empowered to grant interim measures to preserve the rights of the parties during the arbitration process. The courts may also provide assistance in enforcing interim measures ordered by an arbitral tribunal.
- Confidentiality: Arbitration proceedings in the UAE are generally confidential, and the law ensures that the details of the proceedings, as well as the award, remain private, unless the parties agree otherwise.
5. Arbitral Awards
- Final and Binding: Under UAE law, arbitral awards are final and binding on the parties. The parties are generally required to comply with the award once it is issued, and any challenges are limited to specific grounds (such as procedural irregularities or issues related to public policy).
- Written Award: The award must be in writing and signed by the arbitrators. It should include a reasoned decision unless the parties have agreed otherwise.
- Enforcement of Awards: Arbitral awards in the UAE can be enforced through the courts. For domestic awards, the enforcement procedure is straightforward. For foreign awards, the New York Convention facilitates enforcement, though courts may refuse to enforce an award on certain grounds such as violation of UAE public policy.
- Grounds for Setting Aside an Award: A party may seek to set aside an arbitral award in the UAE on the following grounds:
- Lack of Jurisdiction: The arbitral tribunal exceeded its authority.
- Procedural Irregularity: If there was a failure to provide adequate notice or if the procedure was not in accordance with the parties’ agreement.
- Violation of Public Policy: If the award violates the public policy of the UAE.
- Incompetence of the Tribunal: If the tribunal was not properly constituted or if an arbitrator was biased.
6. Enforcement of Arbitral Awards
- Domestic Awards: Domestic awards are generally enforceable through the UAE courts upon application. The process for enforcement is straightforward if the award complies with the UAE Arbitration Law.
- Foreign Awards: The UAE is a signatory to the New York Convention, so foreign arbitral awards are enforceable in the UAE provided they do not violate the country’s public policy. The process for enforcement is similar to the recognition and enforcement of domestic awards, though foreign awards must first be ratified by the UAE courts.
- Grounds for Refusal of Enforcement: Enforcement of both domestic and foreign awards can be refused on the following grounds:
- Breach of the UAE’s Public Policy.
- Incompetence of the Tribunal.
- Lack of Notice to the parties or the tribunal exceeding its authority.
7. Judicial Intervention
- Limited Judicial Intervention: UAE courts are generally hands-off with respect to arbitration and only intervene in specific circumstances, such as:
- Appointment of Arbitrators: Courts may assist in appointing arbitrators if the parties are unable to agree.
- Enforcement of Interim Measures: Courts may assist in the enforcement of interim measures ordered by the tribunal.
- Setting Aside an Award: Courts can annul or refuse to enforce an award on limited grounds (e.g., public policy violation, lack of jurisdiction, procedural flaws).
- Supportive Role: Courts may also intervene in the case of arbitration-related disputes, including issues related to the validity of the arbitration agreement and interim relief.
8. Arbitration Institutions in the UAE
- Dubai International Arbitration Centre (DIAC): The DIAC is one of the most prominent arbitration institutions in the UAE, offering a set of arbitration rules to facilitate dispute resolution. DIAC is a widely recognized institution for both domestic and international arbitration.
- Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC): This institution provides arbitration services for commercial disputes in Abu Dhabi and is recognized for handling disputes related to construction, trade, and investment.
- International Institutions: Parties in the UAE also often refer to international arbitration institutions such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), and the Dubai International Financial Centre (DIFC) Court of Arbitration.
9. Special Economic Zones and Free Zones
- DIFC and ADGM: The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have their own arbitration rules, which are separate from the UAE’s federal laws. They provide a unique legal and regulatory environment that follows common law principles and is particularly attractive for international businesses.
- Arbitration under DIFC Rules: The DIFC-LCIA Arbitration Centre operates within the DIFC and offers a streamlined approach to arbitration, with rules modeled after international standards.
Conclusion
The UAE Arbitration Law (Federal Law No. 6 of 2018) has been designed to provide a modern, efficient, and internationally recognized framework for both domestic and international arbitration. The UAE has become an increasingly popular jurisdiction for arbitration, thanks to its legal reforms, the establishment of arbitration institutions like DIAC, and its adherence to international standards such as the New York Convention. With its emphasis on party autonomy, judicial support, and confidentiality, the UAE is positioning itself as a key arbitration hub in the Middle East.
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