The UAE Arbitration Law

Posted By Emma Cronin   -   Posted On Feb 10, 2019

The United Arab Emirates’ ambition to achieve recognition as an international arbitration centre has seen extensive development and increased confidence in recent years particularly in light of Federal Law No. 6 of 2018 (“the new arbitration law”), which was implemented in June 2018. The new arbitration law has repealed certain articles of the UAE Civil Procedures Law No. 11 of 1992 (“the Civil Code”) and addressed its previous inadequacies ensuring the UAE’s achieves status as a global arbitration centre.

Arbitration

As far as alternate dispute resolution goes arbitration presents notable advantage, particularly in the context of commercial disputes, as a forum wherein parties elect to forego official litigation and instead appoint an impartial third party (arbitrator) to hear their matter under dispute and reach a final, binding decision in respect thereof. Typically, arbitration provides relative speed, informality and a cost-effective means at dispute resolution depending on the nature of the dispute.

Internationally, there has been a surge in demand for impartial arbitration forums that may be availed in the case of dispute which deliver ease of access, uniformity in procedure as well as cost-effective means at reaching a resolution.

The UAE offers various arbitration platforms with the Dubai International Arbitration Centre (DIAC), DIFC London Court of International Arbitration (DIFC-LCIA) and the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) to name a few. These arbitration centres provide parties notable advantages against use of the local courts in adjudication of disputes, however, the enforcement of arbitral awards as well as the framework under which arbitration could be conducted was previously limited under the Civil Code.

Federal Law No. 6 of 2018

The new arbitration law encompasses much of the principles of the United Nations Commission on International Trade Law (UNCITRAL) Model Law which provides a unified standard designed to assist jurisdictions in their promotion and use of arbitration as an alternative method of dispute resolution. The new arbitration law, like UNCITRAL, provides a clear procedural framework enhancing efficiency in proceedings, as well as guidance as to Court recognition of arbitral awards which had previously been an area of concern.

Under the Civil Code, delays were a common occurrence with interim applications, jurisdictional, and arbitral challenge frustrating proceedings over the course of an arbitration. The new arbitration law sets out strict time limits for lodging of certain challenges and specifies the terms for continuance, establishing a streamlined framework under which proceedings may now occur.

Enforcement of Award

The key issue in the election of arbitration by parties to a contract should at all times be the enforceability of the decision reached and award made. The new arbitration law seeks to remedy the shortcomings of the Civil Code by providing for enforcement to commence directly before the UAE Court of Appeal negating the time and expense at application for enforcement in the Court of First Instance as was previously required.

An arbitral award under the new arbitration law is considered binding upon the parties to the arbitration and is equally as enforceable as a judgment of the UAE Courts. This means that an award may be executed voluntarily prior to ratification of the Court of Appeal (where applicable).

Further, an appeal against the validity of an arbitral award is now only accepted within a thirty day time limit providing for swift enforcement and added efficiency in resolution of parties’ disputes.

The UAE’s position as an international financial centre and business hub has meant that arbitration appointment has increased as confidence in the arbitral code develops. The new arbitration law offers solution, where the Civil Code was lacking, as a codified structure with singular enforceability promoting achievement of international status and continuance in attraction of foreign investment as well as confidence in the region.

Should you wish to learn more about Arbitration Law in UAE please do not hesitate to contact us for further information.

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