by the Arbitration Association
RU

UAE arbitration framework: general overview

November 16, 2019

The United Arab Emirates (UAE) today is one of the largest economies in the Middle East[2]. The country has earned its economic success not only through the export of oil or providing foreign investors with a favorable tax regime, but also by developing a modern legal framework. This includes the creation of special jurisdictions to deal with the ever expanding global commercial needs and, more recently, a modern arbitration framework through the enactment of Federal Law № 6/2018 on arbitration[3] (the Arbitration Law).

The Arbitration Law is based on the 1985 UNCITRAL Model Law, as amended (the Model Law), with certain changes relevant to the UAE legal and commercial landscape. The standalone arbitration framework has replaced the non-comprehensive and outdated provisions of the UAE Federal Civil Procedure Code[4] (the CPC), allowing the UAE to enhance further its reputation as a global center for international dispute settlement.

This article provides a snapshot of some of the key provisions of the Arbitration Law that in the author’s view are expected to contribute to the evolution of the UAE arbitration regime in the coming years. 

Scope of Application: Domestic v International

The Arbitration Law applies to both domestic and international arbitral proceedings seated in the UAE. In contrast with the arbitration regime of the CPC, the Arbitration Law now clearly distinguishes between international and domestic arbitration and, following the distinction, further sets out the criteria for determining the international nature of an arbitration.

Pursuant to Article 10, the Arbitration Law applies to (i) every arbitration conducted in the UAE (unless the parties agree otherwise, and this does not conflict with the UAE public order and morality) and (ii) international arbitrations conducted outside the UAE if the parties so choose. While maintaining the public policy restrictions as to the arbitrability, the Arbitration Law as in the past does not provide any specific guidance on the matter, leaving it to the UAE courts to clarify the concept.

It is noteworthy that the Arbitration Law does not apply to arbitrations seated in the special free economic zones within the UAE, so called ‘off-shore’ jurisdictions of the Dubai International Financial Centre (the DIFC) and the Abu Dhabi Global Market (the ADGM)[5] which have their own independent legal frameworks and judicial systems. Arbitrations seated in the free economic zones are subject to special regimes of the DIFC Arbitration Law No 1 of 2008, as amended, and the ADGM Arbitration Regulations of 2015 respectively.

The Arbitration Agreement

Inspired by the Model Law, Article 6 of the Arbitration Law expressly confirms that the arbitration agreement is separate from the rest of the underlining contract. Although Article 7 of the Arbitration Law still requires an arbitration agreement to be made in writing, it expands the interpretation of the written form to include agreements concluded by means of an electronic communication, made at the hearing of the dispute by the court, as well as those incorporated by reference. In the latter case, it is advisable to make the reference to the specific clause to limit the risk of potential challenge in court.

In addition to the formal requirements, Article 4(1) of the Arbitration Law provides for an arbitration agreement to be signed by a representative having a specific authority to do so. It is therefore recommended to verify the powers of the representative to establish whether or not he is authorised to bind the party to an arbitration agreement. 

Enhanced Powers Granted to Arbitral Tribunal

The Arbitration Law expands the authority of an arbitral tribunal by providing it with some of the powers which were not recognised in the preceding arbitration regime under the CPC. These specifically include (i) the authority of an arbitral tribunal to rule on its own jurisdiction[6], (ii) the power to issue interim and conservatory measures[7] (which used to be frequently challenged), (iii) the authority to render interim and/or partial awards, [8] as well as to assess the costs of arbitration, including the fees and expenses of the members of the arbitral tribunal and tribunal-appointed experts[9]. Although the Arbitration Law does not contain any specific rules on costs allocation, an arbitral tribunal in the UAE will generally take into account the relative success of the parties in the arbitration and award the related costs accordingly.

The new arbitration regime has also introduced a number of provisions aimed at increasing the efficiency of the arbitral proceedings by providing a clear set of stringent timeframes and acknowledgement of modern means of communication, therefore allowing an arbitral tribunal to hold a hearing without the physical presence of the parties. [10] 

Relationship with the UAE Courts

Some of the most notable novations introduced by the new Arbitration Law, in our view, are those aimed at enhancing the relationship between the arbitral tribunals and the UAE courts.

Firstly, in accordance with Article 21 of the Arbitration Law, a party seeking enforcement of an interim measure issued by an arbitral tribunal may now apply to the competent UAE court of appeals after obtaining a permission from the tribunal. Separately, the UAE courts are now expressly empowered to provide assistance in taking evidence by issuing respective orders and sanctioning for the parties’ failure to comply with the orders. [11]

Article 43 of the Arbitration Law also provides arbitral tribunals with the powers to continue proceedings pending the determination of parallel criminal application made in relation to matters pertaining to the arbitration (for example, forgery). The Arbitration Law specifically allows continuation of the arbitral proceedings if the tribunal finds that the decision of the UAE courts in the related criminal proceedings is not indispensable for issuing an award on the merits. 

The Award

Article 41 of the Arbitration Law addresses the formal requirements of an award providing that one shall be made in writing and signed by the arbitrators. Notable is that contrary to the previous regime provided in the CPC, the Arbitration Law provides that an award may now be signed outside of the country but will still be deemed to be issued in the UAE. [12]

An award issued under the Arbitration Law has res judicata status and is enforceable as a court judgement[13]. Following the distinction between domestic and foreign arbitration, Article 55 of the Arbitration Law clearly stipulates that domestic awards issued in UAE-seated arbitrations are enforced through a ratification procedure in local courts of appeal. The Arbitration Law, however, lacks provisions relating to the enforcement of foreign arbitral awards.

The gap has been fulfilled by the UAE Cabinet Decision No 57 of 2018[14] (the Cabinet Decision). The Cabinet Decision establishes a separate procedure for enforcement of foreign arbitral awards which now must be brought directly to the competent execution judge in the UAE. Although establishing the national set of rules for enforcement of foreign arbitral awards, the Cabinet Decision provides for supremacy of any related international treaties to which the UAE is a signatory, such as the New York Convention on the Recognition and Enforcement of Arbitral Awards. [15]

Illia Salei,

International Arbitration Group,

Freshfields Bruckhaus Deringer LLP[1], Dubai


[1] The content in this article is provided for general information purposes only and does not constitute legal or other professional advice or an option of any kind. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Freshfields Bruckhaus Deringer LLP.

[2] See https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=ZQ&most_recent_value_desc=true.

[3] The Federal Law No 6 of June 2018 on Arbitration was published in the UAE Official Gazette on 15 May 2018, and came in force on 16 June 2018.

[4] The UAE Federal Civil Procedure Code No 11 of 1992.

[5] See https://www.adgm.com

[6] Article 19(1) of the Arbitration Law.

[7] Article 21 of the Arbitration Law.

[8] Article 39(1) of the Arbitration Law.

[9] Article 46(1) of the Arbitration Law.

[10] Article 33(3) of the Arbitration Law.

[11] Article 36 of the Arbitration Law.

[12] Article 41(6) of the Arbitration Law.

[13] Article 52 of the Arbitration Law.

[14] The UAE Cabinet Decision No 57 of 2018 was published in the UAE Official Gazette on 16 December 2018, and came in force on 17 February 2018.

[15] Article 88 of the Cabinet Decision.