UAE has positioned itself as a prominent hub for arbitration, particularly appealing to multi-jurisdictional parties. UAE’s robust legal framework and well-established arbitral institutions create an environment conducive to efficiently resolving commercial disputes.
These factors work together to attract global businesses seeking dependable dispute resolution mechanisms. The recent enhancements in arbitration rules further solidify the UAE’s reputation as a leading destination for international arbitration
Arbitration is a well-established method of resolving disputes outside the traditional courtroom. Most commercial agreements have an arbitration clause, where the parties agree to submit their disputes to one or more arbitrators. An arbitrator is an impartial and qualified third party appointed by or on behalf of the parties. The arbitrator, acting in a capacity akin to a judge, presides over the matter in a less formal setting compared to a traditional courtroom proceeding. Arbitration Awards are legally binding as a court decision.
UAE Arbitration Law
The UAE Arbitration Law, i.e., Federal Law No. 6 of 2018, was issued in May 2018 and was recently amended by Federal Law No. 15 of 2023. Important provisions of the Law are discussed below:
1. The UAE Arbitration Law applies to any arbitration that is carried out in the UAE (unless both parties agree to apply another arbitration law). The Law also applies to any International Commercial Arbitration that is carried out outside the UAE if the parties agree that it should apply.
2. Article 7 of the Law states that an arbitration agreement must be made in writing, except in some specified cases, such as when the arbitration agreement is contained in an exchange of communications, e.g., email correspondence.
3. Article 10 states that the arbitrator is not required to be of a particular gender or nationality, but the arbitrator should not have any direct relationship with any of the parties that would prejudice his impartiality, integrity, or independence.
4. Article 19 states that the Tribunal has the power to rule on its own jurisdiction and may do so either as a preliminary question or in a final arbitral award on the merits of the dispute.
5. Article 21 grants the Tribunal the power to issue interim measures upon request by a party or on their own initiative whenever they deem it necessary. Interim measures can include an order to preserve evidence that may be material to the resolution of the dispute, taking measures required to preserve the goods that constitute a part of the subject matter of the dispute, preserving assets and property of which a subsequent award may be enforced or maintaining status quo.
Alignment with International Standards
The UAE Arbitration Law is primarily based on the UNCITRAL model. The UAE Arbitration Law aligns closely with the provisions of the UNCITRAL Model Law regarding the formation of arbitral tribunals and the grounds for contesting arbitral awards.
Both prioritize party autonomy, granting parties the freedom to determine various elements of the arbitration process, such as the number of arbitrators and the procedural rules. They mandate that arbitration agreements be documented in writing, which enhances both clarity and enforceability. They restrict judicial intervention in arbitration, allowing court involvement only for specific purposes like appointing arbitrators or enforcing awards.
Recent Developments in UAE Arbitration Law
Enhanced roles for arbitrators and institutions
The UAE Arbitration Law was recently amended by Federal Decree-Law No. 15 of 2023 with significant updates to Article 10, which outlines the requirements for arbitrators. A key amendment states that an arbitrator must not have a direct relationship with any of the parties to the arbitration case that would prejudice his impartiality, integrity, or independence.
Recognition of Virtual Hearings and Modern Practices
Remote hearings/Virtual Hearings have become increasingly popular because of their cost and time-saving advantages. Article 28 of Federal Decree-Law No. 15 of 2023 now clearly acknowledges and establishes virtual hearings as a completely valid option for arbitration.
Benefits of Arbitration for International Businesses
Arbitration is a preferred alternative to traditional court proceedings for several reasons. First, arbitration proceedings are private and confidential. Confidentiality is an essential feature of arbitration and is one of the main reasons parties choose arbitration. Arbitration is considered a private dispute resolution process, and the parties, arbitrators, and the arbitration institution are required to maintain confidentiality with regard to the proceedings, evidence, and award (unless the parties agree otherwise).
Second, arbitration involves a thorough analysis of complex disputes. Unlike litigation, Arbitration enables the parties to select arbitrators with extensive knowledge and experience in the relevant industry. Parties can also appoint technical experts with specialist knowledge to conduct in-depth analysis of technical issues.
Prominent Arbitration Institutions
1. Dubai International Arbitration Centre (DIAC)
Dubai International Arbitration Centre (DIAC) was founded in 1994 as the Commercial Conciliation and Arbitration Centre, initiated by the Dubai Chamber of Commerce. In 2004, it was renamed the Dubai International Arbitration Centre through Dubai Decree No. 10.
As of September 2021, DIAC operates independently from Dubai Chambers and features a three-tier structure that includes a Board of Directors, an Arbitration Court, and an administrative body. Since its establishment, DIAC has developed significant expertise in managing arbitration cases.
DIAC introduced its new Arbitration Rules in 2022. These rules address the evolving needs of arbitration and business communities. Under the new rules, DIAC’s default seat of arbitration is DIFC (unless otherwise agreed by the parties), where the DIFC Arbitration Law applies to the arbitral proceedings.
2. Abu Dhabi International Arbitration Centre (arbitrateAD)
The Abu Dhabi International Arbitration Centre (arbitrateAD) commenced operations on 1 February 2024. This new institution replaces the previous Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC).
The Arbitration Rules for arbitrateAD came into force on 1 February 2024. One of the key features of the Rules is the establishment of the Court of Arbitration, an independent administrative body that plays a supervisory role over the arbitrations.
The Rules designate Abu Dhabi Global Market (ADGM) as the default seat for arbitrations unless otherwise agreed by the parties. The establishment of arbitrateAD marks a pivotal advancement in the modernization of arbitration in Abu Dhabi. By adhering to global standards and offering a comprehensive framework for resolving disputes, arbitrateAD is set to be instrumental in assisting both local and international businesses.
Resolve Complex Disputes with Confidence: Partner with SK Legal for Arbitration in the UAE
Resolving large and complex disputes requires a strategic approach and specialized expertise. Arbitration offers businesses an efficient and private alternative to traditional litigation, and disputes are addressed by impartial experts in a streamlined process.
At SK Legal, we specialize in providing comprehensive arbitration services tailored to the needs of international businesses operating in the UAE. With our deep understanding of UAE’s arbitration laws and access to leading arbitral institutions, we deliver results that protect your interests and align with your business goals.
Our strong local presence and global perspective give us a distinct advantage in managing high-stakes arbitration cases. Whether you’re dealing with cross-border disputes or seeking enforceable resolutions, our experienced team is here to guide you through every step.
Secure reliable dispute resolution today. Contact us at info@sklegalfirm.com for personalized legal advice and expert arbitration services in the UAE.
Frequently Asked Questions (FAQs) about Arbitration for International Businesses
The UAE stands out as a premier arbitration hub due to its robust legal framework and well-established arbitral institutions. These factors work together to foster an environment that efficiently and effectively addresses commercial disputes, making it an appealing location for international businesses searching for dependable arbitration options.
Commercial arbitration is a form of alternative dispute resolution that involves resolution of commercial disputes outside of the court system. Arbitration involves an impartial third party, known as an arbitrator, who listens to both sides of a dispute and makes a binding decision. This alternative dispute resolution mechanism is particularly valued for its confidentiality and flexibility.
International arbitration plays an important role in resolving international commercial disputes. It offers several key advantages, such as confidentiality and flexibility, that make it the preferred choice for companies engaged in cross-border transactions.
The UAE Arbitration Law aims to bolster the credibility of arbitration as a dispute resolution mechanism. The UAE Arbitration Law explicitly prohibits arbitrators from having any direct relationships with the parties involved in arbitration cases. Arbitrators are required to disclose any circumstances that may raise doubts about their neutrality.
Arbitration is a preferred alternative to traditional court proceedings for several reasons. First, arbitration proceedings are private and confidential. Second, arbitration involves a thorough analysis of complex disputes. Unlike litigation, Arbitration enables the parties to select arbitrators with extensive knowledge and experience in the relevant industry. Parties can appoint technical experts with specialist knowledge to conduct in-depth analyses of technical issues.
Disclaimer
This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Therefore, any reliance on such material is strictly at your own risk.
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Sameer A. Khan
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