UAE's new arbitration law will help boost business
It will make the country a preferred dispute resolving centre with parties free to choose their own arbitrators.
By signing the Federal Law No 6 of 2018, the President His Highness Sheikh Khalifa bin Zayed Al Nahyan has provided the UAE with a modern, internationally regarded domestic framework for arbitration. This is excellent news for the UAE and the Middle East as a whole. The law will come into force 30 days after it is published in the Official Gazette and demonstrates the UAE's continued efforts to open its doors to modern-day international arbitration and welcome new businesses and users to the region. The UAE, and in particular Dubai, will benefit greatly from this, as these steps will help cement Dubai as a regional and global centre for resolving disputes.
The phrase that requires emphasis here is 'continued efforts'. This is because the UAE already had a fairly well developed arbitral system as a result of substantial economic growth in the region, by way of investments in real estate and infrastructure projects. The UAE perhaps took its most significant step forward in 2006 when it acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It is also worth highlighting the UAE's efforts to enhance and cement the prominence of the Dubai International Arbitration Centre on the global stage, by agreeing for the expedient enforcement of DIAC awards in the financial free zone.
These examples are not meant to detract from the significance of the UAE's passage of its new Federal Arbitration Law, which was certainly needed and should be applauded, but rather to stress that the passage of this law serves as only the latest step along the path of progression. That being said, the new Federal Arbitration Law remains both timely and significant.
This is because prior to the introduction of the new domestic framework, there was no federal law dedicated to governing arbitration in the UAE. Instead, the procedure for arbitration was amalgamated into the UAE Civil Procedure Code, specifically Articles 203 - 218 of Federal Law No 11 of 1992 (as amended). The principal focus of these rules is court litigation, and so a small chapter on arbitration, consisting of 15 articles, illustrates the previously underdeveloped nature of this area in the UAE. This was mitigated as far as reasonably practicable by the courts, but the codification of these decisions in the new Law will only aid certainty for international users and help attract business to the region.
The new law governs all aspects of arbitration in the UAE at both the local and federal levels. The Federal Arbitration Law is largely based on the UNCITRAL Model Law, which is a positive step for the UAE, as States that adopt the UNCITRAL Model Law are largely perceived as arbitration friendly jurisdictions. Interestingly, the law notes that it will apply to ongoing proceedings even if the arbitration agreement was concluded before the law came into effect.
When compared to the previous domestic framework, there are several significant improvements which are sure to encourage more arbitrations to flow through the region. These changes include the confirmation of the validity of an arbitration agreement incorporated by reference in different circumstances, including to another agreement and where there has been a claim made in any court.
Arbitration agreements will now also be recognised and enforced if made by modern communication methods.
Importantly, under the new law, the parties are free to choose their own arbitrators and that there is no particular requirement of gender, nationality or religion. The important consideration is the arbitrator's impartiality and independence. This flexibility also extends to the logistics of the arbitration, which will help make proceedings more efficient. By way of example, the new law provides that the tribunal may convene meetings and hearings anywhere it considers suitable, including a venue outside of the seat. Further and most importantly, awards can now be signed outside the seat, including by electronic means, meaning that it is now unnecessary for arbitrators to travel to the UAE exclusively for the purpose of signing the award.
Other key features include the recognition of the kompetenz-kompetenz principle, affording the tribunal the power to rule on its own jurisdiction, as well as explicitly allowing the tribunal to grant interim relief to a party where appropriate.
The new Federal Arbitration Law is the latest significant step taken by the UAE to strengthen its position as a major centre for resolving disputes. The new law helps update the domestic framework and in doing so has brought the UAE in line with other preferred dispute resolution centres around the world.
Raid Abu-Manneh is a partner in the Construction & Engineering group and global co-head of the International Arbitration group at Mayer Brown