Arbitration is an internationally recognized method of dispute resolution, under which a legal dispute between two or more parties is decided by one arbitrator or more. Like other jurisdictions, in the United Arab Emirates, there has been a steady move towards arbitration as a dispute resolution mechanism with several established arbitration institutions.
UAE Arbitration Law – Overview
In 2018, the UAE introduced a new arbitration law, called the Federal Law No. 6 of 2018 on Arbitration (UAE Arbitration Law).
Under Article 2 of the UAE Arbitration Law, this law is applicable to an arbitration which is conducted in the UAE. That said, in case the parties agree that another law should govern the arbitration, then that law will be applicable provided that it is not contrary to public order and public morality.
Article 2 of the UAE Arbitration Law further states that this law is applicable to an international commercial arbitration carried out abroad if the UAE Arbitration Law has been chosen by the parties to govern the arbitration. The UAE Arbitration Law will also apply to any arbitration arising from a dispute in a legal relationship, irrespective of contract, which is governed by the UAE laws.
Proceedings under the UAE Arbitration Law
As far as the proceedings are concerned, the parties are free, under Article 23/1 of the UAE Arbitration Law, to agree on the procedure that the arbitral tribunal should follow in the arbitration. The parties can subject the arbitral proceedings to the rules of an arbitration institution inside or outside the UAE.
If there is no agreement to follow a certain procedure, the arbitral tribunal may determine the procedure to be followed under Article 23/2 of the UAE Arbitration Law. This would be subject to the provisions of the UAE Arbitration Law, and the basic principles in litigation and international agreements to which the UAE is a party.
In accordance with Article 9 of the UAE Arbitration Law, based on the agreement of the parties, the arbitral tribunal should consist of one arbitrator or more. In case of no agreement between the parties, three arbitrators will be appointed, unless the relevant authority decides otherwise.
Under the UAE Arbitration Law, arbitration is not allowed where matters cannot be submitted to conciliation.
Arbitration Institutions
Arbitration institutions conduct and administer arbitration proceedings. In the UAE, Dubai International Arbitration Centre (DIAC) is the most common arbitration institute and recently underwent an overhaul and issued new arbitration rules for itself which have come into force on 21 March 2022.
Other arbitration institutes like the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre Arbitration Institute (which administered the DIFC-LCIA arbitration centre) were abolished and their assets and operations merged with DIAC, pursuant to Decree No 34 of 2021 issued by the ruler of Dubai.
Abu Dhabi Commercial Conciliation and Arbitration Centre is another arbitration institute which organizes and conducts arbitration in Abu Dhabi.
DIAC Rules
The new arbitration rules of DIAC are called the Arbitration Rules 2022, and came into force this year. The Arbitration Rules 2022 will apply to arbitrations which commence after 21 March 2022 regardless of the date on which the underlying agreement to arbitrate was entered into (Article 2.3). Under Article 2.1 of the Arbitration Rules, where the parties have agreed to submit their existing or future disputes to DIAC or Dubai Chamber of Commerce and Industry, they shall be deemed to have submitted to the Arbitration Rules.
The Arbitration Rules 2022 set out the procedure for commencing arbitration, nomination and appointment of the arbitral tribunal, including conditions related to the nationality of the arbitrators, number of arbitrators, etc. The rules also explain the procedure in case of failure to appoint an arbitrator. The Rules further set out the procedure for the conduct of arbitral proceedings, including rules related to the seat, place and language of arbitration and the arbitral award and related costs.
Conclusion
While arbitration is considered to be a more costly affair than the traditional route of dispute resolution, there has been a massive increase in arbitrations conducted in the region in the recent times, in line with the international standards and is indicative of UAE’s rise as an arbitration friendly jurisdiction, like its European counterparts.
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