Arbitration has long been established as a method of dispute resolution in the Middle East. In recent times, with the enormous economic growth experienced in the region, and the UAE’s liberal approach to foreign investment, the provision for solving disputes by arbitration has become even more prominent in commercial contracts, aided in part by the fact that it is the favoured method of resolving disputes under many standard form construction contracts.
The UAE has been a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the “New York Convention”, since 1996, but there is currently no federal legislation in force that is solely concerned with arbitration. The legislative provisions that presently apply to arbitrations in the UAE are Articles 203 to 218 of UAE Federal Law No. 11 of 1993, Issuing the Law of Civil Procedure, usually referred to as “the Civil Procedure Code”. A separate law relating to arbitration is in place in the DIFC Free Zone.
The UAE Federal Government, in a move aimed at enhancing investor confidence, has announced that a new Federal Law governing arbitration (“the New Arbitration Law”) throughout the Emirates is to be passed in the near future, with reports suggesting this will happen later this year.
Given that the law is presently still in draft form (“the Draft Arbitration Law”), it is entirely possible that there will be further modifications and refinements made before the Draft Arbitration Law is issued. However, an unofficial English translation of the Draft Arbitration Law was circulated at the recent Draft Arbitration Law Conference held in Abu Dhabi.
The Draft Arbitration Law that we have had the opportunity to review is not a direct reproduction of the UNCITRAL Model Law (“the Model Law”), but it appears that the drafters have had regard to the provisions of the Model Law in preparing the Draft Arbitration Law.
Some of the notable features of the unofficial English translation of the Draft Arbitration Law currently in circulation are:
1. The arbitration agreement is separate from the rest of the contract. Termination, dissolution or the invalidity of the contract, will not affect the validity of the arbitration agreement (Article 11(4)). This confirms that the view taken of arbitration agreements in many overseas jurisdictions will also apply in the UAE.
2. The arbitration agreement is required to be in writing (Article 12). It is worth mentioning that the Draft Arbitration Law goes beyond the Model Law and includes a provision that the arbitration agreement will be considered to be in writing if it is mentioned in written communications between the parties, including an email letter in accordance with the applicable rules of electronic transactions.
3. In the event the parties cannot agree on the number of arbitrators to be appointed, then the dispute shall be determined by a tribunal of three arbitrators (Article 16 (2)).
4. Either party, or the tribunal, may request the relevant local court to pass judgment on a witness who fails to attend or refuses to give sworn evidence or answer a question without legal justification. Similarly, the court may be asked to require a third party to provide any documents in their possession. (Articles 36 and 37).
5. The tribunal may issue interim awards (Article 43).
6. Where there is no agreement on the time period within which an award must be delivered, the tribunal is to deliver the award within six months of the first session, but the tribunal may, of its own volition, extend the period for delivering the award by up to 6 months (unless the parties agree to a longer extension) (Article 44). This differs from the current requirement under the Civil Procedure Code that the arbitration be completed within six months of the first session (unless the parties have stipulated a different period, or agree to extend the period of the arbitration).
While only time will tell what form the New Arbitration Law will take, it appears that the new law will be a more comprehensive piece of legislation than that which currently exists, and will take a form familiar to parties experienced in international arbitration given the regard had to the Model Law.
By Sachin Kerur and Jeremie Witt