The widely anticipated UAE law on arbitration – an end in sight?

by White & Case LLP
Contact

White & Case LLP

By the end of Q4 2017, the United Arab Emirates is expected to enact a new federal arbitration law based on the UNCITRAL Model Law and associated international standards.

The draft law, which is in its final stages of approval, is understood to have been passed by the UAE's National Assembly and Cabinet of Ministers and is currently being submitted to Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, President of the UAE, for his signature. The new law is likely to be enacted before the end of the year.

Issues with the current law

To date, the UAE does not have a modern, dedicated, formal arbitration code in place and currently addresses arbitration matters under Articles 203 - 218 of Chapter 3 of the UAE Civil Procedure Law (Federal Law No 11 of 1992, as amended) which do not conform to the United Nations Commission on International Trade Law (UNCITRAL) Model Law. The primary purpose of the Civil Procedure Law is the governing of court proceedings, and accordingly, only a small number of its articles relate to arbitral proceedings. As a consequence of this, together with the lack of certainty about how those provisions are to be applied, the lengthiness of the enforcement process and the fact that in many cases, arbitration proceedings are subject to the intervention and supervision of the UAE courts, the current law is widely considered in need of updating.

Highlights of the draft new law

Following its accession to the New York Convention in 2006, the key outstanding requirement for the UAE to modernise its arbitration framework is the introduction of a stand-alone arbitration law to replace the provisions of the Civil Procedure Law. The new draft arbitration law, which would govern all aspects of arbitration in the UAE at both local and federal level, has been designed as a specific law on arbitration which would repeal and replace Articles 203 - 218 of Chapter 3 of the UAE Civil Procedure Law. The latest draft law is understood to contain 61 articles covering both domestic and international arbitration and is designed to provide a swift and flexible arbitral process, vesting power in the arbitrator or tribunal to determine any challenges arising during the arbitration.

The draft law includes a number of important changes to the existing arbitration regime, for example:

  • providing a comprehensive procedural framework with defined conditions under which parties may apply to challenge the arbitration award, thereby limiting the scope for challenging awards on technicalities;
  • giving arbitration awards the status of court judgements, such that a party can immediately apply to the UAE courts for execution following ratification of their award, whereas previously enforcement of awards was a lengthy process, often taking up to two to three years; and
  • providing that where an arbitral award is set aside, the arbitration agreement remains valid and therefore unlike with the previous regime, the setting aside of an arbitral award will not be regarded as automatically invalidating the arbitration clause and consequently giving exclusive jurisdiction to the UAE courts to determine the matter. Instead, in such circumstances the parties must commence another arbitration to resolve their dispute, unless the challenge was in relation to the invalidity of the arbitration clause itself.

Gaps in the new law 

While undoubtedly a move in the right direction, the draft new law is understood to lack provisions granting immunity to arbitrators, which will no doubt be a source of concern for UAE arbitrators following the amendment of Article 257 of the Penal Code by Federal Law No. 7 of 2016 last year to provide that arbitrators found to be in contravention of the duty of neutrality and integrity shall be punished by imprisonment. Article 257 is, however, understood to be under the process of amendment and repeal.

Conclusion 

The lack of a stand-alone federal arbitration law is presently no doubt one of the biggest challenges to arbitration in the UAE. Whilst drafts of the arbitration law have been circulating since 2008, these have generally attracted criticism due to their non-conformance with the UNCITRAL Model Law and international arbitration best practice. This criticism has been specifically addressed with the current draft of the law on arbitration which, alike to the DIFC Arbitration Law (Law No.1 of 2008, as amended) and the ADGM Arbitration Regulations (Arbitration Regulations 2015), is specifically based on the Model Law. Accordingly, the new, harmonised law is expected to bolster confidence in the arbitration process in the UAE and address the risks and ambiguities that currently exist due to the absence of a modern and comprehensive arbitration system. It is hoped that the adoption of a modern and internationally recognised arbitration law in the UAE will encourage foreign investment and establish the UAE as a regional international arbitration hub, a move which will support the UAE Government's plan to diversify sources of income outside of the oil industry.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP
Contact
more
less

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.