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The UAE Federal Arbitration Law: an initial verdict (Part 1)

The United Arab Emirates (UAE) Federal Arbitration Law (see Law No. 6 of 2018 Concerning Arbitration) was finally adopted on 3 May 2018. I anticipated the adoption of the new law in a trilogy of blogs published in the summer of 2017 (see Part 1, Part 2 and Part 3). The draft law that I commented on then was the official draft bill that was fed into the UAE legislative process in May last year and that has now been adopted in slightly amended form. The comments I made previously on the continuing similarities between the new law and the UAE Arbitration Chapter, which the new law is to replace, remain true; I will, therefore, not repeat them here. However, a number of modifications that may raise eyebrows deserve further scrutiny. These will be discussed in some detail in a series of two consecutive blogs.

Needless to say, the adoption of the UAE Federal Arbitration Law, which is based on the UNCITRAL Model Law, marks a new era for arbitration in the UAE. It places the UAE on par with other Model Law jurisdictions and sends a strong signal to arbitration users and the arbitration community at large that arbitrations in the UAE follow best procedural practice and procedure. That said, as I have demonstrated elsewhere (see G. Blanke, Commentary on the UAE Arbitration Chapter, Sweet&Maxwell/Thomson Reuters, 2017), arbitration under the UAE Arbitration Chapter – albeit procedurally challenging – has never been unnavigable. To the contrary, the construction of the provisions of the UAE Arbitration Chapter by the UAE courts over the past quarter of a century has given rise to a jurisprudence constante that has provided reliable (and mostly arbitration-friendly) guidance on arbitration practice and procedure under the UAE Arbitration Chapter. In actual fact, the new law raises procedural concerns of its own and will not serve as a panacea for all procedural irregularities that were the bane of practice under the UAE Arbitration Chapter.

A number of points that I did not have an opportunity to discuss in further detail in my previous blogs deserve further consideration here.

Entry into force

It remains uncertain when precisely the new law will enter into force. The new law itself provides for entry into force from one month after publication of the text of the new law in the Official Gazette. Official publication of the new law is presently still pending but scheduled to take place shortly. By way of reminder, once in force, the new law will apply to all pending UAE-seated arbitration proceedings with immediate effect.

Scope of application

The new law applies to arbitrations seated inside the UAE or to arbitrations in relation to which the parties have contracted into the application of the new Law (Article 2).

International v domestic

The new law also introduces the notion of international arbitration: references under the new law are international in the event that the seat of arbitration is outside the UAE; the place related to the subject matter of the dispute or the performance of the parties’ contractual obligations is located outside the UAE; the subject matter of the dispute relates to more than one country; or the head offices of the arbitrating parties were in different countries at the time of entering into the arbitration agreement (Article 3). Importantly, the qualification of an arbitration as international will produce a foreign award enforceable under an international enforcement instrument, such as the 1958 New York Convention.

Party representation

Under the new law, there is a continued requirement for special powers of attorney for valid representation of a party in arbitration or a party’s valid submission to an arbitration process (Article 4) (subject to, of course, the application of apparent authority to the formation of arbitration agreements in the terms ordained by the UAE courts under the UAE Arbitration Chapter).

Arbitrability

In terms similar to those of the UAE Arbitration Chapter, the new law limits arbitrability to matters that are capable of conciliation (Article 4(2)). That said, both contractual and non-contractual causes of action, such as (common law) torts, can be submitted to arbitration under the new law (Article 2(3)).

Arbitration defence

The arbitration defence no longer needs to be raised “in the first session/hearing” before the court, a term that used to cause interpretive challenges under Article 203(5) of the UAE Arbitration Chapter (Article 8(1)). That said, for procedural efficiency, it will no doubt be necessary to raise the arbitration defence before the court at the earliest possible opportunity.

Formation of the tribunal

The new law specifically prohibits institutional nepotism: members of the boards of trustees or case-handlers of an arbitral institution may not be appointed as arbitrators in a reference administered by that institution (Article 10(2)). In any default appointments, the competent court will be assisted by a “list of specialised arbitrators” sourced from a local arbitration institution (Article 11(8)).

Preliminary meeting

Under the new law, there is also no longer a formal requirement for a Preliminary Meeting in the terms of Article 208(1) of the UAE Arbitration Chapter. This will streamline the arbitration process and remove one of the procedural obstacles that existed under the UAE Arbitration Chapter.

Court of Appeal

Under the new law, all “court-supportive functions” are initiated before the competent court of appeal. The decisions of the court of appeal are mostly final and binding and cannot be appealed. This will undoubtedly promote the overall efficiency of the arbitration procedure.

Interim measures

The new law expressly confers wide powers upon the courts and tribunals to support the arbitral process through interim measures both before (in the case of the courts) and after initiation of the arbitration (Articles 18 and 21).

Third party joinder

The tribunal is granted a power to join to the arbitration process a third party that is bound by the underlying arbitration agreement (Article 22).

Confidentiality

The new law stipulates the confidentiality of the arbitration process (Article 33(1)).

Video-conferencing

Hearings, including the hearing of witnesses, as well as tribunal deliberations may be conducted by means of modern means of communication (such as video-conferencing) (Articles 33(3) and 35). There is therefore no requirement for witnesses to be physically present at a hearing, nor for arbitrators to meet in person for deliberations.

Oath-taking

In stark contrast to the position under Article 211 of the UAE Arbitration Chapter, there is also no longer an express requirement for taking witness testimony on oath.  However, this requirement may survive, given the mandatory character it has been accorded by existing case law precedent (International Bechtel Co. Ltd. v Department of Civil Aviation of the Government of Dubai, Dubai Court of Cassation, Petition No. 503/2003 (judgment dated 15 May 2005)). In this context, it is worth recalling that the new law subjects the hearing of oral testimony to applicable UAE laws (Article 33(7)), which in turn may require compliance with the oath-taking requirement under the UAE Law of Evidence.

… to be continued…

DWF LLP Dr Gordon Blanke

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