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UAE Federal Arbitration Law v UAE Arbitration Chapter: old wine in a new bottle? (Part 2)

In Part 1 of this blog, I discussed in some detail the historical background of the United Arab Emirates (UAE) Federal Arbitration Law and its imminent adoption. The discussions in Part 1 also showed that the procedural framework for arbitrations under the Federal Arbitration Law, including in relation to the formation of the arbitration agreement, the doctrine of separability and the appointment of arbitrators is not very different from that presently in place under the UAE Arbitration Chapter. To an extent, therefore, it is safe to say that in these areas at least, the UAE Federal Arbitration Law codifies a position that already exists under the UAE Arbitration Chapter and stays in line with the established case law precedent of the UAE courts.

A further examination of the remaining provisions of the UAE Federal Arbitration Law confirms that the new law is not entirely novel conceptually but is really no more than old wine in a new bottle. This is not necessarily a bad thing given that the provisions of the UAE Arbitration Chapter and their construction by the UAE courts have often been criticised for no good reason. As I concluded in my recent Commentary on the UAE Arbitration Chapter, the UAE courts have made a great effort to construe the existing provisions of the UAE Arbitration Chapter in favorem arbitrandi. As a result, the existing deficiencies of the UAE Arbitration Chapter could have been addressed through reform rather than the wholesale adoption of a standalone law.

Article 19 codifies the tribunal’s power to decide on its own jurisdiction, including more specifically the validity of the underlying arbitration agreement. For the avoidance of doubt, the tribunal’s kompetenz-kompetenz has already been firmly established by the UAE court’s interpretation of the UAE Arbitration Chapter (see Case No. 108/Judicial Year 3, ruling of the Federal Court of Cassation of 12 March 2009; Blanke, I-102 and II-007). Importantly, again in recognition of the status quo, the tribunal will not hear matters that do not fall within its proper jurisdiction, such as an allegation of forgery, which will be dealt with by the competent courts (Article 43).

Article 209(2) of the UAE Arbitration Chapter expressly provides for the temporary suspension of the arbitral proceedings pending a referral of such matters to the curial courts (see Case No. 513/2010, ruling of the Federal Supreme Court of 5 January 2011; Blanke II-082-II-083). For the avoidance of doubt, to the extent that such matters do not bear on the outcome of the arbitration, the new law expressly allows the continuation of the proceedings pending investigations of forgery by the competent authorities.

The new law also allows for the adoption of injunctive relief in support of the arbitral process, both by the curial courts and the tribunal (Article 18), including in particular for the preservation of evidence that is relevant to the dispute (Article 21). Such powers also exist within limits under Article 209(2)(b) of the UAE Arbitration Chapter (see Blanke, II-085).

Article 46 empowers the tribunal to determine the costs of the arbitration, including the parties’ costs, and as such seems to address the present shortcomings of Article 218 of the UAE Arbitration Chapter, which requires an express agreement by the parties on the award of party costs for these to be awardable (see Case No. 282/2012, ruling of 3 February 2013 of the Dubai Court of Cassation; Blanke, I-139 and II-153-155). Under the new law, the tribunal’s decisions on costs will be subject to curial court review (absent an agreement on costs between the parties).

The new law endorses the concept of party autonomy, leaving it to the parties to determine the institutional rules applicable to the arbitration (Article 23). Failure to agree will empower the tribunal to adopt the set of rules it considers most appropriate. This provision essentially suggests that an arbitral tribunal can opt for the application of an institutional set of rules in order to alleviate the procedural difficulties of ad hoc arbitrations. Under the UAE Arbitration Chapter there exists a similar freedom on part of the parties and the tribunal to designate appropriate arbitration rules (see Blanke, I-004 et seq.).

Article 28 empowers the tribunal to determine the place of arbitration in the absence of party agreement and to hold any arbitration hearings at a place other than the arbitral seat. This confirms the existing position under the UAE Arbitration Chapter (see Blanke, I-1081-I-1082, I-126). The new law also expressly provides for the provision of hearing transcripts to the parties, which appears to reflect the minuting requirement under Article 208(3) of the UAE Arbitration Chapter (see Case No. 121/Judicial Year 14, ruling of the Federal Supreme Court of 27 December 1992; Blanke, I-127 and II-079). The new law also makes provision for submission of relevant evidentiary documents in translation (Article 29), again seemingly in recognition of the existing case law precedent to that effect (see Case No. 121/Judicial Year 14, ruling of the Federal Supreme Court of 27 December 1992; Case No. 924/Judicial Year 3, ruling of the Federal Court of Cassation of 17 December 2009; Case No. 518/2010, ruling of the Federal Supreme Court of 12 January 2011; and Blanke, I-083 and II-136).

Article 36 enables the parties and the tribunal to apply to the curial courts in order to request assistance in compelling a recalcitrant witness to appear before the tribunal or facilitating the production of documents by third parties. This form of assistance by the UAE courts is familiar from Article 209(2)(a) of the UAE Arbitration Chapter and has, on occasion, been used by arbitrating parties in the past (see Blanke, II-084).

Under the new law, the final award must be rendered within six months from the first hearing, subject to agreement by the parties otherwise (Article 42). The tribunal is further empowered to extend the time-limit for rendering the final award of its own motion by six months. Absent party agreement, applications lie to the UAE courts for further extensions. This situation is presently no different under Article 210 of the UAE Arbitration Chapter (see Blanke, I-133–I-136 and II-089–II-095). Further, again in terms similar to those presently prevailing under the UAE Arbitration Chapter (see Case No. 301/Judicial Year 20, ruling of the Federal Supreme Court of 13 December 1998; Case No. 71/Judicial Year 20, ruling of the Federal Supreme Court of 12 December 1999; Case No. 43/Judicial Year 23, ruling of the Federal Supreme Court of 13 April 2003; Case No. 873/Judicial Year 3, ruling of the Federal Court of Cassation of 22 October 2009; Case No. 447/Judicial Year 4, ruling of the Abu Dhabi Court of Cassation of 30 September 2010; Case No. 216/2005, ruling of the Dubai Court of Cassation of 26 June 2006; Case No. 222/2006, ruling of the Dubai Court of Cassation of 25 February 2007; and Case No. 156/2009, ruling of the Dubai Court of Cassation of 27 October 2009; Blanke, II-090), in the event that the arbitration process has expired, the UAE courts will be the competent forum to rule on the merits.

To those familiar with the operation of the UAE Arbitration Chapter, this all tastes like more old wine in a new bottle…

… to be continued…

DWF LLP Dr Gordon Blanke

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