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UAE Federal Arbitration Law v UAE Arbitration Chapter: old wine in a new bottle? (Part 3)

This is the third and final part of a series of three blogs that have discussed in some detail the provisions of the new United Arab Emirates (UAE) Federal Arbitration Law and their prevailing similarities to the existing provisions of the UAE Arbitration Chapter. The comparison so far has shown that the provisions of the new law are in their majority old wine in a new bottle, giving rise to the proposition that the entry into force of that law later this year will not bring about the sea change that the local and international arbitration community was anticipating. That said the UAE Arbitration Chapter is not in as bad a shape as international commentators usually seek to make out. The provisions of the Chapter have received an arbitration-friendly interpretation over the past twenty years or so, having given rise to a jurisprudence constante. The resulting case law precedent lends support to the provisions on arbitration procedure and the powers of the arbitral tribunal, discussed in part 1 and part 2 in the series. As discussed in the further course of this blog, the provisions of the new law in relation to issuing, enforcing and challenging the award equally codify – in relevant part – the existing status quo under the UAE Arbitration Chapter.

Under the new law, the arbitrator becomes functus officio after issuance of the final award, subject to a 30 day period during which the tribunal may be required to provide clarifications of the award (Article 49). The presently prevailing situation is not dissimilar in that the issuance of a final award brings to an end the arbitrator’s mandate under the UAE Arbitration Chapter (see Case No. 193/Judicial Year 19, ruling of the Federal Supreme Court of 25 April 1999; Case No. 192/2007, ruling of the Dubai Court of Cassation of 27 November 2007; and Case No. 263/2007, ruling of the Dubai Court of Cassation of 3 February 2008; Blanke, I-136 and II-113); interpretation requests of unclear parts of an award can typically be advanced under the applicable local arbitration rules (see Blanke, I-142). Further, under the new law, where an arbitrator’s award is infra petita, the parties may, within 30 days of receipt of the award, request the arbitrator to make a decision on the outstanding issues, which in turn will form part of the final award (Article 51). Again, this is not materially different from the existing status quo under the UAE Arbitration Chapter (see Blanke, I-142).

Even under the new law, the enforcement and onward execution of an award still requires the completion of a ratification (or validation) process before the UAE courts (Article 52) in terms similar to those under Article 215(1) of the UAE Arbitration Chapter (see Blanke, I-144 and II-126-II-131). Under the new law, a supervisory court ruling ratifying an award cannot be appealed; only a ruling setting aside an arbitral award can (see Article 54). Further, unlike the present situation under the UAE Arbitration Chapter (see Case No. 166/Judicial Year 15; Blanke, II-133), the underlying arbitration agreement remains valid and the parties will have to pursue the resolution of their pending dispute in an arbitral forum. Article 54 also provides for the award to be remitted to the arbitrator to avoid nullification in the terms presently prevailing under Article 214 of the UAE Arbitration Chapter (see Case No. 32/Judicial Year 23, ruling of the Federal Supreme Court of 8 June 2003; Case No. 17/2001, ruling of the Dubai Court of Cassation of 10 March 2001Case No. 192/2007, ruling of the Dubai Court of Cassation of 27 November 2007; and Case No. 173/2013, ruling of the Dubai Court of Cassation of 24 April 2013).

The grounds for challenge of an arbitral award under the new law are identical to those of the UNCITRAL Model Law and hence perceived as more arbitration-friendly, even though this is not necessarily the case in practice given the UAE courts’ interpretation of the corresponding provisions in favorem arbitrandi (see Blanke, II-132 et seq.). Importantly, an application for annulment does not automatically suspend the execution of the award (Article 56). Under the new law, unlike the position under the UAE Arbitration Chapter, a decision by the UAE court to execute an award cannot be appealed, but a decision to stop execution can (Article 57). This, no doubt, is a significant improvement, which will ultimately support the swifter execution of arbitral awards.

From the comparative look taken at the provisions of the UAE Federal Arbitration Law and the corresponding provisions of the UAE Arbitration Chapter, it is evident that the new standalone arbitration law that is anticipated to take effect in the UAE later this year is not as far-reaching in the way it will change the practice and procedure of arbitrations seated in the UAE as was commonly anticipated. In actual fact, it tastes of old wine in a new bottle.

This may be distasteful to some, but the fact of the matter is that there was no need for the adoption of a standalone arbitration law in the first place. As I have defended on repeated occasion elsewhere and most recently in the Commentary on the UAE Arbitration Chapter, piecemeal reform (rather than the wholesale substitution) of the existing provisions of the UAE Arbitration Chapter, to the extent that any of these displayed procedural deficiencies, would have served a better purpose. Given the material similarities between the UAE Arbitration Chapter and the provisions of the new law, the existing case law precedent on the construction of the UAE Arbitration Chapter is certain to retain its relevance in the interpretation of the new law. For that same reason, the Commentary on the UAE Arbitration Chapter will also remain of relevance and be of great assistance in the interpretation of the provisions of the new Law.

With this in mind, I hope that the Commentary will be of service to those who seek guidance on the practice and procedure of arbitrations seated in the UAE, whether under the UAE Arbitration Chapter or the UAE Federal Arbitration Law: New wine in an old bottle will then hopefully not taste all that bad after all… Prosit!

DWF LLP Dr Gordon Blanke

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