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The European, Middle Eastern and African Arbitration Review 2014

United Arab Emirates

Arbitration in the United Arab Emirates

UAE federal law and domestic arbitrations

The arbitration law of the UAE is contained in various articles of Federal Law No. 11 of 1992, the UAE Civil Procedure Code (CPC). The main provisions are set out in articles 203 to 218. The requirements for enforcement and recognition of arbitration judgments in the UAE are set out in article 215 (with respect to domestic judgments) and articles 235 to 238 CPC (with respect to foreign judgments) and execution procedures are dealt with in articles 239 to 243. These provisions of the CPC are not based on the UNCITRAL Model Law and are often criticised for lacking the necessary detail for modern complex arbitral proceedings. These criticisms are examined below.

Arbitration agreement

For an arbitration agreement to be enforceable in the UAE, the arbitration agreement must be in writing and can be contained in either the main contract or a separate arbitration agreement.1 Should a party commence court proceedings as an alternative to following a contractual arbitration provision, and the party seeking to rely on the arbitration clause fails to raise its existence at the first hearing before the court, the UAE court will deem that the parties have waived their right to consider arbitration as a means of dispute resolution.2

The Tribunal

The arbitration provisions of the CPC contain mandatory provisions concerning the appointment of the Tribunal. There must be an odd number of arbitrators3 and they must not be a minor, have a criminal conviction, have been bankrupt; or be legally incapacitated.4 If the parties fail to agree on the number or identity of the arbitrators, the UAE courts are tasked with making the appointments, which will be final and not capable of appeal.5 Should a party wish to challenge and potentially dismiss an arbitrator, it can only do so after the appointment has been made on the grounds of independence or impartiality,6 or if the arbitrator has deliberately neglected to act in accordance with the arbitration agreement.7 A party’s application to remove an arbitrator must be made within five days of either the arbitrator’s appointment or the date on which the grounds for dismissal became known.8

Procedure

Once the Tribunal has been appointed it must, within 30 days of accepting the appointment, inform the parties of the date and venue of the first hearing.9 Generally, the parties will agree in the arbitration agreement the procedures that are to be followed in the arbitration.10

Award

The arbitral tribunal must issue the arbitration award within six months after the date of the first hearing.11 The parties can agree an extension to this time limit in the arbitration agreement itself or the court can extend this time limit upon application by either the tribunal or one of the parties.12

Mandatory provisions of the CPC

The CPC contains further mandatory rules that govern the conduct of the arbitration. For example, witnesses of fact or expert witnesses must present their respective evidence under oath13 and the arbitration proceedings must not violate UAE ‘public policy’.

The procedural requirements set out above can amount to barriers to enforcement of awards if they are not complied with and are often used as the bases for challenges to arbitral awards in the UAE courts. We discuss this issue in further detail below when discussing potential grounds for nullification of arbitral awards under the CPC.

Enforcement of domestic arbitral awards in UAE (non-DIFC)

There is no right to appeal an arbitral award under UAE law.14 However, before a domestic arbitral award can be enforced by the successful party, the award must be ratified by a UAE court.15Parties seeking to apply to the UAE court to ratify an award are required to follow the same steps as if they were bringing an action in the court of first instance in the appropriate local or federal court (ie, issuing a claim form and supporting documents). Once the claim is filed, it is up to the court to either ratify or annul the award. Consequently, new proceedings are essentially commenced. It is important to note that, as a result, the enforcement of awards through UAE courts can be a lengthy process. The new proceeding which must be commenced is subject to the ordinary channels of appeal; the court of first instance’s ruling is open to appeal by the losing party to the court of appeal and, subsequently, the court of cassation. Only once the court of appeal or cassation has ratified the award can the award then be recognised and enforced by the UAE courts. The process may take up to 18 months depending on the intricacies and complexity of the case and if the party against whom the enforcement is sought resists. This lengthy process is one of the criticisms most often made of arbitration in the UAE.

When examining the arbitral award, the court will consider its validity according to the general provisions contained in articles 215 and 216 CPC. The provisions of the CPC do not permit the courts to reconsider the merits of the tribunal’s findings, allowing only examination on procedural grounds. Such grounds are considered below.

Grounds for annulment of domestic arbitral awards

It is very common for the losing party to an arbitration that has taken place in the UAE to apply for an annulment in the form of a defence to the action for ratification. Parties are increasingly challenging awards on the procedural grounds referred to above which, to those unfamiliar with the CPC, may appear mere technicalities. For example, in the past 12 months we have seen annulment applications based on one or more of the following grounds:

  • the signatory to the contract containing the arbitration clause was not specifically authorised to conclude an arbitration clause;16
  • the part of the contract containing the arbitration agreement had not been signed by the parties despite the fact that the main body of the contract had been signed;17
  • the terms of reference (in an ICC arbitration) was signed by a person who was not authorised to do so, despite the fact that all other procedures for commencing arbitration had been complied with;18
  • legal representatives were not properly authorised to attend and make submissions at the hearing, or were not duly authorised to sign the terms of reference or to extend the deadline as prescribed in the terms of reference;19
  • witnesses had not given evidence under oath in the manner required by UAE law;20
  • the award was not issued within six months from the initial arbitral hearing,21 even though it is standard practice for parties to agree that this time is automatically extended;
  • the award was not delivered to the parties within five days of the date of the award;22
  • the majority award of a three-member tribunal did not refer to a dissenting opinion;23
  • the arbitrators only signed the last page of the arbitral award but the other pages of the award, which set out the grounds for the ultimate decision, were not signed;24
  • not all the arbitrators signed the arbitration award while they were physically present in the UAE;25 and
  • due to ‘public policy’ considerations.

All the above procedural challenges are based on provisions of the CPC (as referred to in the footnotes relating to the specific challenges set out above), but a number of them seek, in the opinion of the authors, to stretch the wording of the CPC far beyond what it was intended to guard against. For example, although the CPC provides that an arbitration agreement may only be entered into by parties with authority to enter into such an agreement, should this be extended to include the terms of reference (in an ICC arbitration) if the arbitration agreement itself was executed by a duly authorised representative and the arbitration had already begun? It should also be noted that these challenges, as well as being brought at the enforcement stage only and not being raised earlier, are commonly advanced by the party that caused the alleged procedural irregularity in the first place (ie, the party seeking the annulment is attempting to rely on the fact that its representatives did not, for example, have the necessary authority).

The consequence of these common challenges is that it is imperative that those with conduct of the arbitration (both counsel and Tribunal) ensure that all the procedural requirements set out in the CPC are strictly complied with as, unless and until a stand-alone federal arbitration law is introduced, such challenges are likely to continue to be raised. Such annulment applications on procedural grounds have made the enforcement of domestic arbitration awards extremely challenging. Indeed, in the authors’ opinion, it is as a direct consequence of such procedural challenges that a number of parties are now preferring to agree that the procedural law governing the arbitration proceedings be the DIFC Arbitration Law (described in detail below), instead of the CPC.

Further, in its ruling of 16 September 2012 in Baiti Real Estate Development v Dynasty Zarooni Inc, the Dubai Court of Cassation (Dubai’s highest court) recently annulled three Dubai International Arbitration Centre (DIAC) awards on the grounds of ‘public policy’. Although the ramifications of that ruling are not yet clear, on the face of it, the ruling provides a significant restriction on regional arbitration by virtue of the court’s interpretation of the public policy concept in the context of enforcement of domestic and foreign arbitral awards. The dispute concerned an off-plan property transaction whereby Zarooni purchased an off-plan building in Dubai from Baiti. The arbitrator ruled that the sale and purchase agreement was invalid because the property was not registered on the interim real estate register, as required by article 3 of Law No. 13 of 2008, and ordered Baiti to reimburse the entire purchase price. Baiti appealed the award to the Court of First Instance and then to the Court of Cassation.

The Court of Cassation held that the sole arbitrator had ‘exceeded the bounds of his authority and resolved an issue relating to public policy’. The court concluded that the arbitrator did not have the power to arbitrate matters relating to the interim real estate register because such issues are ‘considered to be related to public policy for being related to the rules of private ownership and the circulation of wealth’. The court referred to the definition of public policy contained in article 3 of the UAE Civil Transactions Code, which states:

public policy shall be deemed to include matters relating to personal status such as marriage, inheritance, and lineage, and matters relating to systems of government, freedom of trade, the circulation of wealth, rules of individual ownership and the other rules and foundations upon which society is based.

The ruling of the court of cassation has been interpreted by a number of legal commentators to mean that any dispute relating to property ownership would fall within ‘rules of individual ownership’ and so would be public policy considerations and non-arbitrable. Such interpretation, if correct, would clearly have a significant impact on the arbitration community in Dubai given the high number of arbitrations brought each year that could be deemed to be ‘property ownership’ related. It is anticipated that the Dubai judiciary may distinguish this case and limit its application of ‘public policy’, perhaps on the basis that it applies only to issues relating to article 3 of Law No. 13 of 2008 (the interim real estate register) and not to all real-estate or property-ownership related disputes. It seems at least possible that, until such clarification is made, parties may seek to resist arbitration if the substantive issue is ‘property ownership’ related.

Perhaps partly to appease investors in light of the Zarooni decision, the Dubai Land Department has announced plans to open a specialised arbitration centre purely for real estate disputes. A draft law to establish the Dubai Real Estate Arbitration Centre has already been sent to the Executive Committee of Dubai for approval. It is not yet clear when such law will be introduced.

Enforcement of foreign arbitral awards (non-DIFC)

The enforcement of foreign arbitral awards in the UAE (non-DIFC) has historically not been routine with a number of decisions having been issued in which the UAE courts have applied the strict provisions of domestic legislation resulting in the setting aside of foreign awards. In the absence of a multilateral or bilateral treaty, foreign awards may be refused enforcement in the UAE courts for the reasons set out in article 235 CPC.26 However, since the UAE’s accession to the New York Convention on the Recognition and Enforcement of Arbitral Awards 1958 (the New York Convention) in 2006, this issue has become more straightforward.

In addition to the New York Convention, the UAE is also party to a number of multilateral27 and bilateral treaties28 relating to recognition and enforcement of foreign arbitral awards.Article 238 CPC provides that the rules set out in article 235 CPC (which sets out the grounds for which a foreign judgment can be challenged) do not prejudice treaties between the UAE and other states. Recognition and enforcement of foreign arbitral awards should therefore be dependent on the requirement of the relevant treaty and it was hoped, given that a principle aim of the New York Convention is to remove discrimination of foreign awards, that it would provide certainty that foreign arbitral awards would be more readily and easily enforced in the UAE. For example, New York Convention awards should only be refused on the grounds set out in article V of the New York Convention.29

Recent development for enforcement of foreign arbitral awards in UAE

The first foreign arbitration awards enforced in the UAE under the New York Convention were enforced by the Fujairah courts as recently as April 2010.30 The court, recognising an award that had been issued in London, confirmed that: the substantive merits of the arbitral award should not be reviewed when considering the ratification and enforcement of an arbitral award; and ratified treaties and conventions between the UAE and other countries such as the New York Convention should be treated as ‘internal legislation’ with respect to the recognition and enforcement of foreign arbitral awards.

In October 2012, the Dubai Court of Cassation confirmed the enforcement of two related foreign awards relying on the terms of the New York Convention. Its decision in Airmech (Dubai) LLC v Macsteel International LLC was a positive reinforcement of the New York Convention as it emphasised for the first time that the Courts should regard the provisions of the CPC as irrelevant and inapplicable to the enforcement of foreign arbitral awards in Dubai.31 Macsteel sought the enforcement of the awards before the Dubai Court of First Instance in accordance with the New York Convention. Airmech objected, but the Dubai Court of First Instance ruled in favour of enforcement, recognising that articles 235 and 236 CPC on enforcing arbitral awards should be disregarded in favour of the New York Convention.32 Airmech then failed in its appeal before the Dubai Court of Appeal.33 Consequently, Airmech brought the claim before the Dubai Court of Cassation. In its ruling, the Dubai Court of Cassation found that the grounds for nullification of the award which Airmech sought to rely on, namely grounds based on article 216 CPC (which relate to domestic arbitral awards), were irrelevant. Significantly, the Court of Cassation expressly referred to article 212(4) CPC, according to which an arbitral award issued outside the UAE ‘shall be subject to the rules applicable to arbitration awards passed in foreign countries’, and additionally confirmed the application of article 238 CPC, that ‘rules provided for in the preceding articles of the CPC do not prejudice rules and regulations provided for in conventions signed between the UAE and other countries in this respect’. The Court of Cassation then went on to apply directly the New York Convention, concluding that Airmech had failed to prove that any of the more limited grounds for nullification set out in article V applied to either of the awards.

The Dubai Court of Cassation decision was warmly welcomed by the local arbitration community as it was felt that this should bring an end to the uncertainty that surrounded enforcement of foreign arbitral awards in the UAE pursuant to the New York Convention.

It is important to note, however, that although the Dubai Court of Cassation’s decision in Airmec should be persuasive to other UAE courts, it does not establish binding precedent. The UAE is a civil law jurisdiction and the rules of stare decisis do not apply. A relatively recent decision in the Dubai Court of First Instance underlines this point as it reversed the recent trend of the UAE courts’ acceptance of the terms of international enforcement treaties and conventions. On 18 December 2012, the Dubai Court of First Instance34 refused to enforce three ICC awards issued in Paris on the basis of article 235 of the CPC. The court decided that:

the UAE Courts lack jurisdiction over the cases brought against any foreigner having no domicile or place of residence within the UAE, unless such case does relate to an obligation that has been concluded, carried out or has to be carried out in the UAE or if a foreign company, located abroad, has a branch in the UAE and the dispute relates to such branch...

The Dubai court apparently failed to take into consideration article 238 CPC, which exempts the application of the provisions governing the execution of foreign judgments and foreign arbitration awards under articles 235 and 236 CPC from the enforcement of foreign judgments and arbitration awards that fall within the scope of application of international treaties and conventions. It has therefore been widely criticised. However, it is not clear from any published judgment (that the authors are aware of) if this decision has been appealed. It seems likely that it will be.

New Federal Arbitration Law?

There would be greater certainty, and hence comfort for the local arbitration community, if the UAE introduced a stand-alone arbitration law that differentiated between international and domestic arbitration and which codified the UAE’s obligations under the New York Convention. The most recent iteration of the draft arbitration law was released in February 2012. The new law would repeal the sections of the CPC relating to arbitration and appears to be based on the UNCITRAL Model Law. However, the first draft of the draft arbitration law was issued in 2008, and it is still unclear when the draft arbitration law will be finalised and implemented as federal law.

The uncertainties relating to arbitration within the UAE, specifically concerning the potential problems faced with enforcement of awards, and the delay to the introduction of a new Federal Arbitration law that would remove such uncertainties, has led to the increasing popularity of the DIFC as a viable alternative seat of arbitration.

DIFC Arbitration Law and arbitral awards

The Dubai International Financial Centre (the DIFC) is a financial free zone within Dubai35 that is governed by its own autonomous and independent judicial system. Seen as an ‘offshore’ zone located within the civil law jurisdiction of ‘onshore’ Dubai, the DIFC court system is based on the common law system and has jurisdiction over civil and commercial (but not criminal) matters. The DIFC passed its DIFC Arbitration Law in September 200836 (the DIFC Arbitration Law) which has largely adopted the UNCITRAL Model Law as the basis of its arbitration law.

The DIFC Arbitration Law of 2008 repealed DIFC Law No. 8 of 2004. The previous 2004 DIFC Law effectively limited the scope of arbitration to disputes involving parties with a connection to the DIFC. However, one of the key developments is that, as a result of the DIFC Arbitration Law of 2008, any party can choose the DIFC as its seat of arbitration, offering parties who might otherwise be reluctant to agree to arbitration in the UAE a real alternative.

Arbitration agreement

The parties may submit to DIFC arbitration any disputes that have arisen or may arise between them in respect of a defined legal relationship, either contractual or otherwise. An arbitration agreement is to be in writing37 and may be in the form of an arbitration clause or a separate agreement.38 The DIFC courts are required to stay court proceedings upon the request of a party if an action is brought before the DIFC courts, which is subject to an arbitration agreement. Such request, however, must be received by the DIFC courts no later than the point at which it files its first substantive statement on the case.39 The scope of this provision, and whether it applies to arbitrations seated outside the DIFC, is an issue that has been debated in the DIFC courts recently. We refer to the conflicting decisions on this issue below.40

The Tribunal

The parties are free to determine the number of arbitrators and, in the absence of such agreement, the default position is that there will be one.41 If the parties are unable to agree on the identity of an arbitrator, the DIFC court will make the appointment within 30 days of a request by a party,42 and the appointment is not subject to appeal. An arbitrator can only be challenged if there are justifiable doubts as to his or her impartiality or independence, or if they do not possess the qualification agreed to by the parties.43

Procedure

The parties are free to determine the rules that will govern the arbitration and if no agreement can be made then the arbitral tribunal shall determine the procedures.44 Similarly, the parties are free to agree the seat of the arbitration and if no agreement is made then the seat of the arbitration shall be the DIFC.45

Award (and provisions for setting it aside)

Under the DIFC Arbitration Law, the arbitral award must be in writing and signed by the arbitrators.46Pursuant to article 41 of the DIFC Arbitration Law, recourse to a court against an arbitral award made in the seat of the DIFC may be made only by an application for setting aside in accordance with article 41(2) and (3), which provide that an arbitral award may be set aside by the DIFC court only if:

  • the party making the application provides proof that a party was under some incapacity;
  • the arbitration agreement was invalid;
  • the party making the application was not given proper notice;
  • the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • the subject matter of the dispute was not capable of settlement by arbitration under DIFC law; or
  • the award conflicts with public policy in the UAE.

The DIFC court appears to continue to interpret these grounds for setting aside an award strictly and so, perhaps as a result, applications to the court based on these grounds have been limited.

Enforcement of foreign arbitral awards in the DIFC

Article 42(1) of the DIFC Arbitration Law states:

An arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognised as binding within the DIFC and, upon application in writing to the DIFC Court shall be enforced subject to the provisions of this Article and of Articles 43 and 44. For the avoidance of doubt, where the UAE has entered into an applicable treaty for the mutual enforcement of judgments, orders or awards the DIFC Court shall comply with the terms of such treaty.

Consequently, the DIFC courts must recognise foreign arbitral awards47 and must comply with the terms of any treaty which the UAE has entered into for the mutual enforcement of judgments, orders or awards. This is further supported by article 24 of DIFC Law No. 10 of 2004, which confirms that the DIFC Court of First Instance has jurisdiction to ratify a recognised arbitral award, which applies to DIFC awards and to foreign awards where the UAE has entered into an applicable treaty for the mutual enforcement of judgments, orders or awards, such as the New York Convention. Upon recognition of a foreign arbitral award by the DIFC courts, which should be a formality in light of the common law tradition and the general pro-arbitration views of the DIFC judiciary, the DIFC courts will issue an order that can be directly enforced in the DIFC court.48

DIFC guide to enforcing DIFC court judgments and orders outside the DIFC

A key component to the DIFC’s credibility as an arbitral seat and whether or not it can be considered a viable alternative to the more commonly opted-for ‘onshore’ UAE arbitral seats, relates to the ease at which a DIFC arbitral award can be enforced in Dubai, outside the DIFC or elsewhere in the UAE. In June 2012, the DIFC issued an enforcement guide to clarify enforcement procedures for parties seeking to enforce judgments from the DIFC courts, including arbitral awards ratified by the DIFC courts:

  • in Dubai, but outside the DIFC;
  • in the UAE, but outside Dubai; and
  • outside the UAE.

Enforcement of DIFC arbitral awards in Dubai, but outside the DIFC

In October 2011, an amendment was made to Dubai Law No. 12 of 2004.49 This amendment is commonly referred to as the DIFC Judicial Authority Law. Prior to the DIFC Judicial Authority Law, the DIFC and Dubai courts had entered into a Protocol of Enforcement (the Protocol) which set out the procedure by which enforcement was to take place and emphasised that the Dubai courts were to enforce a DIFC judgment or order without reviewing the merits of the case. Since October 2011, however, DIFC court judgments, decisions or orders may be enforced through the Dubai courts in accordance with article 7(2) of the Judicial Authority Law, which confirms that:

Where the subject matter of execution is situated outside the DIFC, the judgments, decisions and orders rendered by the Courts and the Arbitral Awards ratified by the Courts shall be executed by the competent entity having jurisdiction outside DIFC in accordance with the procedure and rules adopted by such entities in this regard, as well as with any agreements or memoranda of understanding between the Courts and these entities.

Article 7(2) of the Judicial Authority Law further confirms that, if a DIFC court judgment or order is final and executory, legally translated into Arabic, and certified by the DIFC courts for execution and with a formula of execution affixed by the courts, it will be enforced through the Dubai courts and the other Emirates of the UAE.

According to the DIFC Courts’ Activities and Business Plan 2013-2015, there have been 55 enforcement actions between the DIFC and Dubai courts between 2008 and 2013, all of which have been successful. The procedure now is that the DIFC court order is effectively ‘converted’ into an order for enforcement of the Dubai courts, which can then subsequently be enforced in the other Emirates of the UAE by virtue of article 11 of Federal Law No. 11 of 1973 on Judicial Relationships Amongst Emirates, which provides for the mutual recognition of orders and judgments between various Emirates.

Enforcement of DIFC arbitral awards in the UAE outside Dubai

Commentators have interpreted article 7(2) of the DIFC Judicial Authority Law to suggest that DIFC court judgments, decisions and orders will be able to be sent directly from the DIFC courts for execution by the relevant local ‘competent entity’ within the UAE and hence will be directly enforceable in the other Emirates’ courts, not just the Dubai courts, without the need to first apply to the Dubai executive judge. However, the June 2012 DIFC enforcement guide has confirmed that parties seeking to enforce judgments from the DIFC, including arbitral awards ratified by the DIFC courts, outside Dubai (ie, elsewhere in the UAE), may be better to seek enforcement by first applying to the Dubai courts for an enforcement order, this being the ‘tried and tested’ means. This suggestion may have been made because the DIFC courts appreciate that jurisdictions outside Dubai may be slow to recognise the DIFC as being constitutionally part of the Dubai judicial system.

Enforcement of DIFC arbitral awards outside the UAE

In principle, the enforcement of DIFC court judgments, decisions and orders outside the UAE will be exactly the same as the enforcement of a judgment of the Dubai courts. Constitutionally, the DIFC court is part of the Dubai judicial system and so its judgments have the same weight as Dubai court judgments. However, given that, to date, the DIFC has been reliant on the Dubai courts for the execution of its judgments and orders outside the DIFC, parties may prefer to enforce the DIFC arbitral award in the Dubai courts first before seeking to enforce outside the UAE. Thereafter, where there is a relevant treaty in place between the UAE and the target jurisdiction, enforcement will be governed by the terms of that treaty.50

Recent developments in DIFC: staying court proceedings in favour of arbitration

In 2012, the DIFC courts, in Electromechanical Services v Al Fattan,51 considered the ruling in Injazat Capital Limited v Denton Wilde Sapte52 where it had been held that the DIFC court had no power to order a stay in support of an arbitration agreement specifying a seat outside the DIFC.

While the court agreed with the conclusion in Injazat that article 13 of the DIFC Arbitration Law did not apply to arbitration agreements specifying a seat outside the DIFC, the court in Al Fattan held that it did have an inherent jurisdiction to stay proceedings in favour of a foreign arbitration agreement (including, for this purpose, an LCIA London seated arbitration agreement). The DIFC court, in coming to its decision, referred to several grounds including that:

  • while the DIFC Arbitration Law governed the position with respect to arbitration agreements specifying a seat within the DIFC, it did not, on its proper interpretation, have the effect of excluding the DIFC court’s inherent jurisdiction to stay proceedings in the case of arbitration agreements specifying a seat outside the DIFC. If the legislation had intended to achieve that result, the court considered that it would have done so expressly and in clear terms, which it had not done;
  • the fact that the court retained an inherent jurisdiction to stay proceedings in favour of arbitration agreements specifying a seat outside the DIFC would not deprive the DIFC Arbitration Law of its intended effect; and
  • the DIFC Arbitration Law was intended to require a mandatory stay where there was an arbitration agreement specifying a seat within the DIFC. The continued existence of a discretion to order a stay under the DIFC court’s inherent jurisdiction in the case of an arbitration agreement specifying a seat outside the DIFC was not inconsistent with the purpose of the DIFC Arbitration Law.

Conclusion

Despite indications that a federal arbitration law would be issued soon after the most recent iteration of the draft was produced on 16 February 2012, at the time of writing, some 18 months later, there is still no sign of it. No stand-alone alone arbitration law, therefore, yet exists in the UAE, which means that uncertainties, specifically surrounding enforcement of awards (domestic and foreign), the differentiation between international and domestic arbitration and the, at times, differing approach adopted by the courts concerning the UAE’s obligations under the New York Convention, remain a cause of concern for the local business and arbitration community.

 Nevertheless, the number of disputes in the region and the number of arbitrations being commenced continues to rise. The adequacy of current legislation is therefore being tested to its very limit such that, unless the new law is introduced soon, it seems inevitable that the number of parties opting for an alternative seat of arbitration – specifically the DIFC, which applies its own arbitration law – looks set to increase significantly.

Notes

  1. Article 203 CPC.
  2. Article 203(5) CPC.
  3. Article 206(2) CPC.
  4. Article 206(1) CPC.
  5. Article 204(2) CPC.
  6. Article 207(4) CPC.
  7. Article 207(3) CPC.
  8. Article 207(4) CPC.
  9. Article 208(1) CPC.
  10. Article 212(1) CPC.
  11. Article 210(1) CPC.
  12. Article 210(2) CPC.
  13. Article 211 CPC.
  14. Article 217(1) CPC.
  15. Article 215 CPC.
  16. Relying on article 216(1)(a) CPC.
  17. Relying on article 203(2) CPC.
  18. Relying on article 203(4) CPC.
  19. Relying on article 216(1)(a) CPC.
  20. Relying on article 211 CPC; See also the Bechtel case, Dubai Court of Cassation, Petition No. 503/2003 where the Court of Cassation set aside an international arbitration award against a government department on the grounds that witnesses had not given evidence under oath in the manner required by UAE law.
  21. Relying on article 210(1) CPC.
  22. Relying on article 213(3) CPC.
  23. Relying on article 212(5) CPC.
  24. Relying on article 212(5) CPC.
  25. Relying on article 212(4) CPC.
  26. Article 236 CPC applies the article 235 requirements to foreign arbitral awards.
  27. For example, the Riyadh Convention on Judicial Cooperation between States of the Arab League (1983), which came into force in 1999; the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications (1987) and the Washington Convention on the Settlement of the Investment Disputes between States and Nationals of Other States.
  28. For example, the Treaty on Judicial Cooperation in Criminal Matters, Extradition of Offenders, Cooperation in Civil Commercial and Personal Matters with Morocco (2006); the Treaty on Mutual Legal assistance in Criminal Matters, Extradition of Offenders, Cooperation in Civil Commercial and Personal Matters, Service of Judicial and Extra-Judicial Documents, Obtaining Evidence, Commissions and the Recognition and Enforcement of Foreign Judgments and Arbitral awards with Sudan (2005); the Agreement on Legal and Judicial Cooperation with Syria (2002); the Agreement on Legal and Judicial Cooperation with Egypt (2000); the Agreement on Legal and Judicial Cooperation with Jordan (1999); the Treaty on Judicial Cooperation, Recognition and Enforcement and Judgments in Civil and Commercial Matters with France (1992); and the Agreement on Legal and Judicial Cooperation with Somalia (1972). The bilateral treaties with Sudan and Somalia are of particular importance given that these two countries have not yet ratified the New York Convention.
  29. Article V: 1(a) the existence of an invalid arbitration agreement under the parties’ agreed governing law or (if this cannot be established) under the law of the country; 1(b) a breach of due process; 1(c) an award that fails to comply with the terms of the arbitration agreement; 1(d) irregularities affecting the composition of the arbitral tribunal or the arbitral proceedings; 1(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made; 2(a) the subject matter of the dispute is not capable of settlement by arbitration under the law of that country; and 2(b) the recognition and enforcement would be against public policy.
  30. See the judgment of the Fujairah Federal Court of First Instance on 27 April 2010, Case No. 35 of 2010, dated 27 April 2010.
  31. Appeal for Cassation No. 132/2012.
  32. Court of First Instance Commercial Action No. 268 dated 12 January 2011.
  33. Appeal No. 126/2011 Commercial, ruling of the Dubai Court of Appeal on 22 February 2012.
  34. See Case No. 489/2012, Dubai Court of First Instance.
  35. Established in 2004 in accordance with Dubai Law No. 9 of 2004 in respect of the Dubai International Financial Centre and in accordance with Dubai Law No. 12 of 2004 in respect of the Judicial Authority at Dubai International Financial Centre.
  36. DIFC Law No.1 of 2008.
  37. Article 12(3) of the DIFC Arbitration Law.
  38. Article 12 of the DIFC Arbitration Law.
  39. Article 13 of the DIFC Arbitration Law.
  40. See cases Injazat Capital Limited v Denton Wilde Sapte (DIFC Court of First Instance, 019 of 2010) and Electromechanical Services v Al Fattan (DIFC Court of First Instance, 004 of 2012) referred to under the ‘Recent Developments in DIFC’ subheading below.
  41. Article 16 of the DIFC Arbitration Law.
  42. Article 17 of the DIFC Arbitration Law.
  43. Article 18 of the DIFC Arbitration Law.
  44. Article 26 of the DIFC Arbitration Law.
  45. Article 27 of the DIFC Arbitration Law.
  46. Article 38 of the DIFC Arbitration Law.
  47. Subject to the procedural conditions set out in article 44 of the DIFC Arbitration Law.
  48. Article 43 of DIFC Arbitration Law.
  49. See Law No. 16 of 2011 Amending certain Provisions of Law No. 12 of 2004 Concerning the DIFC Courts, which has: (1) further clarified the procedures for the execution of DIFC Court judgments, decisions and orders; and (2) expanded the jurisdiction of the DIFC Courts, by permitting the DIFC Courts to assert jurisdiction in cases submitted to the DIFC Courts by the agreement of parties in writing before or after the dispute has occurred (even if such parties do not have a nexus with the DIFC) (See article 5 of Law No. 16 of 2011). This expansion of jurisdiction is likely to increase the use of the DIFC Courts by a range of commercial parties in Dubai and the UAE.
  50. Examples of treaties the UAE has entered into with other countries which govern reciprocal enforcement of judgments include: the GCC Convention (1996); the Riyadh Arab Agreement for Judicial Cooperation (1983); and the Convention on Judicial Assistance, Recognition and Enforcement of Judgments in Civil and Commercial Matters signed between France and the UAE (1992).
  51. DIFC Court of First Instance, 004 of 2012.
  52. DIFC Court of First Instance, 019 of 2010.