United Arab Emirates

This past year has seen arbitration continue to be the most popular dispute resolution mechanism across the Middle East for parties involved in complex projects and disputes. The UAE’s arbitral offerings have, in recent years, increased and improved: the Abu Dhabi Global Market (ADGM), Abu Dhabi’s answer to the Dubai International Financial Centre (DIFC), introduced the ADGM Arbitration Regulations 2015 at the end of last year and, in response to users’ demands, the Abu Dhabi Centre (ADCCAC) Rules received a complete overhaul in late 2013. These developments demonstrate the UAE’s ambition to be the undisputed centre for dispute resolution in the region.

However, while arbitration is becoming increasingly popular in the UAE, common procedural issues continue to be raised that threaten the efficiency of proceedings and the enforcement of final awards. A recurring theme in enforcement proceedings in the local courts is the effect of a signature; parties and arbitrators must ensure that contracts, powers of attorney, arbitration deeds and awards are executed properly to ensure that arbitration agreements and awards do not fail as a result of an avoidable procedural flaw. It can sometimes be difficult to be certain what is and is not acceptable. With uncertainties threatening to invalidate an often long-awaited decision, it is best to remain cautious.

As there remains no stand-alone federal arbitration law in the UAE (as distinct from the DIFC’s, and now ADGM’s laws), domestic arbitral proceedings (outside the DIFC and ADGM) are governed by a limited number of articles in the UAE Civil Procedure Code (CPC). Enforcement of awards can be a lengthy process, irrespective of which rules the arbitration was conducted under. Arbitrations concerning real estate disputes still face the possibility of being annulled by the local courts on the grounds of public policy, but a number of recent cases have shed some light on this point and restricted the public policy exclusion to much narrower grounds than the courts had initially indicated.

Finally, one of the most significant developments this year relates to the DIFC and its courts, which have expanded their scope further to act as a host jurisdiction for the enforcement of foreign arbitral awards in the UAE. Parties with no geographical connection to the DIFC are theoretically able to elect to utilise the effective enforcement procedures of the DIFC courts. In addition, the DIFC courts have introduced a novel system whereby winning parties may be able to convert DIFC court monetary judgments into arbitral awards, aiding their enforceability in other jurisdictions. It remains to be seen how popular these new enforcement routes will be.

The themes referred to above are examined in further detail in the remainder of this article.

Irregularities in the procedural requirements of enforcing domestic arbitral awards

Enforcement of domestic awards

There is still no stand-alone arbitration law in the UAE. New legislation in the UAE specifically – but the region more generally – has been mooted for several years. Other MENA states (eg, Bahrain) are developing their own arbitration legislation, so it is likely that the UAE will follow suit shortly.

In the meantime, arbitration law relating to domestic UAE awards remains as set out in articles 203–218 of the CPC – 15 articles that barely cover four sides of paper. These articles are not harmonised with other jurisdictions that have enacted specific legislation to deal with arbitration and enforcement of arbitral awards, and are not based upon the UNCITRAL Model Law. Combined with the UAE courts’ inconsistent interpretation of these articles, the lack of stand-alone and updated arbitration legislation continues to cause uncertainty in relation to the enforcement process. It can also provide losing parties with ammunition to advance procedural arguments for annulment of the award even when these arguments seek to stretch the legislation to (and beyond) its limit, making arbitration in the UAE a procedural minefield. We examine in this article the most topical of such arguments.

Before a successful party can enforce a domestic arbitral award, the award must be ratified by a UAE court. New court proceedings are commenced and, once the claim is filed, it is up to the court to either ratify or annul the award. When examining the award, the court will consider its validity according to the general provisions contained in articles 215 and 216 of the CPC.¹ While the court cannot reconsider the merits of the case, it will treat procedural irregularities and contravention of public policy as recognisable grounds for annulment.

It is common for losing parties to challenge awards on procedural grounds that they have not raised previously and are only loosely connected to the CPC; this may appear to be spurious and unjust. Many parties seek to stretch the wording of the CPC far beyond what it was intended to guard against in an attempt to establish some defective procedural issue. However, despite this seeming manipulation of the system, the UAE courts continue to be prepared to hear these questionable arguments. Furthermore, it is clear from reported case law that the courts interpret the CPC provisions inconsistently and have been known to annul awards because of only a minor technicality. Any party involved in arbitral proceedings in the UAE must therefore be aware of this so that those with conduct of the arbitration (both counsel and the tribunal) can take steps throughout the arbitral process to mitigate the potential for such challenges. Forewarned is most definitely forearmed.

Connected contracts

There can be various separate documents that form one main contract, particularly in construction contracts. It is common for the contractual agreement to incorporate various letters, conditions and schedules defined together as the ‘contract’. Examples of such ancillary contractual documents include, in construction contracts, tender documents (and clarifications and further offers), specifications, and sets of general and particular conditions. Despite contracts comprising a plethora of documents, parties frequently simply sign an execution page; it is likely that the other ancillary documents have also been signed or at least initialled or stamped, possibly on a different occasion, but this is not always the case.

Problems can arise when a document included in the contract is not signed by both parties as its validity can be debated. This problem is intensified when the unsigned document contains important clauses, such as the arbitration agreement.

A recent case in the Dubai courts considered this issue. A signed contract included a standard terms and conditions document that, in turn, incorporated the arbitration agreement. The standard terms and conditions were not signed. The Dubai Court of First Instance held that, as the terms and conditions were not signed, the arbitration agreement was not binding on the parties.

The Court of Appeal subsequently upheld this decision on the basis that an unsigned arbitration agreement was inconsistent with article 203 of the CPC.² Article 203 requires arbitration agreements to be recorded in writing, and while there is no express wording to indicate that the written agreements must be signed, a second case in the Dubai Court of Cassation in 2014 held that validity was established by the parties’ signatures – initialling documents was not sufficient.

A separate case in the Dubai Court of Appeal also held that an unsigned document invalidated an arbitration agreement by virtue of article 11 of the Federal Evidence Law.³ Article 11 indicates that a valid document must be considered to originate from the person signing it. The Court questioned how an unsigned document could ‘originate’ from a party.

With this final case and article 11 in mind, however, perhaps a more pertinent question is what evidences agreement and whether the physical signature itself is necessary. Under the UAE Electronic Transactions and Commerce Law,⁴ parties can confirm their agreement to contract electronically, absent of physical signature. Why should this not also apply to arbitration agreements? The accepted logic is that the UAE courts consider arbitration to be an exceptional dispute resolution forum and hence the presumption is against the fact that parties will have chosen to give up the right to bring a claim in the national courts in favour of an arbitration provision. However, arbitration in the UAE should no longer be considered exceptional. This issue should be clarified in legislation (and hopefully will be in any arbitration law that is introduced). Until then, to avoid uncertainty and to ensure all components of a contract are valid and enforceable, including the arbitration agreement, it is advisable that all pages of documents comprising the contract are signed by both parties.

Authority to arbitrate

Having established that arbitration agreements (and connected contractual documents) should be signed to ensure validity, it is also important that the person who signs such documents has the capacity to do so. The new UAE Commercial Companies Law⁵ has affirmed the rules on capacity to sign for a public joint stock company (PJSC); introducing articles that reinforce the previous law.

Article 154 of the new law states that a board of directors may not agree on arbitration unless specifically authorised to do so under the company’s articles of association. If there is no express authority contained in the articles, the company must pass a special resolution to grant a director the relevant authority.

Article 154 of the new law bears significant resemblance to article 103 of the previous commercial companies legislation;⁶ the key principle being that the board of directors must have express authority in the company articles to sign. The previous law did not, however, require the passing of a special resolution in the absence of express authority. Instead, only ‘specific authorisation’ was required.⁷

The additional requirement for a special resolution to authorise potential signatories, a higher threshold than the previous ‘specific authorisation’ requirement, could cause problems; UAE companies often have complex share structures as under federal law.⁸ With a majority local shareholding, and a perhaps more piecemeal share structure, it may not be straightforward to obtain a 75 per cent majority. Due to this potential uncertainty, it is recommended that companies authorise their directors to sign arbitration agreements in the articles of association. This would give the directors scope to insert an arbitration clause into a contract if it is appropriate to do so without also needing a special resolution granting authority to do so.

Location, location, location

A procedural challenge often invoked by a losing party relates to the seat of arbitration. Arbitrations seated in the UAE will result in a domestic arbitral award. Article 212(4) of the CPC⁹ states that arbitration awards must be issued in the UAE in order to be considered a domestic award and benefit from domestic enforcement proceedings. No guidance is given as to what ‘issued’ is intended to cover. Is it enough for the award to state that it is issued in the UAE or, for example, do all arbitrators need to be physically present in the UAE when signing the award? If the latter, what is the reasoning behind this and is it practical or proportionate, for example, for all three members of a panel to convene in the UAE to sign the award even if one or more of them may be based outside the region and will no doubt have written the award in his or her home jurisdiction long after the hearing was conducted in the UAE?

If the award is issued (or maybe even just signed by one of the tribunal) outside the UAE, foreign law principles apply and enforcement of such awards are governed by international protocols. This domestic and foreign award distinction could therefore apply regardless of where the arbitration seat is located. For example, if parties agree to seat the arbitration in Abu Dhabi but a member of the tribunal signs the award in Egypt, it is arguable that the legal place of arbitration will have been ‘moved’ and that this has been done in contravention of party agreement. This will give rise to questions as to the award’s validity. If the legal place of the arbitration has been moved by an external signature, the UAE will no longer hold jurisdiction to hear annulment claims. This jurisdictional capacity will lie with the new legal place of arbitration and country in which the award was signed. This gives rise to uncertainties and undermines the original choice of the seat.

The obvious counter argument is that article 212(4) of the CPC refers to the issue of awards and not signature. Therefore, as long as the award states that it is issued in the UAE, the location at which the award was signed is irrelevant. Unfortunately, however, the courts continue to give credence to such arguments: we have recently been involved in enforcement proceedings where the court permitted the proceedings to be delayed while information as to an arbitrator’s whereabouts on the date the award was purported to be signed in the UAE was sought from the general directorate of residence and foreign affairs in the relevant emirate. With uncertainty surrounding the consequences of the location of signature on which the enforcement regime is triggered, it is advisable that domestic awards are signed in the UAE itself.

Each page?

A final point regarding award signatures concerns which pages of the award should be signed. There is no express legal requirement for arbitrators to sign every page of an award, and none of the region’s arbitration centres stipulate such an obligation in their respective rules. The position should be straightforward. In practice, however, UAE courts have taken an inconsistent approach and there is some confusion as to the correct procedure.

A recent case in the Dubai Court of Cassation¹⁰ held that an arbitrator’s signature does not have to be signed on every page of an award, only the pages containing the decision and judgment reasoning. In contrast, a similar case in the Abu Dhabi Court of Cassation¹¹ found that an arbitrator’s signature is only required on the very last page of an award, regardless of whether that page contains the decision and reasoning of the case.

With conflicting guidance from the various UAE courts, arbitrators should (and no doubt will) continue to sign all pages of an award; this alleviates the risk of an appeal court invalidating the award, but seems a very old-fashioned requirement that is out of line with modern practice (as well as being a burden on the arbitrators if the award runs to many hundreds of pages).

In practice: pre-empt and prevent

Two of our clients have recently had first-hand experience of these issues when seeking to enforce arbitral awards in the UAE. Both involved receiving awards in their favour that were not complied with, forcing our clients to commence ratification and enforcement proceedings which were challenged by the respondent.¹² The grounds for challenge across both cases mirrored the issues discussed in this article:

• the respondent’s signatory to the original contract did not have authority to enter into the contract;
• the terms of reference was not signed by an authorised signatory;
• the arbitrators did not sign the award while they were all in the UAE – no evidence was provided, but the respondent argued that, though the award stated that it had been signed in the UAE, the fact that two of the three arbitrators were based in Europe meant that it was likely that the award was signed in the arbitrators’ own jurisdictions, not in the UAE, and then sent on in a round-robin format; and
• not all of the pages of the award were signed – the respondent argued that, because the arbitrators only signed the final page of the award and not the reasons for their decision, the award was invalid and should be annulled.

The above issues, if not pre-empted and prevented, cause significant problems in practice for a winning party seeking to enforce an award in the UAE courts. If the discussed formalities are not evidenced, it is likely that the losing party will challenge the validity of an award and commence annulment proceedings on the above procedural grounds, even if they have no merit. Enforcement, and dealing with procedural challenges, however unmeritorious, is a lengthy and costly process. UAE courts continue to react unpredictably to these challenges, and therefore we recommend that parties always take a cautious approach regarding formalities and ensure there is evidence to support what has been done that can be used if such procedural challenges are later made.

Public policy in the UAE

Recent legislative development has meant that all real estate dispositions must now be registered, and failure to do so may void a disposition.¹³ There have been several cases that have considered how this obligation to register may impact the arbitrability of real estate disputes on the basis that they are issues of public policy that cannot be resolved privately by the parties and are not therefore arbitrable. Article 3 of the UAE Civil Code defines public policy to include matters that refer to the ‘circulation of wealth’ and ‘rules of private ownership’.¹⁴

Baiti Real Estate Investment Company LLC v Dynasty Zaroonilic¹⁵

The Dubai Court of Cassation annulled three DIAC awards on the grounds of public policy. It held that the registration of contracts for the sale of off-plan property was a matter of public policy as it related to the ‘rules of private ownership and the circulation of wealth’. Such a broad application of public policy caused concern that any real estate dispute would therefore also be held to be non-arbitrable. We have commented on the potential wide-reaching ramifications of their discussion in previous articles.¹⁶ Recent cases have, thankfully, lessened the likely impact of the Baiti Real Estate case, including a recent case from the Abu Dhabi Court of Cassation.

Abu Dhabi Court of Cassation Case No. 55 of 2014

In this case, the Abu Dhabi Court narrowed the definition of what category of real estate disputes were not eligible for arbitration. The facts of this case concerned a dispute between a seller and buyer for a residential unit. The claimant and respondent had entered into a sale and purchase agreement but the respondent had failed to hand over the property on time. The parties’ agreement contained an arbitration clause and an award was eventually issued in the claimant’s favour. The claimant requested reimbursement of the sums it had paid for the unit under the original agreement.

Following an unsuccessful challenge by the respondent to annul the award in the Court of First Instance, the Court of Appeal considered the dispute’s eligibility for arbitration. Relying on the definition of public policy in article 3 of the Civil Code,¹⁷ the Court of Appeal held that matters concerning individual property ownership were not arbitrable and hence that the award was invalid.

However, on appeal, the Abu Dhabi Court of Cassation (the highest court in Abu Dhabi) held that as the dispute in question concerned the termination of a contract and a claim for payments resulting from breach of that contract, there was no public policy issue. Public policy and the rules contained in article 3 of the Civil Code were explained as relating to the creation and registration of rights in private ownership. Specifically, it was held that arbitration is not permitted for dispositions of property involving existing rights or the creation of new rights if a registration obligation concerning the property cannot be complied with. This scenario would be contrary to public policy. Consequently, this case did not concern an issue of public policy. The Court of Cassation decided that the arbitration award was issued to order the termination of a sale and purchase agreement and compensation by the respondent. Although all dispositions of property must be registered with the relevant authorities and therefore dispositions themselves primarily remain governed by public policy, if disputes involve breach of contract and claims for money owed from that breach, such matters will be eligible for arbitration as they are outside the remit of article 3 of the Civil Code.

Expanding ambit of the DIFC Courts

A significant development in the UAE this past year has been that of the ever-increasing ambit of the DIFC courts. Following on from its successful launch of the DIFC Courts Arbitration Institute last year, and the DIFC courts’ new Courts Enforcement Department, the DIFC courts have further demonstrated their judicial forward thinking by creating a conduit for the enforcement of foreign arbitration awards. This expansion in scope is best illustrated by two recent cases.

Case No. ARB 002/2013 – (1) X1, (2) X2 v (1) Y1 (2) Y2

In this case the DIFC court confirmed that it could be used as a ‘conduit’ or host jurisdiction for the enforcement of foreign arbitration awards. Enforcement of a foreign arbitration award against assets in mainland Dubai can involve lengthy proceedings through the mainland Dubai courts. However, the DIFC Court of First Instance held that an international creditor is able to enforce an award through the DIFC courts against assets of a debtor located in mainland Dubai, irrespective of any geographical nexus to the DIFC. The award can then benefit from the ‘mutual recognition’ regime between the Dubai and DIFC courts by virtue of article 7 of the Judicial Authority Law.¹⁸

A perceived advantage of adopting such an enforcement strategy is that the DIFC courts and its judges are considered to be more familiar with arbitration and enforcement of foreign awards. They may therefore be more ‘pro-arbitration’ than the Dubai courts and less inclined to give credence to spurious procedural arguments advanced to delay enforcement. Whether or not this speeds up enforcement of foreign awards will depend, in part, on how the ‘mutual recognition’ regime continues to be operated by the Dubai courts; if the Dubai courts consider that the DIFC enforcement followed by the ‘mutual recognition’ regime is being utilised simply to bypass the Dubai courts and its validation process, it may reconsider the appropriateness of the ‘mutual recognition’ regime and article 7 of the Judicial Authority Law.

CFI 043/2014 – DNB Bank ASA v (1) Gulf Eyadah Corporation (2) Gulf Navigation Holding PJSC (DNB Bank Asa)

Following the above case, the DIFC Court of First Instance in DNB Bank ASA affirmed the DIFC courts’ position as a conduit for foreign arbitration awards’ enforcement, but not foreign court judgments.

In the present case, the judgment creditor sought recognition by the DIFC courts for a court judgment order requiring the debtor to pay more than US$8.7 million. While the DIFC courts held that a foreign arbitration award could be enforced in the DIFC courts, it confirmed that the same could not be said for foreign court judgments. Justice Al Madhani cited the wording of article 7(2) of the Judicial Authority Law as the basis of his decision. This article states 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.

Justice Al Madhini explained that this article included no reference at all to any foreign judgment being recognised by the DIFC courts. He concluded that the DIFC court cannot be seen as a conduit jurisdiction court when matters before it pertain to a foreign court judgment.¹⁹

This case therefore clarifies the position for parties wishing to utilise the DIFC courts to enforce decisions against potential judgment debtors with assets in mainland Dubai: it is only possible for foreign arbitration awards, not foreign court judgments.

Challenges to the new scope

There have been a number of challenges to the DIFC courts’ apparent authority to ratify arbitration awards that have no geographical nexus to the DIFC. The most significant examples of such challenges are seen in the cases of Banyan Tree v Medan Group LLC (Banyan Tree)²⁰ and X1 and X2 v Y1 and Y2 (X v Y).²¹ The case of Banyan Tree concerned a domestic arbitration award relating to a judgment debtors’ assets located in mainland Dubai. In contrast, X v Y concerned a foreign arbitral award issued outside the UAE.

Both Banyan Tree and X v Y centred on jurisdictional challenges concerning the DIFC court’s capacity to hear an application to ratify and enforce an arbitration award. Neither award had a geographical nexus to the DIFC. It was argued in both cases that, under article 42 of the DIFC Courts Arbitration Law,²² the DIFC courts have jurisdiction to recognise and enforce arbitration awards ‘irrespective of the state or jurisdiction’; this therefore applied to awards seated both in mainland Dubai and outside the UAE.

In response to the above arguments, the judgment debtors of both cases made three key points:

• articles 31(1) and (3) of the CPC²³ provide that jurisdiction to ratify and enforce arbitration awards shall be vested in the court of the area in which the defendant is domiciled or the area in which the contract was initially made – this would therefore not award jurisdiction to the DIFC courts as, in neither case was the judgment debtor domiciled or the contract signed in the DIFC;
• the DIFC courts were created as an exception to the rules of the UAE federal legal system and to avail of their jurisdictions  claimants must show that some special requirement has been met to undermine the authority of the mainland courts (eg, the location of key assets within the DIFC courts); and
• the arguments put forward by the claimants in both cases could result in the Dubai courts being starved of any jurisdiction over arbitration award enforcement. This situation would be ‘wholly absurd’.

Despite these arguments, the DIFC Court of First Instance maintained its position that it could be utilised as a conduit jurisdiction for enforcement of non-DIFC arbitration awards. The presiding judges in both cases held that article 31 of the CPC was irrelevant to a question of DIFC court jurisdiction; the DIFC court is an autonomous jurisdiction and its capacity to determine disputes and enforce awards is defined elsewhere.

Following the first instance decisions in these two cases, the DIFC Court of Appeal has since confirmed the decision of Banyan Tree. Subsequently, the DIFC courts have continued to reinforce their position as a conduit jurisdiction and remain undeterred by challenges raised by award debtors.

A new (practice) direction for the DIFC courts

The DIFC courts in recent months have flexed their jurisdictional muscles even further. Earlier in 2015, the DIFC courts adopted new Practice Direction No. 2 of 2015 regarding the Referral of Payment Judgment Disputes to Arbitration (PD). This confirms that a DIFC courts’ money judgment can be converted into a DIFC-LCIA arbitration award that allows it, for example, to take advantage of international protocols. This means that the creditor of a DIFC court money judgment may be able to elect to enforce its successful result through arbitration. There are a number of reasons a creditor may choose to do so:

• Arbitration awards benefit from international enforcement protocols and agreements. These agreements arguably have greater geographical and jurisdictional scope for enforcement compared with the options available for the enforcement of court judgments. For example, the 156 signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards are able to benefit from its wide-reaching and well-established enforcement procedures.
• By converting the DIFC court judgment into an arbitral award, the judgment creditor is able to invoke a unilateral arbitration option over the judgment debtor. Such action is binding and effectively obliges the debtor to submit to arbitration and payment of the debt. (An important point to note, however, is that to invoke this unilateral arbitration option and oblige the debtor, both parties must have effected a standard DIFC-LCIA arbitration agreement at the time of the original contract.)
• The terms of the PD do not offer an alternative channel of enforcement for judgment creditors, but an additional method of enforcement for parties battling against recalcitrant judgment debtors. A creditor is able to benefit from the PD and arbitration award conversion mechanism, notwithstanding any ongoing exercise of other means of enforcement for the outstanding debt. In other words, a party wishing to avail of the new PD for a DIFC courts’ money judgment does not need to have exhausted all other avenues of enforcement first.

Together with the DIFC courts’ affirmed role as a conduit for foreign arbitration awards, the PD broadens the DIFC courts’ enforcement scope even further, offering parties genuinely attractive alternatives to the lengthy procedures of the mainland Dubai courts. The most recent and amended version of the PD entered into force on 27 May 2015, and therefore with no practical examples to date, it is unclear to what extent foreign courts will be willing to recognise converted DIFC courts’ money judgments. What is clear, however, is that the DIFC court has asserted itself as a strong-minded autonomous jurisdiction within the UAE, unafraid to create and offer parties to a dispute attractive alternatives to the overworked and, at times, cumbersome existing system.

Competition from the ADGM

An equally important and exciting development in 2015 was the enactment of the ADGM Arbitration Regulations 2015 (the Regulations). The ADGM is Abu Dhabi’s ‘offshore’ free-zone that has a separate civil and commercial legal regime broadly independent of the ‘onshore’ Abu Dhabi legal regime. Established only in 2013, the ADGM is in its infancy and has a long way to go to catch up with the established and globally recognised DIFC, but the Regulations are an important step in its development.

The Regulations establish a legal framework for the conduct of arbitrations with an ADGM seat. Like the DIFC, the ADGM Regulations are based on the UNCITRAL Model Law, ensuring that arbitrations seated in the ADGM will benefit from modern international arbitration practice and procedure. However, unlike the DIFC, the ADGM does not yet have its own arbitration centre. This means that arbitrating parties may still decide to adopt the institutional rules of an arbitration centre such as ADCCAC, DIAC or DIFC-LCIA. The Regulations are nevertheless comprehensive and parties may choose to conduct ad hoc arbitrations within the ADGM.

The ADGM’s own website promotes the Regulations as being modern and intended to encourage parties to use the ADGM as the seat for arbitration in the region. The main characteristic of the Regulations are that they seek to:

• limit the scope of court intervention;
• give the Tribunal the power to determine its own jurisdiction (Kompetenz-Kompetenz); and
• limit the grounds by which the parties can challenge an award with no review of the merits of the case.

In light of the first section of this article, the emphasis in the Regulations on the limited grounds by which parties can challenge an award is, in our view, applauded. However, at this stage, unlike the DIFC, the ADGM does not yet have a mutual recognition regime with the ‘onshore’ Abu Dhabi courts. This means that if a party has an ADGM award in its favour, unless it can enforce that award against assets in the ADGM, then the enforcing party must enforce in the local courts – such enforcement may be open to some of the challenges highlighted in this article.

Despite these shortcomings, it is clear that the ADGM is fast developing as a real competitor to the DIFC. It will be interesting to see how readily parties in the region chose the ADGM as the seat for their arbitrations. Competition between the DIFC and ADGM will be healthy for regional arbitration.

Conclusion

The DIFC and its courts has continued its emergence into the domestic and international arbitration communities as a key player in dispute resolution. It certainly seems that the ADGM will look to challenge the DIFC as the most arbitration-friendly jurisdiction in the UAE with its new arbitration Regulations.

While the DIFC courts are moving forward, there are still procedural issues that hold back arbitration in the UAE: process and procedural uncertainty have long plagued parties seeking to enforce domestic awards. Parties must continue to act cautiously when drafting and effecting arbitral agreements and awards to ensure they are safe from challenge and resulting delays, and unnecessary costs should enforcement proceedings be necessary. The courts attempted in 2015 to clear up confusion regarding the ambit of public policy issues in arbitration in the UAE but, while a number of judgments have helped clarify the position, public policy remains a widely used and widely interpreted tool for a losing party, and so continues to cause a party seeking to enforce an arbitration award sleepless nights!

Despite a welcome expansion in the UAE’s arbitral scope and effectiveness, the greater need at present is for clarity on procedure. While the UAE continues to make admirable advances into the international arbitration community, its domestic procedures remain unclear and inconsistent. The UAE has undoubtedly emerged onto the worldwide dispute resolution stage in recent years but, at present, it offers its tradition of procedural inefficiency and legal uncertainty as part of the package. Bring on a federal arbitration law.

Notes

1. Articles 215-216, Civil Procedure Code No. 11 of 1992.
2. Article 203, Civil Procedure Code No. 11 of 1992.
3. Article 11, Federal Law No. 10 of 1992, ‘Issuing of the Law of Proof in Civil and Commercial Transactions’.
4. Federal Law No. 1 of 2006.
5. Federal Law No. 2 of 2015 concerning Commercial Companies.
6. Federal Law No. 8 of 1984 concerning Commercial Companies.
7. Article 58, Civil Procedure Code No. 11 of 1992.
8. Article 10, Federal Law No. 2 of 2015 concerning Commercial Companies.
9. Article 212(4), Civil Procedure Code No. 11 of 1992.
10. Commercial Appeal 156/2009.
11. Commercial Appeal 834/2010.
12. The first matter was subsequently settled out of court. The second example was eventually considered by the Court of Cassation.
13. Law No. 13 of 2008 ‘Regulating the Interim Real Estate Register in the Emirate of Dubai’ (as amended by Law No. 9 of 2009); and Law No. 13 of 2005 concerning Property Ownership in Abu Dhabi (as amended by Law No. 2 of 2007).
14. Article 3, UAE Civil Code, Federal Law No. 5 of 1985 (as amended by Federal Law No. 1 of 1987).
15. Dubai Court of Cassation Case No. 14 of 2012.
16. The European, Middle Eastern and African Arbitration Review 2014, ‘Arbitration in the United Arab Emirates’, ‘Grounds for annulment of domestic arbitral awards’. The European, Middle Eastern and African Arbitration Review 2015, ‘Arbitration in the United Arab Emirates’, ‘Public policy considerations: recent decisions’.
17. Article 3, UAE Civil Code, Federal Law No. 5 of 1985 (as amended by Federal Law No. 1 of 1987).
18. Law No. 12 of 2004 in respect of the Judicial Authority at Dubai International Financial Centre.
19. Paragraph 49 of Justice Al Madhini’s judgment in DNB Bank Asa.
20. DIFC Court Case No. ARB 003-2013.
21. DIFC Court Case No. ARB 002-2013.
22. DIFC Law No. 1 of 2008.
23. Articles 31(1) and (3), Civil Procedure Code No. 11 of 1992.