Navigating Arbitration Procedures in the UAE

The UAE’s arbitration framework, aligned with the UNCITRAL Model Law, provides an efficient and flexible mechanism for resolving domestic and cross-border disputes, supported by distinct regulations across onshore UAE, DIFC, and ADGM jurisdictions. Key aspects include formal arbitration agreements, procedural autonomy, court support, and enforcement of awards, making it a robust alternative to litigation.

Arbitration is emerging as a preferred method for resolving disputes in the UAE, driven by its efficiency, flexibility, and international appeal. With a legal framework modeled on the UNCITRAL Model Law, arbitration in the UAE provides a robust mechanism for resolving both domestic and cross-border disputes. Below, we explore the key aspects of arbitration in the UAE, from its foundational legal framework to procedural nuances and enforcement mechanisms.

Arbitration in the UAE and UNCITRAL Model Law

The UAE Arbitration Law, encapsulated in Federal Law No. 6 of 2018, governs all arbitrations seated in onshore UAE or otherwise subject to UAE law. Arbitrations in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) are regulated under separate statutes: the DIFC Arbitration Law No. 1 of 2008 and the ADGM Arbitration Regulations of 2015, respectively. Despite their distinct jurisdictions, all three laws are closely aligned with the 1985 UNCITRAL Model Law, ensuring consistency and international recognition.

Arbitration agreements: Formal requirements

For an arbitration agreement to be enforceable in the UAE, it must be recorded in writing, although a signature is not mandatory. This principle applies uniformly across onshore UAE, DIFC, and ADGM jurisdictions. Arbitration agreements can either be clauses within contracts or standalone agreements. Importantly, these agreements are treated as independent from the main contract and remain valid even if the underlying contract is deemed invalid.

Choosing arbitrators

In the absence of specific provisions in the arbitration agreement or applicable rules, the number and appointment process for arbitrators vary:

• UAE Arbitration Law: Default appointment of three arbitrators, with each party selecting one, and the two chosen arbitrators appointing the third. If a party fails to appoint, the court or arbitration institution intervenes.
• DIFC Arbitration Law: A single arbitrator is appointed jointly by the parties, with the DIFC Court stepping in if they cannot agree.
• ADGM Arbitration Regulations: Similar to the DIFC, a sole arbitrator is jointly appointed, with the ADGM Court intervening if necessary.

Challenges to arbitrator appointments are permissible on grounds of impartiality, independence, or lack of requisite qualifications. Timelines for filing challenges vary: 15 days under the UAE and DIFC laws, and 30 days under the ADGM Regulations.

Arbitral procedure and party autonomy

The UAE Arbitration Law grants parties significant autonomy to determine procedural rules. In the absence of mutual agreement, the tribunal sets procedures while ensuring compliance with fundamental legal principles and international agreements. Similar provisions apply under the DIFC and ADGM laws, with tribunals empowered to assess the admissibility, relevance, and weight of evidence. A core principle across all jurisdictions is the right of each party to present its case fully.

Court support and interim measures

Courts in the UAE play a supportive role in arbitration. Onshore UAE courts can order interim or precautionary measures, assist in tribunal constitution, and enforce arbitral awards. Similarly, DIFC and ADGM courts provide limited intervention to order interim relief, stay legal proceedings, and facilitate evidence gathering. Arbitrators themselves may grant interim relief unless expressly excluded by agreement, addressing issues such as asset preservation, status quo maintenance, and evidence safeguarding.

Delivering the arbitral award

Arbitral awards must be in writing and include details such as the parties’ names, claims summary, and tribunal’s findings. Specific requirements for the form and timing of awards vary:

• UAE Arbitration Law: Awards must be delivered within six months of the final hearing unless extended by mutual agreement.
• DIFC and ADGM Laws: No specific timelines, but awards must include reasons, dates, and arbitration seat details.

Challenging and enforcing arbitral awards

Grounds for challenging arbitral awards are limited and include invalid arbitration agreements, lack of legal capacity, procedural irregularities, and public policy violations. Challenges must be filed within 30 days in onshore UAE and within three months in DIFC and ADGM. Enforcement procedures differ slightly:

• Onshore UAE: Awards must be ratified by a UAE Court of Appeal before enforcement.
• DIFC and ADGM: Awards are recognized and enforced upon ratification by respective courts.

Cost recovery

Onshore UAE

• Article 46 of UAE Arbitration Law: Tribunals can assess arbitration costs (e.g., tribunal fees, tribunal-appointed expert costs) but are not explicitly authorized to award legal fees or costs to the successful party. Thus, parties to the arbitration can include explicit provisions in writing in the arbitral rules or agreements granting the tribunal authority to award legal costs to the successful party.
• Dubai Court of Cassation Ruling: In Commercial Case No. 821/2023, the court annulled the part of an award related to legal fees, interpreting Article 46 and ICC Rules narrowly. According to legal experts, this decision sparked criticism and concern about similar issues in arbitrations under other institutional rules lacking explicit provisions for legal fee recovery.
• Third-party funding costs: UAE law is silent on recovering these costs. A clear agreement between parties is essential for any claim.

DIFC and ADGM

• Arbitration Laws (DIFC Article 38, ADGM Article 55): Tribunals can award arbitration costs, including:
  • Tribunal fees, expert and witness costs, legal representation fees, and arbitration institution fees.
• ADGM Regulations: Tribunals may specify the distribution of costs. Parties can request a further award on costs within 30 days if not initially included. Only reasonable and proportionate costs are recoverable.

Conclusion

The UAE’s arbitration framework offers a well-balanced blend of flexibility, efficiency, and judicial support. Understanding the nuances of arbitration laws across onshore and offshore jurisdictions is essential for parties seeking effective dispute resolution. By navigating these procedures adeptly, businesses and individuals in the UAE can leverage arbitration’s full potential to resolve disputes efficiently and equitably.

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