United Arab Emirates
middle east
Key points
The United Arab Emirates (UAE) does not currently have an arbitration
law; arbitration proceedings fall under the UAE’s Civil Procedure
Law (CPL). However, at the time of publication, the UAE Ministry of
Economy had announced that an independent arbitration law based
on the UNCITRAL model law would be passed at some point in 2008.
Arbitration proceedings in the UAE are usually carried out within
the individual Emirates through their chambers of commerce and
industry (although parties may, if they wish, elect for their dispute
to be heard by another institution or ad hoc). The Abu Dhabi
Commercial Conciliation and Arbitration Centre and the Dubai
International Arbitration Centre (DIAC) have emerged as the leading
institutions within this chamber of commerce system.
Under the CPL, if one party commences proceedings in the courts
of the UAE and the other party does not object to the court
proceedings at the first hearing, then any alternative arbitration
agreement that may have existed between the parties is deemed
cancelled. It is likely that the proposed UAE arbitration law will allow
arbitration proceedings to continue to an award while the question
of the courts’ jurisdiction is determined.
Currently, the ability of tribunals to issue interim measures depends
on the arbitration rules adopted by the parties. If there is no
agreement between the parties to give such powers to the arbitrator,
a separate action for interim relief through the courts is required.
The proposed UAE arbitration law is likely to provide the tribunal
with powers to grant interim measures, unless the parties have
agreed otherwise.
2 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
While at present arbitration awards need to be ratified by the courts,
the intention is for the proposed UAE arbitration law to give effect
to the UAE’s obligations under the New York Convention. The UAE
acceded to the New York Convention on 21 August 2006.
Tribunals are usually heard, and awards made, in Arabic, unless the
parties have agreed beforehand to conduct arbitrations in English.
Dubai International Financial Centre
The Dubai International Financial Centre (established in 2004)
has its own jurisdiction and a stand-alone arbitration law (the DIFC
Arbitration Law). The DIFC has established an arbitration institution
in conjunction with the London Court of International Arbitration.
The DIFC rules allow tribunals to grant interim and protective
measures. The supervisory role is quite limited under the DIFC
Arbitration Law. Arbitral awards rendered under the DIFC Arbitration
Law and ratified by the DIFC court are automatically enforceable in
Dubai without any power of review by the Dubai courts.
Confidentiality
The CPL contains no provisions relating to confidentiality.
Both the DIFC Arbitration Law and the proposed UAE arbitration law
provide for proceedings and awards to be kept confidential.
Under the rules of the DIAC, all information provided by the parties
requesting conciliation or arbitration is considered confidential
and may not be divulged except with the consent of the parties
or pursuant to an order of a competent judicial authority.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 3
middle east
Model arbitration clauses
All disputes arising from the interpretation, implementation or
termination of the agreement/contract herein shall have to be
conclusively settled via arbitration in accordance with the provisions
on arbitration provided in the Abu Dhabi Commercial Conciliation
and Arbitration Centre’s Procedural Regulations and through an
arbitration board comprising arbitrator(s), who shall be nominated
and summoned up in accordance with the rules and procedures
provided in the Centre’s Procedural Regulations.
Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC)
or
Any dispute arising out of the formation, performance,
interpretation, nullification, termination or invalidation of this
contract or arising therefrom or related thereto in any manner
whatsoever, shall be settled by arbitration in accordance with the
provisions set forth under the DIAC Arbitration Rules (the Rules),
by one or more arbitrators appointed in compliance with the Rules.
Dubai International Arbitration Centre (DIAC)
The DIAC also advises parties to include in their contractual
agreements details of the number of arbitrators (or the authority
of the DIAC to determine the number), the place of arbitration
(Dubai), the venue for proceedings (the DIAC), and the language
of proceedings.
See the Arbitration section for best practice in drafting arbitration
clauses.
4 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
Weblinks
www.adcci.gov.ae
Abu Dhabi Chamber of Commerce and Industry
www.diac.ae
Dubai International Arbitration Centre
www.difcarbitration.org
DIFC LCIA Arbitration Centre
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 5
middle east
1
What arbitration bodies are there within the jurisdiction?
Arbitration proceedings in the United Arab Emirates (UAE) are usually
carried out by the individual Emirates through their chambers of
commerce and industry. The two main bodies are the Abu Dhabi
Commercial Conciliation and Arbitration Centre (ADCCAC) and the Dubai
International Arbitration Centre (DIAC), established by the chambers
of commerce and industry of Abu Dhabi and Dubai respectively.
Dubai International Financial Centre
The Dubai International Financial Centre (DIFC) has its own rules and
its own jurisdiction, separate from the UAE. In February 2008 the DIFC
launched the DIFC LCIA Arbitration Centre as a joint venture with the
London Court of International Arbitration, which will allow parties access
to the LCIA’s extensive database of arbitrators.
2
Is there an Arbitration Act governing arbitration proceedings,
and is it based on the UNCITRAL model law?
There is currently no legislation in the UAE governing arbitration
proceedings, which therefore fall under the general rules of the UAE Civil
Procedure Law, Federal Law 11 of 1992 (the CPL). Provisions on arbitral
procedure and enforcement are set out in chapters 3, 4 and 5 of the CPL.
These provisions are not based on the UNCITRAL model law.
At the time of going to press, the UAE Ministry of Economy had announced
that an independent arbitration law, based on the UNCITRAL model law,
would be enacted in the UAE during 2008, following the UAE’s ratification
of the New York Convention.
6 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
Dubai International Financial Centre
The DIFC has already enacted revised arbitration legislation, which
repeals and replaces the 2004 arbitration law. As with the previous
legislation, the new DIFC arbitration law (the DIFC Arbitration Law) is
based on the UNCITRAL model law. However, unlike the previous law,
the DIFC Arbitration Law does not require any connection with the
jurisdiction in order for the parties to adopt the DIFC as the seat of
their arbitral proceedings.
3
What are the available rules?
Under both the CPL and the proposed UAE arbitration law, provided the
arbitration agreement is in writing and forms part of the basic contract or
an attached agreement, the parties are free to specify the rules for the
proceedings. These may include the rules of any arbitration institution,
whether domestic (DIAC, ADCCAC or DIFC LCIA), regional (Gulf
Cooperation Council Commercial Arbitration Centre) or international.
4
What supervision is there of arbitrators and their awards?
The CPL provides for a number of situations in which the courts retain
a supervisory role over arbitral tribunals. At the request of one or other
of the parties, the courts may dismiss an arbitrator if he has not acted
in accordance with his terms of reference, or if any of the grounds for
disqualification of judges apply. Courts are also empowered to hear
preliminary issues that are outside the scope of the arbitration; to compel
or fine witnesses; on the application of one or other of the parties, to
extend the time for the arbitration; and to approve and enforce awards.
The courts have jurisdiction to appoint an arbitrator where there is no
mechanism for doing so in the arbitration agreement.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 7
middle east
In a domestic arbitration, the tribunal may request the assistance of the
court to enforce its directions. The CPL provides that no award will be
enforced unless it has been approved by the competent courts, which
must conduct a review of the award and the tribunal’s terms of reference
to ensure that there is no encumbrance on enforcement. The court may
also, at the request of either party, correct any material errors in the
award.
The CPL also allows the courts to nullify arbitral awards in certain
circumstances.
Where a valid arbitration agreement is in place, and a party nevertheless
commences court proceedings, the other party must at the first hearing
bring to the court’s attention the existence of the arbitration agreement.
If it fails to do so, it is deemed to have waived its right to have the matter
referred to arbitration and the court will assume jurisdiction of the matter.
Under the UAE arbitration law, the UAE courts are likely to play a
supervisory role similar in scope to that envisaged in the UNCITRAL
model law. It has powers in relation to the appointment and dismissal
of arbitrators, which may be exercised at the request of a party, and it
also has the ability to fulfil an oversight function in relation to certain
decisions made by the arbitral tribunal, such as decisions on its own
jurisdiction or decisions to order interim measures. The tribunal (or a
party with the approval of the tribunal) may request the court’s assistance
in taking evidence.
Dubai International Financial Centre
The DIFC court’s supervisory powers are set out in the DIFC Arbitration
Law. These include certain powers in relation to the appointment and
dismissal of arbitrators, which may be exercised at the request of a party.
The DIFC court may also, at the request of a party, fulfil an oversight
8 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
function in relation to certain decisions made by the arbitral tribunal,
such as decisions on its own jurisdiction or decisions to order interim
measures. The tribunal (or a party with the approval of the tribunal)
may request the DIFC court’s assistance in taking evidence.
While the parties are free under the DIFC Arbitration Law to decide on
the choice of language, for the purposes of enforcing an award within
the DIFC the DIFC court may request a certified English translation of the
arbitration agreement or award.
5
How quickly can a tribunal be set up?
The speed with which a tribunal can be established depends on the rules
of arbitration chosen by the parties.
In the absence of express agreement between the parties, the CPL
specifies that arbitral awards must be delivered within six months from
the date of the first hearing; otherwise, either party can pursue its claim
through the courts. (The CPL allows parties to “contract out” of the
mandatory time periods at the outset and not just by application to the
tribunal once proceedings have started.) The arbitrator may extend the
arbitration period (by mutual agreement of the parties) or the courts may
do so at the request of the arbitrator or one of the parties.
The rules of the DIAC allow the arbitrators to extend the time for
arbitration for an additional period.
The proposed UAE arbitration law draft does not set out any time limits
for the establishment of the tribunal, and allows the parties to determine
the procedure for appointing the arbitrators.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 9
middle east
Dubai International Financial Centre
Under the DIFC Arbitration Law, the speed with which a tribunal can be
set up depends on the rules of arbitration chosen by the parties. There
are no fixed time constraints.
6
What happens if one party refuses to participate in the process?
Under the CPL, arbitrators are required to notify the parties of the date of
the first hearing within 30 days of their appointment, and must fix a date
for the submission of documents to the tribunal. If a party, having been
properly notified, fails to appear before the tribunal, the tribunal may
proceed with the arbitration in that party’s absence.
The draft UAE arbitration law provides that, if the claimant fails to
communicate its statement of claim within the time period agreed by
the parties or fixed by the tribunal, then the proceedings are terminated;
however, if the defendant fails to communicate its defence in the
requisite manner, the tribunal will continue the proceedings without
treating the default as an admission of the claimant’s allegations. If either
party fails to attend at a later hearing or to produce evidence as required,
the tribunal may continue the proceedings and make an award based on
the evidence before it.
Dubai International Financial Centre
If the claimant fails to communicate its statement of claim within the
time period agreed by the parties or fixed by the tribunal, then the
proceedings are terminated; however, if the defendant fails to
communicate its defence in the requisite manner, the tribunal will
continue the proceedings without treating the default as an admission of
the claimant’s allegations. If either party fails to attend at a later hearing
or to produce evidence as required, the tribunal may continue the
proceedings and make an award based on the evidence before it.
10 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
7
What interim measures are available?
Under the CPL, arbitrators do not automatically have jurisdiction over
interim or preliminary measures and must be granted such jurisdiction
in the arbitration agreement.
If the tribunal does not have jurisdiction to grant interim measures,
the parties may seek such relief directly from the courts, even if the
matter is heard as part of an arbitration hearing. This can raise certain
procedural issues, as interim relief can only be granted when a
substantive case is placed before the courts within eight days of the
request for an interim award. It is unclear whether the commencement
of arbitration proceedings is considered to be the same as the
submission of a case in court.
The draft UAE arbitration law looks set to empower tribunals to issue
interim and protective measures, including measures to maintain
or restore the status quo pending the outcome of the proceedings,
measures providing security or preliminary means of enforcement,
measures restraining or requiring certain conduct of a party or measures
to preserve evidence that may be relevant or material to the dispute.
The tribunal may require a party to provide appropriate security in
connection with such measures.
Dubai International Financial Centre
Tribunals conducted under the DIFC Arbitration Law are empowered to
issue interim measures unless the parties have agreed otherwise in
writing. Such measures may include measures to maintain or restore the
status quo pending the outcome of the proceedings, measures providing
security or preliminary means of enforcement, or measures restraining
or requiring certain conduct of a party. The tribunal may require a party
to provide appropriate security in connection with such measures.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 11
middle east
8
What right is there to challenge the appointment of an arbitrator?
Current UAE law
There are two provisions for challenging the appointment of an arbitrator
under the CPL.
If it can be established that an arbitrator has failed to conform to the
terms of the agreement to arbitrate, either party can raise an objection
to that arbitrator with the competent court (article 207(3) of the CPL).
An arbitrator can be dismissed on any of the grounds on which a judge
may be disqualified or deemed unfit for passing judgment. The request
for dismissal must be filed with the competent court within five days of
the parties being notified of the arbitrator’s appointment (article 207(4)).
Proposed UAE law
The proposed UAE arbitration law, as currently drafted, requires that any
person approached in connection with his possible appointment as an
arbitrator must disclose to each of the parties any circumstances likely
to give rise to justifiable doubts as to his impartiality or independence.
Such duty of disclosure continues throughout the course of the proceedings.
Grounds for challenge to the appointment of an arbitrator arise where there
exist justifiable doubts as to the impartiality or independence of an
arbitrator, or if he does not possess the qualifications agreed between the
parties. The draft UAE arbitration law provides some detail on the
circumstances in which doubts will be “justifiable”.
A party may only challenge an arbitrator appointed by him (or in whose
appointment he has participated) where he becomes aware of these
circumstances after the appointment has been made.
12 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
Dubai International Financial Centre
The DIFC Arbitration Law requires that any person approached in
connection with his possible appointment as an arbitrator must disclose
any circumstances likely to give rise to justifiable doubts as to his
impartiality or independence. Such duty of disclosure continues
throughout the course of the proceedings. Grounds for challenge to the
appointment of an arbitrator arise where there exist justifiable doubts
as to the impartiality or independence of an arbitrator, or if he does not
possess the qualifications agreed between the parties.
A party may only challenge an arbitrator appointed by him (or in whose
appointment he has participated) where he becomes aware of these
circumstances after the appointment has been made.
9
Can a party appeal the arbitrator’s decision and, if so, are there
any time limits to be aware of or unusual provisions?
Current UAE law
Although an arbitral award cannot be appealed under the CPL, an award
may be set aside, on the application of either of the parties, if the court
decides that one of the following applies:
• The award was issued based on invalid or expired terms of reference,
or in excess of the tribunal’s powers.
• The arbitrators where not correctly appointed in accordance with the
CPL or were not authorised to act or to issue the award.
• The award or the proceedings become void for any reason that affects
the validity of the award.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 13
middle east
The decision of the court with regard to validity of the arbitral award can
be appealed, unless the parties have waived their right to do so.
At the request of one of the parties, the court may refer the award back to
the tribunal to reconsider any issues which they have omitted to consider
or correct any material errors in the award. Referral or correction in this
way does not amount to a total invalidation of the award.
Proposed UAE law
Under the draft UAE arbitration law the sole recourse against an award
lies in an application to have the award set aside. Any application must
be made within three months from the date the party making the application
received the award unless the parties agree to extend this period.
An arbitral award may be set aside if the party making the application
establishes one of the following grounds:
• A party to the agreement was under some incapacity or the agreement
was otherwise invalid under the relevant law.
• The party making the application was not given proper notice of the
appointment of an arbitrator or of the proceedings themselves or was
otherwise unable to present its case.
• The award deals with a dispute that falls outside the terms of the
arbitration agreement. If possible, only the parts of the award which
deal with a dispute which falls outside the terms of the agreement
will be set aside.
• The composition of the tribunal or the arbitral procedure did not accord
with the agreement between the parties or with the relevant law.
14 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
Equally, an arbitral award may be set aside if the court finds that one of
the following grounds applies:
• The subject matter of the dispute is not capable of settlement by
arbitration under UAE law.
• The award is in conflict with the public policy of the UAE.
Dubai International Financial Centre
Under the DIFC Arbitration Law the parties’ sole recourse against an
arbitral award lies in an application to have the award set aside by the
DIFC court. Any application must be made within three months from the
date the party making the application received the award, unless the
parties have agreed to a longer period.
An arbitral award may be set aside if the party making the application
establishes one of the following grounds:
• A party to the agreement was under some incapacity or the agreement
was otherwise invalid under the relevant law.
• The party making the application was not given proper notice of the
appointment of an arbitrator or of the proceedings themselves or was
otherwise unable to present its case.
• The award itself goes beyond (or deals with a dispute that falls
outside) the terms of the arbitration agreement – provided that,
if possible, only the parts of the award which exceed (or deal with
a dispute which falls outside) the terms of the agreement shall be
set aside.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 15
middle east
• The composition of the tribunal or the arbitral procedure did not accord
with the agreement between the parties or with the relevant law.
Equally, an arbitral award may be set aside if the DIFC court finds that one
of the following grounds applies:
• The subject matter of the dispute is not capable of settlement by
arbitration under DIFC law.
• The dispute is referred to a different body or tribunal for resolution
under the DIFC Arbitration Law or any mandatory provision of DIFC law.
• The award is in conflict with the public policy of the UAE.
10 Is either the UAE or the DIFC a party to the New York Convention?
Yes: the UAE acceded to the New York Convention on 21 August 2006.
This came into force on 19 November 2006.
Dubai International Financial Centre
While the DIFC cannot be a party to the New York Convention (because
it is not a country), the DIFC Arbitration Law makes it clear that the DIFC
Court will comply with the terms of any treaty for the mutual enforcement
of arbitral awards to which the UAE is party.
an arbitration award be enforceable in the UAE and, if so,
11 Will
what is the procedure?
Current UAE law
Arbitral awards must be approved by the courts before they become
enforceable.
16 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
For domestic awards, the arbitrator must deliver a copy of the award to
all relevant parties within five days from the date of the award. The award
must then be ratified by the courts for it to have the force of a court
judgment and to be enforceable.
The CPL sets out a two-stage test for the enforcement of foreign awards
in the UAE. First, there must be reciprocity of enforcement between the
UAE and the jurisdiction in which the award was rendered. The UAE has
signed the New York Convention, so there will be reciprocity with any
other signatory state.
Secondly, there are certain procedural requirements for enforcement.
The courts in the UAE must verify that:
• the UAE courts did not have jurisdiction to hear the dispute
• the arbitral tribunal did have such jurisdiction
• the parties were correctly summoned to appear before the tribunal
• the award has acquired the force of law under the rules of the tribunal
that rendered it
• the award does not conflict with any judgment previously issued by the
courts of the UAE or with public morals or order in the UAE.
Proposed UAE law
The proposed UAE arbitration law seeks to give effect to the UAE’s
obligations under the New York Convention, and accordingly provides
only limited grounds on which enforcement may be refused.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 17
middle east
These grounds are:
• A party to the arbitration agreement was under some incapacity or the
agreement was otherwise invalid under the relevant law.
• The party against whom enforcement is sought was not given proper
notice of the appointment of an arbitrator or of the proceedings
themselves, or was otherwise unable to present its case.
• The award itself goes beyond (or deals with a dispute that falls outside)
the terms of the arbitration agreement. If possible, the parts of the
award which do not exceed (or deal with a dispute which falls outside)
the terms of the agreement will be enforceable.
• The composition of the tribunal or the arbitral procedure did not accord
with the agreement between the parties or with the relevant law.
• The award has yet to become binding on the parties or an application
has been made to the court under the law of which the award was
made to set aside or suspend the award.
Equally, the court can refuse enforcement if it finds one of the following:
• The subject matter of the dispute is not capable of settlement by
arbitration under UAE law.
• The enforcement of the award would be in conflict with the public
policy of the UAE.
18 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group
united arab emirates
Dubai International Financial Centre
Arbitral awards rendered under the DIFC Arbitration Law and ratified by
the DIFC court are automatically enforceable in Dubai without any power
of review by the Dubai courts.
The DIFC court may refuse enforcement (on part or all of the award) if the
party against whom the award is to be enforced proves to it one of the
following:
• A party to the arbitration agreement was under some incapacity or the
agreement was otherwise invalid under the relevant law.
• The party against whom enforcement is sought was not given proper
notice of the appointment of an arbitrator or of the proceedings, or
was otherwise unable to present its case.
• The award itself goes beyond (or deals with a dispute that falls outside)
the terms of the arbitration agreement. If possible, the parts of the
award which do not exceed (or deal with a dispute which falls outside)
the terms of the agreement will be enforceable.
• The composition of the tribunal or the arbitral procedure did not accord
with the agreement between the parties or with the relevant law.
• The award has yet to become binding on the parties or an application
has been made to the court under the law of which the award was
made to set aside or suspend the award.
Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 19
middle east
Equally, the court can refuse enforcement if it finds one of the following:
• The subject matter of the dispute is not capable of settlement by
arbitration under UAE law.
• The enforcement of the award would be in conflict with the public
policy of the UAE.
12 What are the likely costs of arbitration?
The costs of arbitration in the UAE will depend largely on the rules
selected by the parties.
Under the CPL, the arbitrators determine their own fees and decide
whether these should be borne, either entirely or in part, by the party
against whom the award is issued. The arbitrators’ estimate may be
amended by the courts at the request of one of the parties.
The proposed UAE arbitration law looks set to allow the tribunal to
provide for the costs of the arbitration in its award.
The rules of the DIAC set out the administrative fees and arbitrators’
remuneration based on the disputed amount, giving a greater degree
of certainty over costs.
Dubai International Financial Centre
The DIFC Arbitration Law provides for the tribunal to determine the costs
of the proceedings, and the apportionment of such costs between the
parties.
See the Reference section for more details on the DIFC LCIA Arbitration
Centre. ■
20 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group