United Advocates

UAE’s New Arbitration Law: Advancing Dispute Resolution in the Region

The United Arab Emirates (UAE) has taken a significant stride towards modernizing its arbitration framework with the introduction of the Federal Law No. 6 of 2018 on Arbitration, also known as the New Arbitration Law. This legislation replaces the outdated and incomplete arbitration provisions of the UAE Civil Procedures Law No. 11 of 1992, aligning the UAE’s arbitration system with international standards, including the UNCITRAL Model Law on International Commercial Arbitration. This article explores the features of the New Arbitration Law and its implications for businesses and investors operating in the UAE.

The New Arbitration Law has a broad scope of application, covering both domestic and international arbitrations. It extends to arbitrations situated within the UAE, unless the parties agree otherwise, as well as to commercial arbitrations conducted outside the UAE but subject to the New Arbitration Law by agreement. However, it is important to note that separate arbitration laws govern arbitration seated in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

A notable introduction in the New Arbitration Law is the concept of an appointed Competent Court, which can be either a Federal or local Court of Appeal agreed upon by the parties or the court in whose jurisdiction the arbitration takes place. This provision establishes a dedicated circuit within the court system to handle arbitration matters, ensuring the support and protection of the arbitral process.

While the requirement of a written agreement for arbitration remains, the New Arbitration Law expands the definition to include an exchange of correspondence, including emails. It also recognizes arbitration agreements incorporated by reference in written contracts or international agreements.

To promote efficiency and prevent delays, the New Arbitration Law imposes strict time limits throughout the arbitration process. Failure to object to alleged non-compliance with the arbitration agreement or the law within the specified timeframe is deemed as a waiver of the right to rely on such non-compliance. Time limits are also set for the appointment and challenge of arbitrators, as well as for challenging the preliminary decision of the arbitral tribunal on jurisdiction.

Furthermore, the New Arbitration Law introduces clear requirements for arbitrators, barring individuals who are minors, incapacitated, bankrupt, or convicted of a crime from acting as arbitrators. Additionally, arbitrators are prohibited from serving on the Board of Trustees or the administrative body of the arbitral institution administering the arbitration in which they sit. In cases where the parties fail to agree on an appointment, the Ministry of Justice or the Chairman of the competent judicial authority will compile a list of arbitrators.

Additionally, the New Arbitration Law acknowledges the use of modern means of communication in arbitration proceedings. It allows for written correspondence via email, hearings and deliberations conducted through electronic technology, and questioning witnesses via remote communication. This emphasis on technology aims to enhance efficiency and align the UAE’s arbitration practices with global standards.

Confidentiality is implicitly recognized in the New Arbitration Law, with hearings presumed to be confidential unless the parties agree otherwise. Although the law does not explicitly address the confidentiality of documents, pleadings, evidence, or submissions produced during the proceedings, parties are advised to address confidentiality explicitly in their arbitration agreements or by applying institutional rules that provide for confidentiality obligations.

The development of the New Arbitration Law in the UAE has brought significant benefits for businesses and investors. By aligning the UAE’s arbitration framework with international standards, the law promotes a more efficient and effective dispute resolution mechanism. However, businesses and investors must be aware of the ongoing challenges in the application of arbitration laws across different Emirates. This requires diligent consideration of jurisdiction and venue selection to ensure consistency in the interpretation and application of the New Arbitration Law. It is advisable for parties to seek legal advice and include the proper choice of law and dispute resolution clauses in their contracts to mitigate potential inconsistencies. Overall, arbitration offers a specialized, confidential, and efficient alternative for resolving disputes in the business.