By Eric Teo – Head of International Practice & Special Projects

In April, the UAE Mediation Law No. 6 of 2021 was issued. This law supports mediation and has a section on private mediation agreements (in contrast to mediation administered or imposed by the court as a pre-litigation requirement).

Mediation is a process involving an impartial person acting as the mediator to facilitate settlement between disputing parties.  One reason why parties are cautious about mediation is the concern that they might inadvertently reveal sensitive information or make damaging admissions which could backfire if no settlement agreement is reached (or the settlement agreement is challenged by the counterparty).

This concern stems from the position that, under UAE law, there is no protection for “without prejudice” communication or information that one can find under English law. The parties can, of course, sign a confidentiality agreement before commencing the mediation, but whether such agreement will serve its purpose is not guaranteed.

The above concern would now be less of an issue given the new mediation law, i.e. subject to certain conditions, the law mandates that all documents, information, and compromises exchanged during the mediation are confidential and cannot be disclosed in any court other than the executed settlement agreement. The law also allows a shorter court procedure for the enforcement of settlement agreements.

The introduction of this law is timely given the rise in disputes following the aftermath of the COVID-19 pandemic.  Customarily, many prefer to use the help of a respected industry member to facilitate settlement rather than resort to a more structured mediation. So, time will show whether this law would encourage the use of a more structured or institutionalized mediation.

In addition to a supportive legal framework, other factors that might influence the success of the mediation include the quality of the mediator and the timing for conducting the mediation. The mediator should have relevant knowledge or experience in the industry that the parties operate in and the ability to stimulate meaningful discussions and motivate settlement negotiations.  In terms of timing, mediation can be conducted at any time, be it during the early days of the dispute or after litigation or arbitration has commenced.

It is not unusual for mediation to take place after litigation or arbitration has proceeded. A couple of years back, I was in a mediation involving a large and complex construction project. The mediation took place after arbitration has reached an advanced stage. When the parties are too far apart in their expectations or the dispute involves very complex technical and legal issues, it sometimes makes sense for mediation to occur after the parties have the opportunity to weigh their respective legal and factual arguments. The hope is that this could narrow the difference between them by culminating in more realistic expectations before they mediate and hence increase the chances of a settlement.