CDR – Essential Intelligence: The Belt and Road Initiative 2022 (UAE)
I Connection to Belt and Road projects
Situated geographically at the crossroads of Europe and Asia, the Gulf region is expected to play a vital role in the Belt and Road Initiative (“BRI”). Of the BRI nations situated within the Gulf, the UAE stands poised to be a leader and consolidate itself as the trade hub of the Middle East and the gateway to Africa.
Prior to joining the BRI, China was already the UAE’s second-largest trading partner, with bilateral trade between the two nations exceeding USD 41 billion in 2020.
Despite competitive growth within the Gulf region, the UAE has a head start on its neighbouring countries and appears focused on securing this advantage as part of the BRI. The UAE has capitalised on import, export and re-export opportunities more than any other nation within the Gulf. Substantial investments into its infrastructure have resulted in the UAE having the busiest seaports and airports of the region, as well as the most established and diverse free zones. All of this is supported by a strong legal and regulatory system where both traditional civil courts of the region are in place, as well as common law jurisdictions in the “offshore” jurisdictions of the Dubai International Financial Centre (“DIFC”) and the Abu Dhabi Global Market (“ADGM”), where some of the most pre-eminent common law judges from around the world preside.
Dubai’s DXB Airport has not only been the busiest of the region since 2014 when it overtook Heathrow, it has also been the busiest airport in the world by international passenger count. Along with DXB Airport, there is the Al Maktoum Airport, which focuses on cargo flights into Dubai (including China Airlines Cargo and Emirates Sky Cargo), and the Abu Dhabi Airport, which is the home base of Etihad Airways.
Notwithstanding the number of aircraft connecting the UAE to the rest of the world on a daily basis, 78.1% of the UAE’s imports, 92.7% of its exports and 86% of its re-exports occur by sea. Currently, the Port of Jebel Ali is the 12th-busiest container port in the world (by container traffic), handling more than 13.5 million TEUs in 2020. Whilst this amount was down by 611,000 TEUs from 2019, Jebal Ali Port is the fourth-busiest port outside of China (including Hong Kong), and by a considerable margin, the busiest of the Gulf region. The second- and third-busiest ports of the Gulf both share land borders with the UAE, being Jeddah Port in Saudi Arabia in second place with 4.4 million TEUs per year (in 2019), and Salalah Port in Oman, at 4.1 million TEUs per year (2019), both handling less than one-third of the TEUs compared to the Port of Jebel Ali.
In addition to the Port of Jebal Ali, the Khalifa Port in Abu Dhabi is one of the largest deep-water harbours in the world. The Port is operational, although its six planned phases of construction are targeted for completion by 2030. Part of the port includes China’s COSCO Shipping Ports (“CSP”) Abu Dhabi Terminal. The CSP terminal covers an area of 275,000 square metres and is the CSP’s regional hub of its network of 36 ports across the globe. The CSP terminal has a design capacity of 2.5 million TEUs annually and the ability to accommodate mega vessels carrying in excess of 20,000 TEUs.
The Khalifa Port is part of the wider Khalifa Industrial Zone Abu Dhabi (“KIZAD”), an area that serves the Emirates of both Dubai and Abu Dhabi and stretches out to sea on a reclaimed island covering an area of over 400 square kilometres.
As such, whilst the UAE connects the world by air, the infrastructure for the movement of goods through its seaports, along with its industrial and commercial free zones, provides a solid foundation upon which the UAE will look to expand its role in international business and trade and be a key member of the BRI.
Supporting the physical infrastructure for trade, the UAE’s involvement in the BRI is likely to go beyond the movement of goods. It has a number of shared interests with China in the areas of education, science, technology, culture, tourism, space and artificial intelligence. The UAE is at the forefront of such endeavours and the Emirates of both Abu Dhabi and Dubai provide a regional hub for Fintech business. This role is expected to expand as the UAE seeks to benefit from the digital aspects of the BRI and its closer ties with China.
On this front, the DIFC signed a memorandum of understanding (“MoU”) with China’s Jiaozi Fintech Dreamworks (“Jiaozi”) in July 2020. This MoU explicitly focused on the advancement of the BRI through Fintech collaboration in the areas of blockchain, artificial intelligence, big data and cloud computing. The DIFC has created the largest Fintech ecosystem in the region and such agreement with Jiaozi is aimed at providing reciprocal benefits to the respective jurisdictions of both nations, with a focus on providing reciprocal access to markets. In 2021, the UAE again asserted itself as the most accessible and hospitable nation in the Gulf, successfully hosting the World Expo 2020 (delayed to 2021 due to COVID-19). Following on from the event, Dubai experienced a significant boost to its local property market, sending a clear message that Dubai is the most attractive nation in the Gulf for international investment, and affords residents from around the world a modern and inclusive lifestyle. Overall, the UAE stands to be the leader of the region in terms of the BRI – both with the physical transportation of goods, and on the digital and technology front. As a consequence, the more than 4,000 Chinese businesses already in the UAE stand to strengthen the important platform from which the UAE provides a gateway to the vast emerging markets of the entire Gulf region, which includes close to 100 million residents.
Known or anticipated BRI projects
One of the initial core projects announced in the wake of the UAE joining the BRI is the Dubai Traders Market (“Market”).
The Market is situated opposite the location of the Dubai Expo 2020. Phase 1 (Yiwu Market) opened on 28 June 2022.
The entire Market is planned to span approximately 800,000 square metres and will form part of the Jebal Ali Free Zone (“JAFZA”). As such, the Market will have the benefit of the JAFZA regulatory environment, which permits 100% foreign ownership, and various free-zone benefits for the re-export of goods.
In 2019, it was announced that the Dubai port operator DP World had entered a 70/30 joint venture partnership with Zhejiang China Commodity City Group (“CCC Group”) to develop the first phase of the project. This phase will be the construction of a “Yiwu Market”, a model based off CCC Group’s Yiwu China Commodities City. The Chinese investment in the project is estimated at USD 2.4 billion.
The Yiwu Market UAE will span over 200,000 square metres and when completed is expected to have over 1,600 showrooms and 324 bonded warehouses. It is aimed at providing traders and businesses from across the globe access to wholesale discounts with minimised supply chain costs and clearly play a key role in the UAE’s contribution and alignment with the objectives of the BRI.
DP World, a Dubai-based logistics group, also signed an agreement with China for a USD 1 billion project in Dubai to import, process, pack and export agricultural, marine and animal products, which is to be known as the “Vegetable Basket”.
At the same time as announcing the Market, the two countries signed a deal for a further USD 1 billion investment for the “Vegetable Basket” project. This facility will enable the mass importation, processing and re-exporting of agricultural, marine and animal products, a project ideally positioned to both enhance and capitalise on the BRI. Details of this project remain scarce at this time.
Furthermore, there is the construction of the China-UAE Industrial Capacity Cooperation Demonstration Zone in KIZAD, in conjunction with Jiangsu Provincial Overseas Cooperation and Investment Company (“JOCIC”). The project covers an area of 220,000 square metres
and will include approximately 80,000 square metres of buildings. The project has attracted investment from more than 20 Chinese companies totalling approximately USD 1.6 billion since it was officially launched in 2019. Such investment in KIZAD comes in addition to CSP establishing the Khalifa Port as its regional hub.
II Country Overview
Guided by the UAE Vision 2021 (“Vision 2021”), which is the core of its national economic agenda, the UAE has made great strides to diversify away from its position as an oil-dependent economy.
An integral aspect of Vision 2021 is to create and maintain a sustainable and diversified economy. As noted in Vision 2021, this is targeted through a commitment to the “development of a competitive knowledge-based economy, promoting innovation, research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors”.
In order to achieve this, the UAE government has set out the following 12 Key Performance Indicators (“KPIs”):
- Non-oil real GDP growth.
- Gross National Income (“GNI”) per capita.
- Net inflow of foreign direct investment as a percentage of GDP.
- Global Competitiveness Index.
- Share of UAE nationals in the workforce.
- Ease of Doing Business Index.
- Emiratisation rate in the private sector.
- SME’s contribution to non-oil GDP.
- Global Entrepreneurship and Development Index (“GEDI”).
- Global Innovation Index.
- Share of “knowledge workers” in the labour force.
- Research and development expenditure as a part of GDP.
Crucially, and in line with its economic agenda, the UAE introduced two significant pieces of legislation in the second half of 2018. Firstly, it enacted a new Foreign Direct Investment Law (Federal Decree Law No. 19/2018) (the “FDI Law”) and a new long-term visa system (Cabinet Decision No. 56/2018), seeking to attract investors, entrepreneurs and people with specialised talents.
Together, these laws are aimed at attracting foreign investment, promoting the UAE’s emerging status as a trading hub and continuing to transform it into a regional and global centre for excellence in various fields.
The United Arab Emirates dirham (“AED”) is the currency of the UAE. Since November 1997, the AED has been pegged to the US dollar at a rate of USD 1 to AED 3.6725.
Government and stability/security The UAE is a confederation of seven Emirates comprising of Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Umm Al Quwain and Fujairah. Formed in 1971, the UAE’s federal authority, the Federal Supreme Council, consists of the hereditary rulers of each Emirate who further elect a President and Vice President from the existing members. The capital is the Emirate of Abu Dhabi, which is also the largest Emirate, occupying 87% of the UAE’s total landmass. The most populated Emirate is, however, Dubai with almost twice as many residents as the capital. The legal system in the UAE is based on both civil code principles (mostly heavily influenced by Egyptian law) and Islamic Shari’ah Law. The primary sources of law include:
- The UAE Federal Constitution.
- Federal laws and regulations.
- Emirati laws and regulations.
- Islamic Shari’ah principles.
- Free zone regulations.
The UAE Federal Constitution provides the basis of all legislation communicated at the federal and national level, whereby the federal laws take precedence over any local laws. The federal government has exclusive jurisdiction over various substantive matters, whereas each Emirate maintains its own jurisdiction over matters not assigned to the federal government.
According to the Fragile States Index (“FSI”), released by Fund for Peace, the UAE was ranked as the most stable Arab nation in 2019. The FSI measures each country based on social, economic and political indicators.
The UAE is home to a large expat community from citizens of nations all over the world. In fact, expats make up about 88% of the country’s population of approximately 10 million people. With the recent introduction of the new remote work visa scheme, this is likely to continue to grow.
The intersection of various cultures has fostered a tolerant and cosmopolitan environment. Notwithstanding this, the UAE is an Islamic country and so a basic understanding of Islamic cultural norms are essential when conducting business in the UAE. Family values and a deference to authority are extremely important values to espouse and uphold.
As such, considerations as to behaviour and conduct when living and conducting business in the UAE need to be taken into account. Notwithstanding this, the UAE passed legislation in 2021 to modernise some of its laws. As an example, this included the decriminalisation of consensual relationships between unmarried couples, a significant cultural shift for the country and a first for the region.
The UAE possesses nearly 10% of the world’s total hydrocarbon reserves. The two primary natural resources are petroleum and natural gas, 90% of which come from the Emirate of Abu Dhabi.
The UAE also accounts for 3.4% of the world’s aluminium smelter production.
Approximately 80% of the UAE’s landmass classifies as desert, while a further 2.6% is mountainous. Such a topography causes significant difficulty on the nation’s ability to develop agriculture. Furthermore, it relies heavily on desalination plants for the production of water.
In keeping with its strong commitment to adopt a green economy and reduce carbon emissions, the UAE has taken serious steps in recent years to address environmental concerns. For example, in January 2017, it launched a national energy strategy (called the UAE National Energy Strategy 2050). The UAE has allocated over USD 163 billion in order to meet its target of increasing the contribution of clean energy sources in the total capacity mix to 50% by 2050.
The UAE has the most advanced and developed infrastructure in the Gulf region. In addition to the airports and seaports noted above, the country has placed a large emphasis on real-estate development, telecommunication infrastructure, and constructing an extensive road network (both within the UAE and within neighbouring countries), as well as establishing itself as a hub for maritime activity and transportation.
Creating and maintaining a sustainable environment and infrastructure is a key tenet of Vision 2021. This provides that the UAE government aims to develop “quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all”.
The KPIs set by the UAE government in Vision 2021, as they relate to infrastructure, include improving the UAE’s standing on the Networked Readiness Index (telecommunication and IT sectors) and Online Services Index.
Foreign investors or businesses wishing to establish a presence in the UAE may generally avail of
one of two avenues:
- establish a presence in the UAE mainland (i.e. in one of the Emirates); or
- establish a presence in one of the many (over 40) UAE free zones, which are designated areas within the UAE where 100% foreign ownership is permitted, together with import duty and VAT exemptions.
On 21 June 2021, amendments were made to the UAE Commercial Companies Law, which, subject to some restrictions, permits 100% foreign ownership of companies. Prior to these amendments, UAE companies not located in free zones faced restrictions to foreign ownership whereby UAE nationals must own at least 51% of the shareholding in commercial companies based outside of free zones.
The amendments also removed the requirement for branches of foreign companies in the UAE to appoint a UAE national agent for most activities.
As a consequence, it has become more appealing for entities to perhaps establish themselves in mainland UAE and also for entities not particularly suited to the structure or regulations of the particular free zones, to also establish themselves in Dubai.
The Departments of Economic Development (“DED”) in certain Emirates have now started to issue their respective lists of approved activities and requirements for foreign shareholders. The Abu Dhabi and Dubai DED, for instance, have issued “positive lists” of 1,105 and 100 activities, respectively – both lists being heavily focused on commercial and industrial activities. The recent amendments to foreign ownership requirements in the UAE do not apply to “strategic activities”, which include the banking, insurance and re-insurance, and telecommunication sectors.
Construction-related (and maritime-related) activities, however, are now eligible for 100% foreign ownership, subject to various conditions, such as minimum capital requirements or the use of new technology.
III International dispute settlement
The legal structure in onshore UAE runs in a dichotomous system, with the Federal Judiciary presided by the Federal Supreme Court as the highest judicial authority in the UAE and the local judicial departments at the local government level.
In addition to the onshore UAE legal system, the “offshore”/“free zone” companies are governed by their relevant free zone’s laws and regulations. One of the most sophisticated and robust regulatory frameworks in this regard is situated within the DIFC free zone. This free zone is regulated by the Dubai Financial Services Authority, an independent regulator of financial services conducted in or from the DIFC, and has further established its own DIFC Court.
The courts of the DIFC Court include a Small Claims Tribunal (“SCT”), the Court of First Instance, and the Court of Appeal. The SCT deals with disputes valued up to AED 500,000 and prohibits the appearance of lawyers within the court. As such, it has sought to implement a simplified and cost-effective procedure for dispute resolution.
Both the SCT and Court of First Instance can be nominated as the forum for dispute resolution in all commercial contracts. This not only includes entities that operate outside of the DIFC, or Dubai, but also extends beyond the borders of the UAE. All that is required is the agreement of both parties, which can be done prior to entering into the contract, or at the time of the dispute arising.
The DIFC Courts’ jurisdiction only deals with civil and commercial disputes. Criminal proceedings (such as crimes committed within the DIFC zone) do not fall under the remit of these courts. Any criminal issues that may arise within the DIFC are referred to the appropriate external channels.
The existence of a provision for parties to opt in to the jurisdiction of the DIFC Courts further highlights the increasing prominence of the DIFC Courts in the international disputes arena. The DIFC Courts have become known for offering several advantages over other courts in the region.
Such advantages include an international judiciary of outstanding calibre. Their significant experience in sophisticated commercial disputes in the most prestigious and established common law courts from around the world make the DIFC Courts excellent fora for justice. The
availability of an immediate/summary judgment and the opportunity to recover most of a successful party’s legal costs are also factors that distinguish the common law jurisdiction to many other civil courts within the region.
With a panel of extremely experienced and highly qualified judges and the adoption of remote hearing capabilities, the DIFC Courts are accessible from anywhere in the world, and are being recognised as preferred fora for highervalue disputes. In addition to this, the SCT provides a quick and efficient way for parties to utilise the Court to resolve disputes valued under AED 500,000, without the involvement of legal counsel on either side.
The DIFC Courts have also been active specifically in relation to enhancing judicial cooperation between Dubai and China. In 2016, the DIFC Courts and Shanghai High People’s Court entered into an MoU on Judicial Cooperation.
The ADGM is an international financial centre situated in the Emirate of Abu Dhabi. It has also gained notable recognition for developing a business-friendly environment, largely following the success and format of the DIFC, its Dubai counterpart.
Similar to the existing regulatory framework in the DIFC, the ADGM Courts and its judiciary are largely modelled on the English judicial system, thereby creating an internationally recognised and accepted legal framework. English common law, including the rules and principles of equity, are directly applicable in the ADGM.
Moreover, similar opt-in provisions are in place whereby parties, without any connection to the ADGM, can opt in to the jurisdiction of the ADGM to determine their disputes. However, unlike the DIFC Courts, recent amendments to the ADGM’s Founding Law provide that the ADGM Courts cannot be used as a conduit jurisdiction for the enforcement of non-ADGM judgments and arbitral awards made in other jurisdictions.
As a part of the UAE government’s commitment to effectively employ advanced technologies and digital platforms to improve public services, measures were introduced in the UAE in 2017 at the federal level in relation to the use of remote communication technologies (i.e. e-trials) into civil proceedings in the UAE.
Such measures of incorporating advanced technological platforms have helped the courts deliver more efficient and cost-effective solutions in the handling of proceedings.
Bolstered by increasing demand resulting from COVID-19 restrictions, the DIFC Court leveraged its existing digital infrastructure to stay connected with court users during this period. Videoconferencing and teleconferencing facilities for applications and hearings were extended, as well as the issuing of digital orders and judgments, and court users were able to access all extensive eServices remotely and effectively manage their case and access all relevant filing from the eRegistry portal.
In 2020, the DIFC Court further established its Arbitration Division, which was required in order to accommodate the increasing number of arbitration disputes. The Arbitration Division maintains the advantage of dedicated judicial and registry oversight and case management expertise of the DIFC Court. This has led to increased efficiency of the process arising directly from the ability to expeditiously review applications for interim measures and injunctive relief mechanisms.
Federal Law No. 6 of 2018 (“the Arbitration Law”) was introduced in May 2018 and was a major development in the field of international arbitration for the UAE. The legislation is closely aligned with the UNCITRAL Model Law on International Commercial Arbitration and best international practice.
The Arbitration Law is applicable in arbitrations seated “onshore” in any of the seven Emirates of the UAE. It does not, however, apply to the DIFC and ADGM. Notwithstanding this, both the DIFC and ADGM have their own arbitration law.
The DIFC Arbitration Law No. 1 of 2008 (“DIFC Arbitration Law”) is also based upon the UNCITRAL Model Law on International Commercial Arbitration. It applies to arbitrations seated within the DIFC; however, like the court, parties are free to adopt the DIFC as the seat of the arbitration, irrespective of whether there is any connection between the DIFC and the parties and/or the matter in dispute.
Similarly, the ADGM has an arbitrationspecific legal framework in the form of the Arbitration Regulations 2015. Notwithstanding the alternative arbitration jurisdictions operating within the UAE, the vast majority of international arbitrations conducted across the Emirates are subject to the Arbitration Law.
Mediation is not a common or promoted form of alternative dispute resolution within the UAE. That said, the prevalence of barristers and King’s Counsel practising regularly in the UAE for arbitrations and proceedings in the DIFC and ADGM Courts, as well as the prevalence of top international law firms, means that there is certainly no shortage of persons extremely capable and duly qualified to provide mediation services. Therefore, should the parties feel that mediation might be effective in resolving a dispute, it is certainly available to them.
Whilst it is has not been determined precisely as to why mediations are rare in the UAE (and across the Gulf region more widely), by experience it is perhaps explained by cultural influences of an organisation. Parties facing a situation where they have liability for a substantial sum that was unexpected or arisen due to fault or mistake are often unable to consent to paying (to a certain degree) such amount, without the direction of an authority such as a court or arbitrator.
Despite this generalised statement, negotiations with due consideration of all commercial factors involved are very important and common practice. As such, negotiations are an effective way to resolve disputes in the UAE. However, general experience shows that parties within the UAE are more likely to have a hard limit in their negotiations and the addition of a third party to help such negotiations is not particularly effective in changing that.
Often, it appears that the fear of being perceived as being too lenient or perhaps agreeing to an outcome that might not be less advantageous of what a court may ultimately order can override commercial decisions as to the risk and costs of litigation. As such, placing
the decision in the hands of an authority such as a court or arbitrator is perceived as safer and easier to justify if queried. This is particularly the case where the entity is receiving state funds and subject to state audits.
As the Arab world’s second-largest economy, the UAE has signed a significant number of Bilateral Investment Treaties (“BITs”) with Belt and Road Countries (“BRCs”) since joining the BRI in 2018. Over 50% of the BITs that the UAE has signed since 2018 have been with BRCs, a recent example being the BIT that was signed with North Macedonia in February of 2021. This follows earlier BITs with BRCs such as Gambia, Zimbabwe and Kazakhstan. The stated purposes of these treaties are to create favourable conditions for cross-border economic cooperation and to encourage investment and reciprocal protection of foreign nationals’ investments.
Other cross-border/regional treaties
Regionally, the UAE is also party to several multilateral and bilateral trade agreements, including with partner countries in the Gulf Cooperation Council (“GCC”). As a member of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, as well as a common market and customs union with these nations.
Similarly, under the Greater Arab Free Trade Area Agreement, the UAE has free trade access to 18 of the 22 Arab League states. This agreement provides a series of privileges, the most significant being the complete exemption of commodities produced by participating member states from customs duties.
Another noteworthy cross-border treaty that the UAE is party to as a member of the GCC is the GCC agreement with the countries of the European Free Trade Area (“EFTA”). The GCC-EFTA Free Trade Agreement (“EFTA Agreement”) covers a broad range of areas including trade in goods and services, government procurement and intellectual property rights. The Joint Committee established by the Agreement supervises the application of the EFTA Agreement, which provides for dispute settlement through arbitration.
The UAE has also signed trade agreements with Singapore (through the GCC’s agreement with the nation) and New Zealand, and has engaged in talks regarding the establishment of similar arrangements with Argentina, Brazil, China, the European Union (“EU”), India, Japan and Pakistan, among others.
Relationship with the EU
Bilateral relations between the EU and the UAE have increased through trade, development and humanitarian cooperation, energy cooperation and cultural and educational exchanges.
In 2018, the UAE and EU signed a Cooperation Arrangement with the aim of boosting collaboration in a number of policy areas such as the economy, agriculture, trade, advanced sciences and renewable energy. The UAE and the EU maintain a solid trading relationship and the UAE imports more EU products than any other Gulf country. Yet, compared to nations such as China, Russia or South Korea, the EU has limited involvement in the UAE’s economic goals. On the other hand, the EU retains some influence in the UAE through soft power initiatives, including projects such as the Louvre Abu Dhabi, Sorbonne University Abu Dhabi and the EU’s participation in UAE Expo 2020.
Overall, progress continues to be made between the UAE and EU, with plans for further collaboration in areas such as intellectual property protection and sustainability already well under way.
Reciprocal arrangements for the recognition and enforcement of court judgments with BRI countries
Projects carried out under the BRI mainly take the form of large-scale infrastructure ventures and, as a result, disputes can arise in a number of different forms. At present, there are no set terms of BRI global engagement nor a set mechanism to resolve disputes that arise out of such engagement.
The UAE generally relies on bilateral civil and commercial judicial assistance treaties with a number of BRCs for the enforcement of judgments. In particular, the UAE has treaties with neighbouring Gulf countries and fellow BRCs by way of the 1996 GCC Convention. The Convention provides for the recognition and execution of final judgments issued by the courts of any GCC member state in civil, commercial and administrative cases. Further, the 1983 Riyadh Arab Agreement for Judicial Cooperation (“the Riyadh Convention”) remains in force and is largely similar to the GCC Convention, the primary difference being that judgments under the Riyadh Convention require ratification by a UAE First Instance Court prior to execution.
Outside the GCC, there are a small number of judicial treaties in place with other BRCs. This includes the Agreement on Judicial Cooperation, Execution of Judgments and Extradition of Criminals between the UAE and the Tunisian Republic of 1975 (“the Tunisian Agreement”), which provides for the enforceability of final judgments granting civil or commercial rights, or deciding compensation from the criminal or personal status courts. Additionally, the Legal and Judicial Cooperation Agreement between the UAE and the Arab Republic of Egypt of 2000, and the Agreement between the Republic of Kazakhstan and the UAE on Judicial Assistance in Civil and Commercial Matters of 2009 provide for the same parameters of enforceability as the Tunisian Agreement.
New York Convention
There is often a reluctance for parties to submit their disputes to BRC national courts, leading to a preference for arbitration.
Among the 140 participating members of the BRI, approximately 60 are contracting parties of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the New York Convention”). This includes the UAE, who acceded to the New York Convention in 2006 without making any declarations or reservations.
The DIFC and the ADGM are also bound by the New York Convention by virtue of the fact that they are part of the UAE.
Article 52 of the Arbitration Law confirms that an arbitral award issued by a validly constituted arbitral tribunal in accordance with the requirements of the Arbitration Law is binding on the parties, shall constitute res judicata and is enforceable as a judicial ruling. Ratification may be achieved by means of an application to the Chief Justice, in accordance with the requirements set out under Article 55 thereof.
The court can, however, on its own initiative, set aside the award if it finds that:
a) the subject matter of the dispute is not capable of settlement by arbitration; or
b) the arbitral award is in conflict with the public order and morality of the UAE.
As such, the court’s ability to set aside an award is quite limited. Therefore, arbitration is a common form of dispute resolution within the UAE and arbitration awards are, for the most part, enforceable.
This article was first published by Global Legal Group