International Comparative Legal Guides: International Arbitration 2022 (UAE)
Thanos Karvelis, Partner, and Mazin Al Mardhi, Senior Associate, authored the UAE chapter of the Global Legal Group International Comparative Legal Guides - International Arbitration 2022.
1. Arbitration Agreements
1.1 What, if any, are the legal requirements of an arbitration agreement under the laws of your jurisdiction?
Federal Law No. 6 of 2018 (“the Arbitration Law”), as applicable to arbitrations seated (onshore) in any of the seven Emirates of the UAE, provides the substantive and formal requirements for a valid arbitration agreement.
In particular, any agreement to refer disputes to arbitration must be in writing, either in the form of an arbitration clause or by reference to a separate document, such as an addendum. As an exception to the rule, any oral agreement to arbitrate will only be considered binding if such agreement occurs during court proceedings and is recorded in the relevant court judgment.
An arbitration agreement may only be validly entered into by a person with the requisite capacity to do so, which means that one should carefully review the constituting documents of any counterparty to ensure that such authority is in fact granted.
1.2 What other elements ought to be incorporated in an arbitration agreement?
One should consider all aspects of the proceedings including, amongst others, the seat of the arbitration, application of bespoke or institutional procedural rules where appropriate, applicable substantive law, language of the proceedings and the arbitral institution (if any) required to conduct the proceedings.
1.3 What has been the approach of the national courts to the enforcement of arbitration agreements?
The importance of protecting the free will of the parties to enter binding arbitration agreements is vital and recognised as such by the national courts. Where a valid arbitration agreement is concluded, the national courts will dismiss an application to initiate court proceedings, subject to the defendant raising the objection to court proceedings on the basis that an arbitration agreement exists prior to submitting any request or pleading on the merits of the case.
2. Governing Legislation
2.1 What legislation governs the enforcement of arbitration proceedings in your jurisdiction?
Article 55 of the Arbitration Law sets out the necessary procedure for the filing of an application for enforcement of arbitral awards. Where a party refuses to voluntarily comply with an award, enforcement measures conducted by the Execution Court may be adopted as prescribed under Federal Law No. 5 of 1985 (“Civil Code”).
2.2 Does the same arbitration law govern both domestic and international arbitration proceedings? If not, how do they differ?
Unless the parties have agreed otherwise, the Arbitration Law applies to any arbitration conducted in the UAE (international or domestic).
2.3 Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
There is no doubt that the UAE’s Arbitration Law is based on the UNCITRAL Model Law. However, this is not to say that the Model Law is mirrored without deviations. In particular, the following deviations are noteworthy:
(1) Article 4 provides that a signatory must be specifically authorised, whether in the form of a power of attorney or board resolution, in order to enter into the arbitration agreement, otherwise the arbitration agreement is considered null and void. Proof of a signatory’s authority is not required under the Model Law.
(2) Article 22 permits the arbitral tribunal to join a third party to the arbitral proceedings, following the request of either party or the third party itself, provided that the third party is party to the underlying arbitration agreement. The Model Law does not provide for third-party joinder.
(3) Article 27 provides that arbitral proceedings are deemed to have commenced from the date following the formation of the arbitral tribunal, unless otherwise agreed by the parties. In contrast, Article 21 of the Model Law provides that the arbitral proceedings are deemed to have commenced on the date on which the request for arbitration is received by the respondent.
(4) Article 28 provides that, unless otherwise agreed by the parties, the arbitral tribunal may hold the arbitration hearings (a) at any physical venue it deems appropriate, or (b) through modern means of communication and technology (e.g., video conferencing). However, the Model Law does not provide the option for the arbitral tribunal to hold the arbitration hearings through modern technological means. The UAE Arbitration Law introduces technological advancements in an effort to provide flexibility to international arbitrators and parties.
(5) Articles 33 and 48 protect the confidentiality of arbitration
hearings and arbitral awards, unless otherwise expressly agreed by the parties. Whilst the parties remain entirely free to agree confidentiality terms between them, the Model Law does not expressly protect the confidentiality of arbitral hearings and awards.
(6) Article 54 provides that the party seeking to set aside the arbitral award must submit its request within 30 days from the date of the notification of the award, whereas the Model Law affords a party three months from the date of receipt of the award.
(7) Finally, where a party submits an application to annul or set aside the award, the Model Law allows the relevant court where recognition or enforcement is sought to stay enforcement proceedings, even if the parties have not requested it (Article 36.2). However, the Arbitration Law (Article 56.1) provides that the court before which a request for annulment is heard may not stay enforcement without receipt of a request by either party.
2.4 To what extent are there mandatory rules governing international arbitration proceedings sited in your jurisdiction?
Firstly, the aforementioned requirements of a valid arbitration agreement must be observed in order for the arbitral tribunal to have jurisdiction over the matters referred and deliver an enforceable award.
Secondly, the procedural rules and substantive laws adopted by the parties in respect of the arbitration must not conflict with State public policy or morality. Any agreement otherwise would be null and void. Equally, the subject matter of a dispute must be capable of settlement by arbitration; for example, disputes involving criminal activity may not be settled by arbitration.
The Arbitration Law (Article 10) imposes certain requirements applicable to the members of the arbitral tribunal, including, amongst others, that the arbitrator must be a natural person who is not a minor or someone under court interdiction or criminal conviction for a crime relating to a breach of State morality.
In addition, there are a number of other mandatory rules set out under Article 53 of the Arbitration Law that, if breached, would provide grounds for an arbitral award to be subject to challenge and set aside. Generally, arbitral proceedings must be conducted in a fair and equitable manner. Failure to do so will likely cause any application for enforcement of an arbitral award to be dismissed and the award set aside. An action to set aside an arbitral award remains admissible even if the party invoking nullity has waived its right to do so prior to issuance of the award. Any such agreement would not be enforceable.
3.1 Are there any subject matters that may not be referred to arbitration under the governing law of your jurisdiction? What is the general approach used in determining whether or not a dispute is “arbitrable”?
Article 53 of the Arbitration Law provides that the subject matter of the arbitration must be capable of settlement by arbitration.
Disputes concerning criminal activity may not be settled by arbitration. The Public Prosecution has exclusive jurisdiction to prosecute criminal acts as a matter of public policy; therefore, parties may not refer disputes arising from violations of the Penal Code to arbitration. Disputes arising from commercial agency contracts are also precluded from arbitration, provided that the agency agreement in question is registered with the Commercial Agency Registrar at the Ministry of Economy. No such restriction applies to non-registered agency agreements.
Similarly, the UAE’s Trademark Law vests the UAE Trademark Office and the civil courts with exclusive authority to settle disputes related to trademark acceptance and registration. However, disputes concerning trademark ownership or distribution may be referred to arbitration, as confirmed by the recent landmark decision in Alfahim vs Alfahim Case No. 205 of 2020.
On the other hand, disputes concerning trademark infringement are generally not capable of settlement by arbitration due to the fact that trademark infringement constitutes a criminal act under the UAE’s Penal Code. However, the national courts have handed down judgments whereby disputes relating to the infringement of non-registered trademarks may be referred to arbitration. It remains to be seen whether criminal courts in the UAE will surrender jurisdiction to hear such disputes, given that trademark infringement remains punishable as a criminal offence.
3.2 Is an arbitral tribunal permitted to rule on the question of its own jurisdiction?
Yes, the Arbitration Law expressly provides that a validly constituted arbitral tribunal may rule on its own jurisdiction.
3.3 What is the approach of the national courts in your jurisdiction towards a party who commences court proceedings in apparent breach of an arbitration agreement?
In such case, the party seeking to invoke the arbitration clause must raise an objection to the commencement of court proceedings, citing a valid arbitration agreement (with proof ) prior to filing any request or plea on the merits of the case. The court should dismiss the application to initiate court proceedings where its jurisdiction is precluded by means of an arbitration agreement.
3.4 Under what circumstances can a national court address the issue of the jurisdiction and competence of an arbitral tribunal? What is the standard of review in respect of a tribunal’s decision as to its own jurisdiction?
In the event that a party challenges the arbitral tribunal’s jurisdiction or competence, even after the tribunal has issued a ruling in respect of the same, the national courts may issue a judgment on the validity of the tribunal’s jurisdiction. Such jurisdiction will only be set aside subject to one or more of the following grounds being established:
(a) the arbitration is void or never existed;
(b) the signatory to the arbitration agreement was incompetent;
(c) the signatory to the arbitration did not have the requisite authority to bind the other party to arbitration;
(d) the party was not afforded a fair opportunity to present its case, either as a result of not receiving notice of the appointment of the arbitral tribunal or proceedings or breach of due process;
(e) the arbitral award excludes the application of the parties’
choice of governing law;
(f ) composition or appointment of the arbitral tribunal was not in accordance with the Arbitration Law or agreement of the parties;
(g) the arbitral proceedings were marred by irregularities that affected the award or the award was not issued within the specified timeframe;
(h) the award contains decisions on matters falling outside the terms or beyond the scope of the submission to arbitration, in which case the award may be partially set aside in respect of those matters if the court considers it possible to separate those issues from the remainder of the award;
(i) the subject matter of the dispute is not capable of settlement by arbitration; or
(j) the arbitral award conflicts with State public order and morality.
3.5 Under what, if any, circumstances does the national law of your jurisdiction allow an arbitral tribunal to assume jurisdiction over individuals or entities which are not themselves party to an agreement to arbitrate?
None; jurisdiction over individuals or entities may only be established by virtue of a valid arbitration agreement.
3.6 What laws or rules prescribe limitation periods for the commencement of arbitrations in your jurisdiction and what is the typical length of such periods? Do the national courts of your jurisdiction consider such rules procedural or substantive, i.e., what choice of law rules govern the application of limitation periods?
Unless the parties have an agreement in place establishing a limitation period for the commencement of the arbitration, the UAE Civil Transactions Law (also referred to as the Civil Code) contains specific prescription periods that differ depending on the nature of the claim. For example, claims arising from construction contracts must be filed within 10 years, unless the parties agree otherwise. Limitation periods contained in the Civil Code are treated as a matter of substantive law.
3.7 What is the effect in your jurisdiction of pending insolvency proceedings affecting one or more of the parties to ongoing arbitration proceedings?
The UAE’s Bankruptcy Law (Federal Law No. 9 of 2016) provides that where insolvency proceedings are initiated in respect of a party involved in an ongoing arbitration, notice must be given to the court-appointed trustee administering bankruptcy proceedings on behalf of the court. Whilst the arbitration may continue in parallel to bankruptcy proceedings, enforcement of the arbitral award would become subject to the outcome of those bankruptcy proceedings by order of the court.
4. Choice of Law Rules
4.1 How is the law applicable to the substance of adispute determined?
Firstly, by agreement of the parties, which is normally contained in the arbitration agreement or a clause within the contract. Where no such agreement exists, UAE law will apply to any arbitration conducted in the State.
4.2 In what circumstances will mandatory laws (of the seat or of another jurisdiction) prevail over the law chosen by the parties?
If the parties choose a law that happens to conflict with the mandatory laws of the seat or another jurisdiction, such mandatory laws should prevail.
4.3 What choice of law rules govern the formation, validity, and legality of arbitration agreements?
The Arbitration Law governs as such.
5. Selection of Arbitral Tribunal
5.1 Are there any limits to the parties’ autonomy to select arbitrators?
Article 10 of the Arbitration Law imposes a number of requirements that must be satisfied when parties appoint an arbitral tribunal, which primarily relate to the capacity and impartiality of the arbitrator. There are no mandatory requirements in respect of the arbitrator’s gender or nationality.
5.2 If the parties’ chosen method for selecting arbitrators fails, is there a default procedure?
In such case, Article 11 of the Arbitration Law sets out a default procedure for appointment of the tribunal. Such procedure allows for the parties to request that the appointment be made by the arbitral institution responsible for administering the arbitration (if any). Alternatively, where no such institution is agreed by the parties, recourse to the national courts may be sought in order to make the necessary appointment(s).
5.3 Can a court intervene in the selection of arbitrators? If so, how?
Yes; parties in deadlock may request intervention by the national courts for the appointment of an arbitrator, having due regard to the nature of the dispute. The court’s decision in such case is not subject to appeal.
5.4 What are the requirements (if any) imposed by law or issued by arbitration institutions within your jurisdiction as to arbitrator independence, neutrality and/or impartiality and for disclosure of potential conflicts of interest for arbitrators?
Arbitrators are required to declare their independence, neutrality and impartiality prior to their appointment in an arbitration. The standards of independence and impartiality mirror those required of judges in onshore courts. Circumstances giving rise to serious doubts as to the impartiality or independence of an arbitrator shall be grounds for that arbitrator to be recused and for an arbitral award issued by that arbitrator to be set aside.
6. Procedural Rules
6.1 Are there laws or rules governing the procedure of arbitration in your jurisdiction? If so, do those laws or rules apply to all arbitral proceedings sited in your jurisdiction?
The Arbitration Law contains provisions relating to procedure which the parties may adopt if they so choose. Alternatively, the parties may adopt their own bespoke set of rules or refer to institutional rules of procedure, such as those issued by the International Chamber of Commerce (“ICC”), London Court of International Arbitration (“LCIA”) or Dubai International Arbitration Centre (“DIAC”) by way of agreement. Where the parties fail to agree, the provisions of the Arbitration Law shall apply.
6.2 In arbitration proceedings conducted in your jurisdiction, are there any particular procedural steps that are required by law?
Yes, there are certain procedures that are mandatory to ensure that due process is adhered to and that the proceedings are conducted fairly. In particular, parties must be given adequate notice of the appointment of an arbitrator and commencement of proceeding.
6.3 Are there any particular rules that govern the conduct of counsel from your jurisdiction in arbitral proceedings sited in your jurisdiction? If so: (i) do those same rules also govern the conduct of counsel from your jurisdiction in arbitral proceedings sited elsewhere; and (ii) do those same rules also govern the conduct of counsel from countries other than your jurisdiction in arbitral proceedings sited in your jurisdiction?
There is no defined code of conduct specifically relating to the conduct of counsel in arbitration; however, all legal practitioners are required to adhere to the ethical regulations applicable in the UAE.
6.4 What powers and duties does the national law of your jurisdiction impose upon arbitrators?
Article 21 of the Arbitration Law explicitly recognises the arbitral tribunal’s power to award interim or conservatory measures, either on the request of a party or of its own motion.
When approached in connection with possible appointment as an arbitrator, an individual must disclose, in writing, anything likely to give rise to doubts as to their impartiality or independence. Arbitrators are, of course, obliged to conduct proceedings in a fair and equitable manner with due regard to all applicable laws, including those of the arbitral seat.
6.5 Are there rules restricting the appearance of lawyers from other jurisdictions in legal matters in your jurisdiction and, if so, is it clear that such restrictions do not apply to arbitration proceedings sited in your jurisdiction?
No, there are no provisions prohibiting the appearance of lawyers from other jurisdictions in arbitral proceedings. There are, however, strict rules with respect to the appearance of non-Emirati advocates appearing before the national courts, as they require a special licence to do so.
6.6 To what extent are there laws or rules in your jurisdiction providing for arbitrator immunity?
Following the introduction of the Arbitration Law, the UAE enacted Federal Law No. 24 of 2018 amending certain provisions of the UAE Penal Code. In particular, Article 257 was amended, which previously imposed criminal liability on arbitrators and experts found to have issued decisions or opinions in a manner inconsistent with their duties of impartiality and neutrality. As a result of the amendment, issued in September 2018, Article 257 shall only apply to experts, translators and fact finders appointed by the judicial or administrative authority in criminal or civil cases who knowingly and deliberately confirmed a false fact or issued an untrue interpretation. Accordingly, Article 257 will no longer apply to arbitrators, including experts in arbitration.
6.7 Do the national courts have jurisdiction to deal with procedural issues arising during an arbitration?
Yes, the national courts have jurisdiction to hear applications for interim measures and determine challenges in respect of the appointment of the arbitral tribunal.
7. Preliminary Relief and Interim Measures
7.1 Is an arbitral tribunal in your jurisdiction permitted to award preliminary or interim relief? If so, what types of relief? Must an arbitral tribunal seek the assistance of a court to do so?
Having due regard to the nature of the dispute, the tribunal may, either on the request of a party or of its own motion, award interim or conservatory measures that include:
(a) orders to preserve relevant and material evidence;
(b) orders for the preservation of goods which form part of the subject matter of the dispute, such as an order to deposit goods with a third party or to sell goods that are susceptible to damage;
(c) orders to preserve assets and funds for the satisfaction of a subsequent award;
(d) orders to maintain or restore the status quo pending determination of the dispute; and
(e) orders to take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitration process itself. The Arbitration Law also provides that the arbitral tribunal may order the party requesting an interim measure to provide appropriate security for costs.
7.2 Is a court entitled to grant preliminary or interim relief in proceedings subject to arbitration? In what circumstances? Can a party’s request to a court for relief have any effect on the jurisdiction of the arbitration
Pursuant to Article 18 of the Arbitration Law, the Chief Justice of the court may, at the request of a party or of the tribunal, order such interim or conservatory measures as are necessary to be taken in respect of existing or potential arbitral proceedings. The jurisdiction of the tribunal remains unaffected in such instance.
7.3 In practice, what is the approach of the national courts to requests for interim relief by parties to arbitration agreements?
The provisions surrounding interim relief align the UAE’s onshore arbitration practice with the UNCITRAL Model Law. Applications for interim measures before national courts are determined swiftly, often within a few days if filed before the Court of Urgent Matters. Parties may apply for such measures before the arbitral tribunal pursuant to Articles 18 or 21 of the Arbitration Law and, if granted, seek enforcement by national courts.
7.4 Under what circumstances will a national court of your jurisdiction issue an anti-suit injunction in aid of an arbitration?
The national courts do not issue anti-suit injunctions as such. Where the existence of an arbitration agreement is raised as a defence, the court may dismiss an application to commence court proceedings.
7.5 Does the law of your jurisdiction allow for the national court and/or arbitral tribunal to order security for costs?
Article 21(2) of the Arbitration Law allows for arbitral tribunals to order a party to provide appropriate security to cover the costs of any interim measures, and may further require that party to bear all damages arising in connection with the enforcement of such measures should the tribunal thereafter decide that the party is not entitled to secure them.
7.6 What is the approach of national courts to the enforcement of preliminary relief and interim measures ordered by arbitral tribunals in your jurisdiction and in other jurisdictions?
Applications for interim measures before national courts are determined swiftly, often within a few days if filed before the Court of Urgent Matters. Parties may apply for such measures before the arbitral tribunal pursuant to Articles 18 or 21 of the Arbitration Law and, if granted, seek enforcement by the national courts.
8. Evidentiary Matters
8.1 What rules of evidence (if any) apply to arbitral proceedings in your jurisdiction?
Parties may agree on the rules of evidence appropriate given the circumstances of the case. The International Bar Association (“IBA”) Rules of Evidence are the most commonly adopted in this jurisdiction.
Article 33(8) of the Arbitration Law affords the arbitral tribunal discretion to determine the rules of evidence to be followed and the admissibility, relevance or weight of evidence adduced by any of the parties in relation to facts or expert opinions. The tribunal may also specify a time limit, method, and form for the exchange of such evidence between the parties, as well as a method for its submission to the tribunal.
8.2 What powers does an arbitral tribunal have to order disclosure/discovery and to require the attendance of witnesses?
Pursuant to Articles 31 and 36 of the Arbitration Law, the arbitral tribunal may, on its own motion or if a party so requests, order the disclosure of evidence and seek assistance from the national courts, if necessary. If a party fails to comply with an order for disclosure, the tribunal may draw adverse inferences.
8.3 Under what circumstances, if any, can a national court assist arbitral proceedings by ordering disclosure discovery or requiring the attendance of witnesses?
Subject to the arbitral tribunal’s request, the court may order witnesses to appear before the tribunal in order to give oral testimony or adduce documents or any evidentiary materials.
The court’s Chief Justice may order sanctions against any witness who fails to appear or answer questions without lawful excuse. Article 36 of the Arbitration Law also empowers the court to direct a third party to produce documents in its possession that are essential for deciding the dispute.
8.4 What, if any, laws, regulations or professional rules apply to the production of written and/or oral witness testimony? For example, must witnesses be sworn in before the tribunal and is cross-examination allowed?
When taking oral or written testimony, the witness must be sworn in, either by way of swearing a religious oath or providing a declaration as to the truth of his or her testimony, pursuant to the Law of Evidence (Federal Law No. 10 of 1992).
8.5 What is the scope of the privilege rules under the law of your jurisdiction? For example, do all communications with outside counsel and/or in-house counsel attract privilege? In what circumstances is privilege deemed to have been waived?
Whilst the UAE is yet to produce a codified set of rules governing rules of prejudice, it is a widely accepted practice in international arbitration for parties to agree to apply “without prejudice” rules to sensitive communications.
9. Making an Award
9.1 What, if any, are the legal requirements of an arbitral award? For example, is there any requirement under the law of your jurisdiction that the award contains reasons or that the arbitrators sign every page?
Article 41 of the Arbitration Law sets out the fundamental requirements of an arbitral award. In particular:
(1) The arbitral award shall be made in writing.
(2) In arbitral proceedings with more than one arbitrator, the award shall be issued by majority opinion. If different opinions of the arbitrators rule out a majority, the presiding arbitrator shall issue the award, unless otherwise agreed by the parties; in which case, the dissenting opinions shall be noted in writing or enclosed and shall form an integral part of the award.
(3) The award shall be signed by the arbitrators and the signatures of the majority of the arbitrators shall suffice, provided that the reason for any omitted signature is stated.
(4) The award shall state the reasons upon which it is based, unless the parties have agreed otherwise, or the law applicable to the arbitral proceedings does not require reasons to be given.
(5) The arbitral award shall include the names and addresses of the parties, the names of the arbitrators, their nationalities and addresses, the text of the arbitration agreement, a summary of the parties’ claims, statements and documents, the order made and the reasons on which the award is based, if required to be stated, and the date and place of issue of the award.
(6) Unless agreed otherwise, the date of the award shall be taken to be the date on which it is signed by the arbitrator or, where there is more than one arbitrator, by the last of them.
9.2 What powers (if any) do arbitral tribunals have to clarify, correct or amend an arbitral award?
The Arbitration Law allows for the clarification, correction and amendment of an arbitral award. The relevant procedural rules relating to the issuance of any such clarification, correction or amendment may be agreed by the parties or subject to Articles 49 or 50 of the Arbitration Law.
10. Challenge of an Award
10.1 On what bases, if any, are parties entitled to challenge an arbitral award made in your jurisdiction?
An arbitral award may be challenged if any of the following circumstances may be established:
(a) that no Arbitration Agreement exists or such agreement is void or has lapsed under the law to which the parties have subjected it;
(b) that a party, at the time of conclusion of the arbitration agreement, was incompetent or under some incapacity;
(c) that a person does not have the legal capacity to dispose of the disputed right under the law governing his capacity;
(d) that a party fails to present its case because it was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or because the tribunal breached due process or for any other reason beyond his control;
(e) that the arbitral award excludes the application of the parties’ choice of law for the dispute;
(f ) that the composition of the arbitral tribunal or appointment of any arbitrator was not in accordance with the law or agreement of the parties;
(g) that the arbitral proceedings were marred by irregularities that affected the award or the arbitral award was not issued within the specified timeframe; or
(h) that the award contains decisions on matters not falling within the terms of the submission to arbitration.
10.2 Can parties agree to exclude any basis of challenge against an arbitral award that would otherwise apply as a matter of law?
If any such agreement to exclude a basis of challenge would necessarily result in the breach of public policy, such agreement would not be enforceable. For example, rules relating to the legal capacity of the parties or impartiality of the tribunal may not be waived or excluded by agreement of the parties.
10.3 Can parties agree to expand the scope of appealof an arbitral award beyond the grounds available in relevant national laws?
There are no provisions under UAE law enabling parties to expand the scope of appeal beyond the grounds available under the Arbitration Law.
10.4 What is the procedure for appealing an arbitral award in your jurisdiction?
Article 53 of the Arbitration Law provides for grounds upon which an appeal may be set aside (not appealed), and the Code of Civil Procedures sets out the procedural requirements for an application to be set aside before national courts. Arbitrations subject to institutional rules often provide a particular criteria for the appeal of an arbitral award within a fixed period.
11. Enforcement of an Award
11.1 Has your jurisdiction signed and/or ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Has it entered any reservations? What is the relevant national legislation?
Pursuant to Federal Decree No. 43 of 2006, the UAE acceded to the New York Convention in 2006 without making any declarations or reservations.
11.2 Has your jurisdiction signed and/or ratified any regional Conventions concerning the recognition and enforcement of arbitral awards?
The UAE is a party to the following treaties on the recognition and enforcement of arbitral awards, namely the:
(a) Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965;
(b) Riyadh Convention on Judicial Cooperation between States of the Arab League of 1983; and
(c) Gulf Cooperation Council (“GCC”) Convention for the Execution of Judgments, Delegations and Judicial Notifications of 1996.
11.3 What is the approach of the national courts in your jurisdiction towards the recognition and enforcement of arbitration awards in practice? What steps are parties required to take?
The ratification of an arbitral award may be achieved by means of an application to the Chief Justice in accordance with the requirements of Article 55 of the Arbitration Law thereof. Once ratified, parties may apply to the Execution Court for enforcement measures where a party fails to comply with the award.
11.4 What is the effect of an arbitration award in terms of res judicata in your jurisdiction? Does the fact that certain issues have been finally determined by an arbitral tribunal preclude those issues from being re-heard in a national court and, if so, in what circumstances?
An arbitral award delivered 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. The effect of res judicata means that any issue determined by the tribunal may not be subject to another determination on the merits by national courts.
11.5 What is the standard for refusing enforcement of an arbitral award on the grounds of public policy?
National courts will strictly enforce all public policies as a matter of priority. Therefore, where an arbitral award conflicts with public policy, it may be set aside.
12.1 Are arbitral proceedings sited in your jurisdiction confidential? In what circumstances, if any, are proceedings not protected by confidentiality? What, if any, law governs confidentiality?
Unless agreed otherwise by the parties, arbitral proceedings are deemed confidential as per Article 48 of the Arbitration Law.
12.2 Can information disclosed in arbitral proceedings be referred to and/or relied on in subsequent proceedings?
No, unless the parties have agreed to waive confidentiality, such information may not be relied upon in subsequent proceedings, except insofar as disclosure is required by order of a national court.
13.1 Are there limits on the types of remedies (including damages) that are available in arbitration (e.g., punitive damages)?
Punitive damages are not recognised in the UAE.
13.2 What, if any, interest is available, and how is the rate of interest determined?
Simple interest is recoverable and capped at 12% per annum.
13.3 Are parties entitled to recover fees and/or costs and, if so, on what basis? What is the general practice with regard to shifting fees and costs between the parties?
Recovery of fees and costs is permitted subject to an agreement by the parties. Generally, arbitrators have discretion to award costs as they deem appropriate given the circumstances of the case and conduct of the parties.
13.4 Is an award subject to tax? If so, in what circumstances and on what basis?
Arbitral awards are not subject to tax in the UAE.
13.5 Are there any restrictions on third parties, including lawyers, funding claims under the law of your jurisdiction? Are contingency fees legal under the law of your jurisdiction? Are there any “professional” funders active in the market, either for litigation or arbitration?
Third-party funding is permitted in the UAE; however, strict contingency fee arrangements are not. In order for an application to recover legal costs to be admissible in court, the funding agreement between a client and counsel should comprise an ordinary retainer, i.e. specifying the services and amounts payable at each stage of the proceedings.
14. Investor-State Arbitrations
14.1 Has your jurisdiction signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965) (otherwise known as “ICSID”)?
The UAE signed and ratified the ICSID in 1981.
14.2 How many Bilateral Investment Treaties (“BITs”) or other multi-party investment treaties (such as the Energy Charter Treaty) is your jurisdiction party to?
The UAE is currently party to 92 BITs and 12 investment treaties, and at least 11 multilateral investment-related agreements at government level.
14.3 Does your jurisdiction have any noteworthy language that it uses in its investment treaties (for example, in relation to “most favoured nation” or exhaustion of local remedies provisions)? If so, what is the intended significance of that language?
No such noteworthy language exists to our knowledge.
14.4 What is the approach of the national courts in your jurisdiction towards the defence of state immunity regarding jurisdiction and execution?
Neither the UAE nor the Dubai International Financial Centre (“DIFC”) has set out any legislation expressly conferring sovereign immunity upon foreign states.
15.1 Are there noteworthy trends or current issues affecting the use of arbitration in your jurisdiction (such as pending or proposed legislation)? Are there any trends regarding the types of dispute commonly being referred to arbitration?
The Ruler of the Emirate of Dubai recently issued Decree No. 34 of 2021 ordering the abolishment of the Emirates Maritime Arbitration Centre and the Arbitration Institution of the DIFC (formerly known as the DIFC-LCIA Arbitration Centre).
Decree 34 requires that all existing cases registered with these institutions be transferred to the DIAC with immediate effect. Article 6 of the Decree provides that all arbitration agreements referring disputes to the abolished institutions shall be deemed valid and effective, and that the DIAC will replace the abolished centres when considering and determining disputes that arise under the agreements, unless otherwise agreed by the parties.
The decision means that the DIAC has immediately inherited a substantial case load, which it must now administer as efficiently as possible. It remains unclear precisely why Decree 34 has come into force, although parties seeking to commence arbitral proceedings will find comfort in knowing that their arbitration agreements will remain valid and enforceable before national courts.
15.2 What, if any, recent steps have institutions in your jurisdiction taken to address current issues in arbitration (such as time and costs)?
It has been reported that the DIAC and LCIA have come to an agreement under which the LCIA will administer all existing DIFC-LCIA cases (i.e. those commenced and registered by the DIFC-LCIA under a designated case number on or before 20 March 2022) from London.
The DIAC and LCIA have also agreed a mechanism for the orderly management of funds paid by parties into bank accounts previously held on behalf of the DIFC-LCIA and now owned by the DIAC, pursuant to which the DIAC shall transfer such casework-related payments to the LCIA to be disbursed to the respective beneficiaries by the LCIA directly. The LCIA will
communicate with parties and tribunals as soon as practicable.
15.3 What is the approach of the national courts in your jurisdiction towards the conduct of remote or virtual arbitration hearings as an effective substitute to in-person arbitration hearings? How (if at all) has that approach evolved since the onset of the COVID-19 pandemic?
National courts have welcomed the adoption of smart systems for the electronic administration of cases over extended periods where movement was severely restricted as a result of the pandemic. Notwithstanding the efficiency gained by technology, virtual hearings are disadvantageous insofar as witness examination cannot be conducted in person. It remains to be seen how this problem may be overcome in the future.