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The New UAE Federal Arbitration Law is about to come into force

12 June 2018
A glass cubicle boardroom with white chairs

The UAE has issued a new Federal Arbitration Law, No. 6 of 2018 ("New Arbitration Law") which replaces Articles 203 – 218 ("current law") of the UAE Civil Procedures Law, No. 11 of 1992. With this development, the UAE now has its own free standing arbitration law and joins other members of the Gulf Cooperation Council who have implemented new arbitration legislation in recent years.

Points to note:

  • This is the first major update to the arbitration law since 1992.
  • The new law is a free standing arbitration law and will replace Articles 203 – 218 of the Civil Procedures Law of the United Arab Emirates ("UAE") once in force.
  • It applies to all ongoing arbitration proceedings, regardless of the date the arbitration agreement was entered into.
  • The new law now clearly distinguishes between domestic and international arbitrations.
  • It provides greater certainty on arbitration proceedings in the UAE and the finality of the arbitral process.

The New Arbitration Law was published in the UAE Official Gazette on 15 May 2018, and will come into force 30 days after publication. It is worth noting that it will apply to all arbitrations that are ongoing at the time that the New Arbitration Law comes into force, regardless of whether the arbitration agreement was entered into before the new law came into force. We provide below a summary account of the key features underpinning the New Arbitration Law.

Key features of the new law

Scope of Application

The New Arbitration Law applies to all arbitration procedures conducted in the UAE, unless the parties have agreed that another arbitration law will govern the dispute in question. It also applies to all international commercial arbitration procedures conducted outside of the UAE, provided that the parties have agreed that the provisions of the New Arbitration Law will apply to their dispute. In addition, the New Arbitration Law applies to any arbitration that arises out of a legal relationship – contractual or non-contractual - regulated by the laws of the UAE, unless expressly excluded by the parties. The current law does not distinguish between domestic and international arbitrations in the same way as the New Arbitration Law.

The arbitration agreement

The New Arbitration Law provides more clarity where it concerns the formalities and execution of the arbitration agreement. While it is still a requirement that arbitration agreements be made in writing, an agreement shall now also be deemed to have been made in writing if, amongst others, it was executed by way of an email exchange, or where another written document (for example a standard contract) contains a reference to an arbitration clause and it is clear that the parties consider the arbitration clause to be part of their contract.

Language of the arbitration

It is a requirement under the New Arbitration Law that arbitration proceedings be conducted in the Arabic language, unless the parties have agreed otherwise. Parties are therefore urged to include an express provision in their agreement dealing with the language of the proceedings. Where parties have adopted rules that provide for the language of the arbitration to be English, this will be sufficient.

Interim Measures

One of the most significant changes to the law is that it expressly recognises the kompetenz-kompetenz principle (i.e. the tribunal's authority to rule on its own competence) and the tribunal is now also expressly empowered to issue interim or partial awards, where appropriate. This is not the case under the current law.

Enforcement of arbitral awards

The New Arbitration Law sets out more detailed grounds for challenging an arbitral award. These grounds include: that no valid arbitration agreement was executed, that the parties to the arbitration agreement didn't have the required legal authority to enter into the arbitration agreement, and that the constitution of the tribunal contravened the laws of the UAE. This will hopefully help stem vexatious challenges.

Another major development is that the New Arbitration Law addresses the issue of enforceability of domestic awards. The Court is required to issue an execution order within sixty (60 days) from the date of the application, which will expedite the enforcement process. Foreign arbitral awards will still be dealt with in accordance with the provisions of the New York Convention that was ratified by the UAE in 2006.

Miscellaneous

A positive development of the New Arbitration Law is that it makes provision for the hearing of witness and expert evidence via technology means (for example video conferencing) and allows for electronic signature of the arbitral award meaning that arbitrators are no longer required to be physically present in the seat for domestic awards to be validly executed. The use of technology in arbitration proceedings is expected to make the proceedings much more cost-effective and efficient.

Conclusion

While it remains to be seen how the New Arbitration Law will be applied in practice once it is officially in force, it is clear from the text that the New Arbitration Law is designed to promote efficiency and provide greater certainty in arbitration proceedings in the UAE.

It is expected that the New Arbitration law will bring significant reform to the arbitration landscape in the UAE, instil and entrench investor confidence, and promote the use of arbitration as an effective dispute resolution mechanism in the UAE. This is certainly a welcome development for the UAE, and is reflective of the UAE's desire and commitment to become the number one arbitration destination in the Middle East. It also brings the UAE's arbitration framework closer in line with international practice and ensures greater predictability about the outcome of arbitration proceedings in the UAE.

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