ADCCAC -1

United Arab Emirates

2 United Arab Emirates July 2008 Arbitration in the Middle East Norton Rose Group

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Key points

The United Arab Emirates (UAE) does not currently have an arbitration

law; arbitration proceedings fall under the UAE’s Civil Procedure

Law (CPL). However, at the time of publication, the UAE Ministry of

Economy had announced that an independent arbitration law based

on the UNCITRAL model law would be passed at some point in 2008.

Arbitration proceedings in the UAE are usually carried out within

the individual Emirates through their chambers of commerce and

industry (although parties may, if they wish, elect for their dispute

to be heard by another institution or ad hoc). The Abu Dhabi

Commercial Conciliation and Arbitration Centre and the Dubai

International Arbitration Centre (DIAC) have emerged as the leading

institutions within this chamber of commerce system.

Under the CPL, if one party commences proceedings in the courts

of the UAE and the other party does not object to the court

proceedings at the first hearing, then any alternative arbitration

agreement that may have existed between the parties is deemed

cancelled. It is likely that the proposed UAE arbitration law will allow

arbitration proceedings to continue to an award while the question

of the courts’ jurisdiction is determined.

Currently, the ability of tribunals to issue interim measures depends

on the arbitration rules adopted by the parties. If there is no

agreement between the parties to give such powers to the arbitrator,

a separate action for interim relief through the courts is required.

The proposed UAE arbitration law is likely to provide the tribunal

with powers to grant interim measures, unless the parties have

agreed otherwise.

Norton Rose Group Arbitration in the Middle East July 2008 United Arab Emirates 3

united arab emirates

While at present arbitration awards need to be ratified by the courts,

the intention is for the proposed UAE arbitration law to give effect

to the UAE’s obligations under the New York Convention. The UAE

acceded to the New York Convention on 21 August 2006.

Tribunals are usually heard, and awards made, in Arabic, unless the

parties have agreed beforehand to conduct arbitrations in English.

Dubai International Financial Centre

The Dubai International Financial Centre (established in 2004)

has its own jurisdiction and a stand-alone arbitration law (the DIFC

Arbitration Law). The DIFC has established an arbitration institution

in conjunction with the London Court of International Arbitration.

The DIFC rules allow tribunals to grant interim and protective

measures. The supervisory role is quite limited under the DIFC

Arbitration Law. Arbitral awards rendered under the DIFC Arbitration

Law and ratified by the DIFC court are automatically enforceable in

Dubai without any power of review by the Dubai courts.

Confidentiality

The CPL contains no provisions relating to confidentiality.

Both the DIFC Arbitration Law and the proposed UAE arbitration law

provide for proceedings and awards to be kept confidential.

Under the rules of the DIAC, all information provided by the parties

requesting conciliation or arbitration is considered confidential

and may not be divulged except with the consent of the parties

or pursuant to an order of a competent judicial authority.


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Model arbitration clauses

All disputes arising from the interpretation, implementation or

termination of the agreement/contract herein shall have to be

conclusively settled via arbitration in accordance with the provisions

on arbitration provided in the Abu Dhabi Commercial Conciliation

and Arbitration Centre’s Procedural Regulations and through an

arbitration board comprising arbitrator(s), who shall be nominated

and summoned up in accordance with the rules and procedures

provided in the Centre’s Procedural Regulations.

Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC)

or

Any dispute arising out of the formation, performance,

interpretation, nullification, termination or invalidation of this

contract or arising therefrom or related thereto in any manner

whatsoever, shall be settled by arbitration in accordance with the

provisions set forth under the DIAC Arbitration Rules (the Rules),

by one or more arbitrators appointed in compliance with the Rules.

Dubai International Arbitration Centre (DIAC)

The DIAC also advises parties to include in their contractual

agreements details of the number of arbitrators (or the authority

of the DIAC to determine the number), the place of arbitration

(Dubai), the venue for proceedings (the DIAC), and the language

of proceedings.

See the Arbitration section for best practice in drafting arbitration

clauses.

http://www.nortonrose.com/knowledge/publications/pdf/Arbitration%20manuals/file26050.pdf#nameddest=Drafting_arbitration_clauses



Weblinks

www.adcci.gov.ae

Abu Dhabi Chamber of Commerce and Industry

www.diac.ae

Dubai International Arbitration Centre

www.difcarbitration.org

DIFC LCIA Arbitration Centre


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1 What arbitration bodies are there within the jurisdiction?

Arbitration proceedings in the United Arab Emirates (UAE) are usually

carried out by the individual Emirates through their chambers of

commerce and industry. The two main bodies are the Abu Dhabi

Commercial Conciliation and Arbitration Centre (ADCCAC) and the Dubai

International Arbitration Centre (DIAC), established by the chambers

of commerce and industry of Abu Dhabi and Dubai respectively.


The Dubai International Financial Centre (DIFC) has its own rules and

its own jurisdiction, separate from the UAE. In February 2008 the DIFC

launched the DIFC LCIA Arbitration Centre as a joint venture with the

London Court of International Arbitration, which will allow parties access

to the LCIA’s extensive database of arbitrators.

2 Is there an Arbitration Act governing arbitration proceedings,

and is it based on the UNCITRAL model law?

There is currently no legislation in the UAE governing arbitration

proceedings, which therefore fall under the general rules of the UAE Civil

Procedure Law, Federal Law 11 of 1992 (the CPL). Provisions on arbitral

procedure and enforcement are set out in chapters 3, 4 and 5 of the CPL.

These provisions are not based on the UNCITRAL model law.

At the time of going to press, the UAE Ministry of Economy had announced

that an independent arbitration law, based on the UNCITRAL model law,

would be enacted in the UAE during 2008, following the UAE’s ratification

of the New York Convention.




The DIFC has already enacted revised arbitration legislation, which

repeals and replaces the 2004 arbitration law. As with the previous

legislation, the new DIFC arbitration law (the DIFC Arbitration Law) is

based on the UNCITRAL model law. However, unlike the previous law,

the DIFC Arbitration Law does not require any connection with the

jurisdiction in order for the parties to adopt the DIFC as the seat of

their arbitral proceedings.

3 What are the available rules?

Under both the CPL and the proposed UAE arbitration law, provided the

arbitration agreement is in writing and forms part of the basic contract or

an attached agreement, the parties are free to specify the rules for the

proceedings. These may include the rules of any arbitration institution,

whether domestic (DIAC, ADCCAC or DIFC LCIA), regional (Gulf

Cooperation Council Commercial Arbitration Centre) or international.

4 What supervision is there of arbitrators and their awards?

The CPL provides for a number of situations in which the courts retain

a supervisory role over arbitral tribunals. At the request of one or other

of the parties, the courts may dismiss an arbitrator if he has not acted

in accordance with his terms of reference, or if any of the grounds for

disqualification of judges apply. Courts are also empowered to hear

preliminary issues that are outside the scope of the arbitration; to compel

or fine witnesses; on the application of one or other of the parties, to

extend the time for the arbitration; and to approve and enforce awards.

The courts have jurisdiction to appoint an arbitrator where there is no

mechanism for doing so in the arbitration agreement.


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In a domestic arbitration, the tribunal may request the assistance of the

court to enforce its directions. The CPL provides that no award will be

enforced unless it has been approved by the competent courts, which

must conduct a review of the award and the tribunal’s terms of reference

to ensure that there is no encumbrance on enforcement. The court may

also, at the request of either party, correct any material errors in the

award.

The CPL also allows the courts to nullify arbitral awards in certain

circumstances.

Where a valid arbitration agreement is in place, and a party nevertheless

commences court proceedings, the other party must at the first hearing

bring to the court’s attention the existence of the arbitration agreement.

If it fails to do so, it is deemed to have waived its right to have the matter

referred to arbitration and the court will assume jurisdiction of the matter.

Under the UAE arbitration law, the UAE courts are likely to play a

supervisory role similar in scope to that envisaged in the UNCITRAL

model law. It has powers in relation to the appointment and dismissal

of arbitrators, which may be exercised at the request of a party, and it

also has the ability to fulfil an oversight function in relation to certain

decisions made by the arbitral tribunal, such as decisions on its own

jurisdiction or decisions to order interim measures. The tribunal (or a

party with the approval of the tribunal) may request the court’s assistance

in taking evidence.


The DIFC court’s supervisory powers are set out in the DIFC Arbitration

Law. These include certain powers in relation to the appointment and

dismissal of arbitrators, which may be exercised at the request of a party.

The DIFC court may also, at the request of a party, fulfil an oversight



function in relation to certain decisions made by the arbitral tribunal,

such as decisions on its own jurisdiction or decisions to order interim

measures. The tribunal (or a party with the approval of the tribunal)

may request the DIFC court’s assistance in taking evidence.

While the parties are free under the DIFC Arbitration Law to decide on

the choice of language, for the purposes of enforcing an award within

the DIFC the DIFC court may request a certified English translation of the

arbitration agreement or award.

5 How quickly can a tribunal be set up?

The speed with which a tribunal can be established depends on the rules

of arbitration chosen by the parties.

In the absence of express agreement between the parties, the CPL

specifies that arbitral awards must be delivered within six months from

the date of the first hearing; otherwise, either party can pursue its claim

through the courts. (The CPL allows parties to “contract out” of the

mandatory time periods at the outset and not just by application to the

tribunal once proceedings have started.) The arbitrator may extend the

arbitration period (by mutual agreement of the parties) or the courts may

do so at the request of the arbitrator or one of the parties.

The rules of the DIAC allow the arbitrators to extend the time for

arbitration for an additional period.

The proposed UAE arbitration law draft does not set out any time limits

for the establishment of the tribunal, and allows the parties to determine

the procedure for appointing the arbitrators.


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Under the DIFC Arbitration Law, the speed with which a tribunal can be

set up depends on the rules of arbitration chosen by the parties. There

are no fixed time constraints.

6 What happens if one party refuses to participate in the process?

Under the CPL, arbitrators are required to notify the parties of the date of

the first hearing within 30 days of their appointment, and must fix a date

for the submission of documents to the tribunal. If a party, having been

properly notified, fails to appear before the tribunal, the tribunal may

proceed with the arbitration in that party’s absence.

The draft UAE arbitration law provides that, if the claimant fails to

communicate its statement of claim within the time period agreed by

the parties or fixed by the tribunal, then the proceedings are terminated;

however, if the defendant fails to communicate its defence in the

requisite manner, the tribunal will continue the proceedings without

treating the default as an admission of the claimant’s allegations. If either

party fails to attend at a later hearing or to produce evidence as required,

the tribunal may continue the proceedings and make an award based on

the evidence before it.


If the claimant fails to communicate its statement of claim within the

time period agreed by the parties or fixed by the tribunal, then the

proceedings are terminated; however, if the defendant fails to

communicate its defence in the requisite manner, the tribunal will

continue the proceedings without treating the default as an admission of

the claimant’s allegations. If either party fails to attend at a later hearing

or to produce evidence as required, the tribunal may continue the

proceedings and make an award based on the evidence before it.



7 What interim measures are available?

Under the CPL, arbitrators do not automatically have jurisdiction over

interim or preliminary measures and must be granted such jurisdiction

in the arbitration agreement.

If the tribunal does not have jurisdiction to grant interim measures,

the parties may seek such relief directly from the courts, even if the

matter is heard as part of an arbitration hearing. This can raise certain

procedural issues, as interim relief can only be granted when a

substantive case is placed before the courts within eight days of the

request for an interim award. It is unclear whether the commencement

of arbitration proceedings is considered to be the same as the

submission of a case in court.

The draft UAE arbitration law looks set to empower tribunals to issue

interim and protective measures, including measures to maintain

or restore the status quo pending the outcome of the proceedings,

measures providing security or preliminary means of enforcement,

measures restraining or requiring certain conduct of a party or measures

to preserve evidence that may be relevant or material to the dispute.

The tribunal may require a party to provide appropriate security in

connection with such measures.


Tribunals conducted under the DIFC Arbitration Law are empowered to

issue interim measures unless the parties have agreed otherwise in

writing. Such measures may include measures to maintain or restore the

status quo pending the outcome of the proceedings, measures providing

security or preliminary means of enforcement, or measures restraining

or requiring certain conduct of a party. The tribunal may require a party

to provide appropriate security in connection with such measures.


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8 What right is there to challenge the appointment of an arbitrator?

Current UAE law

There are two provisions for challenging the appointment of an arbitrator

under the CPL.

If it can be established that an arbitrator has failed to conform to the

terms of the agreement to arbitrate, either party can raise an objection

to that arbitrator with the competent court (article 207(3) of the CPL).

An arbitrator can be dismissed on any of the grounds on which a judge

may be disqualified or deemed unfit for passing judgment. The request

for dismissal must be filed with the competent court within five days of

the parties being notified of the arbitrator’s appointment (article 207(4)).

Proposed UAE law

The proposed UAE arbitration law, as currently drafted, requires that any

person approached in connection with his possible appointment as an

arbitrator must disclose to each of the parties any circumstances likely

to give rise to justifiable doubts as to his impartiality or independence.

Such duty of disclosure continues throughout the course of the proceedings.

Grounds for challenge to the appointment of an arbitrator arise where there

exist justifiable doubts as to the impartiality or independence of an

arbitrator, or if he does not possess the qualifications agreed between the

parties. The draft UAE arbitration law provides some detail on the

circumstances in which doubts will be “justifiable”.

A party may only challenge an arbitrator appointed by him (or in whose

appointment he has participated) where he becomes aware of these

circumstances after the appointment has been made.




The DIFC Arbitration Law requires that any person approached in

connection with his possible appointment as an arbitrator must disclose

any circumstances likely to give rise to justifiable doubts as to his

impartiality or independence. Such duty of disclosure continues

throughout the course of the proceedings. Grounds for challenge to the

appointment of an arbitrator arise where there exist justifiable doubts

as to the impartiality or independence of an arbitrator, or if he does not

possess the qualifications agreed between the parties.

A party may only challenge an arbitrator appointed by him (or in whose

appointment he has participated) where he becomes aware of these

circumstances after the appointment has been made.

9 Can a party appeal the arbitrator’s decision and, if so, are there

any time limits to be aware of or unusual provisions?

Current UAE law

Although an arbitral award cannot be appealed under the CPL, an award

may be set aside, on the application of either of the parties, if the court

decides that one of the following applies:

• The award was issued based on invalid or expired terms of reference,

or in excess of the tribunal’s powers.

• The arbitrators where not correctly appointed in accordance with the

CPL or were not authorised to act or to issue the award.

• The award or the proceedings become void for any reason that affects

the validity of the award.


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The decision of the court with regard to validity of the arbitral award can

be appealed, unless the parties have waived their right to do so.

At the request of one of the parties, the court may refer the award back to

the tribunal to reconsider any issues which they have omitted to consider

or correct any material errors in the award. Referral or correction in this

way does not amount to a total invalidation of the award.

Proposed UAE law

Under the draft UAE arbitration law the sole recourse against an award

lies in an application to have the award set aside. Any application must

be made within three months from the date the party making the application

received the award unless the parties agree to extend this period.

An arbitral award may be set aside if the party making the application

establishes one of the following grounds:

• A party to the agreement was under some incapacity or the agreement

was otherwise invalid under the relevant law.

• The party making the application was not given proper notice of the

appointment of an arbitrator or of the proceedings themselves or was

otherwise unable to present its case.

• The award deals with a dispute that falls outside the terms of the

arbitration agreement. If possible, only the parts of the award which

deal with a dispute which falls outside the terms of the agreement

will be set aside.

• The composition of the tribunal or the arbitral procedure did not accord

with the agreement between the parties or with the relevant law.



Equally, an arbitral award may be set aside if the court finds that one of

the following grounds applies:

• The subject matter of the dispute is not capable of settlement by

arbitration under UAE law.

• The award is in conflict with the public policy of the UAE.


Under the DIFC Arbitration Law the parties’ sole recourse against an

arbitral award lies in an application to have the award set aside by the

DIFC court. Any application must be made within three months from the

date the party making the application received the award, unless the

parties have agreed to a longer period.

An arbitral award may be set aside if the party making the application

establishes one of the following grounds:

• A party to the agreement was under some incapacity or the agreement

was otherwise invalid under the relevant law.

• The party making the application was not given proper notice of the

appointment of an arbitrator or of the proceedings themselves or was

otherwise unable to present its case.

• The award itself goes beyond (or deals with a dispute that falls

outside) the terms of the arbitration agreement – provided that,

if possible, only the parts of the award which exceed (or deal with

a dispute which falls outside) the terms of the agreement shall be

set aside.


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Equally, an arbitral award may be set aside if the DIFC court finds that one

of the following grounds applies:


arbitration under DIFC law.

• The dispute is referred to a different body or tribunal for resolution

under the DIFC Arbitration Law or any mandatory provision of DIFC law.

• The award is in conflict with the public policy of the UAE.

10 Is either the UAE or the DIFC a party to the New York Convention?

Yes: the UAE acceded to the New York Convention on 21 August 2006.

This came into force on 19 November 2006.


While the DIFC cannot be a party to the New York Convention (because

it is not a country), the DIFC Arbitration Law makes it clear that the DIFC

Court will comply with the terms of any treaty for the mutual enforcement

of arbitral awards to which the UAE is party.

11 Will an arbitration award be enforceable in the UAE and, if so,

what is the procedure?

Current UAE law

Arbitral awards must be approved by the courts before they become

enforceable.



For domestic awards, the arbitrator must deliver a copy of the award to

all relevant parties within five days from the date of the award. The award

must then be ratified by the courts for it to have the force of a court

judgment and to be enforceable.

The CPL sets out a two-stage test for the enforcement of foreign awards

in the UAE. First, there must be reciprocity of enforcement between the

UAE and the jurisdiction in which the award was rendered. The UAE has

signed the New York Convention, so there will be reciprocity with any

other signatory state.

Secondly, there are certain procedural requirements for enforcement.

The courts in the UAE must verify that:

• the UAE courts did not have jurisdiction to hear the dispute

• the arbitral tribunal did have such jurisdiction

• the parties were correctly summoned to appear before the tribunal

• the award has acquired the force of law under the rules of the tribunal

that rendered it

• the award does not conflict with any judgment previously issued by the

courts of the UAE or with public morals or order in the UAE.

Proposed UAE law

The proposed UAE arbitration law seeks to give effect to the UAE’s

obligations under the New York Convention, and accordingly provides

only limited grounds on which enforcement may be refused.


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These grounds are:

• A party to the arbitration agreement was under some incapacity or the

agreement was otherwise invalid under the relevant law.

• The party against whom enforcement is sought was not given proper

notice of the appointment of an arbitrator or of the proceedings

themselves, or was otherwise unable to present its case.

• The award itself goes beyond (or deals with a dispute that falls outside)

the terms of the arbitration agreement. If possible, the parts of the

award which do not exceed (or deal with a dispute which falls outside)

the terms of the agreement will be enforceable.



• The award has yet to become binding on the parties or an application

has been made to the court under the law of which the award was

made to set aside or suspend the award.

Equally, the court can refuse enforcement if it finds one of the following:



• The enforcement of the award would be in conflict with the public

policy of the UAE.



Arbitral awards rendered under the DIFC Arbitration Law and ratified by

the DIFC court are automatically enforceable in Dubai without any power

of review by the Dubai courts.

The DIFC court may refuse enforcement (on part or all of the award) if the

party against whom the award is to be enforced proves to it one of the

following:

• A party to the arbitration agreement was under some incapacity or the

agreement was otherwise invalid under the relevant law.

• The party against whom enforcement is sought was not given proper

notice of the appointment of an arbitrator or of the proceedings, or

was otherwise unable to present its case.

• The award itself goes beyond (or deals with a dispute that falls outside)

the terms of the arbitration agreement. If possible, the parts of the

award which do not exceed (or deal with a dispute which falls outside)

the terms of the agreement will be enforceable.



• The award has yet to become binding on the parties or an application

has been made to the court under the law of which the award was

made to set aside or suspend the award.



Equally, the court can refuse enforcement if it finds one of the following:



• The enforcement of the award would be in conflict with the public

policy of the UAE.

12 What are the likely costs of arbitration?

The costs of arbitration in the UAE will depend largely on the rules

selected by the parties.

Under the CPL, the arbitrators determine their own fees and decide

whether these should be borne, either entirely or in part, by the party

against whom the award is issued. The arbitrators’ estimate may be

amended by the courts at the request of one of the parties.

The proposed UAE arbitration law looks set to allow the tribunal to

provide for the costs of the arbitration in its award.

The rules of the DIAC set out the administrative fees and arbitrators’

remuneration based on the disputed amount, giving a greater degree

of certainty over costs.


The DIFC Arbitration Law provides for the tribunal to determine the costs

of the proceedings, and the apportionment of such costs between the

parties.

See the Reference section for more details on the DIFC LCIA Arbitration

Centre. �

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