intlarbguide - united arab emirates

Arbitration Guide IBA Arbitration Committee

UNITED ARAB EMIRATES

February 2013 Reza Mohtashami Antonia Birt Lee Rovinescu

Freshfields Bruckhaus Deringer LLP Al Fattan Currency House Tower 2 Level 20 DIFC, Dubai UAE [email protected] [email protected] [email protected]

mailto:[email protected]�



United Arab Emirates

Table of Contents

Page

I. Background 1 II. Arbitration Laws 2 III. Arbitration Agreements 3 IV. Arbitrability and Jurisdiction 5 V. Selection of Arbitrators 7 VI. Interim Measures 8 VII. Disclosure/Discovery 8 VIII. Confidentiality 9 IX. Evidence and Hearings 10 X. Awards 11 XI. Costs 13 XII. Challenges to Awards 14 XIII. Recognition and Enforcement of Awards 16 XIV. Sovereign Immunity 18 XV. Investment Treaty Arbitration 18 XVI. Resources 19 XVII. Trends and Developments 20


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I . B ackground

(i) H ow prevalent is the use of ar bitr ation in your jur isdiction? W hat are seen as the pr incipal advantages and disadvantages of ar bitr ation?

Arbitration has over the last decade become more prevalent in the UAE. In 2003, the Dubai International Arbitration Centre, currently the busiest arbitration centre in the Gulf, registered 15 cases. By 2008, this figure reached 100 and, by 2010, the Centre registered 413 new disputes, almost all of them seated in Dubai. This figure levelled off slightly in 2012 to 390 cases. While this increase is in part due to disputes arising out of the construction boom and the subsequent financial crisis, which impacted the UAE, it is also a result of the increased level of foreign trade and investment in the market.

A key advantage of choosing arbitration, as opposed to the local courts in the UAE, is the relative speed with which complex disputes can be resolved. Given that parties have automatic rights of appeal in litigation, court cases can take some time to be resolved. This is, however, a double-edged sword as delays due to appeals can also be experienced when parties seek to enforce their arbitral awards before the courts. A further advantage arises out of the fact that almost all contracts of any significance are drafted in English, which is the dominant business language in the UAE. As the courts operate in Arabic only, arbitration enjoys a natural linguistic advantage.

A historic disadvantage of choosing to seat an arbitration within the UAE is the somewhat outdated legal framework that governs arbitration. In the past, the courts had a deserved reputation for interfering in the arbitral process. Today, the courts interfere less with the arbitral process, although the potential for recalcitrant parties to disrupt the arbitral process remains high. In addition to seating an arbitration in the UAE, the parties have the choice of the Dubai International Financial Centre (‘DIFC’), which is an autonomous common law jurisdiction that is geographically located within the UAE, but retains juridically independent courts and law-making powers. While the focus of this guide is on arbitration within the UAE proper, reference is made by way of comparison in some instances to the DIFC arbitration regime. Given that the DIFC was only established in 2004, there is a limited body of arbitral jurisprudence in the DIFC.

(ii) I s most ar bitr ation institutional or ad hoc? Domestic or inter national? W hich institutions and/or r ules are most commonly used?

The majority of arbitrations in the UAE are institutional. Due to the high number of expatriate individuals and businesses operating in the UAE, even most domestic disputes have an international element.


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The major arbitral institutions are the Dubai International Arbitration Centre (‘DIAC’), the Abu Dhabi Commercial Conciliation and Arbitration Centre (‘ADCCAC’) and the Dubai International Financial Centre-London Court of International Arbitration (‘DIFC/LCIA’) Arbitration Centre. There is also the recently launched Sharjah International Commercial Arbitration Centre (‘SICAC’).

DIAC is by far the busiest centre in terms of numbers of arbitrations that it administers. For this reason, we refer to the DIAC Rules in this chapter as being illustrative of practice in the UAE.

(iii) W hat types of disputes are typically ar bitr ated?

All types of commercial disputes, in particular construction, real estate and project development.

(iv) H ow long do ar bitr al proceedings usually last in your countr y?

The arbitration law provides that arbitral awards must be furnished within six months of the first hearing, unless the parties agree to extend the time limit. In practice, arbitrations usually last around 12 to 18 months (depending on size and complexity), although may last more than two years if particularly complex.

(v) A re there any restr ictions on whether foreign nationals can act as counsel or ar bitr ator s in ar bitr ations in your jur isdiction?

There are no such restrictions, except that a valid power of attorney is required.

I I . A r bitr ation L aws

(i) W hat law gover ns ar bitr ation proceedings with their seat in your jur isdiction? I s the law the same for domestic and inter national ar bitr ations? I s the national ar bitr ation law based on the UNC I T R A L M odel L aw?

Part 3 of Book II of the Federal Law No 11 of 1992, the Civil Procedure Code (‘CPC’) governs arbitration proceedings seated within the UAE, save for those seated in the DIFC. Arbitrations seated within the DIFC are governed by the DIFC Arbitration Law (No 1 of 2008) (the ‘DIFC Law’). Whereas the UAE is a civil law jurisdiction (with Shari’a law influence) based to a great extent on Egyptian law, the DIFC is a common law jurisdiction that draws on the laws of England and Wales. The arbitration provisions within the CPC are not based on the UNCITRAL Model Law, but the provisions in the DIFC Law are.


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(ii) I s there is a distinction in your ar bitr ation law between domestic and inter national ar bitr ation? I f so, what are the main differences?

There is no such distinction. Awards emanating from UAE-seated arbitrations must be rendered in the UAE. The UAE courts have interpreted this to mean that the award must be physically signed by the arbitrators in the UAE. There is no such formalism under the DIFC arbitration regime.

(iii) W hat inter national treaties relating to ar bitr ation have been adopted (eg New Yor k C onvention, G eneva C onvention, Washington C onvention, Panama C onvention)?

The UAE has ratified the following Conventions:

• the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, in 2006;

• the 1965 Washington Convention on the Settlement of Disputes between States and Nationals of Other States, in 1982;

• the 1987 Gulf Cooperation Council for the Execution of Judgments, Delegations and Judicial Notifications, in 1996;

• the 1983 Riyadh Convention on Judicial Cooperation between States of the Arab League, in 1999; and

• the 1907 Hague Convention for the Pacific Settlement of International Disputes, in 2008.

(iv) I s there any r ule in your domestic ar bitr ation law that provides the ar bitr al tr ibunal with guidance as to which substantive law to apply to the mer its of the dispute?

The CPC provides no guidance on which substantive law to apply to the merits of the dispute. The DIFC Law provides that, absent agreement between the parties, the tribunal shall determine the applicable law by reference to the conflict of laws rules which it considers to be applicable.

I I I . A r bitr ation A greements

(i) A re there any legal requirements relating to the for m and content of an ar bitr ation agreement? W hat provisions are required for an ar bitr ation agreement to be binding and enforceable? A re there additional recommended provisions?

The CPC requires that arbitration agreements be evidenced in writing. A party representative signing an arbitration agreement must be granted specific authority


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to do so. Arbitration agreements in insurance policies must be contained in an agreement separate from the general terms and conditions.

Save for where governmental permission has been granted, arbitration agreements with the Government of Dubai, or its departments and agencies must be seated in Dubai and be subject to the applicable laws in Dubai, failing which the agreement will be invalid.

Arbitration agreements are enforceable where they evidence a clear intention by the parties to refer disputes to arbitration. While specific provisions are not required for an enforceable agreement, parties seeking to minimise interference by the courts and including reference to institutional rules should identify that those rules are deemed incorporated in the arbitration agreement by reference.

The DIFC Law similarly requires that the agreement be evidenced in writing.

(ii) W hat is the approach of cour ts towar ds the enforcement of agreements to ar bitr ate? A re there par ticular circumstances when an ar bitr ation agreement will not be enforced?

The courts generally enforce arbitration agreements. Given that referring matters to arbitration is an exception to the courts’ general jurisdiction, courts in the UAE will construe arbitration agreements restrictively. Courts will not enforce an arbitration agreement (i) when it is rendered void (by, for example, fraud or incapacity), or (ii) where the subject matter of a dispute is not arbitrable (eg matters of public policy).

(iii) A re multi-tier clauses (eg ar bitr ation clauses that require negotiation, mediation and/or adjudication as steps before an ar bitr ation can be commenced) common? A re they enforceable? I f so, what are the consequences of commencing an ar bitr ation in disregar d of such a provision? L ack of jur isdiction? Non-ar bitr ability? Other ?

Multi-tier dispute resolution clauses are common in contracts in the UAE, particularly in the construction industry. Such clauses are enforceable in the UAE. Where mandatory pre-conditions to arbitration are not followed, a respondent may argue that the claim is inadmissible and that a constituted tribunal does not have jurisdiction to hear the dispute. Awards made notwithstanding a claimant’s failure to follow the pre-conditions may be annulled by the courts.


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(iv) W hat are the requirements for a valid multi-par ty ar bitr ation agreement?

The CPC does not expressly provide for multi-party arbitration agreements. In the absence of specific guidance, such arbitration agreements should be enforceable insofar as they provide clear and unequivocal consent to arbitration.

(v) I s an agreement confer r ing on one of the par ties a unilater al r ight to ar bitr ate enforceable?

The courts in the UAE have not yet decided the enforceability of a unilateral right to arbitrate. However, the prudent course is to avoid such clauses.

(vi) M ay ar bitr ation agreements bind non-signator ies? I f so, under what circumstances?

Save for circumstances of subrogation, assignment or succession of companies, arbitration agreements do not bind non-signatories.

I V . A r bitr ability and J ur isdiction

(i) A re there types of disputes that may not be ar bitr ated? W ho decides – cour ts or ar bitr ator s – whether a matter is capable of being submitted to ar bitr ation? I s the lack of ar bitr ability a matter of jur isdiction or admissibility?

The CPC expressly excludes certain types of disputes as being non-arbitrable as a matter of UAE law (disallowing arbitration ‘in matters where no conciliation may be reached’, such as in criminal matters). Matters may be deemed non-arbitrable either by (i) existing legislation, or (ii) as a matter of public policy by the courts. Existing legislation sets out some matters that are non-arbitrable. These include disputes arising out of commercial agency, distributorship, and labour agreements.

The UAE courts have considered arbitrability to be a question of jurisdiction, such that a tribunal that issues an award on a matter that is non-arbitrable acted outside the scope of its jurisdiction. The UAE courts are able to determine whether a matter is arbitrable, and typically do so upon reviewing an award during an application for ratification.

The DIFC Law provides that awards may be set aside where they resolve disputes whose subject-matter is non-arbitrable. The DIFC Law also provides some specific instances of non-arbitrability. Save for where an exception exists, disputes arising out of employment contracts and certain contracts for the supply of goods or services are non-arbitrable in the DIFC.


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(ii) W hat is the procedure for disputes over jur isdiction if cour t proceedings are initiated despite an ar bitr ation agreement? Do local laws provide time limits for making jur isdictional objections? Do par ties waive their r ight to ar bitr ate by par ticipating in court proceedings?

If court proceedings are commenced notwithstanding the existence of an arbitration agreement, the respondent party will waive its right to enforce the arbitration agreement if it does not object during the first court hearing. The UAE courts have consistently held that the first court hearing is the first time a party appears before the court, irrespective of whether an application for adjournment is made at that time.

In the DIFC, parties wishing to rely on an arbitration agreement despite an action having been brought to the DIFC Court must do so not later than in submitting a first statement regarding the substance of the dispute. A 2012 judgment held that the DIFC Courts are only obliged to stay proceedings where the arbitration is seated in Dubai. The law may be broadened to achieve compliance with the New York Convention requirement to enforce an agreement to arbitrate notwithstanding the seat of arbitration.

(iii) C an ar bitr ator s decide on their own jur isdiction? I s the pr inciple of competence-competence applicable in your jur isdiction? I f yes, what is the nature and intr usiveness of the control (if any) exercised by cour ts on the tr ibunal’s jur isdiction?

The CPC does not include a provision providing for the principle of competence-competence. Unless the parties’ arbitration agreement (usually by reference to institutional rules) provides that the tribunal can rule on its own jurisdiction, it is open to the parties to apply to the UAE courts for a decision on whether a dispute referred to arbitration is in fact covered by the arbitration agreement. The decision of the courts in this respect is appealable.

Where a matter is raised in an arbitration which goes beyond the scope of the tribunal’s jurisdiction (including where allegations are raised, regarding the possible forgery of documents submitted in the arbitration or related penal proceedings), the tribunal shall stay the arbitration until a final judgment is rendered.

In contrast, the DIFC Law provides that the tribunal may rule on its own jurisdiction. Save for where the parties have agreed otherwise, where the tribunal rules on its jurisdiction as a preliminary question, the decision on its jurisdiction can be reviewed at the request of a party by the DIFC Court of First Instance.


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V . Selection of A r bitr ator s

(i) H ow are ar bitr ator s selected? Do cour ts play a role?

The parties are free to agree on the procedures for the appointment of arbitrators. Arbitration institutions have arbitrator lists but these do not have to be followed. Failing agreement between the parties on a procedure or on an appointing authority, appointment of arbitrators by the court is possible upon the application of a party. The number of arbitrators must be uneven.

(ii) W hat are the requirements in your jur isdiction as to disclosure of conflicts? Do cour ts play a role in challenges and what is the procedure?

Arbitrators are bound by the principles of independence and impartiality. An objection by the parties to an appointment of an arbitrator would initially be directed at the tribunal but a formal application to the court is possible. Only serious issues, including doubts of the arbitrator’s impartiality or independence, would be considered by the court. Specifically, such grounds include: a particular disqualifying relationship between the arbitrator and one of the parties, including marital, intimate, professional or trustee relationships; conflicting interests in other proceedings; bias or a deliberate failure to comply with the arbitration agreement.

Parties may agree on a different procedure for challenging arbitrators. For example, by adopting institutional rules, the parties typically agree that challenges to arbitrators are decided by the institution administering the arbitration. It is unclear whether under UAE law, the parties would then have the right to appeal the institution’s decision before the courts, as per the UNCITRAL Model Law.

(iii) A re there limitations on who may ser ve as an ar bitr ator ? Do ar bitr ator s have ethical duties? I f so, what is their source and gener ally what are they?

A minor, a person under a legal disability, a person deprived of his civil rights by reason of a criminal penalty or someone that is bankrupt at the time of appointment may not act as arbitrator.

(iv) A re there specific r ules or codes of conduct concer ning conflicts of interest for ar bitr ator s? A re the I B A G uidelines on C onflicts of I nterest in I nter national A r bitr ation followed?

There are no UAE rules or codes of conduct concerning conflicts of interest that bind arbitrators. In practice, many arbitrators will follow (at the least in spirit) the IBA Guidelines on Conflicts of Interest in International Arbitration.


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V I . I nter im M easures

(i) C an ar bitr ator s issue inter im measures or other for ms of preliminar y relief? W hat types of inter im measures can ar bitr ator s issue? I s there a requirement as to the for m of the tr ibunal’s decision (or der or awar d)? A re inter im measures issued by ar bitr ator s enforceable in cour ts?

The current arbitration law is silent on the tribunal’s powers to grant interim relief. According to the UAE courts, absent specific agreement of the parties, tribunals do not have jurisdiction to issue interim or conservatory measures. Under the DIAC Rules, tribunals are empowered to adopt certain interim and conservatory measures, including injunctions or security for costs. Such decisions may take the form of an interim or provisional award.

By contrast, the DIFC arbitration law specifically permits tribunals to grant interim measures as appropriate.

(ii) W ill cour ts gr ant provisional relief in suppor t of ar bitr ations? I f so, under what circumstances? M ay such measures be or dered after the constitution of the ar bitr al tr ibunal? W ill any cour t or dered provisional relief remain in force following the constitution of the ar bitr al tr ibunal?

The courts have a residual power to grant interim relief in support of arbitrations both before and after the constitution of the tribunal. Relief may include injunctions, attachment orders or the appointment of experts.

(iii) To what extent may cour ts gr ant evidentiar y assistance/provisional relief in suppor t of the ar bitr ation? Do such measures require the tr ibunal’s consent if the latter is in place?

The courts can order a third party to produce documents necessary for the arbitration. Consent is not required and tribunals are bound to suspend the arbitration if an application for production of documents is made by one party. Upon the tribunal’s request, the courts can also order a witness to attend the arbitration hearing in accordance with the general rules of civil procedure.

V I I . Disclosure/Discover y

(i) W hat is the gener al approach to disclosure or discover y in ar bitr ation? W hat types of disclosure/discover y are typically per mitted?

Disclosure obligations before the courts are very limited, typically only involving production of documents relied on by each party. However, in arbitration proceedings, the tribunal is empowered to order any type of disclosure that


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complies with the applicable arbitration rules and the parties’ agreement on procedure, such as the IBA Rules on the Taking of Evidence in International Arbitration. The provisions of the Law of Evidence No 10 of 1992, which govern civil litigation in the UAE, do not apply to arbitration proceedings unless the parties have agreed to apply them or the tribunal so directs.

UAE law does not recognise the concepts of legal privilege or the protection of without prejudice communication, absent specific agreement of the parties.

(ii) W hat, if any, limits are there on the per missible scope of disclosure or discover y?

As disclosure is not a developed principle under UAE law, its scope is determined by the parties’ agreement and/or the Tribunal’s directions.

(iii) A re there special r ules for handling electronically stored infor mation?

The arbitration law is silent on handling of electronic documents. Under UAE law, electronic documents have the same evidential weight as hard copy documents as long as they are stored in the original form that allows the verification of the sender, destination and times and dates of transmission and receipt.

V I I I . C onfidentiality

(i) A re ar bitr ations confidential? W hat are the r ules regar ding confidentiality?

Even though the UAE arbitration law does not expressly provide for confidentiality, it is generally accepted before the courts that arbitration proceedings are conducted in private. By contrast, the DIFC arbitration law specifically provides for confidentiality.

(ii) A re there any provisions in your ar bitr ation law as to the ar bitr al tr ibunal’s power to protect tr ade secrets and confidential infor mation?

No.

(iii) A re there any provisions in your ar bitr ation law as to r ules of pr ivilege?

UAE law does not recognise the concepts of legal privilege or the protection of without prejudice communication, absent specific agreement of the parties.


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I X . E vidence and H ear ings

(i) I s it common that par ties and ar bitr al tr ibunals adopt the I B A R ules on the Taking of E vidence in I nter national A r bitr ation to gover n ar bitr ation proceedings? I f so, are the R ules gener ally adopted as such or does the tr ibunal retain discretion to depar t from them?

Arbitrations often either refer to or adopt the IBA Rules on the Taking of Evidence in International Arbitration.

(ii) A re there any limits to ar bitr al tr ibunals’ discretion to gover n the hear ings?

In respect of the preliminary hearing, the tribunal must notify the parties of the date within 30 days of the tribunal’s appointment. Subject to the principles of equality and due process, tribunals enjoy wide discretion to organise hearings.

(iii) H ow is witness testimony presented? I s the use of witness statements with cross examination common? A re or al direct examinations common? Do ar bitr ator s question witnesses?

In practice, witnesses are usually required to provide oral testimony which will involve a short direct examination and a full cross-examination. This applies to both expert and fact witnesses.

Where there is no party agreement, it is unclear whether video-conferencing is permitted as a means of presenting witness testimony.

(iv) A re there any r ules on who can or cannot appear as a witness? A re there any mandator y r ules on oath or affir mation?

There are no rules on who can appear as a witness.

A mandatory requirement under UAE law is for witnesses to swear an oath before presenting their testimony. This is the reason cited for why witness evidence by video-conference is not permitted absent agreement.

(v) A re there any differences between the testimony of a witness specially connected with one of the par ties (eg legal representative) and the testimony of unrelated witnesses?

There are no legal differences, but tribunals are able to take this into account when they determine the weight to be given to evidence.


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(vi) H ow is exper t testimony presented? A re there any for mal requirements regar ding independence and/or impar tiality of exper t witnesses?

Like fact witnesses, expert witnesses testify under oath. There are no formal requirements of impartiality and independence for experts.

(vii) I s it common that ar bitr al tr ibunals appoint exper ts beside those that may have been appointed by the par ties? H ow is the evidence provided by the exper t appointed by the ar bitr al tr ibunal considered in compar ison with the evidence provided by par ty-appointed exper ts? A re there any requirements in your jur isdiction that exper ts be selected from a par ticular list?

Tribunal-appointed experts are permitted under the DIAC Rules but in practice are not common.

(viii) I s witness conferencing (‘ hot-tubbing’ ) used? I f so, how is it typically handled?

Witness conferencing is becoming more frequent for examination of expert witnesses. It usually involves questioning expert witnesses simultaneously on identical issues by both side’s counsel and then the tribunal.

(ix) A re there any r ules or requirements in your jur isdiction as to the use of ar bitr al secretar ies? I s the use of ar bitr al secretar ies common?

There are no rules relating to secretaries. As in other jurisdictions, tribunal secretaries are common for larger disputes.

X . Awar ds

(i) A re there for mal requirements for an awar d to be valid? A re there any limitations on the types of per missible relief?

The arbitral award must set out the arbitration agreement in full, a summary of the statements of the parties, the evidence submitted, the grounds and context of the award and the date and place of issue. It must be signed by the majority of arbitrators and include the refusal of any arbitrator to sign together with a dissenting opinion, if any. The award must be issued (signed) in the UAE.

Both the final decision and the grounds in support of that decision must be signed by each arbitrator. In practice, this means that each page of the award is signed.


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The default language of the award is Arabic. The parties have the option to choose another language. For enforcement purposes, the award must be translated into Arabic.

There is no express limitation as to permissible remedies, as long as the award is in accordance with the law. However, the tribunal cannot award criminal or public remedies.

(ii) C an ar bitr ator s awar d punitive or exemplar y damages? C an they award interest? C ompound interest?

The arbitration law is silent on punitive damages. Under UAE law, punitive damages are not enforceable. Remedies should be linked to the damage suffered by the injured party. Although enforceable, an agreement of predetermined damages (such as liquidated damages) can be modified by the tribunal in certain circumstances.

UAE law recognises the concepts of direct damages, loss of profits, loss of opportunity, consequential damages, interest and moral damages.

Arbitrators are free to award compound interest, which is enforceable in the Emirate of Dubai but may not be in the Emirate of Abu Dhabi.

(iii) A re inter im or par tial awar ds enforceable?

The arbitration law does not specifically address interim or partial awards, other than costs awards.

In practice, interim or partial awards are enforceable, although not common. The DIAC Rules specifically permit the Tribunal to make interim or partial awards.

(iv) A re ar bitr ator s allowed to issue dissenting opinions to the awar d? W hat are the r ules, if any, that apply to the for m and content of dissenting opinions?

Dissenting opinions are permitted as long as they are enclosed with the award.

(v) A re awar ds by consent per mitted? I f so, under what circumstances? B y what means other than an awar d can proceedings be ter minated?

The arbitration law is silent on consent awards.

The DIAC Rules provide for the possibility of a consent award if the parties agree on a settlement. Such an award must state that it is made by the parties’ consent.


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(vi) W hat power s, if any, do ar bitr ator s have to cor rect or inter pret an awar d?

Under UAE law, the courts have the power to correct typographical or arithmetical errors in an award upon the application of a party. As part of the ratification process, the courts may remand an issue which has been omitted or needs to be clarified to the tribunal.

Under the DIAC Rules, the parties have 30 days from the final award to request an interpretation of the award. During the same time, the tribunal may correct the award either voluntarily or upon request of any one party.

X I . C osts

(i) W ho bear s the costs of ar bitr ation? I s it always the unsuccessful party who bear s the costs?

Under UAE law, tribunals may award costs in their discretion. Although the losing party typically bears at least part of the costs of the arbitration (ie, the fees and expenses of the arbitrators and costs of the administering authority), there is no established doctrine that costs follow the event. Under the DIAC Rules, the tribunal has discretion to award the arbitration costs.

Neither UAE law nor the DIAC Rules address the allocation of the parties’ legal costs and expenses. Tribunals in practice award such costs on the basis of their inherent jurisdiction.

(ii) W hat are the elements of costs that are typically awar ded?

Please see Section XI(i) above.

(iii) Does the ar bitr al tr ibunal have jur isdiction to decide on its own costs and expenses? I f not, who does?

Unless otherwise agreed by the parties, the tribunal has jurisdiction to decide on its own costs. In accordance with the DIAC Rules, the tribunal’s fees are determined by DIAC in accordance with the Centre’s fee scale.

(iv) Does the ar bitr al tr ibunal have discretion to appor tion the costs between the par ties? I f so, on what basis?

Please see Section XI(i) above.


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(v) Do cour ts have the power to review the tr ibunal’s decision on costs? I f so, under what conditions?

Upon application of a party, the tribunal’s assessment on costs may be varied by the court to make it appropriate to the effort expanded and the nature of the dispute.

X I I . C hallenges to Awar ds

(i) H ow may awar ds be challenged and on what grounds? A re there limitations for challenging awar ds? W hat is the aver age dur ation of challenge proceedings? Do challenge proceedings stay any enforcement proceedings? I f yes, is it possible never theless to obtain leave to enforce? Under what conditions?

Awards may be challenged by means of either (i) an application for annulment, or (ii) submissions made during the ratification of the award. In practice, award debtors typically raise challenges as defences to an application by the award creditor for ratification of the award. The grounds for challenge or annulment, set out in article 216 of the CPC, include circumstances where:

• There are defects in relation to the arbitration agreement and the tribunal’s jurisdiction, such as where the award was rendered without a valid arbitration agreement, where the tribunal overstepped its jurisdiction set out in the arbitration agreement or where the arbitration agreement was concluded by those not having the capacity to agree to arbitration.

• There are defects in relation to the tribunal, such as where the arbitrators were improperly appointed; or where some of the arbitrators rendered the award in the absence of the others and without their authorisation, or by arbitrators who did not fulfil the legal requirements to act as an arbitrator.

• There are other procedural defects, such as where the subject matter of the dispute was not indicated to the tribunal either in the arbitration agreement or through the parties’ pleadings; the award suffers from procedural irregularities; or the procedures adopted in the arbitration otherwise affect the award by, for example, not respecting the parties’ due process rights.

• The award is contrary to public policy.

The ground based on procedural deficiencies has been interpreted broadly by the UAE courts, requiring strict compliance with the mandatory requirements of the CPC during the course of an arbitration. Guidance on the meaning of public policy is provided at article 3 of the UAE Civil Code, which requires compliance with the fundamental principles of Islamic Shari’a law.


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Challenge proceedings before the UAE courts can take anywhere from several months to two or three years, depending on whether appeals to the courts of appeal and cassation are pursued. The award is not enforced in the interim as the above challenges are made prior to the award being ratified and converted into an executory instrument.

Under DIFC Law, either by way of a separate annulment action or as a defence to an action for the recognition and enforcement of an award, a party may raise grounds for challenge that are drawn from Article V of the New York Convention. These are discussed further below in Section XIII(i). An independent action for annulment must be made within three months from receipt of the award. It is in the DIFC Court’s discretion to determine whether to adjourn enforcement in light of annulment proceedings.

(ii) M ay the par ties waive the r ight to challenge an ar bitr ation awar d? I f yes, what are the requirements for such an agreement to be valid?

Under the CPC, the parties cannot, prior to the issuance of the award, waive the right to challenge the eventual arbitration award. After the award has been issued, parties can expressly or impliedly waive the right to apply for an action declaring that the award should be annulled.

(iii) C an awar ds be appealed in your countr y? I f so, what are the grounds for appeal? H ow many levels of appeal are there?

Awards cannot be appealed on any substantive grounds. The courts have confirmed that challenges for annulment of an award are exhaustively set out in the provisions of the CPC. The position is the same under DIFC Law.

(iv) M ay cour ts remand an awar d to the tr ibunal? Under what conditions? W hat power s does the tr ibunal have in relation to an awar d so remanded?

Courts in the UAE may remand an award to the tribunal for either (i) clarification of the award, or (ii) to decide on issues that had been omitted. Unless directed by the remanding court, or otherwise agreed by the parties, the tribunal must respond within three months. The UAE courts maintain the authority to correct material errors in the award (such as, for example, calculation errors) in the same manner that it has to correct court judgments.

The parties may also agree on an additional procedure for the correction or interpretation of an award. For example, the DIAC Rules provide that parties may do so 30 days from receipt of the award. This is not mutually exclusive of the courts’ right to remand the award.


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X I I I . R ecognition and E nforcement of Awar ds

(i) W hat is the process for the recognition and enforcement of awar ds? W hat are the grounds for opposing enforcement? W hich is the competent cour t? Does such opposition stay the enforcement? I f yes, is it possible never theless to obtain leave to enforce? Under what circumstances?

UAE Awards

Awards rendered in the UAE are recognised and enforced by a two-stage process known as ratification and execution. Awards that are rendered in the UAE must be deposited by the parties at the court clerk’s office, accompanied by an Arabic translation, if necessary. The court can only ratify the award after reviewing the award and the arbitration agreement and determining that no procedural deficiencies exist on the face of the award. During the ratification process, a counter-application for the annulment of the award may be made on the grounds already identified above. Once ratified, the CPC procedures for summary execution apply to the execution of the award and the award effectively enjoys the status of a court judgment.

Until the award is ratified, the award creditor will be unable to seek enforcement.

DIFC Awards

Awards rendered in the DIFC are recognised and enforced, subject to the grounds for opposing enforcement which follow the limited grounds for challenging awards set out in Article V of the New York Convention. Once ratified, an award may thereafter be executed in the DIFC or elsewhere in the emirate of Dubai, without any further review by the Dubai courts by virtue of a protocol that exists between the Dubai courts and the DIFC courts (enshrined in Dubai Law No 16 of 2011).

Foreign Awards

Since the UAE ratified the New York Convention in 2006, awards rendered abroad are no longer subject to the provisions on recognition and enforcement of foreign arbitral awards set out in the CPC. After some initial hiccups, the courts are now routinely enforcing foreign awards by applying the New York Convention.


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(ii) I f an exequatur is obtained, what is the procedure to be followed to enforce the awar d? I s the recour se to a cour t possible at that stage?

Once an exequatur is obtained, the execution of the award will be carried out under the supervision of an execution judge to the relevant court and with the assistance of ‘execution agents’ (ie, court bailiffs). Upon receiving the exequatur, the award debtor receives a notification requiring it to make payment within 15 days, failing which the execution judge can order forcible measures to effect payment.

(iii) A re conser vator y measures available pending enforcement of the awar d?

It is open to the award creditor to make an application for conservatory measures (in the form of provisional attachment) in circumstances where there is a risk of dissipation of assets.

(iv) W hat is the attitude of cour ts towar ds the enforcement of awar ds? W hat is the attitude of cour ts to the enforcement of foreign awar ds set aside by the cour ts at the place of ar bitr ation?

The courts take a formalistic approach in their review of awards towards ensuring compliance with the mandatory requirements of the CPC and assessment of the grounds of annulment under article 216 of the CPC. Since the ratification of the New York Convention, the enforcement of foreign awards has become commonplace after some initial hiccups, although the lower courts are still prone to applying the pre-Convention enforcement regime on occasions.

Awards annulled in their place of origin are most unlikely to be enforced in the UAE.

(v) H ow long does enforcement typically take? A re there time limits for seeking the enforcement of an awar d?

Enforcement can take anywhere from several months to several years, depending on whether challenges are brought by the award debtor during the ratification stage. There is no time limit set out in the CPC for bringing an application for ratification of the award. However, once ratified, the award creditor should bring its action for execution within a period of 15 years.


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X I V . Sovereign I mmunity

(i) Do State par ties enjoy immunities in your jur isdiction? Under what conditions?

UAE law does not expressly provide that foreign State parties enjoy immunity.

Emirati State parties are not immune from suit, but do enjoy immunity from execution (see below). Each individual Emirate may have preconditions that are to be fulfilled prior to commencing an action against a State party. For example, in order to commence an action against the government of Dubai and any department thereof (including public institutions and corporations), a claimant must first submit a written copy of the full details of the dispute with the Office of the Government of Dubai’s Legal Advisor (see Dubai Law No 3 of 1996 on Government Lawsuits, as amended by Dubai Law No 10 of 2005).

(ii) A re there any special r ules that apply to the enforcement of an awar d against a State or State entity?

Public or private properties owned by the UAE or any individual Emirate are immune from seizure. No debt due from the governments in the UAE, their emanations or corporations may be recovered by a legal process – even if the judgment debtor has signed a sovereign immunity waiver, which the courts will likely not enforce on public policy grounds (see article 247 of the CPC).

X V . I nvestment Treaty A r bitr ation

(i) I s your countr y a par ty to the Washington C onvention on the Settlement of I nvestment Disputes B etween States and Nationals of Other States? Or other multilater al treaties on the protection of investments?

The UAE is a party to the Washington Convention. Other multilateral treaties providing for the protection of foreign investments to which the UAE is party include:

• the 1971 Convention Establishing the Inter-Arab Investment Guarantee Corporation;

• the 1974 Convention on the Settlement of Investment Disputes between States Hosting Arab Investments and Citizens of Other States

• the 1980 Unified Agreement for the Investment of Arab Capital in the Arab States;

• the 1981 Agreement on Promotion, Protection and Guarantee of Investments among Member States of the Organization of the Islamic Conference;


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• the 1985 Convention establishing the Multilateral Investment Guarantee Agency; and

• the 1992 Agreement of Islamic Corporation for the Insurance of Investment and Export Credit.

(ii) H as your countr y entered into bilater al investment treaties with other countr ies?

The UAE is party to 38 bilateral investment treaties, 28 of which are in force at the time of publication.

X V I . R esources

(i) W hat are the main treatises or reference mater ials that pr actitioner s should consult to lear n more about ar bitr ation in your jur isdiction?

The following reference materials should be consulted by practitioners looking to familiarise themselves with arbitration in the UAE:

• Abdul Hamid El Ahdab and Jalal El Ahdab, Arbitration with the Arab Countries, (Kluwer Law International, 2011);

• Essam Al Tamimi, Practitioner’s Guide to Arbitration in the Middle East and North Africa (Juris, 2009);

• Samir Saleh, Commercial Arbitration in the Arab Middle East, 1st ed, (Hart Publishing 2006) (see chapter on arbitration under Shari’a law);

• Essam Al Tamimi, Practical Guide to Litigation and Arbitration in the United Arab Emirates (Kluwer Law International, 2003);

• The DIAC Journal; and • The Journal of Arab Arbitration.

Translated excerpts of Court of Cassation judgments (the highest court in the UAE) are also a good resource to learn about the leading arbitration-related judgments, though these are only accessible on subscription-based websites.

(ii) A re there major ar bitr ation educational events or conferences held regular ly in your jur isdiction? I f so, what are they and when do they take place?

Many international arbitration institutions organise conferences in the UAE, though these are held on an ad hoc basis.


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X V I I . Trends and Developments

(i) Do you think that ar bitr ation has become a real alter native to cour t proceedings in your countr y?

Arbitration has become a genuine alternative to court proceedings in the UAE, especially in the context of transactions conducted by the large number of resident expatriate individuals and businesses. The UAE is developing into an arbitration hub in the Gulf and, more broadly, the Middle East, North Africa and the Indian subcontinent.

(ii) W hat are the trends in relation to other A DR procedures, such as mediation?

ADR procedures, such as mediation, are not frequently used.

(iii) A re there any notewor thy recent developments in ar bitr ation or A DR ?

Draft of a new arbitration law

Since 2008, there has been much discussion within the arbitration community in the UAE surrounding a new federal arbitration law to supplant the provisions of the CPC. Early drafts of the law were based on the UNCITRAL Model Law, however, the latest draft circulated towards the end of 2012 is based on the Egyptian arbitration law. Practitioners are eagerly awaiting promulgation of a new UAE arbitration law to bring the arbitration regime in line with best international standards.

Arbitrability of real estate disputes

Two 2012 judgments of the Dubai Court of Cassation nullified domestic arbitration awards on the grounds that disputes relating to the registration of properties in the real estate registry are non-arbitrable for reasons of public policy. In the event that the judgments are interpreted broadly, there may be far-reaching implications for real estate disputes that have, whether central to the dispute or ancillary, an issue relating to the registration of the property with the government registry. More broadly, practitioners have voiced concerns about the potential confusion caused by these judgments as regards the arbitrability of real estate disputes, which represent a sizeable portion of arbitrations seated in the UAE.

Enforcement of foreign arbitral awards

Practitioners have been encouraged by recent Dubai Court of Cassation judgments pursuant to which foreign arbitral awards have been recognised and enforced under the New York Convention. Particularly, in October 2012, the Dubai Court


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of Cassation held that the CPC should not be relied upon at all in reviewing foreign arbitral awards, and identified that the courts are restricted to reviewing awards under the grounds set out in the New York Convention.

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