Académique Documents
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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
reza.mohtashami@freshfields.com
antonia.birt@freshfields.com
lee.rovinescu@freshfields.com
Table of Contents
Page
I.
Background
II.
Arbitration Laws
III.
Arbitration Agreements
IV.
V.
Selection of Arbitrators
VI.
Interim Measures
VII.
Disclosure/Discovery
VIII.
Confidentiality
IX.
10
X.
Awards
11
XI.
Costs
13
XII.
Challenges to Awards
14
XIII.
16
18
XV.
18
XVI. Resources
19
20
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somewhat outdated legal framework that governs arbitration.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)
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)
(iv)
(v)
A re ther e 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.
II.
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 Sharia 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.
(ii)
(iii)
W hat inter national treaties relating to ar bitr ation have been adopted (eg
New Yor k C onvention, G eneva C onvention, W ashington C onvention,
Panama C onvention)?
The UAE has ratified the following Conventions:
(iv)
I s ther e 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.
III.
(iii)
(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)
(vi)
M ay ar bitr ation agr eements 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.
IV.
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.
(ii)
W hat is the procedure for disputes over jur isdiction if cour t proceedings are
initiated despite an ar bitr ation agr eement? 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 cour t 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)
V.
(ii)
(iii)
A re ther e 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)
VI.
I nter im M easures
(i)
(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)
VII.
Disclosure/Discover y
(i)
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 ther e 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 Tribunals directions.
(iii)
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 ibunals
power to protect tr ade secr ets and confidential infor mation?
No.
(iii)
IX.
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 ther e 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 tribunals appointment. Subject to the principles of
equality and due process, tribunals enjoy wide discretion to organise hearings.
(iii)
(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)
10
(vi)
(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 requir ements
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)
(ix)
X.
Awar ds
(i)
11
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)
(iii)
(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)
12
(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.
XI.
C osts
(i)
W ho bear s the costs of ar bitr ation? I s it always the unsuccessful par ty 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 tribunals fees are
determined by DIAC in accordance with the Centres 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.
13
(v)
Do cour ts have the power to review the tr ibunals decision on costs? I f so,
under what conditions?
Upon application of a party, the tribunals assessment on costs may be varied by
the court to make it appropriate to the effort expanded and the nature of the
dispute.
XII.
C hallenges to Awar ds
(i)
There are defects in relation to the arbitration agreement and the tribunals
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 Sharia law.
14
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 Courts 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 ther e?
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)
15
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 cir cumstances?
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 clerks 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.
16
(ii)
(iii)
(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 r e ther e 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.
17
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 Dubais Legal Advisor (see Dubai Law No 3 of 1996 on
Government Lawsuits, as amended by Dubai Law No 10 of 2005).
(ii)
A re ther e 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).
XV.
18
(ii)
X V I . R esources
(i)
W hat are the main tr eatises 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, Practitioners 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 Sharia 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.
19
Do you think that ar bitr ation has become a r eal 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 tr ends in relation to other A DR procedur es, such as mediation?
ADR procedures, such as mediation, are not frequently used.
(iii)
20
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.
21