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13 NOV 2018

Enhancing confidence in Arbitration

A form of alternative dispute resolution (ADR) that can be dated back to hundreds of years, arbitration has been settling commercial disputes in many jurisdictions.

Traditionally chosen over litigation by parties to disputes, arbitration is considered to be economical and concise, offering added confidentiality. The regional construction sector prefers to use it as the method to resolve their disputes, and with a vast number of construction and infrastructure projects in the region, it is always in demand.

Arbitration remains one of the main means to resolve disputes in the UAE. Its status as a preferred dispute resolution method has been boosted by various key developments over the last 12 years. Most, importantly, however, it is the recent enactment of the new arbitration law that has enhanced the UAE’s reputation as a hub for arbitration.

Claire Miller
Managing Partner, Beale & Co

Introducing the new arbitration law

The new Arbitration Law (Federal Law No. 6 of 2018 on Arbitration in Commercial Disputes), came into effect from 16th June 2018. The introduction of this law has given counsel, parties and investors more confidence in the certainty of enforcement of arbitral awards in the UAE. 

A modern law, based on the internationally recognised and accepted UNCITRAL Model Law, the new Arbitration Law has been designed to attract further foreign direct investment into the UAE, reinforcing its place as the most progressive market to do business in. According to Natalie Ledger, Associate at Beale & Co, the law was further introduced to the market to provide a framework which is already familiar to the global business community, for the fair and efficient resolution of commercial disputes. 

Reforming the arbitration laws of the UAE, most notably the new law allows an arbitral tribunal (which decides the dispute being arbitrated) with authority to rule on its jurisdiction, issuing partial awards.

“The law grants the court the power to issue interim measures and, in limited circumstances, to intervene in the arbitration process, providing a 60-day timeline for enforcement of an arbitral award, unless the court is satisfied that a reason for annulment exists, and addressing several procedural formalities that allowed a debtor to prevent an award being enforced by the courts.” – Natalie Ledger

Industry Gains

By incorporating key features and principles seen in international arbitration, the new law touches on arbitration agreements, the appointment of the arbitral tribunal, arbitral proceedings, arbitration awards and reinforcement of those awards.

According to Claire Miller, primarily the new law gives parties access to a range of interim measures and injunctive relief, such as:

  • Orders to maintain evidence, assets or funds
  • Maintain or restore a condition until the dispute is resolved
  • Take or refrain from taking an action that can damage or prejudice the arbitration

These measures, she states, are supported by the courts and are also not generally available in litigation proceedings before the courts.

Impact on arbitrating commercial disputes

By giving parties greater freedom and flexibility to determine their arbitral proceedings than was previously possible, the new law will help in arbitrating commercial disputes. Claire Miller affirms that the availability measures and injunctive relief, along with the attempt to address procedural formalities which commonly frustrated the enforcement of an award, gives greater certainty surrounding implementation. Additionally, the introduction of a time limit for the enforcement of awards should simplify and expedite the process.

Offering a practical alternative to the courts for dealing with significant value and complex disputes, arbitration continues to mature rapidly in the UAE and the wider region, resulting in more utilisation of it as a means of resolving disputes.

Supported by strong legislations, such as the new UAE law which is in line with international best practices, confidence of businesses operating in the UAE is strengthening, attracting further investment to the region.