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Why arbitration in the UAE is

different
Paul Stothard
Partner
Ravinder Bhullar
Associate
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The picture 57 years ago
This contract was made in Abu Dhabi and to be
performed in Abu Dhabi. If any municipal law can be
said to apply to this dispute, it would be the law of Abu
Dhabi. But no such law can be said to exist. The sheikh
administers a purely discretionary justice with the
assistance of the Koran; and it would be fanciful to
suggest in this very primitive region that there is any
settled body of legal principles applicable to the
construction of modern commercial instruments.
Lord Asquith Abu Dhabi v. Petroleum Development Ltd
(1952) (Arbitral Award).
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Outline
How arbitration works.
Why choose arbitration?
How dispute resolution in the UAE.
Focus on arbitration in the UAE.
Two alternatives to normal arbitration:
Dubai International Financial Centre.
Treaty claims.
Practical tips.
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How arbitration works
Based on contractual ouster of the courts
jurisdiction to decide the dispute on the
merits.
The dispute is referred to an arbitrator or
tribunal who will make determinations on the
law and the facts.
The award is final and binding (in a sense).
The court retails supervisory jurisdiction.
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Why arbitrate?
Enforcement of arbitral awards: the New York
Convention.
Party autonomy.
Independent, neutral, professional, expert arbitrators.
Tried and tested rules of procedure and professional
administration of disputes.
Neutrality of seat.
Trend away from court proceedings in trade disputes
costs, speed, privacy.
Increasingly friendly international legal landscape, as
encouraged by UNCITRAL.
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The dispute resolution landscape in the
UAE: The Courts
Unfamiliar process to many international
parties.
Time and automatic rights of appeal.
Unpredictable.
Nominal award of costs.
No specialist commercial court.
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Arbitration law in the UAE
No comprehensive arbitration law in the UAE.
What happened to the 2008 draft Federal
Arbitration Law?
Civil Procedures Law (Federal Law No. 11 of
1992), Articles 203 to 218:
Recognition of arbitration.
Certain important mandatory rules of procedure.
Challenge to arbitrators.
Ratification of and challenge to award.
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Arbitrators
Grounds for objection (Article 207(4)):
If an arbitrator is not capable of rendering a fair award or
under any ground outlined in Article 115 (re judges).
Challenge may run parallel to procedure under arbitration
rules.
Risk of derailing proceedings / spurious objections.
Compensation may be payable if arbitrator withdraws
without serious reason (Article 207(2)).
Examples of what CPL does not deal with:
Replacement of arbitrators.
Can a tribunal determine its own jurisdiction?
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Mandatory procedural requirements:
Four important examples
Sworn evidence (in form adopted in court
proceedings) and liability for perjury (Article 211).
Award must be issued within the UAE (Article 212(4)).
Award must comprise a copy of the agreement to
arbitrate (Article 212(5)).
Key time limits:
30 days to call first hearing (Article 208(1)).
Six month rule (Article 210(1)).
Five days to supply award after issue (Article 213(3)).
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The award: ratification and challenges
Award only enforceable after it has been ratified by the court.
No express reference to ratification of interim or partial awards.
No review on the merits (Article 217(1)).
General grounds to set aside award (Article 216).
Courts propensity to set aside allegedly defective awards for
technical / trivial reasons.
No waiver under Article 216(2).
Court has power to remit award for corrections and clarifications /
correct flaws (Article 214), but rarely (if ever) exercised.
Potential for litigation about litigation (Article 217(2)).
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Dubai International Financial Centre
(DIFC)
What is DIFC?
UNCITRAL-based arbitration law.
Supportive court:
Interim remedies.
No ratification procedure.
DIFC/LCIA arbitration centre.
Is there jurisdiction to deal with non-financial
(inc. construction) disputes?
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Treaty claims
Bilateral investment treaties: agreements between
states to protect investments made by nationals in the
territory moving.
Protection for investors:
Compensation for expropriation or illegitimate interference
with investments.
Fair and equitable treatment / most favoured nation status.
Protection against war and civil unrest.
Prompt and fair compensation and repatriation in freely
convertible currency.
Washington Convention and ICSID.
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Bilateral treaties with the UAE
China
Egypt
France
Germany
Italy
Rep of Korea
Lebanon
Malaysia
Sweden
Switzerland
Syria
United Kingdom
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Practical tips
If possible, adopt rules of arbitration to
supplement the CPL. This can be done as a
new submission agreement or at the Terms of
Reference stage.
Think ahead, particularly with regard to the
service of contractual notices relating to
arbitration proceedings.
Dont assume that you have to rely on the
local market for arbitrators and counsel, even
if the dispute is governed by UAE law.
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Practical tips (2)
Scrupulously observe the technicalities in
contract, CPL and arbitration rules.
Educate the tribunal as to mandatory
requirements under CPL to obtain an
enforceable award.
Obtain powers of attorney confirming lawyers
authority to act.
Check to see whether you have rights under a
bilateral investment treaty.
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Thank you.
Paul Stothard
Partner
Ravinder Bhullar
Associate