On the occasion of Dubai Arbitration Week, we look at how the enactment of a new federal arbitration law has the potential to address the difficulties faced when seeking to ratify and enforce both domestic and foreign awards in the UAE.
THE BIRTH OF A NEW UAE FEDERAL ARBITRATION LAW – A LONG AND DIFFICULT LABOUR
A new draft federal arbitration law has been "imminent" since the UAE acceded to the New York Convention in 2006 and the most recent draft, which remains under consideration by the legislature, was circulated in 2013. This draft is primarily based on the UNCITRAL Model Law and retains some of the current provisions of the UAE Civil Procedure Code which currently governs arbitration conducted in the UAE.
ENFORCING AWARDS IN THE UAE
The Civil Procedure Code provides that the execution of foreign awards and orders should take place pursuant to the UAE's international treaty obligations, which include the New York Convention.
Despite this there have historically been some difficulties in the UAE with respect to enforcement. These difficulties arise primarily from the UAE Courts' willingness (outside of the DIFC) to set aside foreign awards on grounds that they do not meet (non- Convention) requirements of the Civil Procedure Code.
Recent Court of Cassation judgments have confirmed that the provisions of the Civil Procedure Code have no application in the enforcement of foreign arbitral awards in the UAE. There has, however, been the occasional setback and the enforcement of foreign arbitral awards can continue to be a challenge.
The current draft federal arbitration law seeks to confirm the application of the New York Convention with respect to enforcement by mirroring in large part the language of Article V.
Where domestic awards are concerned, a reconsideration of the merits of an award is not permitted. The Civil Procedure Code directs that decisions in respect of ratification be taken on procedural grounds. Procedural irregularities, however trivial, have therefore always been used and continue to be used by award debtors as a basis for resisting domestic awards.
The current draft federal arbitration law seeks to limit in part the parties' ability to raise procedural irregularities at the enforcement stage.
IF YOU'RE GOING TO DO IT DO IT RIGHT
As stated above, the current draft federal arbitration law retains certain provisions of the Civil Procedure Code which can potentially continue to be relied upon by parties seeking to resist enforcement. Dissenters consider that the continued inclusion of these provisions does not accord with international best practice, which is detrimental to ongoing efforts to change the general perception that the UAE is an unpredictable jurisdiction for the enforcement of arbitral awards.
The welcome fact, however, is that progress is being made to achieve the goal of making the UAE an arbitration friendly jurisdiction. Subject to further consultation and amendment, the enactment of a federal arbitration law containing clear guidance on the approach to be adopted by the Courts will ensure that the steps already taken by the UAE to promote arbitration as an attractive means of dispute resolution in the region continue to gather momentum.
Dubai Arbitration Week events taking place today are listed below:
- CIArb MENA Young Arbitrators Conference - Nassif BouMalhab, Partner, Clyde & Co will be presenting
- CIArb MENA Young Arbitrators Cocktail Reception
- DIFC-LCIA - Into the Future - The Dispute Resolution Authority,
DAI and New Rules - Alec Emmerson, Consultant, Clyde & Co will be presenting
- DIFC-LCIA - Into the Future – Cocktail reception