Eleven years in the planning, the new UAE Arbitration Law has finally been rolled out – but has it modernised the UAE’s arbitral framework?
In June 2018, Federal Law No 6 of 2018 on Arbitration (the New Law) came into force in the UAE. It repealed and replaced Articles 203 to 218 of Federal Law No 11 of 1992 (the Old Law).
The Old Law was perceived by some to be outdated and not reflective of best practices in commercial arbitration. Its provisions – only 16 in total – left considerable scope for recalcitrant debtors to delay proceedings and frustrate enforcement of awards, as evidenced by numerous successful nullification challenges to awards in recent years.
In contrast, the New Law is based on the UNCITRAL Model Law. It is comprehensive, comprising 61 articles, and seeks both to remedy these issues and to bring the UAE in line with international best practice.
The New Law applies to both current and future arbitrations. Highlights include:
- the law will apply to local and international arbitrations (though treaty provisions may take precedence);
- the principles of separability and competence will apply, allowing the tribunal to rule on its own jurisdiction;
- electronic communications will satisfy the requirement for an arbitration clause to be in writing;
- interim and partial awards will be enforceable;
- awards will no longer need to be physically signed by the arbitral tribunal in the seat, potentially saving travel and administration costs.
Further, to reduce challenges to enforcement, applications for total or partial annulment must now be initiated within 30 days of the award being notified to the parties. Additionally, clarification has been given that an application for annulment will not automatically stay enforcement proceedings.
The New Law makes clear that both arbitral tribunals and courts have the power to order interim and conservatory measures in ongoing or potential arbitrations. It is not yet known how the tribunals and the courts will interact on this issue, as interim measures have not, traditionally, been available in the local courts. What is clear is that an application to court does not mean the parties have waived their right to arbitrate.
There are also limited restrictions on arbitrators’ qualifications, addressing previous uncertainty about the ability of non-UAE lawyers to sit on tribunals. At the same time, the UAE Ministry of Economy will co-ordinate with local arbitration institutions to develop a code of conduct for arbitrators.
The New Law is a welcome development, particularly in construction claims where arbitration remains the most popular method of dispute resolution. However, its true impact will ultimately be determined by the manner in which the UAE Courts interpret and apply its articles and address challenges to enforcement. It is nevertheless clear that the New Law represents a bold step to modernise the practice of arbitration in the UAE, with the ultimate goal of maintaining the UAE’s position as a regional hub of arbitration and making arbitrations more streamlined and cost-effective.