A Concise Summary of the Arbitration Law in the UAE

In 1952, the UAE witnessed its first arbitration case when a dispute arose between the Sheikh of Abu Dhabi and Petroleum Development Ltd. over a 75-year oil concession agreement. This landmark case, referred to international arbitration, marked the beginning of arbitration practices in the country. Today, the UAE is renowned globally for its oil exports and diverse economy, which spans tourism, international finance, shipping, logistics, construction, retail, and manufacturing. To support this economic diversity, the UAE acknowledges the importance of robust arbitration legislation to effectively and swiftly resolve disputes that may arise across various sectors.

Prior to the establishment of a dedicated arbitration law, disputes were governed by Articles 203-218 of Federal Law No. 11 on Civil Procedures (the Civil Procedures Law). Recognizing its pivotal role as a hub for major business transactions in the Middle East, the UAE identified the necessity for a modern and comprehensive arbitration framework to address the complexities of commercial disputes.

To this end, the UAE enacted Federal Law No. 6 of 2018 concerning arbitration (the Arbitration Law) on 3 May 2018, which took effect on 14 June 2018. This legislation, the first standalone arbitration law in the UAE, replaced the arbitration provisions previously found in the Civil Procedures Law. The Arbitration Law was designed to align with contemporary global arbitration standards and is based on the principles of the United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL’s framework promotes the harmonization and unification of international trade law through conventions, model laws, and instruments that address critical legal issues in international commerce.

Scope of Application of the Law

Article 2 defines the scope of this law’s application, covering the entire UAE unless the parties mutually agree to be governed by a different arbitration law, provided such an agreement does not conflict with the UAE’s public policy or morality. Additionally, the law applies to international commercial arbitration if the parties have consented to be governed by its provisions, as well as to any arbitration arising from disputes—whether contractual or non-contractual—pertaining to legal relationships established under the laws in force within the UAE.

The Arbitration Agreement

Arbitration is a process in which a dispute between two or more parties is submitted, by mutual agreement, to one or more arbitrators who have the authority to deliver a binding decision on the dispute. By choosing arbitration, the parties select a private method of resolving disputes instead of pursuing litigation. Articles 4 to 8 of the Arbitration Law provide the legal framework for the formation, requirements, separability, and scope of arbitration agreements.

According to Article 4, only individuals with the legal capacity to enter into agreements or representatives authorized by a juristic person can enter into an arbitration agreement. Any agreement made by parties lacking this capacity is deemed invalid. Furthermore, disputes that fall outside the scope of conciliation, such as those involving public policy issues, cannot be referred to arbitration. Public policy-related matters include criminal offenses, insolvency, fraud, and similar cases that are not suitable for conciliation.

Article 4(4) ensures that arbitration agreements are not discharged upon the death of a party or their withdrawal. It allows such agreements to be enforced by or against the legal successors of a deceased party.

Article 7 of the Arbitration Law requires that arbitration agreements must be documented in writing to be valid. A written arbitration agreement can take various forms, such as:

• A signed document between the parties;
• An express statement in the exchange of letters or other written communication; or
• An electronic form, such as agreements made through emails, provided they comply with applicable laws related to electronic transactions.

Additionally, references to arbitration agreements in model contracts, other agreements, or international treaties are valid as long as the reference is sufficiently clear to establish that the arbitration clause forms part of the contract.

Disputes pending in competent courts may also be referred to arbitration with court approval. This allows the parties to initiate arbitration proceedings at a mutually agreed time and place, provided they adhere to the relevant terms of the arbitration agreement. Such arbitration agreements can be made both before and after the initiation of disputes, even if the disputes are already before the courts.

Article 6 introduces the principle of separability, ensuring that arbitration agreements remain enforceable even if the underlying contract is rendered null, terminated, or rescinded, provided the arbitration agreement itself is valid. Exceptions apply only if the issue involves the incapacity of a party. This principle aligns with the UNCITRAL Model Law, emphasizing that arbitration agreements operate independently from other contractual clauses. Furthermore, disputes related to the nullity, rescission, or termination of a contract will not halt arbitration proceedings, as the arbitral tribunal retains jurisdiction to rule on the validity of the arbitration agreement and associated disputes.

Lastly, Article 8 allows courts to dismiss any lawsuit that falls within the scope of an arbitration agreement if the agreement is brought to their attention before substantive claims or defenses are made unless the court determines the arbitration agreement to be invalid or unworkable. Filing such a claim does not hinder arbitration proceedings or the issuance of an arbitral award.

Arbitration Proceedings Commencement:

Article 27 of the Arbitration Law stipulates that arbitration proceedings begin the day after the arbitral tribunal is fully composed. Additionally, if a notice of request for arbitration is submitted for the purpose of imposing provisional seizure, it is considered equivalent to initiating a legal case.

According to Article 23, parties are allowed to determine the procedures to be followed by the arbitral tribunal. These procedures must adhere to the rules of any arbitration institution or organization, whether domestic or international, that the parties choose.

Furthermore, if a party proceeds with arbitration despite being aware that the agreement’s conditions have not been met or violate the provisions of the Arbitration Law, and does not act to address this within the agreed-upon time limit or within seven days of becoming aware of the issue, that party will be considered to have waived its right to object.

Place of Arbitration:

According to Article 28, the parties involved have the freedom to determine the place of arbitration by mutual agreement. However, if the parties cannot reach an agreement, the arbitral tribunal will decide the place of arbitration, taking into account the circumstances of the case and the convenience of the parties involved. If the parties fail to agree on a location, the arbitral tribunal may hold arbitration hearings as it deems appropriate, ensuring that a summons is issued to the parties well in advance to allow for their participation.

Additionally, arbitration proceedings can now utilize all available means of communication, including modern electronic technologies, to facilitate the arbitration process.

Language of Arbitration:

Typically, arbitration proceedings are conducted in Arabic. However, the arbitration law allows parties the option to select the language for the proceedings and all related aspects. Once the fundamental requirements for arbitration are met, Articles 30 to 36 outline the general arbitration procedure, and it is beneficial to understand the sequence of these steps. The arbitration process begins with the exchange of statements of claims and defenses by the claimant and the respondent.

Article 30 specifies the time period for submitting these statements to the other party and the arbitrator, along with the information they must include. The claimant’s statement should feature their name, address, the name and address of the respondent, a description of the claim’s facts, the points of contention, arguments, and any other relevant matters as per the parties’ agreement. This statement must be delivered within fourteen (14) days from the formation of the arbitral tribunal unless the parties have agreed on a different time period. Similarly, the respondent must respond to the claimant’s statement with a defense, which may include any incidental arguments or counterclaims relevant to the dispute, within fourteen (14) days of receiving the claimant’s statement. The respondent can also raise a claim for offset at any stage of the proceedings if justified by the arbitral tribunal.

Amendments to claims, defenses, or counterclaims are permitted during the arbitration unless the parties agree otherwise, or if the arbitral tribunal deems the delay inappropriate, irrelevant, or beyond its jurisdiction. However, any amendments must respect the principles of fair litigation and the parties’ right to a defense. Parties are allowed to submit any supporting documents with their claims or defenses but must adhere to Article 30 unless otherwise agreed.

If the claimant fails to submit their statement without a valid reason as per Article 30, the arbitral tribunal may terminate the arbitration if it determines that the delay is unjustified and hinders fair resolution or causes injustice to the respondent.

Similarly, if the respondent fails to submit a defense, the arbitral tribunal may proceed as though the respondent has admitted the claimant’s allegations. The same rule applies to the claimant if they fail to respond to a counterclaim. Even if a party fails to meet their obligations, appear at hearings, or provide evidence without valid justification, the arbitral tribunal retains the authority to proceed with arbitration based on the available evidence and relevant facts.

Arbitration proceedings are held in private unless both parties agree otherwise. Article 33 outlines the procedures for hearings and evidence presentation. Unless the parties decide otherwise, the arbitral tribunal has the discretion to determine how evidence and arguments should be presented—either through oral hearings or based on documentary and material evidence. The Arbitration Law allows parties to retain experts and legal representatives, such as attorneys, at their own expense, provided that the expert is impartial and independent.

The arbitral tribunal may seek court assistance to gather evidence, either at its own initiative or at the request of the parties, for the purposes of facilitating the arbitration process.

Arbitral Tribunal

According to Article 1 of the Arbitration Law, an arbitral tribunal refers to a panel of one or more arbitrators assigned to resolve a dispute referred to arbitration. Understanding the composition, responsibilities, and powers of the arbitral tribunal is vital to ensuring a fair and effective arbitration process. Articles 9 to 21 of the Arbitration Law provide comprehensive details regarding the arbitral tribunal’s structure.

The arbitral tribunal may consist of either one or multiple arbitrators, depending on the parties’ agreement. If no such agreement is reached, the tribunal will have three arbitrators appointed by the relevant authority. A key requirement is that the number of arbitrators must always be odd; otherwise, the arbitration is deemed null and void.

Article 10 outlines the qualifications for an arbitrator. Aside from any qualifications mutually agreed upon by the parties, an arbitrator must:

• Not be a minor, incapacitated, or deprived of civil rights due to bankruptcy unless rehabilitated;
• Not have been convicted of any felony or misdemeanor involving dishonesty or immorality, even if rehabilitated;
• Not be a member of the administrative or Board of Trustees of the relevant arbitration institution overseeing the arbitration proceedings.

Arbitrators can be of any nationality or gender unless otherwise restricted by law or mutual agreement. It is essential that arbitrators maintain impartiality during proceedings. They are required to disclose in writing any circumstances that may compromise their impartiality or independence and must notify the parties throughout the arbitration proceedings if such circumstances arise.

The parties have the discretion to decide on the procedures, time, and methods of arbitrator appointment. Article 11 specifies the method of appointment:

1. Single arbitrator scenario: The parties have 15 days from the date of filing the request to agree on the arbitrator. If no agreement is reached, the relevant authority appoints the arbitrator upon a party’s request.
2. Three arbitrator scenario: Each party appoints one arbitrator, and these two arbitrators appoint the third. If they cannot agree on the third arbitrator within 15 days, the relevant authority intervenes to appoint the arbitrator without prejudice to Article 14.

If the authorized arbitration body fails to adhere to the agreed-upon appointment requirements, the parties may request the court to ensure compliance. Court decisions in this regard are final and non-appealable.

When there are multiple arbitrators, decisions are made by majority vote. However, procedural matters are handled by the presiding arbitrator if authorized or by the remaining arbitrators. Article 14 defines the grounds under which an arbitrator can be disqualified or challenged. Disqualification may occur in cases of impartiality or failure to meet agreed qualifications.

According to Article 16, an arbitrator can be dismissed by the relevant authority if they fail to fulfill their duties, cause undue delays, or neglect their obligations despite receiving reasonable notifications. Arbitrators may also be dismissed if they lose capacity, die, or fail to meet the appointment requirements. In the event of dismissal, the parties can appoint a replacement arbitrator.

The competent court retains jurisdiction over arbitration-related matters until the arbitration proceedings are concluded. The court, through its president, may issue interim or precautionary orders upon a request by either the arbitral tribunal or a party.

Article 19 incorporates the Kompetenz-Kompetenz principle, allowing the arbitral tribunal or relevant body to decide on its own jurisdiction and address challenges related to its jurisdiction, including disputes concerning the validity or existence of arbitration agreements. These jurisdictional challenges can be ruled on as preliminary questions or resolved in a final award.

Article 21 grants the arbitral tribunal the power to order interim or precautionary measures to protect evidence, assets, or maintain the status quo while arbitration is ongoing. These measures include:

• Preserving evidence essential to resolving the dispute;
• Safeguarding goods that are part of the subject matter of the dispute;
• Taking measures to ensure that assets may be enforced in a future arbitration award;
• Preventing any action that may harm the arbitration proceedings.

Key arbitral institutions in the UAE:

1. Dubai International Arbitration Centre (DICA)
2. Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC)
3. Ras Al Khaimah Centre for Reconciliation and Commercial Arbitration
4. Ajman Centre for Commercial Conciliation and Arbitration
5. Tahkeem Sharjah International Arbitration Centre

Arbitral Award

Articles 37 to 57 of the Arbitration Law govern the provisions related to the arbitral award. Parties have the option to select the rules of law applicable to the substance of their dispute. If they fail to agree on such rules, the arbitral tribunal will apply the substantive rules of law it considers most closely connected to the dispute’s subject matter. Additionally, the arbitral tribunal may issue interim awards or partial awards regarding certain claims before the final award that resolves the entire dispute is rendered.

A significant feature of the arbitral award is that the parties may reach a mutual settlement before the final award is issued and request that the arbitral tribunal considers the terms of this settlement.

Article 41 specifies the form and content of the arbitral award as follows:

• The arbitral award must be in writing.
• If there is more than one arbitrator, the award must be signed by the majority of the arbitral tribunal members. If a majority cannot sign, the presiding arbitrator may issue the award with dissenting opinions attached.
• The arbitral award must include:
  • Names and addresses of the parties;
  • Names, nationalities, and addresses of the arbitrators;
  • The arbitration agreement;
  • A summary of the parties’ claims, statements, and supporting documents;
  • The operative part of the award and its reasoning if required;
  • The date and location of the award’s issuance.
• The award can be signed by the arbitrators even outside the arbitration’s place, regardless of the signing method—whether in person, electronically, or separately sent.
• The date of the arbitral award’s issuance is the date of the last signature for arbitration with multiple arbitrators or the sole arbitrator’s signature for a sole arbitrator.

Article 53 outlines the grounds for objections against an arbitral award. Objections must be lodged with the court to seek nullification. A party seeking annulment of the arbitral award must prove the following:

• The arbitration agreement was void, nonexistent, or legally invalid as per the parties’ choice or under the current law.
• A party lacked the legal capacity to enter into an arbitration agreement.
• A party was unable to submit a statement of defense due to improper notice of the arbitration or other procedural lapses.
• The arbitral tribunal failed to apply the agreed-upon law to the subject matter.
• The composition of the arbitral tribunal or the appointment of an arbitrator was not made in accordance with the Arbitration Law or the agreement between the parties.
• The arbitration proceedings became void due to being influenced or issued beyond the stipulated period.
• The arbitral award addressed issues outside the arbitration agreement’s scope, unless the separable parts of the award can be isolated and upheld.

The court may also declare the award null on its own initiative if:

• The dispute’s subject matter cannot be resolved through arbitration;
• The arbitral award conflicts with public order or morality.

Article 54 clarifies that the court’s decision to annul an arbitral award is final but may be appealed by cassation. Nullification may terminate the award either partially or fully, depending on the grounds of nullification. However, the arbitration agreement remains effective unless the nullification is based on the absence of such an agreement or similar reasons.

Article 55 sets out the enforcement process for arbitral awards. To enforce an award, a party must submit a request to the president of the court along with the following documents:

• The original award or a certified copy;
• A copy of the arbitration agreement;
• A certified Arabic translation of the award if it was issued in another language;
• A copy of the minutes of the arbitration award’s court deposit.

Once submitted, the president of the court or a designated judge will recognize and order the award’s enforcement within 60 days, unless nullification reasons under Article 53 are presented. Filing a nullification action does not halt enforcement unless the court orders a stay on the enforcement for serious grounds. Parties can also appeal the court’s decision to deny or approve enforcement. The arbitral award, when enforced, will have the same binding effect as a court judgment.

The arbitrator may refuse to issue the final arbitral award if the parties fail to meet their arbitration costs or fees.

Termination of the Arbitration Proceedings

The arbitration proceedings are concluded upon the issuance of the award resolving the dispute. The arbitral tribunal may also terminate proceedings under the following circumstances:

1. The parties consent to terminate arbitration proceedings under the Arbitration Law.
2. The claimant voluntarily abandons the case, but the arbitral tribunal may proceed at the respondent’s request if it deems it important to resolve the dispute.
3. The arbitral tribunal determines that continuing arbitration is unnecessary or no longer feasible for any reason.

The UAE has undertaken significant measures to establish arbitration legislation consistent with the UNCITRAL Model Law to address arbitration-related issues more effectively. The new Arbitration Law (Federal Law No. 6) has replaced previous provisions in the Civil Procedures Law to create a modern, efficient arbitration system. This article highlights key features of the Arbitration Law to inform parties about critical considerations when pursuing arbitration as a dispute resolution mechanism.