The rapid change in the economy reflected in the fast proceeding of the New Arbitration Law
Following globalization, fast-changing market dynamics and in support of the country’s efforts to always be an exhaustive global groundbreaker that attracts foreign investors, multinational organizations, business leaders and innovators, the UAE has amended existing laws and introduced new ones to facilitate and speed up the process in resolving disputes based on international practices.
Recognized as the multinational business hub in the region, the UAE with the introduction of the New Arbitration Law is taking a step forward to establishing a fast, more efficient and reliable dispute resolution method.
The introduction of the Federal Law No. 6 of 2018 on Arbitration in the UAE (The New Arbitration Law) has enhanced the UAE’s place as a preferred destination for arbitral seating in the MENA region, which in turn has a positive impact on the overall economic advancement of the county.
The New Arbitration Law is mostly based on the UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006. The article 60 of the new law canceled the articles from 203 to 218 concerning Arbitration from the UAE Civil Procedures Law No. 11 of 1992.
Below is a brief summary of the key points of the new law:
- Scope of implementation
Article No. 2 of the New Arbitration Law listed the situations where the new law shall be applicable:
- The new law will apply on any arbitration conducted in the State, unless the parties have agreed that their arbitration should be governed by another law, provided that such convention law does not conflict the public order and the public morals of the State.
- Any international commercial arbitration conducted abroad, which the parties to the same have agreed to subject their arbitration to the provisions of the new law.
- Any arbitration arising from a dispute related to a legal relationship, whether contractual or not contractual, and which is governed by State’s applicable laws, except those exempted by a special provision.
Also, Article 59 of the New Arbitration Law applied the provisions of the new law on every ongoing arbitration at the time this law came into force, also this article confirmed that all proceedings which were conducted under any prior legislation will be considered legal.
- Agreement to Arbitrate
Articles 4,5,6,7 and 8 of the New Arbitration Law dealt with the issue of the Arbitration Agreement.
Article 4 stated that Arbitration Agreement shall only be concluded by a natural person which has the legal capacity and the disposition capacity of his rights, or by the legal representative of the juridical person.
The capacity issue is a very important matter and it is advisable that when entering into an arbitration agreement the relevant parties should examine the capacity issue and make sure that this issue is in conformity with the legal requirements of the new law.
Article 7 of the New Arbitration Law requires that any Arbitration Agreement should be in writing, also the same article listed four scenarios whereby the writing condition is considered fulfilled.
The New Arbitration Law introduced the Kompetenz-kompetenz rule in article 19 where it was stated that the arbitral Tribunal shall have the ability to rule on the matter of whether it has jurisdiction or not before intervention by the competent courts. The Arbitral tribunal may decide on its jurisdiction matter through a preliminary decision and in that case any party of the dispute shall have the right within 15 days from the date on which the preliminary decision was notified to the concerned party to request the court to rule in this matter and the court should rule in this request within 30 days from the date on which the request was filed.
- Language of the Arbitration
The New Arbitration Law provides that the arbitration proceedings should be conducted in the Arabic language unless agreed otherwise by the parties as sated in Article 29 of the new law.
- Interim Measures
The New Arbitration Law granted the arbitral tribunals the right issue interim measures, such as orders to protect evidence which is substantial for the dispute also to take all measurements necessary to preserve goods which are part of the subject of the dispute. These powers given to the tribunal were detailed in Article 21 of the new law.
- The Award
As per article 41 of the New Arbitration Law, it is required that the arbitral award should be issued in writing. Also, in case the arbitral proceedings were conducted by more than one arbitrator then the award should be issued by the majority of the arbitrators; in case the arbitrators opinions differs than the presiding arbitrator shall issue, unless the Parties agree otherwise.
The award must be signed by all arbitrators, and in case any of them refuses to sign it, then the reason for such refusal should be stated, and the award will be valid if signed by the majority of the Arbitrators.
The award must be reasoned unless the parties agreed otherwise, or the applicable law to the arbitration proceedings does not require to mention the award’s reasons.
The award must include the names and addresses of the Parties, the names, nationalities and addresses of the arbitrators, the wording of the Arbitration Agreement, a summary of the Parties’ statements and supporting documents, the order and the award reasons if mentioning the same was required and the date and place of the award.
- Nullification of an Arbitral Award
Article No. 53 of the New Arbitration Law, listed the reasons and grounds which can cause the nullification of the arbitral award as follows:
- If there was no Arbitration Agreement, or the arbitration agreement was invalid, or expired as per the law which the parties agreed to apply, or as per the new law if there was no agreement by the parties to an applicable law.
- In case any of the parties, at the time of entering into the Arbitration Agreement had no capacity in accordance with the laws governing his/her capacity.
- If the party did not have the capacity of his/her rights’ disposition.
- If a party did not have the chance to provide his/her defense due to being incorrectly notified with the appointment of the arbitrator or with the arbitration proceedings, or due to the Tribunal’s default on the fundamentals of the judicial process, or for any reason beyond his/her control.
- If the award excluded the implementation of the law chosen by the parties as the substantive
- If the arbitral tribunal constitution, or the appointment of the sole arbitrator processes were in breach to the provisions of the new law or to the agreement of the parties.
- If the award contained decisions about issues which were not included in the arbitration agreement or the award went beyond the limits of the arbitration agreement.
Article 54 of the New Arbitration Law sets a time limit of 30 days from the day on which the party claiming award annulment gets notified with the award to file for nullification request.
In conclusion and based on the key points listed above, it is noticeable that the new arbitration law is a giant leap towards having a unique and professional legal framework for arbitration in the UAE which will result in much more productive dispute resolution process.