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UAE law on arbitration in commercial disputes may be approved this year after 11 years of anticipation

ANALYSIS: Al Emarat Al Yaoum (The Emirates Today newspaper) recently reported that the UAE's Federal National Council had forwarded a draft of the Federal Law on Arbitration in Commercial Disputes to the Financial, Economic and Industrial Affairs Committee, so that it may be presented for parliamentary discussion and approval before the end of 2017.13 Jul 2017

The draft law, which has been said to be imminent since the UAE acceded to the 1958 New York Convention in 2006, is believed to be based on the UNCITRAL Model Law.

A UNCITRAL-based arbitration law would modernise the legal framework currently governing arbitrations seated in the UAE and bring it in line with international standards. Arbitral proceedings seated in the UAE are currently governed by a 15 article arbitration chapter from the Federal Civil Procedure Law which is not based on the UNCITRAL Model Law. A new Federal Arbitration Law would presumably repeal the 15 articles in question.

According to the Emirates Today report, the new law encompasses 61 articles, 25 more than the UNCITRAL Model Law. Other reports across the years have previously noted that the draft law may also incorporate elements from the Egyptian Arbitration Law.

The Emirates Today report provides limited detail on the contents of the draft law, but the most interesting reported articles are:

  • Article 14 of the draft law, which appears to be based on the Model Law, and deals with the grounds for the dismissal of arbitrators. Among other stipulations, the Article reportedly provides that an arbitrator may be challenged only if circumstances give rise to 'justifiable doubts' as to his or her impartiality or independence, or if he or she does not possess qualification agreed to by the parties. The justifiable doubts standard appears to be adopted from the Model Law. If this is indeed the case, it will be interesting to see how the introduction of the standard of 'justifiable doubts' fits with and may aid in limiting the scope of the UAE's recently amended Article 257 of UAE Penal Code. These changes expose arbitrators and experts to potential temporary imprisonment if they are deemed to have acted 'in contravention of the requirements of the duty of neutrality and integrity'. Neutrality and integrity are not defined by law, and there is little guidance in jurisprudence on how these are defined within the UAE legal framework. Accordingly, it remains to be seen whether the draft law, among other things, introduces a definition of neutrality and integrity or impartiality and bias to address some of the controversy caused by the recent changes to the Penal Code.
  • Article 34, which, according to the report, attempts to redress the issue of oath swearing in the setting of an arbitration. Currently, the UAE Federal Civil Procedures Code requires that all witnesses swear an oath before giving evidence. According to the new article, while witnesses are still to be placed under oath before presenting evidence the oath is to be ‘in accordance with the formula prescribed by the tribunal’. This would be a welcome change, limiting the scope for challenging awards on technicalities.
  • Article 53(a), which according to the report provides for seven grounds for the annulment of arbitral awards, appears to be based heavily on Article 53 of the Egyptian Arbitration Law. According to the newspaper article, article 53(b) of the draft also provides the a court may, in its own discretion, refuse the recognition and enforcement of the award if the subject-matter of the dispute is not capable of settlement by arbitration under the law of this state, and if the recognition or enforcement of the award would be contrary to the public policy of the UAE. These grounds are the same grounds provided for in the Model Law.

The enactment of a new federal law on arbitration would be welcome news for arbitration in the UAE. This would go a long way to modernise the law governing arbitrations seated in the UAE, a jurisdiction which is already seen as a regional arbitration hub.

The enactment of a new Model Law-based arbitration law may also lift some of the uncertainty caused by recent changes to the UAE's Penal Code, although it remains to be seen whether the draft law introduces a definition of neutrality and integrity/impartiality and bias that is needed after the changes to the penal law.

Maria Mazzawi is an arbitration expert with Pinsent Masons, the law firm behind Out-Law.com