UAE repeals arbitrators' 'objectivity and integrity' penalties

For the last two years there has been significant concern amongst arbitrators some of whom have been reluctant to accept appointments in the UAE for fear of being found in breach of the previous wording of Article 257 of the UAE Penal Code, according to construction disputes and arbitration expert Nesreen Osman of Pinsent Masons, the law firm behind Out-Law.com.

The previous wording, which came into force in October 2016, provided that any person "acting in the capacity of an arbitrator, expert, translator or investigator appointed by an administrative or judicial authority or elected by the parties" risked imprisonment where that person "issues a decision, gives an opinion, presents a report or a case or establishes a fact in favour or against a person, contrary to the duty of objectivity and integrity".

This has now been amended by Federal Law 24 of 2018, which came into force last month, according to an unofficial translation published by the Dubai International Financial Centre (DIFC) hub of the London Court of International Arbitration (LCIA).

The new wording limits application of the penalty to experts, translators or investigators appointed by a judicial authority on a civil or criminal case or by an administrative authority. It also sets out a clearer test for when the potential penalties will apply, restricting them to circumstances in which the individual "confirms a matter contrary to what is true and misrepresents that matter while knowing the truth about it".

"As had been widely reported, the previous version of Article 257  caused much concern for arbitrators and experts in the UAE," said Nesreen Osman of Pinsent Masons. "In some instances, arbitrators were hesitant to accept appointments in the UAE for fear of the serious consequences of being alleged or found to have issued a decision which was 'contrary to the duty of objectivity and integrity'."

"News of this amendment will be greatly welcomed by the arbitration community in the UAE which, together with the recent Arbitration Law, will serve to further increase confidence in the UAE arbitration regime," she said.

The UAE has also amended Article 236 of the Penal Code to bring arbitrators and experts under the definition of 'public servant'. Osman said that, when read in conjunction with Articles 234 and 237 of the Penal Code, this change "brings arbitrators within the ambit of the anti-bribery and anti-corruption rules applicable to all public servants'.

A new UAE arbitration law, Federal Law No. 6 of 2018 on Arbitration in Commercial Disputes, came into force in June 2018. The law, which is based on the internationally accepted UNCITRAL Model Law, expressly repealed the former law governing arbitration in the UAE, which dated back to 1992.

Earlier this year, arbitration expert Bill Smith of Pinsent Masons welcomed the new law, which he said would "further strengthen the UAE's position as a regional hub for arbitration".