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Challenge and Enforcement

Challenge and Enforcement

CHALLENGING THE ARBITRATION AWARD

The international framework The UK (which comprises, England, Wales, Scotland and Northern Ireland) is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“the New York Convention”) and as a result will recognize and enforce awards made in other contracting states. Given the number of signatory nations to the New York Convention, in most instances the enforcement of foreign arbitral awards will be governed by the New York Convention. As a result and while there are other ways to enforce foreign arbitral awards apart from the New York Convention, this guide will deal solely with enforcement under the New York Convention.

Recognition and enforcement The New York Convention and the Act distinguish between the recognition and enforcement of arbitral awards.

As far as recognition is concerned (i.e. treating a “foreign” award as if it were a domestic award), the Act provides that an arbitration award made in the territory of a state (other than the United Kingdom) which is a party to the New York Convention shall be recognised as binding on the parties to the arbitration. That means it can be relied on by way of a defence, set-off or otherwise in any legal proceedings in England and Wales. As regards enforcement (i.e. treating a “foreign” award as if it were a domestic judgement), the court may give permission for judgment to be entered in terms of the award. Where this is done, the award may be enforced in the same manner as an English court judgment.

The law governing arbitration in England and Wales The Arbitration Act 1996 (the “Act”) regulates matters relating to arbitration  which arise in England and Wales, whether or not the seat (place) of the arbitration is in England. So if a party wishes to enforce a foreign arbitral award in England and Wales, they need to have regard to the Act. The Act gives effect to and implements the New York Convention.

ENFORCEMENT OF ARBITRATION AWARDS IN THE UAE UNDER THE NEW ARBITRATION LAW 

The Arbitration Law will apply to:

All arbitration proceedings conducted in the UAE unless parties choose another law provided that this other law does not contravene the UAE public order and morals;

  • Arbitral proceedings conducted abroad, if parties so agree;
  • Any arbitration arising from a  legal relationship governed by the UAE law, unless excluded by law. The Arabic text of this provision leaves some doubts as to whether its effect is to make the law applicable to all foreign arbitral proceeding where substantive UAE law is applied.
  • Notably, there are two free zones in the UAE that have their own arbitration regimes – the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). The general consensus in the legal community is that the law intends to preserve the freedom of the parties to choose these autonomous arbitration regimes by agreement, but it could have been clearer in expressing this intention.  

The Arbitration Law shall apply to any arbitration proceedings existing at the date the law enters into force. This means that any awards enforced after 16 June 2018 (issued both before and after the entry of the law into force) should be enforced under the new procedure.

Challenging/Appealing awards

The Arbitration Law introduces the concept of commencing a fresh action to challenge the arbitration awards. Previously, the UAE courts have found that a party wishing to set aside the award issued in the UAE could only do so if the successful party was seeking ratification and enforcement in the local courts. The defendant could not initiate an independent challenge in the local courts.

Now any party can challenge the award before local courts by starting a fresh action for setting aside the award or in response to the claimant’s application to ratify the award. Article 53(1) sets out the grounds for setting aside the award, some of which are similar to the grounds for setting aside under the UNCITRAL Model Law on International Commercial Arbitration but do not entirely mirror it. For example, the ground under Article 53(1)(e) is that the award “did not apply the law which the arbitration parties have agreed to apply to the subject matter of the dispute.” This may be interpreted as a permission for the UAE courts to set aside the award due to an error of law. Appeals of arbitral awards on the point of law are permitted in certain jurisdictions.

For example, they are allowed in England on limited grounds, but in practice such appeals are rarely made and are even rarer to succeed.1 In absence of similar established practice in the UAE courts, this ground of appeal can create obstacles for enforcement. It remains to be seen how the UAE courts will interpret this provision.

Procedurally, the action for setting aside the award must be filed with the Court of Appeal that has jurisdiction over the matter or as agreed by the parties, and it must be brought within 30 days from the date of serving the award on the party seeking the challenge (Article 54(2)). Any waiver of the right to apply for setting aside of the award will not be effective. In addition, the new action for setting aside has a number of helpful features:

  • The decision of the court to set aside an award is final and can only be appealed in cassation courts;
  • The award can be set aside in whole or in part;
  • The arbitration agreement remains in force after the award is set aside (unless the ground for setting aside is a defect in the arbitration agreement);
  • The court can grant a period of up to 60 days to the arbitral tribunal to rectify the form of the award (but not the substance) if this will eliminate the grounds for setting aside;
  • The action to set aside does not stay enforcement, although such a stay can be ordered by court upon a good cause. A stay can be accompanied by an order to provide security.

Ratifying and enforcing awards

The new Arbitration Law simplifies the process for ratification and enforcement of the awards that are governed by the Arbitration Law. Instead of filing a substantive claim as used to be the case, the claimant now must file the following documents with the chief justice of the Court of Appeal in the relevant Emirate: (i) the original award (or certified copy of it) accompanied by certified Arabic translation where award is not in Arabic; (ii) a copy of the arbitration agreement and (iii) a copy of the minutes of lodging the award in court.

According to Article 55, the court must issue an order for ratification and enforcement of the award within 60 days from submission of the application for enforcement unless the court finds a reason to set aside the award upon any of the grounds under Article 53(1).

 

 

 

 

 

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