New law will have a positive impact on both domestic and foreign businesses.
The UAE has unveiled the long-anticipated new ‘Federal
Arbitration Law’ that will go a long way to consolidating the country’s
position as the most attractive hub for arbitration in the Middle East and
North Africa region, legal experts said.
The new legislation issued by President His Highness Sheikh Khalifa bin Zayed Al Nahyan repeals the former law governing arbitration in the UAE.
“The much-awaited self-standing arbitration law of 61 articles, which is based on the United Nations Commission on International Trade Law [UNCITRAL] Model Law, will significantly revamp UAE arbitration law. The new law is expected to build the UAE’s reputation as a preferred seat for international arbitration in the region since it is aligned with international best practices and standards,” said Al Tamimi & Company news alert.
“As one of the most significant and anticipated law reforms of recent times, the Federal Law No. 6 of 2018 on Arbitration in Commercial Disputes is welcome news for the UAE and was greeted by businesses and the international arbitration community,” according to Maria Mazzawi and Bill Smith, arbitration experts at Pinsent Masons, the law firm behind Out-Law.com.
“This new law will have a positive impact on both domestic and foreign businesses, while encouraging even more foreign direct investment into the UAE,” said Mazzawi.
“Businesses already operating in the region will benefit from further reassurance should any disputes arise as the new law provides greater certainty of outcome within a recognised international framework for conflict resolution. The new law will come into effect 1 month after it is published in the Official Gazette, which is expected to happen shortly,” said Smith.
“Thought to be imminent since the UAE acceded to the 1958 New York Convention in 2006, the Federal Arbitration Law is based on the internationally accepted UNCITRAL Model Law, which has been adopted in 111 jurisdictions across 80 states,” Smith commented in a newsletter.
He said the countries that have adopted the ‘Model Law’ are commonly perceived to be arbitration-friendly jurisdictions.
“The modernisation of the law governing arbitration in the UAE and its harmonisation with international standards and the New York Convention, to which the UAE is a signatory, will be greeted enthusiastically by businesses and the international arbitration community,” legal experts said.
The new arbitration law is “a very exciting development” for the whole of the UAE. “While the state has developed a reputation as the pre-eminent seat in the Middle East for arbitration, it did risk falling behind other nations who have introduced comprehensive new laws. That issue has now been addressed and I am sure the new law will help cement the UAE’s position in the global arbitration market,” said Craig Shepherd, head of the Global Contentious Construction Practice at Herbert Smith Freehills and head of the Dubai Dispute Resolution team, in a legal note.
The UAE Minister of Economy Sultan bin Saeed Al Mansouri will coordinate with the arbitration institutions in the UAE in order to issue a charter on the professional conduct of arbitrators.
Major changes in the new law compared to the previous law include the recognition of arbitration agreements made by modern communication methods, such as e-mail as well as the recognition of the competence-competence principle with arbitrators given the power to decide their own jurisdiction.
The law also permits preliminary orders and interim measures and ensures that enforcement is not automatically stopped if there is a challenge to an award. Under the new law, arbitrators are now empowered to award costs. There is a provision made for joinder of parties to arbitral proceedings. Under the new law, arbitral proceedings and the award are confidential unless the parties agree otherwise.