When considering the advantages of placing an arbitration clause into contracts as the preferred and agreed method of dispute resolution in UAE, some of the considerations are as follows:
- In accordance with the Dubai International Arbitration Centre Arbitration Rules 2007 ('DIAC Rules'), if the parties to a dispute agree to refer the dispute to arbitration, no claim may be filed before the courts in the alternative. However, if one of the parties files a claim (irrespective of the arbitration provision) and the other party does not object to the filing of the claim at the first hearing, the claim may be considered, and in such case, the arbitration provision would be deemed cancelled.
- The proceedings in an arbitration are usually confidential unless the parties agree otherwise.
- The Tribunal has the power, on the application of any party or of its own motion, to extend any time-limit provided by the arbitration agreement or the DIAC Rules (this is if the Dubai International Arbitration Centre ('DIAC') is chosen) relating to the conduct of the arbitration. This can happen as long as the Tribunal has given the parties a reasonable opportunity to state their views.
- No agreement for arbitration is valid unless it is evidenced in writing.
- Depending on the rules of the chosen arbitration centre, arbitration proceedings can be conducted in any language chosen by the parties to an agreement. In this regard, both the DIFC- LCIA and DIAC permit this.
- It is generally the case that parties to an arbitration usually have more power to agree between themselves, the administrative aspects of an arbitration. For example, by way of mutual agreement of the parties or stipulation within a contract, the parties can decide on the number of arbitrators that there should be constituting a tribunal. Further, the arbitrator can be nominated by each party and agreed upon. In the event that there is a dispute, the arbitration centre would decide.
- The ease of enforcement of an arbitration award (as compared to a court judgment) in foreign jurisdictions can often be a deciding factor in electing arbitration as the dispute resolution mechanism in contracts. The UAE is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the "New York Convention") which, generally speaking, makes provision for the enforcement of arbitral awards made in member states enforceable in other member states. This is particularly relevant where assets are located in other/a number of jurisdictions.
Originally published 26 June 2019
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.