Recent update of the UAE Federal Arbitration Law

Fatima Balfaqeeh
Balfaqeeh Advocates & Legal Consultants, Abu Dhabi
fatima@balfaqeehlaw.com

Arbitration in the UAE had a humble yet ambitious start. While arbitration cases date back to 1951,[1] the formal legislative framework was established in 1992 through the Federal Civil Procedure Code ('CPC').[2] The CPC provided general guidelines for arbitration procedure in a generic manner, those articles provided a pathway to providing arbitration the legislative support to operate but didn’t keep up with the complexity and the scale of the disputes that was arising for an ever changing and growing economy of the UAE. As arbitration cases became more complex, it became evident that these rules were no longer sufficient or aligned with the UAE's financial and economic aspirations.

In 2018, the UAE issued its first standalone federal arbitration law (the 'Federal Arbitration Law'), propelling Dubai into the top 10 preferred arbitration seats globally.[3] The Federal Arbitration Law received consistent support from the UAE judicial system by way of having consistent enforcement judgements that are in line with international best practice.[4]

The Federal Arbitration Law largely adopts the UNCITRAL Model Law, with a few key deviations. Notable among these is Article 4 that deals with the 'legal capacity to conclude an arbitration agreement' and requires individuals who enter into or amend arbitration agreements to have 'special authority'. Additionally, Article 22, addressing intervention and joinder of new parties, empowers the tribunal to join a third party either upon request of a party, or the joining party provisional to the joining party being a party of the arbitration agreement. However, like the UNICITRAL Model Law, the consolidation of arbitration proceedings is not explicitly mentioned in the Federal Arbitration Law.

The Federal Arbitration Law was amended on 15 September 2023 by Federal Decree-Law No. 15/2023. The amendments replaced Articles 10, 23, 28, and 33 and added Article 10 bis.

Arbitrator qualifications

Article 10 (Requirements to be Met by the Arbitrator) outlines certain qualifications required of every arbitrator, such as the absence of civil or criminal convictions, and prohibits arbitrators from holding certain positions within the arbitration institution administering the case. It emphasises the arbitrator's impartiality and independence, requiring written declarations to address any doubts that may arise during proceedings.

The repeated Article 10 introduces significant changes, establishing seven requirements for arbitrators holding positions in supervisory or controlling bodies of the competent arbitration institution administering the case. These conditions include explicit approval by the arbitration institution, a robust governance structure, and a written declaration by the parties acknowledging the arbitrator's position. Any violation results in the invalidity of the arbitral award, with parties granted the right to seek civil compensation.

This marks a robust position by the UAE to safeguard the integrity of arbitration proceedings, governance, and transparency.

Confidentiality

In Article 33 (Arbitral Proceedings and Hearings) the legislator provided further clarifications on the scope of confidentiality in arbitral proceedings. Prior to the 2023 amendments, the Federal Arbitration Law provided that hearings were confidential, whereas now the legislator has extended the scope of the confidentiality to the entire arbitral proceedings in line with international best practice. 

Fine-tuning arbitration proceedings

Article 28 (Arbitral Proceedings; Place of Arbitration) allows the parties to agree on the conduct, location, and virtual location of proceedings. In the absence of agreement, the tribunal determines the place, considering the best interests of the case. The article emphasises the use of technological means for arbitral proceedings, ensuring equal access and a level playing field for all parties. Specifically, the amendments confirm the right of the parties to conduct the arbitration virtually and even requires arbitration bodies to provide the necessary technology in order for arbitration proceedings to meet the required technological standards, putting the UAE at the forefront of jurisdictions that promote the conduct of arbitration using efficient and advanced means.

Article 33 (Arbitral Proceedings and Hearings) provides guidance on the rights of the parties, the authority of the Tribunal, and the efficient conduct of proceedings. This article grants the tribunal the flexibility and discretion to ensure just and efficient proceedings in line with international best practice, including determining if the proceedings will be document basis only or would requirement oral pleadings, determination of rules of evidence, determination of the use of experts as well as conducting the proceedings virtually on in person.

Conclusion

In conclusion, these amendments to the Federal Arbitration Law aim to shift and impact arbitration practices in the UAE. The application by all parties, including arbitral institutions, arbitrators, parties, and the courts, will reveal the full extent of these changes.

[1] See The Sheikh of Abu Dhabi Arbitration between the British oil company Petroleum Development (Trucial Coast Ltd) and the Sheikh of Abu Dhabi of 1951.
[2] See Articles 203-218 of the UAE Federal Civil Procedures Code No. 11 of 1992 and its amendments.
[3] See The Queen Mary University of London 2021 International Arbitration Survey.
[4] Dubai Court of Cassation, Labour Case No. 55/2020 (4 Feb 2020); and Dubai Court of Cassation, Commercial Case No. 692/2020 (23 Sept 2020).