Recent amendments to the UAE Arbitration law (September 2023 update)

October 12, 2023by Aparna T Nambissan0

UAE Arbitration Law amendment

With the recent amendments, the UAE cements its position as a preferred hub for arbitration. These changes relate to more stringent measures to ensure the impartiality of an arbitrator, videoconferencing for hearings and engaging of legal experts for representation, among other things. There are new criteria for choosing an arbitrator, and clauses have been introduced ensuring the arbitrators are impartial and more open to suggestions from the clients.

This article provides an in-depth exploration of the recent amendments to the Federal Arbitration Law, offering concise explanations of each modified concept.

Arbitration can be done through virtual means

A notable amendment brought about by the new Law is the integration of technology into arbitration procedures. Under this provision, parties engaged in arbitration can agree on the seat of arbitration either physically or “virtually through modern technology or technical environments.”

This flexibility extends to the Arbitral Tribunal if there is no mutual agreement between the parties. Consequently, Arbitration Institutions are tasked with providing the essential technologies required for conducting arbitration proceedings.

This pivotal change significantly boosts the efficiency of Arbitration Law by enabling parties to utilize online platforms for dispute resolution, particularly in situations where physical attendance at hearings is not feasible.

The Arbitral Tribunal possesses discretionary authority to establish the procedures (Article. 23) and rules of evidence (Article. 33) in cases where no agreement exists among the parties. The sole restriction on this authority is that the rules chosen by the Tribunal must not violate public order. Accordingly, its powers encompass:

  • Determining the admissibility level of evidence presented by the parties and specifying the time, method, and format for the exchange of this evidence.
  • Deciding whether to conduct oral hearings for evidence submission and at which stage of the proceedings these hearings should take place.

Sessions shall be private, oral hearings are optional

Further to explain regarding the arbitration hearings and proceedings, the new Law amends the following from that of the Law:

  • By default, unless otherwise agreed upon by the parties, arbitration hearings will be conducted in private sessions.
  • The Arbitral Tribunal has the discretion to decide whether to conduct oral hearings for evidence presentation, oral arguments, or proceed based on documents and other materials. If requested by a party, the Tribunal can schedule hearings at an appropriate stage of the proceedings.
  • The Arbitral Tribunal must provide advance notice to the parties regarding the scheduled hearing dates, allowing sufficient time before the specified date as determined by the Tribunal.

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Parties can appoint legal experts; the tribunal is more empowered

  • Parties have the option, at their own expense, to engage legal experts, lawyers, or other representatives to advocate on their behalf before the Arbitral Tribunal. The Tribunal may request documentation verifying the capacity of any party’s representative, following a form it establishes.
  • Every session held by the Arbitral Tribunal is summarized and documented, with a copy provided to each party involved.
  • Witness hearings, including expert testimonies, will adhere to the prevailing legislation in the country unless otherwise agreed upon by the parties.
  • If the applicable law lacks specific rules of evidence to decide the dispute, the Arbitral Tribunal has discretionary authority to establish evidence rules, provided they do not conflict with public order.
  • The Arbitral Tribunal is empowered to assess the admissibility and relevance of evidence presented by any party concerning a fact or expert opinion. It can also determine the time, method, and format for exchanging such evidence among the parties and its presentation before the Tribunal.

Requirements to be met by the arbitrator

  1. The arbitrator, aside from conditions agreed upon by the parties, must meet specific requirements:
    1. Must be a mentally competent adult without legal restrictions due to bankruptcy, convictions, or moral misconduct.
    2. Cannot be part of the management of the arbitration institution overseeing cases in the State.
    3. Should maintain impartiality, integrity, and independence, avoiding direct relationships that might compromise these qualities with any party involved.
  2. The arbitrator’s gender or nationality is not mandatory unless agreed upon by parties or stipulated by the law.
  3. When nominated, the arbitrator must disclose any factors raising doubts about impartiality or independence. If such concerns arise during the proceedings, the arbitrator must promptly inform the parties and fellow arbitrators, unless previously disclosed.

Article 10 BIS: Conditions ensuring the arbitrator’s impartiality

The Arbitration Law typically prohibits the appointment of arbitrators holding roles in the Arbitration Institution’s management. However, a new provision, Article 10 BIS, outlines specific conditions for such appointments. These conditions include:

  1. The rules of the Arbitration Institution must not forbid such appointments and should guarantee the separation of roles and impartiality to prevent conflicts of interest.
  2. The arbitrator shall not be a member or head of the Arbitral Tribunal.
  3. The arbitrator must provide a written undertaking to abstain from exploiting their position, participating in or influencing the arbitration proceedings in any manner during their term.
  4. The Arbitration Institution must establish a secure reporting mechanism for any violations committed.
  5. The Arbitration Institution must establish a governance system ensuring the arbitrator’s impartiality and preventing conflicts of interest. This system should address appointment, dismissal, and recusal mechanisms based on specified conditions, ensuring fairness and equal treatment among all arbitrators.
  6. The involved parties must provide written consent, acknowledging the arbitrator’s position in relevant institution boards or regulatory bodies. Their consent indicates no objections to the appointment.
  7. The arbitrator can be involved in a maximum of five cases per year.

Failure to fulfill or breaches of these conditions could render the Arbitral Award invalid. Additionally, parties may be unable to claim civil damages against both the Institution and the arbitrator in such cases.

UAE: A favorable destination for resolving disputes through arbitration

The new amendments introduced by the Federal Decree-Law No. 15 of 2023 mark a significant leap forward in the UAE’s arbitration landscape. The integration of modern technology into arbitration procedures, allowing both physical and virtual proceedings, enhances the efficiency of dispute resolution, particularly in situations where physical attendance is challenging.

The Arbitral Tribunal’s discretionary powers in establishing procedures and evidence rules, while respecting public order, offer a tailored approach to each case. This flexibility ensures a fair and transparent arbitration process for all parties involved.

Moreover, the updated requirements for arbitrators prioritize their independence and impartiality. The prohibition on arbitrators holding management roles in arbitration institutions is now nuanced, allowing such appointments under strict conditions that safeguard fairness and prevent conflicts of interest. Mandating the written consent of parties and a cap on the number of cases an arbitrator can handle further ensures the integrity of the arbitration process.

These comprehensive changes not only align UAE’s arbitration practices with international standards but also strengthen the country’s position as a hub for international dispute resolution. The clear regulations and technological adaptability empower businesses and individuals alike, fostering trust in the UAE’s arbitration system. As the UAE continues to enhance its legal framework, it solidifies its reputation as a favorable destination for resolving disputes through arbitration.

Important Dates and Articles

The new Federal Decree-Law No. 15 of 2023 was enforced on the 16th of September 2023, introducing evolving developments in the Federal Arbitration Law No. 6 of 2018 (the “Law”). The changes made in the Law in Articles 10, 23, 28, and 33 relate to the conditions to be met by arbitrations, the seat of arbitration, and the arbitration procedures and hearings. The New Law further added Article 10 bis which is the condition for appointing an arbitrator from among members of the supervisory or regulatory authorities in the Competent Arbitration Institution.

 

At ATB Legal, our dedicated team comprises experts in the realm of arbitration. Our services for arbitral disputes opens avenues to enhance your business endeavors. Our tailored legal counsel offers innovative and diverse strategies, contributing significantly to your business achievements.

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ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Aparna T Nambissan

Aparna is a legal consultant at ATB legal. She holds a Bachelor’s degree in Law and Commerce from Karnataka State Law University. She is enrolled with the Bar Council of Karnataka.

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