Enforcement of Arbitral Awards in the UAE – A Step-By-Step Guide Under Federal Law No.6 of 2018

February 2, 2024by Sudha Sampath0

A comprehensive, step-by-step approach to navigating the arbitral enforcement process in the UAE. The law makes a clear distinction between domestic and international arbitrations, significantly influencing the procedures associated with the enforceability of arbitral awards for domestic arbitrations and for international arbitrations.

Introduction

Arbitration in the United Arab Emirates (UAE) is a widely favoured method for resolving disputes, offering a more efficient and flexible alternative to traditional litigation. However, the true test of arbitration’s effectiveness lies in the successful enforcement of arbitral awards. This article aims to provide a comprehensive, step-by-step approach to navigating the enforcement process in the UAE, with a focus on the provisions outlined in Federal Law No.6 of 2018.

Extent of Application of the Federal Arbitration Law in Enforcement

The applicability of Federal Law No. 6 of 2018 is comprehensive, encompassing both ongoing and prospective arbitration proceedings, unless the parties have explicitly opted out of its provisions. Additionally, the law makes a clear distinction between domestic and international arbitrations. An arbitration is deemed international if either the parties’ headquarters are situated in two or more countries at the time of agreement, or the location of the arbitration’s seat, or the subject matter of the dispute, is outside the UAE. This differentiation significantly influences the procedures associated with the enforceability of arbitration awards arising from domestic arbitrations compared to those originating from international arbitrations. A key advancement brought about by Federal Law No. 6/2018 is the introduction of a streamlined procedure for the enforcement of arbitration awards.

Practical Insights into the Enforcement Process

To begin the enforcement proceedings, it is important to initiate the ratification process. Practical steps involve submitting the arbitral award to the competent local authority, typically the UAE Court of Appeal having the supervisory jurisdiction over the arbitral tribunal as outlined in Article 52 of the Federal Law No.6 of 2018. Once the award is ratified by the Court of Appeal, enforcement can be carried out through local enforcement courts.

Article 55 of the Federal Law No.6 of 2018 introduces a simplified and expedited procedure for the recognition and enforcement of arbitral awards. Despite the streamlined procedural requirements, it’s essential to note that UAE courts often approach these requirements with formality, more so than the courts in England and Wales. Therefore, parties are strongly advised to ensure compliance with these requirements before seeking recognition and enforcement.

It’s important to highlight that Federal Law No.6 of 2018 acknowledges the concept of partial enforcement. It permits the remittance of an award to the arbitrator for clerical corrections as a preventive measure against nullification (Article 54). This provision encompasses rectifying irregularities related to the signing of an award, as specified in Article 41(3) of Federal Law No.6 of 2018.

With the UAE’s adherence to the New York Convention, foreign awards may be recognized and enforced within the country, provided the award originates from a Convention-ratifying nation. UAE courts typically apply New York Convention provisions when enforcing foreign arbitral awards. Recent regulations have streamlined the process for recognizing and enforcing foreign arbitral awards, making it quicker and more straightforward than the enforcement of local awards. The UAE courts, especially those in Dubai, generally show a favorable disposition towards award enforcement.

Time Frame for Enforcement

There is no limitation period prescribed for the enforcement of the arbitration award. The ratified award is enforced by submitting an application to the Execution Court, and the enforcement process mirrors that of a court judgment. Although Federal Law No.6 of 2018 provides that an order recognizing the arbitral award and facilitating its enforcement be passed within sixty (60) days from the filing date of the recognition and enforcement request, it’s crucial to note that the entire ratification and enforcement phase, including potential appeals, can extend beyond 18 (eighteen) months, making it a prolonged process following the already protracted arbitration proceedings.

Costs for enforcing the Arbitral Awards

The expenses associated with enforcing awards vary based on the court where the enforcement proceedings are initiated. It’s important to note that these costs, except for court fees, cannot be reclaimed. The fee structure varies slightly in different Emirates. For example, the fee in Dubai Courts is 2% (two percent) of the claim amount with a minimum of AED 200 (Dirhams Two Hundred only) and up to a maximum of AED 5,000 (Dirhams Five Thousand only), whereas in Abu Dhabi, the fee is 2% (two percent) of the claim amount with a minimum of AED 100 (Dirhams One Hundred only) and up to a maximum of AED 3,000 (Dirhams Five Thousand only).

  Resistance during execution is not uncommon. Navigating the ratification and execution processes demands a nuanced understanding of local laws, collaboration with authorities, and the ability to address challenges effectively.

Procedure for Enforcement

A party intending to enforce an arbitral award must submit a request for the acknowledgment of the arbitral award and the issuance of an enforcement order to the president of the Court. The request should be accompanied by the following:

  • The original award or a properly certified copy.
  • A copy of the Arbitration Agreement.
  • A certified Arabic translation of the arbitral award, if it is in a language other than Arabic.
  • A copy of the minutes documenting the deposit of the award with the Court.

This application is directed to the competent Court of Appeal, excluding the Court of First Instance from the enforcement proceedings. The Court of Appeal is mandated to render a decision on the application within 60 (sixty) days, according to Article 55 (1) of Federal Law No.6 of 2018. This timeframe may be extended only if one or more grounds for nullifying the arbitral award, as specified in Article 53 (1) of Federal Law No.6 of 2018 are substantiated.

The ruling of the Court of Appeal is subject to appeal to the Court of Cassation within 30 (thirty) days, as stipulated in Article 57 of Federal Law No.6 of 2018. Following the procedural guidelines outlined in the Civil Procedures Law, the decision of the Court of Appeal is enforceable even if an appeal is underway unless the Court of Cassation explicitly directs a suspension of execution (Civil Procedures Law, Article 175).

After the award has been acknowledged, it can be enforced similarly to any other judgment in the UAE courts through an application to the Execution Court.

The Dubai Court of Cassation has affirmed that the enforcement of a domestic arbitral award requires it to have a clear operative part. This underscores the importance of understanding whether a tribunal has the authority to address ambiguities or defects in the award, a determination influenced by whether it is a court-administered arbitration, institutional, or ad-hoc arbitration. In cases where parties opt for arbitration in the UAE without involving an institution, they should include a clause granting the tribunal the power to amend and clarify the award within a defined period after the final award is issued.

Obstacles to Enforcement

The grounds for challenging an arbitral award, akin to those outlined in the UNCITRAL Model Law, are delineated in Article 53 (1) (a) to (h) of Federal Law No.6 of 2018:

  • Absence or invalidity of the arbitration agreement, or expiration thereof.
  • Incompetence or incapacity of a party under the applicable law to the arbitration agreement, with the application of the apparent authority doctrine confirmed in relevant court cases.
  • Lack of authority for a relevant person to enter into the arbitration agreement.
  • Inability of a party to present its case due to inadequate notice of arbitrator appointment, arbitral proceedings, tribunal’s due process breach, or other uncontrollable reasons.
  • Exclusion of the chosen substantive law by the award for the dispute, with courts affirming the tribunal’s adherence to the parties’ law selection in applicable cases.
  • Non-compliance with the UAE Federal Arbitration Law or the parties’ agreement in the composition of the arbitral tribunal or the appointment of an arbitrator.
  • Irregularities affecting the award or failure to issue the award within the specified timeframe in the arbitral proceedings.
  • Inclusion of decisions in the award on matters outside the arbitration agreement or beyond its scope, subject to separability, allowing only the non-arbitrable part to be set aside if distinguishable from the rest of the award.

Article 53 (1) of Federal Law No.6 of 2018 stipulates that an award can only be contested on the aforementioned grounds through either a legal action to annul the award or during the ongoing process of an application for recognition and enforcement under Article 55 of of Federal Law No.6 of 2018, as previously discussed.

Moreover, Article 53 (2) of the UAE Federal Arbitration Law grants the UAE courts the authority, independently, to annul an award if they determine that:

  • The subject matter of the dispute is not suitable for resolution through arbitration.
  • The award is in conflict with the public order and morality of the state.

UAE courts have recently restricted the scope of the public policy rule, distinguishing cases where the dispute’s subject matter doesn’t involve a public interest affecting societal systems but rather pertains to the private interests of the parties, allowing for conciliation. In such instances, an arbitration clause can be effectively invoked.

The court has the discretion to reject the recognition and enforcement of an arbitral award if the award does not adhere to the legal regulations of the place or seat of arbitration. Establishing the criteria for a valid domestic award is not a straightforward task, as it involves considerations beyond the Procedural Code, including various statutes and court decisions. While it is impractical to list all the specific requirements, the following provides a useful reference. After the issuance of a UAE arbitral award, a prompt review is recommended to ensure compliance with UAE laws and practices, enhancing the likelihood of enforceability. It is crucial for any party engaged in arbitration with the UAE as a seat to seek guidance from local lawyers to ensure that the arbitration proceedings and the final award align with applicable UAE laws, thereby minimizing the risk of the final award being annulled by the local court.

Dealing with Resistance

Resistance during execution is not uncommon. Practical strategies for addressing resistance include negotiation, mediation, or legal intervention when necessary. Real-world cases highlight successful resolutions and offer valuable lessons for parties facing similar challenges. Practical considerations for ensuring timely execution involve understanding the role of local courts and leveraging any available expedited procedures. Proactive measures, such as monitoring potential challenges and addressing them promptly, contribute to a swift execution process.

In conclusion, the practical journey from obtaining a favorable arbitral award to its successful enforcement in the UAE requires a strategic and proactive approach. Navigating the ratification and execution processes demands a nuanced understanding of local laws, collaboration with authorities, and the ability to address challenges effectively. By embracing practical insights, parties engaged in domestic or international arbitration can enhance the enforceability of their awards, ensuring that justice is not only delivered but effectively served.

REFERENCES

  1. Federal Law No. (6) of 2018 on Arbitration
  2. Enforcing arbitral awards in the United Arab Emirates (UAE)
  3. Enforcement of arbitral awards in the United Arab Emirates (shlegal.com)
  4. Challenging and Enforcing Arbitration Awards: 
  5. Enforcement of arbitral awards in the United Arab Emirates (shlegal.com)
  6. Blanke – 2020 – Chapter III The Award and the Courts, Recognition
  7. UAE Arbitration Yearbook 2019
  8. Developments in Enforcement of Arbitration Awards in the UAE
  9. Recognition and Enforcement of Arbitration Awards
  10. Litigation and enforcement in the United Arab Emirates: overview
  11. Navigating Arbitration in the UAE with Dr. Gordon Blanke
  12. Chapter 14: Recognition and Enforcement of Awards Micha Bühler; Michael Cartier
  13. Sader UAE Annotated Arbitration Code

About ATB Legal

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 Sudha Sampath

Sudha is an arbitration and litigation specialist who represents clients before the Supreme Court of India, the High Courts of Chennai and Delhi, the Company Law Board of India and various arbitral tribunals involving high value arbitration matters

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