Global Development

Introduction

The UAE enacted its first standalone federal arbitration statute under Federal Law No. 6 of 2018 (the ‘Federal Arbitration Law’), which entered into force on 15 June 2018. The Federal Arbitration Law repealed the Arbitration Chapter of the UAE Civil Procedures Code No. 11 of 1992 and introduced a number of procedural developments in relation to arbitration proceedings from the time of conclusion of the arbitration agreement until the process of enforcing arbitration awards before the UAE courts.¹ The Federal Arbitration Law embodies a more modern and favourable approach to arbitration, with fewer restrictions imposed on the parties and the arbitral tribunal.

1. Enforcement of domestic arbitration awards

One of the main developments introduced under the Federal Arbitration Law is the change in the procedure for the enforcement of arbitration awards, which has been significantly shortened. Article 55 stipulates that any enforcement application for the enforcement of an arbitration award can now be brought directly before the UAE Court of Appeal, which shall in turn issue its enforcement order within 60 days from the date of filing of the application, unless a party can demonstrate that one of the nullification grounds set out in Article 53 of the Federal Arbitration Law exists.

Article 54 of the Federal Arbitration Law also sets out a 30-day time limit for a party to challenge the validity of a final award before the relevant UAE Court of Appeal. This 30-day period starts to run from the date on which the award is notified to the party seeking to set aside the award. A challenge to the validity of the final award may also be made in defense to an enforcement application filed by the award creditor outside the 30-day time limit.

2. Enforcement of foreign arbitration awards obeys a separate regime

One of the major controversies that arose following the promulgation of the Federal Arbitration Law was whether the scope of the procedure for the enforcement of arbitration awards extended to the enforcement of foreign arbitration awards in the UAE. The consensus at the time the Federal Arbitration Law was issued was that applications for the recognition and enforcement of foreign arbitration awards also fell within the scope of the Federal Arbitration Law such that applications for enforcing foreign awards should be filed before the Court of Appeal.

Based on the UAE courts’ treatment of recent enforcement cases for both domestic and foreign arbitration awards, however, it is now clear that the rules for enforcement of arbitration awards under the Federal Arbitration Law do not extend to foreign arbitration awards under the New York Convention, to which the UAE is a signatory.² Instead, applications for the recognition and enforcement of foreign awards should be made in accordance with the procedures set forth in the recently issued Executive Regulations of the Civil Procedures Code (‘Executive Regulations’).³

The Executive Regulations have introduced a number of amendments to the Civil Procedures Code, which are intended to facilitate and expedite the process of ratification and enforcement of foreign arbitration awards.

Unlike the prior process, which largely resembled filing a new case before the competent Court of First Instance, the application for the recognition and enforcement of a foreign award under the Executive Regulations is submitted by way of a petition to the enforcement judge, within the Execution Court. Moreover, the enforcement judge is now required to issue its order on the petition within three days from the submission date (Article 85 of the Executive Regulations):

Judgements and orders issued in a foreign country may be ordered to be enforced in the UAE on the same conditions prescribed in the laws of that country for the enforcement of similar judgments and orders issued in the UAE.

An enforcement order shall be applied for under a petition submitted by a concerned party to the Execution Judge who should issue his order within a maximum of 3 days from the date of filing of the petition.

Article 86 of the Executive Regulations expressly provide that such provisions:

[S]hall apply to arbitration awards issued in a foreign state. The arbitration award must have been issued on a matter for which arbitration is permissible in accordance with the Law of the State and is enforceable in the State wherein it has been issued.

While Article 85(2) of the Executive Regulations provides that an enforcement order may be challenged in the same manner as any judgement by the Court of First Instance, the former is however immediately enforceable. Any appeal will not stay enforcement unless the court considers that the immediate enforcement will result in irreparable harm.

The above amendments have certainly been a positive development, with several foreign arbitration awards recently enforced under the Executive Regulations.⁴

Conclusion

The Federal Arbitration Law has introduced an efficient and expedited regime for the enforcement of domestic arbitration awards, in line with international standards and the UAE's drive to become a leading international arbitration hub.

Having addressed the common pitfalls which had existed under the old arbitration regime, the Federal Arbitration Law has been a welcome development for the international business and arbitration community. Companies operating and doing deals in the UAE now have access to a more flexible and efficient arbitration process, particularly in relation to the enforcement of arbitration awards.

While the Federal Arbitration Law’s scope does not extend to the enforcement of foreign awards, the enforcement of such awards are now governed by the Executive Regulations, which have also facilitated the process of enforcing of foreign arbitration awards.

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