I. SCOPE

I.1. Federal Law No. 6 of 2018 (the Law) is the UAE’s first stand-alone Federal arbitration law. On balance, it is an honest and mostly successful attempt to adopt the 1985 UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law).

I.2. The Law replaces Articles 203-218 of the UAE Civil Procedure Code, Federal Law No. 11 of 1992. It also renders Article 235 of the UAE Civil Procedure Code of no further relevance to the enforcement of UAE arbitration awards, in the same way as the UAE’s adhesion to the 1958 New York Convention rendered Article 235 of no further relevance to applications for the enforcement of foreign arbitration awards.

I.3. It is worth noting that the Law includes no provisions regarding the recognition and enforcement of foreign arbitration awards. This omission was doubtless informed by the fact that the UAE is a New York Convention State, and Article 238 of the UAE Civil Procedure Code already requires the courts to apply the UAE’s international treaty obligations regarding the enforcement of foreign judgments and awards—as they repeatedly have.

I.4. According to Articles 2(1) - (3), the Law applies to (i) arbitrations that “take place” in the State unless the parties have agreed to apply another arbitration law, (ii) any “International Commercial Arbitration that takes place abroad” where the parties have agreed to apply the Law and (iii) where an arbitration arises out of a “dispute concerning a contractual or non-contractual legal relationship regulated by the laws in force in the State, except as expressly excluded by a special provision.” Consequently, save where an arbitration “takes place” abroad as per Article 2(2), the Law does not distinguish between international and domestic arbitrations or civil and commercial disputes. Unfortunately, the scope of the term “take place” is not evident from the Law.

I.5. It is noteworthy that the Law (and Article 2(1) in particular) contains no direct or indirect references to the Dubai International Financial Centre (DIFC), the Abu Dhabi Global Market (ADGM) or any of the Federal laws enabling the establishment of these Financial Free Zones. It is reasonable to assume, however, that arbitrations seated in the DIFC remain subject to the DIFC Arbitration Law 2008, while those seated in the ADGM remain subject to the ADGM Arbitration Regulations 2015.

I.6. Assuming that when Article 2(1) is construed by the courts it is recognised that an unqualified choice of seat is ipso facto a choice of procedural law, the Law will not apply where the parties have agreed to a DIFC seat or an ADGM seat.

I.7. Article 2(2) is not problematic, although arbitrations of the type described at this same article are likely to be rare.

I.8. The scope of Article 2(3) is not entirely clear. The correct view may be that unless the parties have agreed otherwise (most obviously by their choice of seat), the Law will apply to any arbitration where the substantive law of the dispute is the law of the UAE. In effect, the Law provides a seat where none has been chosen by the parties to a dispute governed by UAE law.

II. POSITIVE STEPS

II.1. At least four draft Federal arbitration laws were released for consultation in the UAE between 2005 and 2017. The drafters of the DIFC Arbitration Law 2008 (which built on the DIFC Arbitration Law 2004) adopted significant portions of the 2007/2008 draft Federal arbitration law in the belief that it would be desirable for the two laws to promote a unified approach to arbitral practice in the UAE.

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II.2. Federal Law No. 6 of 2018 goes a long way towards closing the gap that has hitherto existed between the DIFC Arbitration Law 2008 and the arbitration provisions of the Code of Civil Procedure. However, although Federal Law No. 6 of 2018 adopts much of the 1985 UNCITRAL Model Law on International Commercial Arbitration (as do the DIFC Arbitration Law 2008 and the ADGM Regulations 2015), when all is said and done the Law is a distinctive rather than generic arbitration law whose terms will repay careful analysis.

II.3. It is encouraging to note from the definition of “Court” that applications to the Court pursuant to the terms of the Law will be to a single judge of the Court of Appeal rather than to a single judge of the Court of First Instance. Thereafter, challenges to decisions of the Court will either be to a full Court of Appeal (see Article 57, challenges to orders granting or refusing enforcement) or to a full Court of Cassation (see Article 54, challenges to orders nullifying awards).

II.4. The Law includes numerous other provisions that should increase certainty, improve efficiency and reduce cost. For example:

a. Article 11(8) enables any court charged with making an arbitral appointment to request a list of potential arbitrators from any arbitral institution in the UAE, if requested to do so by a party.

b. Article 19(2) aims to ensure that appeals against findings of jurisdiction are determined expeditiously. Consequently, an appeal against a tribunal’s finding of jurisdiction must be filed within 15 days of the notification of the tribunal’s decision and the Court must issue its decision on the appeal within 30 days of it being filed.

c. Article 21(1) expressly permits arbitrators (absent any contrary agreement of the parties) to order (on the request of a party or on its own motion) interim or precautionary measures “in respect of the subject matter of the dispute”. Among other things, the Tribunal may direct the taking of a measure to “preserve the assets and property out of which a subsequent award may be satisfied.”

d. Article 21(2) provides that an order granting interim or precautionary measures may (i) require the applicant to provide a guarantee to meet the costs of the measure and (ii) require the applicant to give an undertaking to pay any damages caused by any measure that the applicant is later found not to have been entitled to.

e. Article 22 permits joinder of any other party to the arbitration agreement on the application of an existing party to that agreement.

f. Article 25 provides that a party “shall be deemed to have waived its right to object” if it fails to object to any known non-compliance with the terms of the arbitration agreement or any non-mandatory provision of the Law, either within any agreed period or otherwise without undue delay.

g. Article 33(3) permits hearings to be held by means of modern telecommunication.

h. When read with Article 33(3), Article 33(7) appears to permit the parties to agree that witnesses and experts need not swear an oath or affirmation or that they may swear any oath or affirmation when not physically before the tribunal, or any member of the tribunal. Article 33(7) provides that “Unless the arbitrating parties agree otherwise, the hearing of witnesses and experts shall be conducted in accordance with the laws in force in the State.”

i. Article 35 (which may be superfluous in light of Article 33(3) above) permits the tribunal to question witnesses and experts through means of modern telecommunication, such as video-conference. Although the article only refers to arbitrators, the time and cost benefit the article appears intended to bestow (coupled with Articles 33(3) and 33(7) above) would suggest that the tribunal should be permitted to allow the parties to ask questions of such witnesses (through the tribunal or possibly even directly) by the same means.

j. Article 39 permits the tribunal to make interim or partial awards “before rendering its final award ending the entire dispute.”

k. Article 40 appears to require that tribunals issue consent awards when requested to do so by the parties.

l. Article 41(4) permits the parties to agree that the award shall not include reasons.

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m. Article 41(6) does away with the need for overseas arbitrators to travel to the UAE to sign an award. It provides that an award is deemed to be issued at the seat even if signed overseas. Electronic signature is permitted unless the parties agree otherwise.

n. Article 42(2) permits the Court to extend the time for the issue of an award, even when the award has not been issued in time, i.e. as per Article 42(1). Article 42(1) provides that awards are to be issued within six months of the first hearing in the proceedings and that unless the parties agree otherwise the Tribunal may only once extend this by a further six months. Article 42(3) makes clear that if no extension is granted and the Court terminates the arbitration, the parties may bring their claims in court.

o. Article 43 makes clear that a tribunal may continue its proceedings when “a question outside the jurisdiction of the Arbitral Tribunal arises, or if a document submitted to it is challenged for forgery, or criminal proceedings are initiated for its forgery or any other criminal act”, if the tribunal “deems that deciding on such a question, on the forgery of the document or on other criminal act is not necessary for deciding on the subject matter of the dispute.”

p. Article 44 provides that an award is to be notified to the parties within 15 days of its issue. The Law simplifies matters for all concerned by allowing that an original or a copy may be provided. Consequently, it would appear a pdf copy sent by email would satisfy the notification requirements.

q. Articles 53 (1) and 53(2) largely reflect the substance, if not the familiar form, of Articles 34(1) and 34(2) of the UNCITRAL Model Law, which between them provide for the setting aside/annulment of an arbitration award by the Court. Article 53(1) makes clear that the only means of recourse against an award is by an application to the Court to set it aside. Helpfully, Article 53(1) also makes it clear that a party wishing to apply to set aside/annul an award may do so before any application to ratify the award has been made. The need for ratification is confirmed at Article 52. It ought not to be a criticism of the Law that at the same time as re-stating the substance of the established grounds for setting aside an award found at Article 34(2) of the UNCITRAL Model Law, it has added several grounds which on their face appear to be describing scenarios falling within the established grounds. This may even be said of Article 53(2)(e), which requires the setting aside of an award where it is found that “The arbitration award excluded the law to which the parties subjected the dispute.” If Article 53(2) is taken to be referring to a tribunal identifying and applying an incorrect governing law rather than a tribunal applying the correct governing law incorrectly, then it is arguably merely identifying a particular example of conduct which under Article 34(2) (a)(iv) of the UNCITRAL Model Law could be characterised as the arbitral procedure “not being in accordance with the agreement of the parties” and under Article 34(2)(g) of the Law could be characterised as an instance of “a serious irregularity in the arbitration proceedings that affects the award.” Indeed, the Law’s requirement that the irregularity be “serious” and that it have an identifiable effect on the award might indicate that the Law imposes a higher burden on a party wishing to challenge an award on the basis of procedural irregularity than might otherwise be the case.

r. Article 54(2) provides that no action for the annulment of an award shall be heard after 30 days of the award being notified to the party seeking annulment.

s. Article 54(4) provides that (absent the parties’ contrary agreement) an arbitration agreement shall remain valid after annulment of an arbitral award unless the annulment was caused by the “absence, extinction, nullity or non-enforceability of the Agreement itself”.

t. Article 55(1) provides that applications for the recognition and enforcement of awards are to be made to the Presiding Judge of the Court. Article 55(1)(e) states that his or his nominee’s order on the application is to be issued within 60 days of it being filed. Article 55 (e) goes onto provides that an order may only be refused if one or more of the same grounds for nullification are established as are set-out Article 53(1).

u. It should be noted that whereas the Law also allows the Court to nullify an award of its own motion if it finds that the subject matter of the award is not arbitrable (Article 53(2)(a) of the Law, and Article 34(2)(b)(i) of the UNCITRAL Model Law), there is no parallel provision in Article 55 of the Law. Similarly, whereas the Law permits the Court to nullify an award of its own motion where it finds that the award is in conflict with “public order and morals in

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the State” [Article 53(2)(b) of the Law, and Article 34(2)(b)(ii) of the UNCITRAL Model Law—where there is instead a reference to the award being in conflict with “public policy” of the State], Article 55 of the Law contains no parallel provision.

II.5. The Law helpfully institutionalises important principles of arbitration theory and practice into UAE law. For example:

a. Article 6(1) addresses the separability of the arbitration agreement by providing that the arbitration agreement is independent of the contract in which it appears and thus is not affected by the “nullity, rescission or termination of the contract”, so long the arbitration agreement is itself a valid agreement.

b. Article 19(1) addresses the competence of the tribunal to rule on its own competence, i.e. on its own jurisdiction. Furthermore, Article 19(2) makes clear that if a party requests that it do so, an arbitral tribunal may continue to hear and determine a dispute notwithstanding that a party has appealed its finding of jurisdiction to the Court. Absent such a request, the arbitration proceedings are stayed pending the appeal.

III. OTHER NOTEWORTHY PROVISIONS

III.1. Although the Law has removed several previously contentious issues of practice, it includes some provisions which specialist practitioners (including arbitrators) may view as unclear, unnecessary or inconsistent with the apparent object and purpose of the UNCITRAL Model Law. For example:

a. Article 2(1) provides that the Law will not apply to any arbitrations that “take place” in the State if the parties have chosen to apply another arbitration law. However, this provision is subject to a condition that the chosen arbitration law is not “in conflict with public order and morals in the State”. Two matters arise with respect to Article 2(1):

i. Firstly, it is not clear whether the term “take place” is a reference to the place of arbitration/seat being in the UAE or whether the term is intended to refer to those instances where the UAE is the venue for meetings and hearings held in an arbitration with some other seat.

ii. Secondly, the meaning and purpose of the reference to “public order and morals” is unclear and could encourage early challenges to the validity of arbitration agreements/proceedings which but for the condition might only have been pursued (if at all) after the issue of an award.

b. Article 10(2) appears to prohibit certain persons engaged in the running of arbitral institutions from acting as an arbitrator. The scope of this provision is not entirely clear.

c. Although Article 21 gives arbitrators wide powers to order interim measures, Article 18(4) provides that court orders granting interim measures do not automatically lapse upon further order of the arbitral tribunal or any other body authorised to act with respect to the arbitration. Only a further order of the Court can discharge the Court’s previous order.

d. Article 23 requires that when determining the procedures to be followed, the tribunal should have regard to the Law, procedural justice “and international treaties to which the State is a party”. It is not immediately obvious what potential mischief the latter phrase is intended to guard against.

e. Article 27 is a significant departure from Article 21 of the UNCITRAL Model Law regarding the commencement date of arbitration proceedings. Instead of providing that proceedings commence on the date the Respondent receives “a request for that dispute to be referred to arbitration”, Article 27(2) provides that service of the request for arbitration [on the Respondent] qualifies as the commencement of a legal action only for the purposes of an attachment. Furthermore, Article 27(1) provides that unless the parties agree otherwise, arbitration proceedings commence on the day following the formation of the Tribunal. Given that tribunals can sometimes take many months to be appointed, Article 27(1) may prove particularly problematic for parties faced with expiring time-limits for the commencement of proceedings.

f. Article 28(2)(b) requires that arbitrators issue minutes save where the parties agree otherwise. [Page15:]

g. Unlike Article 22 of the UNCITRAL Model Law, rather than leaving the choice of language to the arbitrators in the event of the parties not having agreed on it, Article 29(1) provides that the language will be Arabic.

h. Article 33(5) raises issues regarding the recoverability of legal and expert costs incurred by the parties in that it provides that the parties may “at their own cost” use experts and attorneys, including advocates and others, to represent them in the arbitration. The powers of the tribunal to assess and award “Arbitration Costs” is provided for at Articles 46(1) and 46(2). Article 46(1) states that “Unless otherwise agreed by the parties, the arbitration tribunal shall have the authority to assess the costs of the arbitration, including the arbitrators’ fees and the expenses incurred by any arbitrator in the performance of his duties, as well as the costs of experts appointed by the tribunal.” The most common means by which parties agree otherwise is by agreeing to arbitrate under the Rules of an arbitral institution that itself sets the tribunal’s fees and approves the nature and amount of its expenses.

i. Articles 37(1) and 37(2) also make the parties’ choice of a governing law, or other rules governing their relationship, conditional on these not being in conflict with “public order and morals in the State”.

j. Article 41(5) requires that in addition to giving the names and addresses of the arbitrators, the award must also record their nationality. While this may well be a sensible requirement, it is uncommon enough to be a trap for the unwary in the short term.

k. Article 46(1), see Article 33(5) above.

l. Article 48 on the “Confidentiality of the Award” provides in material part that the arbitrator’s award cannot be published in whole or part without the written agreement of the parties. The meaning of “published” is arguably unclear. For example, is an award “published” within the meaning of the Law when it is relied upon by a party to court or arbitration proceedings to assert or defend a claim, whether between the original parties to the award or otherwise?

m. As touched on above, Articles 53 and 55 of the Law are not as straightforward as their counterparts in the UNCITRAL Model Law, noting of course that the application of Article 55 of the Law is limited by Article 2 of the Law. These provisions will doubtless come under intense judicial scrutiny in the years to come.

n. Article 58 provides that “The Minister of Justice or the president of the competent judicial body shall establish rosters of arbitrators who are to be selected in accordance with the provisions of Article 11 of this Law.” Unfortunately, the meaning and effect of this provision is not elaborated. Consequently, it is not clear from the Law whether the parties may only nominate arbitrators that are on the roster or whether the intention is that when the court is called upon to make an appointment (as per Article 11(5)) it will do so from the roster. On a positive note, Article 11(8) permits the court to seek arbitrator proposals from arbitral institutions, which may suggest that the intention is that when the court is required to appoint it will appoint from the roster unless a party invokes Article 11(8) and requests proposals from an institution.

IV. CONCLUSION

IV.1. The Law is a significant development in that it recognises the importance of arbitration to the UAE business community and the need to facilitate its practice in accordance with internationally recognised standards.

IV.2. The adoption of the UNCITRAL Model Law as the template for the Law is evident, and the role given to the higher-level courts is promising.

IV.3. There are undoubtedly some provisions that will repay the careful ongoing consideration of users, practitioners, arbitrators and the Courts