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I. INTERNATIONAL COMMERCIAL ARBITRATION

The recent years have seen a significant development in international commercial arbitration. Due to the rise in intra-nation trade, it has become more and more natural to use arbitration as a useful means to resolve trade disputes. The parties mutually agree to choose an effective method to put an end to their commercial dispute without recourse to the court of law.

Various international treaties and national conventions are formulated in order to provide common standards for arbitration. The International Chamber of Commerce established in 1923 played a vital role in the promulgation of Geneva treaties and the New York Convention.¹The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards set a common legislative standard on the recognition of arbitration agreements, court recognition and enforcement of foreign and non-domestic arbitral awards.2 The Convention aims at the non-discrimination of any foreign and non-domestic arbitral award in recognising and enforcing it in the jurisdiction of the parties just as a domestic award.³

Arbitration is a method of alternative dispute resolution, a technique for the resolution of disputes outside the court wherein parties to a dispute refer it to one or more person (arbitrators) by whose decision (arbitral award) they agree to be bound. The introduction to arbitration dates back with the base of law. It is a matter of free decision and does not set any precedent. Every case is observed in the light of pragmatism in accordance with the moral and economic customs of a certain set of individuals.

I.1. History of Arbitration

In the medieval period, commercial arbitration was practised at courts of the fair.⁴Past traders recognised the significance of extra judicial methods and preferred justice according to the “Lex Mercatoria” (The Law of Merchant) to that of the common law.⁵In the 12th and 13th centuries, disputes between the guild merchants were settled by “fair law” in accordance with the universal customs of merchants, and had no reference to the courts of the realm.⁶

Rule of revocation was then perceived as today’s refusal for non-enforcement of an arbitral award. An arbitration clause inserted in a contract endorsed the parties to choose the alternate dispute method for settling a possible future dispute. Such an arbitration clause can be revoked according to the common law. Vynior’s⁷case laid down the question of revocability. Lord Coke observed that the agreement to arbitrate cannot be enforced because private and voluntary arbitration ousted the jurisdiction of court. Decision held the defendant liable and directed to enforce obligations in bond as damages. The reason for the above decision was stated as jurisdiction envy⁸ by an English judge in the subsequent case of Kill v Hollister.⁹ A similar view was adopted by Lord Campbell in Scott v Avery¹⁰ which held that parties by contract may not oust courts but they may agree by a contract that no cause of action shall arise until a reference is made and a decision had.¹¹ This case had positioned its authority sooner as the doctrine of penalties and fines abolished, which in turn repudiated the former doctrine in Vynior’s case.

*The article aims at providing a summary of the origin of arbitration taking into account that the underlying concept of public policy dates back to the medieval period and has since evolved constantly mainly due to enlightened lawmakers. This paper draws attention towards the necessity for arbitration and throws light on the unification of ‘international commercial arbitration’ with the New York Convention. The growing importance of International trade and the interest of foreign investors in UAE have certainly been of paramount importance in the adoption of the new Federal Arbitration Law No.6 which is based on the UNCITRAL Model Law. This study focuses on the influence of public policy exception as a ground for refusal of recognition and enforcement of foreign arbitral awards. Furthermore, it explains the approach of UAE courts towards Sharia law as part of public policy.

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However, arbitration has changed quite a lot and demonstrated its relevance in the mounting economy. The major reason for adoption of this method was its intrinsic flexibility and time saving process. The informal procedural form allows parties to choose expert arbitrator(s). While confidentiality is maintained, the parties can enhance communications thereby promoting business relationships. The provisions of the New York Convention enable an easier enforcement of the arbitral award in other nations and jurisdictions, and in addition to other various reasons, this method of dispute resolution is cost-effective and risk-free to the parties.

I.2. Conflict of Laws

International arbitration has become more and more complex due to conflict of laws¹² or otherwise termed as private international law. International disputes before domestic courts are resolved through application of a rule of private international law.¹³ It emphasises the difference between the national legal systems which reflects on the county’s societal values. Nonetheless the national laws and legal system vary from one country to another giving rise to a conflict of laws. The founder of the science of private international law Magister Aldricus, towards 1200, suggested that “a judge confronted with two opposing customary laws should select the law whose application would be best and most useful in relation to the facts in dispute.”¹⁴

Legal provisions relating to marriage, estate or inheritance, torts, and business transactions differ in every country. These legal situations are often based on religion or ethnicity and have an impact on the public moral. Therefore the question of public policy in private international law is familiar throughout the world.

II. THE DOCTRINE OF PUBLIC POLICY

Initially, Public policy concentrated on elimination of acts that are injurious to the interest of the public or to the church and the community. Under the principles relating to the doctrine of public policy, courts of justice will not recognize or sustain any matter which amounts to be harmful to the public welfare, to sound morality, or to principles of society. Judge Cardozo stated the doctrine of public policy is to test whether the foreign law can be said to “violate some fundamental principle of justice, the prevalent conception of good morals, and some deep-rooted tradition of the common weal.”¹⁵

II.1. Application of Public Policy Doctrine under Different Legal Systems

A. CIVIL LAW SYSTEM

During the years, judicial interpretations of the concept of public policy varied in each legal system. The civil law countries like France and Germany adopted the statutory method in dealing with conflict of laws. French Civil Code was first to codify the principles of ordre public. Associated closely with public policy concept of common law, Ordre public protects the basic value of the domestic law and becomes an essential wield to avoid unacceptable situations which contradict with law, justice, and morality of the nation. Basically, this set of principles to refuse the recognition and enforcement of foreign awards which is against the public morale. The concept of ordre public is invoked in two kinds of situations: Firstly, when the foreign law contradicts the morals of civilized society and one more is when the foreign law imperils the French civilization.¹⁶

The doctrine of ordre public was incorporated in the German legal system at the end of the nineteenth century with restrictive interpretation by the courts. If a foreign law violates the moral or is applied against the policy of German Law, the application of former will be denied.¹⁷

B. COMMON LAW SYSTEM

However, interference of the public policy concept was in silence until the decision in Dyer’s18 case. This case established the rule of “encounter commone ley”, wherein, the English bench held that restriction of any person from engaging in trade for a period of six months is against the benefit of the commonwealth.19 This was the traditional approach to public policy designed to guard against violations of public morale. The term public policy was first pointed out in a case involving the restraint of trade.²⁰

Lord Mansfield in Holman v Johnson²¹ defined public policy by stating that “no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”. Other similar expressions used by courts were “may be detrimental to the interests of his own country”22, “repugnant to the interests of the state23, “injurious to the interest of the public”²⁴, “against the public benefit”²⁵ etc.²⁶[Page49:]

Subsequently, in the case of Egerton v Brownlow questions were raised regarding public policy as to a) whether the courts or legislature has the power to determine what is public policy and b) whether the doctrine of public policy is different from other principles of common law. An opinion of eleven judges was considered by the House of Lords, whereby Judge Parke and Judge Pollock approached the idea of public policy differently. Taking a restrictive approach, Judge Parke viewed that, it is the power of the legislature to determine the scope of public policy. Contrarily, according to Judge Pollock, the court has the power to determine the scope and extent of application of the public policy concept. Though a majority of judges agreed with the view of Judge Parke, House of Lords concluded its opinion by favoring Judge Pollock.

Disregarding the view of The House of Lords in Egerton v Brownlow, Lord Watson in Nordenfelt case²⁷ adopted the old-standing principle that public policy is that, which is best in the public interest From the twentieth century onwards, courts have found it necessary to compromise between the broad and narrow approach towards the concept of public policy.

II.2. Principles by Jurists on the Concept of Public Policy

Between the twelfth to eighteenth centuries, the continental writers had a significant role in the development of the concept of public policy. Prior to the 12th century, the court rarely applied the concept of public policy in their decisions despite the prevalence of the question of conflict of laws.

In 1820, J. Burrough in Richardson v Mellish interpreted that

[Public Policy is] a very unruly horse, and when once you get astride it, you never know where it will carry you. I may lead you from sound the law. It is never argued at all, but when other points fail.²⁸

However, the view by English courts stated:

With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. It can leap the fences put up by fictions and come down on the side of justice.²⁹

Italian political theorist P. Mancini in his lecture ”argued that in order to protect the public order, there are certain rules prescribed by the state and those rules have to be applied to anyone who is within the territory of the state, without referring to the person’s national law.30 Nationality idea of Mancini suggested that the national law of the person should be applied with regard to the status and capacity, family relations and succession of the individual, and that it should prevail over the local laws.31 He argued that private international law should be governed by a principle of nationality and respect for party autonomy.³²

In 1934, Joseph Story, an American jurist, published his Commentaries on Conflicts of laws which marked the beginning of the modern analysis of conflict of laws. Story adopted common law approach and followed the Dutch school doctrine of “comitas genitum” of in order to deal with the disputes of foreign elements. He viewed comity as the force of development in the conflict of laws and suggested that “the comity” could be a unifying force to overcome the structures of sovereignty, which produced an isolationist territorial outlook and consequent arbitrary exclusion of foreign law’.³³ Story’s theory lost its importance as an outcome of the development of the principles of nationalism and positivism.

A German jurist and legal scholar Friedrich Karl von Savigny proposed that extraterritorial effect of municipal laws were not based on comity but on the compelling forces of business and commerce, which created disputes that need to be resolved expeditiously and efficiently.³⁴ According to him, only when dealing with intra-national disputes, the foreign acquired rights are to be deferred.³⁵ He analyzed the concept of public policy in a detailed manner by classifying public policy into two: a priori and a posteriori notions of public policy. While a priori conception of public policy constitutes certain principles of law having an inherent feature to exclude foreign law which results in the application of law of the forum in international cases, the posteriori public policy focuses on the effect of doctrine on the domestic legal, social and economic system. His statement that the foreign laws can be excluded in exceptional cases gained the attention of its followers and continental acceptance of the theory.

In the modern world, more conflicts occur in respect to commercial transactions. In international commercial arbitration, the principle implies that the arbitral panel would have to apply conflict of rules prevailing at the place of arbitration (lex arbitri).³⁶ Although international treaties have unified certain areas of conflict of laws with respect to the participating states,³⁷ differences in substantive national laws lead to the existence of the doctrine of public policy.

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In a landmark decision of Mitsubishi case having international dimensions, the United Nations Supreme Court concluded that “the concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of international commercial system for predictability in the resolution of disputes required enforcement of the agreement, even assuming that a contrary result would be forthcoming in a domestic context”.³⁸ Prior to Mitsubishi the court invoked a similar principle in Scherk v Alberto-Culver Co.³⁹

Public policy doctrine has gained attention in the field of international commercial arbitration due to increase application of arbitration clauses in international transaction agreements. The concept of public policy is envisaged in Article V (2) (b) of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958.⁴⁰The discretion for refusing recognition of foreign judgments on the ground of public policy is recognized by the common law rules and is embodied in the statute of private international law. The United Nations Commission enacted the UNCITRAL model law⁴¹ aiming at modernization and harmonization of rules on international business which also includes procedures for arbitration.

Various countries have individually enacted legislation both governing domestic and international arbitration by adopting the UNCITRAL model law with recognition to New York Convention.

III. INTERNATIONAL COMMERCIAL ARBITRATION IN THE UAE

Extensive trading in GCC countries has advanced the practice of arbitration in resolving commercial disputes. UAE being a part of GCC has witnessed growing commercial transaction, attracting foreign investments, whereby the parties prefer dispute resolution methods that include arbitration to resolve their disputes. Thus the courts have initiated in evoking alternative dispute resolution methods. In order to facilitate and recognize with international standards of the business community, the country has developed its rules on arbitration. The mode of arbitration is preferred by the traders and the foreign investors due to various reasons as to avoid the lengthy, time consuming and expensive court proceedings. In addition, the official language Arabic used in courts becomes a barrier for the international parties to conduct litigation.

The UAE has signed the New York Convention on Recognition and Enforcement of Foreign Arbitral Award on 13th June 2006. In May 2018, the new Federal Law No.6 was issued replacing provisions of Federal Law No 11 of 1992 ⁴² concerning arbitration. The new federal arbitration law adopted the UNCITRAL model law of 1994 on international commercial arbitration.

III.1. New Federal Law No.6

In accordance with the constitution, the federal government has the confined jurisdiction for promulgating substantive legislation and regulating the principle and central aspects of the federation. These also include foreign affairs, defense, security, federal judicial system, Federal public work, etc.

The new Federal law no.6 was issued replacing provisions of Federal Law No 11 of 1992 concerning arbitration. The new federal arbitration law adopted the UNCITRAL model law of 1994 on international commercial arbitration. The law replaces article 203-218 of the UAE civil procedure code, federal law no.11 of 1992.⁴³ It also renders the provision of the enforcement of the UAE arbitration award contained in article 235 of no relevance. Notably, the new law does not include any provisions regarding the recognition and enforcement of foreign arbitration award as UAE is a New York Convention state, and article 238 ⁴⁴ of UAE civil procedure code already requires the courts to apply UAE’s international treaty obligations regarding the enforcement of foreign judgments and awards.

The subject matter of recognition and enforcement of an arbitral award is debatable. Provisions in articles 53(1) and 53(2), grants party to the dispute, the right to apply to the court for setting aside or to annul an award on the grounds stated in Article 34(2) of the UNCITRAL model law.

The law allows the court to nullify an award on the grounds:

• If the subject matter of the award is not arbitrable under article 52(2)(a), and
• If the award is in conflict with the public order and morals in the state under article 53(2)(b).

The most controversial part is in the execution stage of recognition and enforcement of an arbitral award; i.e. when the courts refuse to enforce the arbitral award on grounds of refusal.

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III.2. The Concept of Public Policy in UAE

Regardless the adoption of rules for the recognition and enforcement of the foreign arbitral award, at instances the UAE courts have refused foreign awards on grounds if the elements of the award contradict with the public policy or moral. The New York Convention provides certain principles based on which the host state can avoid the enforcement of the arbitral award on the ground of public policy. The UAE being a member to the Arab League Convention and Riyadh Convention provides public policy grounds to refuse enforcement of an arbitral award.

Construction and interpretation of the rules and principles of Islamic jurisprudence (fiqh)⁴⁵ is laid down in UAE civil transaction law. Wherein article 346 defines the concept of public policy, stating, that public order “include[s] matters relating to personal status such as marriage, inheritance, and lineage, and matters relating to systems of government, freedom of trade, the circulation of wealth, rules of individuals ownership and the other rules and foundations upon which society is based, in such a manner as not to conflict with the definitive provisions and fundamental principles of the Islamic Sharia.”

Apart from public policy, another significant ground is arbitrability.⁴⁷ Not every dispute can be settled by arbitration. For the international enforceability of decisions contracting parties agree upon a neutral forum for flexibility of proceedings. The subject matter of arbitrability various from every country as to its economic and social policy in practice. Jurisdiction and competence of the principle laid down in article 8 and article 19 respectively are also subject to arbitrability.

The conflict of law arises when the arbitral award to be enforced is against the law of Sharia. The Islamic law, Sharia or the law of land influences on the doctrine of public policy. Article .7 of the UAE Federal Constitution provides that “Islam shall be the official religion of the Union and that it shall be a principal source or legislation in the Union”.⁴⁸ According to the Union an award shall not be lawful to apply, if such principles are contrary to Sharia.

IV. SHARIA LAW

Sharia is the legal principles considered as sacred law by the Islamic community. It is derived from Islam’s primary and secondary sources: the Quran, the Sunna, and the Hadith.⁴⁹ According to the law, it is said that one must be obliged to his duty to prevent himself and others from committing outrageous offenses against fellow humans’.⁵⁰ Therefore, Sharia is the code of conduct and regulating social changes.⁵¹

The two major schools of thought are Sunni and non-Sunni. The Sunni branch constitutes four major schools of thought varying in its doctrinal approach to arbitration: the Maliki School, the Hanafi School, the Shafi’i School, and the Hanbali School. The Hanafi School and the Shafi’i school consider arbitration as a form of conciliation which is similar to mediation, in which the decisions are not binding on the parties. While arbitration decision has the same binding force as judicial decisions according to schools of Maliki and Hanbali School.⁵² At the same time, the Shi’a and the Khawarej School of non-Sunni branch accepted arbitration as a form of dispute resolution mechanism. However, Khawarej School only deals with matters relating to individual rights.⁵³

Siyasa or the concept of public policy was a result of the fundamental transformation in the institution of societal leadership, from prophethood to kingship.⁵⁴ This transformation was accelerated by the influence of the theories of administration espoused by Iranians, who reflected upon the administrative practices of the courts of the Persian kings.⁵⁵

IV.1. Sharia as Substantive Public Policy

Sharia substantive public policy concerns primarily with two grounds of prohibitions which are likely to affect the enforcement of foreign awards.⁵⁶

> RIBAH

Ribah is the Quranic prohibition of economic gain earned from money lending. It seeks to prevent usurious conditions as acquired profits would be exploitative in nature. Although the Quran clearly prohibits Ribah, what constitutes the forbidden practice is debated.⁵⁷ Every branch of Sharia schools of law prohibits the practice of Ribah, but the degree of strict adherence to the prohibition varies according to the degree relevant to international commercial transactions. According to the Hanbali School, “the prohibition of Ribah extends beyond the geographical boundaries of Islam.”⁵⁸ However, the Islamic countries which follow the Hanbali School of law [Page52:]

such as Saudi Arabia, and Qatar do not strictly adhere to the prohibition of Ribah. In Iraq, Egypt and Oman, the prohibition of Ribah are less rigid and contract bearing interest is permitted under their respective domestic laws.

There are certain modern mechanism practiced in different countries in the Middle East to circumvent the prohibition of Ribah and which permit the charging of interest. One of such method of circumventing the prohibition of Ribah is called “Tawarruq” which implies that in order to create liquidity; the asset which is initially purchased on a deferred payment is later sold to the third party for cash at a price lower than the deferred purchase.⁵⁹ A notable form of compound interest is also correlated to Ribah under the Islamic Sharia. The Union Supreme court referring to Article 177 of Law of Civil Procedure and 1970 Abu Dhabi Civil Courts Law held that in no circumstances compound interest be awarded, however, may be calculated and is prohibited under Sharia as the subject matter is of public order and is correlated to Ribah ⁶⁰ A similar view on compound interest was taken by the Abu Dhabi Court of Cessation in 2010.⁶¹

The Hanbali School of thought accepted “Tawarruq” as a method of circumventing the prohibition of Ribah. The Hanafi school of thought prohibits Ribah less rigidly creating legal mechanism⁶² or “Hiyal” to circumvent the prohibitions of Ribah.⁶³“Murabaha”⁶⁴ is one of such legal mechanism, which implies the purchase of an item by the bank in lieu of an agreement that the customer will buy back the said item from the bank at a set higher price. The Hanafi School permits certain types of “accrued interests” or interest on loans are not prohibited by Hanafi school of thought.⁶⁵ Even Shafi’s school of thought supports the legal mechanism or Hiyal to circumvent the prohibition of Ribah.

> GHARAR

The prohibition against speculation is termed as Gharar. In Arabic, the term Gharar is associated with risk or uncertainty. Transactions which are highly uncertain causing injuries to the parties in a contract are against the Islamic law of finance. The guidelines for determining Gharar is derived from Hadith, which depicts transactions characterized by pure speculation, uncertain outcomes, and unclear future benefits.⁶⁶ Contracts covering uncertain future delivery are considered invalid. Such uncertain risks are involved in gambling and contracts. Under the Islamic Law, selling of uncertain quality of goods also amounts to speculation.

Even though Gharar is prohibited by Sharia law, approach varies from one country to another. With respect to arbitration and most of the Islamic countries permit an arbitration agreement to apply to future disputes. Nevertheless in certain cases ruled out by courts prohibits Gharar. For Instance, in a case before the Union Supreme court, it was stated that “the contracts involving speculation on future currency fluctuations are not forward sales and are tainted by Gharar and gambling”⁶⁷

IV.2. Sharia as Procedural Public Policy

Saleh and Wakim discuss three fundamental rights covered by Sharia procedural public policy: the right to equal treatment of the parties, the right to be heard, and the right to present a case or defense.⁶⁸

The three fundamental principles “are not necessarily found in the Quran or Sunna but ... constitute the immutable rules of Islamic judicial law.”⁶⁹ Saleh explained these three fundamental principles as follows:

1) the strictly equal treatment of the parties to the judicial or arbitral action;

2) the prohibition against a judge or arbitrator deciding a dispute without hearing both plaintiff and defendant;

3) the prohibition against a judge or arbitrator making his judgment or award without giving the parties the opportunity to submit their evidence, pleas, and defenses..⁷⁰

They view these Sharia procedural public policy principles as largely compatible with the international principles of due process and fairness and therefore consistent with the New York Convention.

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V. APPLICATION OF PUBLIC POLICY EXCEPTION IN THE UAE COURTS

V.1. Influence of the Doctrine of Public Policy in the Enforcement of Domestic Awards in the UAE

In Baiti Real Estate Development v Dynasty Zarooni Inc.,⁷¹ the court misapprehended the limited scope of public policy under Article 3 of the UAE Civil Transactions Code. The dispute aroused from an off-plan property transaction, wherein the Dynasty purchased from Baiti, a building on the Dubai Waterfront.⁷² The dispute was regarding the validity of three Sale and Purchase agreements.⁷³ In this case, the tribunal applied Article 3 of the Law No.13 of 2008 (Property Law), which states that any sale or other disposition that transfers or restricts title will be void if not recorded on the Interim Real Estate Register of the Dubai Department of Lands and Properties, which is used to record all sales of off-plan real estate units.⁷⁴ In order to arrive at its decision to set aside the award, the Court of Cassation relied on Article 3 of the UAE Transaction Code and held that Article 3 of the Property Law is a matter of public order and falls within the exclusive jurisdiction of the court and concluded that the Sale and Purchase agreement is void.⁷⁵

There were considerable debates generated on the decision made by the Court of Cassation. It was argued by the Counsel of Dynasty that the decision of the Court of Cassation set a dangerous precedent for the interpretation of public policy in the UAE in the context of arbitration because the court seemed to state that if a matter involves an element of public policy such as disposition of property, it is not arbitrable.⁷⁶ However, the counsel for Baiti argued that the decision had no international bearing and that the judgment of the Court of Cassation was much narrower which means that in matter relating to registration of off-plan property sales which comes under the purview of Article 3 of the Property Law, the parties have valid right to submit the dispute to arbitration because Article 3 of the Property Law is a matter of Public order and falls within the exclusive jurisdiction of the court.⁷⁷ Further they argued that the courts were not empowered to review the merits of an arbitral award and that they can only take action, in case, the arbitral tribunal exceeded its jurisdiction.⁷⁸ The Baiti court, according to Blanke, set a dangerous precedent for both domestic and foreign arbitral awards to be refused or set aside based on an overly broad standard of public policy that allows for application whenever the rules relate to the circulation of wealth or private ownership.⁷⁹ However, there are commentators who opposed the view of Blanke and instead of considering its limited scope and application; they viewed that it should not affect the enforcement of foreign arbitral awards in the UAE.

V.2. Influence of the Doctrine of Public Policy in the Enforcement of Foreign Awards in the UAE

In the case of CFE v Ministry of Irrigation of the Democratic Republic of Sudan (otherwise known as Canal De Jonglei case),⁸⁰ the Court of Cassation confirmed the decision made by the Dubai Court of First Instance which refused to enforce Canal De Jonglei award on the ground that UAE lacked jurisdiction. The dispute was between a French company and Government of Sudan. The court held that UAE lacked jurisdiction because the case was brought against the party who had no domicile or place of residence within UAE, no branches in the UAE and the obligation has no connection with the UAE as it is neither carried out nor concluded in the UAE.⁸¹ The decision of the court was read as follows: “UAE courts have no jurisdiction over cases against an alien who maintains no domicile or residence in the UAE unless the case involves an obligation concluded, performed, or supposed to be performed in the UAE or, in the case of a foreign juridical person whose head office is abroad, it has a branch in the UAE and the dispute relates to a matter pertaining to that branch.”⁸² The court further stated that a question of lack of jurisdiction falls within the purview of public policy considerations.⁸³

VI. CONCLUSION

The approach towards Public policy doctrine differs from one state to another based on the fundamental, socio-cultural, economic and legal principles prevailing in the state. Time is yet another affecting the application of public policy. This change is seen due to the evolution of society culturally, economically, legally and politically.

In sphere of international commercial arbitration, the public policy doctrine connects the international arbitration with the legal system and is applied regardless of the place of arbitration or the law applicable to the merits of the case. It can act as a limitation on the denationalization of international arbitration because the recognition and enforcement of an arbitral award is

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ultimately under the control of the national courts. The very effectiveness of system of international commercial arbitration would be jeopardized by this broad and narrow application of public policy exception. Therefore, it is necessary to regulate the grounds factors under which the court may refuse the recognition and enforcement of arbitral awards and thereby limits the application of public policy defense to critical circumstances. Member to the New York Convention by adopting Model law abides the rules and correspondingly apply public policy exception in limited cases.

The UAE judiciary recently has changed their attitude towards refusing the recognition and enforcement of arbitral award based on the public policy ground, even though there are signs of pro-enforcement attitude followed by them. As a result of this, there is no binding precedent in the UAE, which makes it difficult to predict with certainty the scope of application of public policy doctrine in the UAE. In order to attain their goal of being an international hub for arbitration as well as for the development of legal system in the UAE, it is necessary for the UAE courts to follow a pro-enforcement attitude by enforcing arbitral awards- either domestic or foreign. Sharia being the main source of law stands as the pillar to the culture of society. Therefore it constitutes part of public policy of the nations’ economic and principles of the legal system. Although the new law has come into force, the concept of public policy will remain debatable and in the execution of the arbitral awards, the judiciary may review and consider taking narrow approach towards the Doctrine of Public Policy.

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