Arbitration is a popular method of dispute resolution in the UAE and in the surrounding regions. The growth of arbitration in the UAE is reflected to some extent by the fact that there are now several institutions in the UAE which administer commercial arbitrations.
The UAE also introduced Federal Law No. 6/2018 on Arbitration (Arbitration Law), the UAE’s first stand-alone law on arbitration, which introduced, among other things, a more streamlined process to enforce domestic arbitration awards, as well as amendments to the UAE Civil Procedure Code to facilitate the recognition and enforcement of foreign arbitral awards.
In 2021, Dubai Decree No. 34 of 2021 (Decree 34) abolished the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre (DIFC) Arbitration Institute (which administered DIFC-London Court of International Arbitration (LCIA) arbitrations), and all assets and liabilities of these centres were transferred to the Dubai International Arbitration Centre (DIAC).
The more prominent arbitral institutions in the UAE are the:
DIAC, which administers arbitrations under the DIAC Arbitration Rules 2007 (DIAC Rules) and the DIAC Arbitration Rules 2022. The DIAC has also recently begun to accept the filing of new arbitration cases subject to a DIFC-LCIA arbitration agreement. These cases will be administered by DIAC under the DIAC Rules 2022.
Some advantages of arbitration over litigation include:
- The proceedings are confidential (unless the parties agree otherwise).
- Arbitrators with the requisite expertise can be appointed to deal with disputes involving technical subject matters.
- Arbitrations can be conducted in English, or in any other language agreed to by the parties, whereas local court litigation is always in Arabic.
- Oral evidence is permitted in arbitration, whereas only written submissions are generally permitted in the courts.
- There are limited avenues for appealing arbitral awards and the merits of a decision cannot be challenged.
Some disadvantages of arbitration when compared to litigation include:
- Arbitral proceedings are generally more costly, considering the tribunal and administrative fees.
- Arbitration awards must be ratified by the courts to be enforceable. This can cause delays and extra costs in the enforcement of an award, although the position has improved with the introduction of the Arbitration Law.
If the arbitration clause was not clear in the agreement, how do I know if I should proceed to DIAC?
You should submit a request called an order on petition arbitration in Dubai Court and based on the order, the Court shall decide if it needs to be transferred to DIAC.