All About Arbitration - The Draft Federal Arbitration Law

The role of arbitration has recently taken a new direction as a result of current challenges facing economies globally. The slowdown in the world economic order has no doubt given rise to the number of commercial disputes, bringing the importance of the arbitration process as an integral dispute resolution mechanism to the forefront.

With the UAE becoming a prominent domestic and international arbitration hub, and its arbitral centres reflecting a standard of international best practice, the legal community has been waiting patiently for a Federal Arbitration Law to complete the arbitration wheel. Such a law will provide guidance and clarity to the arbitration procedure in a country where arbitration is exponentially growing and proving a favourable seat for parties to resolve their arbitration disputes.

The UAE has five domestic institutions which administer arbitration under their own rules. They include:

• The Dubai International Arbitration Centre ("DIAC") which administers arbitrations under the DIAC Arbitration Rules 2007 (which came into effect on 7 May 2008)
• The DIFC-LCIA Arbitration Centre which administers arbitration under the DIFC-LCIA Arbitration Rules 2008 (which came into effect on 17 February 2007)
• The Abu Dhabi Conciliation and Arbitration Centre ("ADCCAC") which administers rules under the Procedural Regulation of Abu Dhabi Commercial Conciliation and Arbitration Centre (which were issued pursuant to Resolution No (7) of 3/1/1993)
• The Sharjah International Commercial Arbitration Centre (established pursuant to Emiri Decree No.6 of 2009)
• Ras Al-Khaimah Commercial and Arbitration Center – (established pursuant to Emiri Decree No. 17 of 2008)

The UAE has also formally acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 on 19 November 2006.

However, the UAE does not have independent legislation governing domestic and international arbitration. Therefore all arbitrations under UAE law are principally governed by the UAE Civil Procedure Law, Federal Law No (11) of 1992 ("CPL").

Although the primary purpose of the CPL is to govern court proceedings before local and federal courts, there are a small number of sections which specifically address arbitration:

• Articles 203 to 218 set out the general framework for arbitration in the UAE
• Articles 235 to 238 govern the enforcement of foreign judgments
• Articles 239 to 243 govern execution procedures.

The CPL respects the parties' agreement to arbitrate and provide for the recognition of arbitration in the UAE. However, the articles are brief and provide the minimal guidance for arbitration proceedings.

The current law, which is heavily influenced by Egyptian law is now under review, and a draft form of a new Federal Arbitration Law was circulated last year for public comment. Once enacted, the new Federal Arbitration Law which is based on the UNCITRAL model law as well as on Egyptian law, will replace the existing provisions of the CPL.

On the 24 May 2010, a team of Al Tamimi & Company dispute resolution lawyers attended the "Draft Federal Arbitration Law" Conference in Abu Dhabi under the Patronage of H.E. Eng. Sultan Bin Saeed Al Mansouri, Minister of Economy, The International Islamic Centre For Reconciliation & Arbitration, and The Institute of Training & Judicial Studies. The conference put the Draft Federal Arbitration Law under the limelight and provided the opportunity to discuss and comment on the Draft Law, which is expected to be passed by the Federal Government by the end of 2010.

The conference was conducted in partnership with the Abu Dhabi Conciliation and Arbitration Center and the Dubai International Arbitration Centre, and presented papers by prominent and specialist individuals in the Arbitration field as follows:

• Dr. Abdul Wahhab Abdoul, Chief of Supreme Federal Court
• Dr. Ashraf Abdul Muniem, Senior Legal Specialist at the Securities and Commodities Authority presented the first paper on "General Presentation of Federal Arbitration Draft Law" which outlined the main general features of the Arbitration Draft Law and aspects of its implementation. It also highlighted characteristics of the Draft Law when compared to any similar previous draft laws dealing with arbitration. Furthermore, it compared the similarities and some of the differences to the UNCITRAL model law.
• Mr. Karim Nasif, Lawyer at Habib Al Mullah presented a paper on "Development of Arbitration Status with the Aim of Enacting an Integrated Federal Arbitration Law". This talk discussed the evolution of arbitration law in the UAE, from as early as 1970 in Abu Dhabi to the current CPR laws, highlighting strengths and weaknesses and the need for an integrated law that would combine the various issues of arbitration including its deep impact on investor confidence.
• Judge Dr. Jamal Al Sumaiti, General Manager of the Dubai Judicial Institute presented "Arbitration in the Perspective of UAE Supreme Courts Justice". This paper discussed the key UAE judicial rulings on arbitration in light of provisions of federal procedural law. It also reviewed the principles reached by the Supreme Federal Court, Dubai Courts of Appeal and Cassation in the area of domestic and international arbitration. It also investigated judicial approaches to the reasoning of arbitration rulings, their ratification and enforcement, with particular focus on foreign arbitration decisions based on the UAE joining the New York Convention 1958.
• Mr. Essam Al Tamimi – Advocate and Senior Partner at Al Tamimi & Company presented "The Role of the Arbitral Tribunal in the Progress of Litigation Procedures", which explained the way arbitrators are appointed, the manner they accept their assignment and the duty of disclosure carried out by the arbitrator before and after his appointment. He also discussed the mechanism and powers of the arbitral tribunal, as well as the principles arbitrators must abide by within a framework which compared the Draft Law and the model law. Mr. Al Tamimi outlined that the Draft Law is almost complete and is at the fine tuning stages. He emphasized the need for the Draft Law to refer to existing arbitration centers, to extend time limits and to accommodate for arbitrations with multiple parties where multi-party awards are needed.
• Dr. Abul Hameed Al Ahdad, Legal Consultant and Advocate and Editor in Chief of the Law Magazine in Beirut presented a paper in absentia "The Supporting Role of the Judge in an Arbitration Proceeding Prior to Issuing a Ruling" which dealt with normal and urgent judicial jurisdiction to supervise and intervene in arbitration proceedings, as well as the role of justice in making arbitration a success.
• Dr Burhan Tawid Amralla, Chief of Cairo Court of Appeal shared a paper on "The UAE Justice Control over Arbitration Rulings on Validation and Invalidation".
• Dr. Abdul Sattar Al Khuwailedi, Secretary General of the International Islamic Centre for Reconciliation and Arbitration presented "The Role of the Draft Law in Reducing Procrastination".
• Dr. Nasser Bin Ghineim Al Zeid, Secretary General of the GCC Commercial Arbitration Center presented in absentia "The Gulf Experience in the Area of Arbitration: Laws and Provisions".
• Dr Hussam Al Talhouni – Director of the Dubai International Arbitration Centre discussed and commented on risk management, annulment of awards and jurisdiction of the Courts.

In light of the in-depth and broad communal consultation initiatives taken to develop and draft the Federal Arbitration Law, the UAE will soon have an effective consolidated law to support the growing popularity of arbitral proceedings in the country. The conference provided a platform for further discussion and comments in order to address all issues that arise under the current arbitral process. These need to be resolved in the Draft Law in order to provide a comprehensive legal framework which encourages foreign and domestic parties to arbitrate locally and which is on par with international model law. Of course the Draft Law is a work in progress and is subject to further modifications by the working groups formed to assist in the drafting. This initiative heralds a new chapter in arbitration for the UAE and we look forward to welcoming the enactment of the Draft Law.

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