Arbitration is a legal process that resolves bi or multi party disputes without taking them through the formal court system.
In the UAE and Middle East it is an alternative dispute resolution method highly considered in light of its advantages over the particularities of the national estate courts and legal system.
The below table addresses the main aspects of arbitration, from how to plug it into potential disputes to the benefits of enforcing an arbitral decision.
ARBITRATION - THE BASICS
Litigation takes place within a given national
court system (e.g. UAE or Saudi Arabia), whose judges are
emporwered to rule based on the powers granted to them by the
Arbitration takes place in accordance with procedure selected by the Parties by an Arbitral Tribunal empowered by the Parties' contractual freedom
Finality of the Award - decisions rendered by
arbitrators are final and cannot be appealed.
Cost - in light of the shorter procedure, arbitration is usually less costly
Specialization - Parties can select arbitrators with experience in relevant fields (engineering, a particular type of projec, etc)
Neutrality - when involving parties' nationals of the country where the arbitration is being held
|WHEN AND HOW I SELECT ARBITRATION||Usually such decision is undertaken at the onset of the parties' contractual relations and reflected in the Contract between them by way of enclosure of an arbitration clause. Very rarely but possible, such decision can also take place upon the initiation of the dispute and the subsequent decision by the Parties to dispute the matter.|
|DO I ALWAYS NEED TO SELECT AN INSTITUTION?||While arbitral institutions (ICC, LCIA, DIAC, etc) do not arbitrate disputes, they provide administrative support to arbitrations, such assign arbitrators when parties cannot agree and (many of them) maximise chances that awards shall be complaint with procedural requirements of the jurisdiciont by revising the texts of awards prior to their release.|
|HOW LONG DOES IT TAKE TO OBTAIN AN AWARD||Most institutional rules provide a period of 6 months from the date the file is transferred to the Arbitral Tribunal. Such period can be extended by the Arbitrator merely once and subsequently by common agreement by the Parties. The most common practice in Dubai (as regional arbitration hub) is 6-12 months.|
|` ARBITRATION IS EXPENSIVE!||Given the complexities
of the process and the difficulty to find experienced lawyers in
the field, it used to be more expensive than regular litigation.
The law of the offer and demand!
However nowadays, one is looking at equal legal fees if compared to litigation before local courts. In addition arbitration awards usually grant to the successful parties the full amount of legal fees paid. This does not take place in local courts in the Middle East!
Costs vary significantly subject to amount in dispute, arbitral institution or ad hoc arbitration and whether lawyers are familiar with arbitration best practices.
|WHAT DO I DO IF I WIN THE CASE BUT I STILL DO NOT GET PAID||In such case the
enforcement of the award shall be required. The enforcement of an
award involves the involvement of the local courts of the
jurisdiction where the award needs to be enforced.
However, losing parties are often cautious of not complying with the terms of the awards in light of the interests which shall be applied from the date the award is rendered.
Where can I enforce the award?
Thanks to the New York Convention of 1958, awards rendered abroad can benefit of the mechanism established in this treaty to enforce in country members (170approximately!)
|WHAT IF I AM THE LOSING PARTY? ANYTHING I CAN DO AGAINST AN ARBITRAL DECISION?||Notwithstanding the fact that arbitral awards cannot be appealed, dissatisfied parties can seek to invalidate – vacate – the award in the country where the award was rendered – i.e. in the UAE Courts – or in the courts where its enforcement is sought. Depending on the different jurisdictions, the grounds for doing so will vary.|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.