"There are two sides to Every Story."
Mediate over Litigate
Mediation is a non-judicial means of dispute resolution mechanism, and it has become very prevalent because of the disadvantages or limitations faced in litigation. Mediation or conciliation has been for centuries in UAE as it has helped to resolve the disputes cheaply, efficiently and expediently. Sulh or amicable settlement has a long history within Arab and Islamic societies and have their roots in pre-Islamic Arabia. Sulh is the preferred result and process in any form of dispute resolution.
As per the voting results of the Global Pound Conference (Dubai) 2017, 67% of the voters feel that financial and time constraints are the main obstacles or challenges that parties face when seeking to resolve commercial disputes and other significant problems voted were uncertainty and emotional and cultural constraints. We are all aware that the litigation is a very costly and time-consuming mechanism for resolution of disputes and it destroys the commercial or personal relationship between the parties. In past few decades, UAE has experienced an exponential amount of industrial growth and investment, but this has also increased commercial and labor disputes – effective and timely settlement of which is extremely important of UAE to maintain itself as a stable and attractive business and commercial hub.
In this article, we track the legal and regulatory framework surrounding mediation and conciliation in federal UAE and Dubai.
The 'How' of Mediation
I. UAE Federal Law
UAE does not have a dedicated law to cover all necessary aspects of commercial, family or labor reconciliation. The mediation can categorize into two forms as below:
- compulsory mediation;
- voluntary mediation.
Compulsory or mandatory mediation is an amicable dispute resolution process in which the parties are required, under the applicable law, to compulsorily go through the mediation process before they can move to a court. Voluntary mediation is, as the name suggests, an amicable dispute resolution process where parties opt to go through conciliation voluntarily as opposed to being forced by any law to do so.
The UAE Federal Law Number 17 of 2016 (the Mediation Centre Law) provides for the establishment of mediation and conciliation centers for civil and commercial disputes. The Article 2 of the Mediation Centre Law provides that the minister or head of the local judicial authority can establish one or more mediation and conciliation center within the jurisdiction of the Court of First Instance. Article 3 of the Mediation Centre Law provides that parties can refer following kinds of the dispute to such established centers;
- A civil or commercial debate not exceeding AED 500,000.
- A civil or commercial dispute of un-known or non-estimated value.
The Article 4 of the Mediation Centre Law provides below-mentioned disputes cannot be referred to a mediation and conciliation center established under this law;
- Urgent and temporary orders and lawsuits.
- Cases where the government is a party.
- Rent lawsuits settled by committees specialized in rental disputes.
- Labor lawsuits.
- Personal status lawsuits.
- Any other lawsuits which decide for settlement another Centre, committee or entity of similar competence.
The Mediation Centre Law further provides the duties and obligations of conciliators, work procedures, termination of mediation and conciliation proceedings, etc. It is pertinent to mention that Article 15 of the Mediation Centre Law provides that the settlement reached in a mediation and conciliation proceeding is final and the judge overseeing the center shall have the power of a writ of execution, and the agreement does not entail the right to appeal in any way.
The UAE Federal Law Number 26 of 1999 (the Conciliation Committee Law) provides for the establishment of conciliation and reconciliation committees at the Federal Court. Article 1 of the Conciliation Committee Law provides that one or more Conciliation and Reconciliation Committee can be set up at the seat of every Civil of Sharia Federal Court of First Instance and Article 2 provides that such committee shall be competent to settle civil, commercial and labor disputes of whatever value. The Article 3 of the Conciliation Committee Law further provides that the Federal Court of First Instance establishes such committee, cannot register any case unless the concerned parties submit a no objection certificate issued by the concerned Conciliation and Reconciliation Committee. Furthermore, the Article 7 of the Conciliation Committee Law provides that, if the parties reach to an agreement, then it shall be final, and the competent court shall have the force of the writ of execution, and it cannot be subject to any further review or appeal.
The UAE Federal Law Number 8 of 1980 (the UAE Labour Law) provides provisions related to UAE labor law. The Article 6 of the UAE Labour Law provides that in case of a dispute the employer, the worker or any beneficiary thereof shall file an application to the competent Labour Department that shall then summon both the parties and aim to resolve the dispute amicably.
The Federal Law Number 28 of 2005 (the Personal Status Law) governs the legal issues related to disputes arising out of personal status. Article 16 of the Personal Status Law provides that discussions about personal status matters should first come before the Family Orientation Committee which shall be responsible for conciliation between the parties. If the parties reach to a settlement, then it should be recorded in minutes and upon sanctioned by the competent judge, it shall be enforced as an executory deed and shall not include the right to appeal unless there is a violation of the provision of the UAE Labour Law.
II. Dubai Laws
The Law Number 16 of 2009 (the Amicable Centre Law) provides for the establishment of the Center for the Amicable Settlement of Disputes in Dubai. The Article 4 of the Amicable Centre Law provides for the jurisdiction of the Centre. It states that the Centre shall have jurisdiction over all disputes, except following;
- Summary and interim orders and actions,
- Actions to which the Government is a party,
- The steps beyond the authority of the Courts,
- Works registered before the Courts before the coming into force of the provisions hereof.
The Article 12 of the Amicable Centre Law provides that if the parties settle then, their settlement should be mentioned in the form of a reconciliation agreement as approved by the competent judge and shall have the force of an executive bond.
Furthermore, as per the Article 1 of the Dubai Administration Decision Number 1 of 2017 the Centre shall have jurisdiction in the following matters;
- Division of joint ownership;
- If the value of the debt principal in a dispute does not exceed AED 100,000;
- At the request of disputing party or both parties upon registration;
- At the request of both parties in the cases raised before the courts of the first instance, or commercial, civil, or real estate courts regardless of the values involved following the approval of the competent chief judge of the circuit;
- Request for the appointment of an expert.
III. Dubai International Financial Center (DIFC)
The Rules of DIFC Court 2014 (the RDC 2014) apply to all DIFC Court proceedings in the Court of First Instance and Court of Appeal.
The Rule 27.1 of the RDC 2014 provides that the Court can encourage parties to consider the use of alternative dispute resolution as an alternative means of resolving disputes or particular issues. The Rule 27.2 further provides that the DIFC Court believes the settlement of disputes by use of alternative dispute settlement mechanisms helps parties to save the cost, time, commercial relationship and offers a border range of solutions than litigation. The Rule 27.2 provides that the Judges will, in appropriate cases, invite the parties to consider whether their dispute or particular issues in it, could be resolved through alternative dispute resolution.
Parties are also free to agree to resolve their disputes through private mediation by agreeing to an intervention or conciliation clause in their agreements. Several mediation centers offer mediation services to the parties in UAE life DMCC Mediation Centre, DIFC-LCIA Arbitration Centre, Abu Dhabi Commercial Conciliation and Arbitration Centre.
Although UAE or any of its emirates does not have dedicated legislation for enforcement settlement agreements arising out of private mediation, however, the above analysis of highlight the emphasis given to amicable dispute resolution process by this Arab nation. It is referred that parties take help of experienced mediators and mediation counsels to ensure that they understand the process and mechanism to negotiate effectively for their rights.
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.