Out-Law News 2 min. read

Amended UAE arbitration law bolsters confidence in onshore arbitration

Recent changes to the arbitration regime in the UAE are welcome and expected to boost confidence in onshore arbitration among domestic and international parties, according to experts in international arbitration who believe it will, in turn, cement the business ecosystem in the UAE and encourage further interest and investment.

Mark Raymont, Melissa McLaren and Seema Bono of Pinsent Masons were commenting after the UAE made several important amendments to its Arbitration Law, in a move to improve efficiency and flexibility of arbitration proceedings in the jurisdiction.

Raymont said the amended arbitration law “underscores the UAE as an arbitration-friendly jurisdiction and highlights the UAE government’s proactive approach to ensure that disputes are resolved effectively”.

Bono added that the changes “underline independence of arbitrators, add greater accountability of arbitration proceedings, provide more freedom to parties to agree on arbitral procedures, and embrace modern methods and technologies”.

The changes to the UAE Arbitration Law include provisions relating to the appointment of arbitrators, modern arbitration methods such as virtual fora and the use of technology, and greater freedom for the parties to agree on procedures.

The amended law imposes stricter requirements for arbitrators to maintain impartiality and independence. Any direct relationship between an arbitrator and one of the parties that would prejudice the arbitrator’s integrity, impartiality or independence is expressly prohibited.

While an arbitrator cannot be a member of a board of trustees, executive management or management body of the arbitration institution administering the proceedings in the UAE, new provisions have introduced an exception. This exception permits individuals from amongst the board of directors, the board of trustees, or those in similar positions, in the supervisory or controlling bodies of the arbitration institution administering the proceedings in the UAE to act as arbitrators if they satisfy eight specific conditions. Notably, if any of those conditions are violated – which include the arbitrator not sitting as a sole arbitrator or chair of the tribunal – it will result in the invalidity of the arbitration award. In those cases, the parties to the arbitration will have the right to demand civil compensation from the arbitral institution and the arbitrator. As such, it is anticipated that both the relevant arbitral institution, affected arbitrators and nominating parties will tread very carefully in this area.

The amendments reaffirm the parties’ right to agree on the procedures that the arbitration tribunal should follow in the conduct of the proceedings, having regard to the rules of the applicable arbitral institution. Tribunals are also given discretionary power to “determine the applicable rules of evidence, where the applicable law lacks evidence to decide on the dispute”, but they are required to ensure that the chosen rules do not conflict with public order.

Adopting a trend seen in the revisions to many institutional rules, the amended law has acknowledged that the physical place of arbitration proceedings can be virtual.

Acknowledging that the amendments to the UAE Arbitration Law are welcomed, Melissa McLaren of Pinsent Masons added a word of caution: “Recent changes to the UAE Arbitration Law serve as a reminder that the law of the seat of arbitration proceedings, incorporated into an arbitration agreement and fundamental to the resolution of future disputes, can change. Parties would be well advised to keep their arbitration clauses under review and always take legal advice before commencing proceedings.”

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