In the last few months, there have been two notable developments in the United Arab Emirates relating to arbitration. First, it was announced on 27th February 2018 that the Federal National Council of the United Arab Emirates has approved the highly anticipated draft of the Federal law on Arbitration (understood to be based on the UNCITRAL Model Law on International Commercial Arbitration). Second, the Legal Affairs Department of the Government of Dubai has clarified that all lawyers who are licensed in Dubai have the right of audience before any arbitration tribunal in Dubai, including foreign lawyers, and that visiting lawyers may also appear before arbitral tribunals in Dubai. These significant and welcome developments are discussed further below.
The highly anticipated UAE Federal Arbitration law is announced
On Tuesday 27th February 2018, the UAE government announced that the Federal National Council (FNC) of the United Arab Emirates has approved a draft Federal Law on Arbitration. The draft law is understood to be based on the 1986 UNCITRAL Model Law on International Commercial Arbitration (as amended in 2006) and has been eagerly awaited since the UAE acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the “New York Convention”) over a decade ago.
Scope of application and next steps
The new federal law will replace and supersede Articles 203 to 218 of the Federal Civil Procedure Code which currently govern arbitrations seated onshore UAE. It is anticipated that the new law will provide a properly structured procedural framework for domestic and international arbitrations seated in the UAE, with clear rules on when an award may be challenged, as well as easing the route to enforcement of awards by giving arbitration awards the status of court judgments which can be ratified in the UAE Courts (thereby avoiding lengthy enforcement proceedings).
There are still a number of procedural steps that must be taken before the law will come into force. Pursuant to Article 110 of the UAE Constitution, following approval by the FNC of the draft law, the law will be submitted to the President of the Union for his agreement and presentation to the Supreme Council for ratification. Once ratified, the law will be signed and promulgated by the President. Pursuant to Article 111 of the Constitution, the law will then be published in the Official Gazette of the Union within a maximum of two weeks, and will come into effect either one month after the date of publication or on the date stipulated in the law.
The introduction of a standalone Federal Arbitration Law is a significant and welcome development in the UAE and the region. Stuart Paterson, Partner in the Dubai Dispute Resolution team at Herbert Smith Freehills, was quoted in the Dubai newspaper, The National, noting the welcome implications the law would have for investors who choose to arbitrate in the UAE: “The UAE’s draft law provides a more comprehensive, modern framework for managing complex cross-border arbitrations than what is currently contained in a small set of provisions in the UAE civil procedure code. Arbitration is an increasingly popular choice for businesses because it can offer confidentiality, independence, speed, flexibility and ease of overseas enforcement compared to litigation in a national court.”
Clarification on Ministerial Resolution No. 972 of 2017
In a previous blog, we considered the potential effect of Ministerial Resolution No. 972 of 2017 of the Executive Regulations to the Federal Legal Profession Law No. 23 of 1991 (the “2017 Regulations”). The article discussed the concern amongst the legal community that Articles 2 and 17 of the 2017 Regulations suggested that only UAE nationals could represent parties in UAE-seated arbitration proceedings, and explored how this effect would be contrary to the UAE Civil Code and Constitution.
In a welcome development, however, the Legal Affairs Department of the Government of Dubai has since circulated a letter allaying those concerns. The letter, circulated in December 2017, confirms that all lawyers who are licensed in Dubai have the right of audience before any arbitration tribunal in Dubai, including foreign lawyers (who are registered as legal consultants with the Dubai Legal Affairs Department). The letter also confirms that visiting lawyers may also appear before arbitral tribunals in Dubai.
This letter from the Legal Affairs Department provides a helpful clarification to legislation which at first appeared at odds with the pro-arbitration approach taken by the UAE.
If you would like further information regarding the new arbitration law and how this may affect you, please contact Craig Shepherd, Partner, Stuart Paterson, Partner, Caroline Kehoe, Partner, Anna Wren, Senior Associate, or your usual Herbert Smith Freehills contact.