The threat of imprisonment for arbitrators in the UAE has been removed as Article 257 is amended

A decision by the federal government of the UAE to remove arbitrators from the scope of application of Article 257 of the UAE Penal Code has been welcomed by the arbitral community in the UAE and beyond. Federal Decree No. 24 of 2018 came into force on 8 October 2018.

Dubai, seen as an arbitration-friendly jurisdiction, saw a threat to its image when Article 257 was amended in 2016 to include arbitrators in the category of individuals against whom criminal sanctions could be imposed if they failed to maintain integrity and impartiality in the discharge of their duties.

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Arbitration in Dubai: two steps forward, one step back

Introduction

Dubai promotes itself as an arbitration-friendly jurisdiction, in line with its objective of attracting international business. A recent, much-publicised change to the UAE Federal Penal Code which introduces potential criminal sanctions for arbitrators, threatened to undermine this reputation.

It would now appear that this threat is real, as arbitrators are in increasing number withdrawing from UAE-seated tribunals and refusing nominations to sit as arbitrators on such tribunals.

While the apparent policy behind the new amendment is understandable, since it requires that arbitrators act with impartiality and integrity, the drafting has far-reaching and perhaps unintended consequences.

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