First insight – the new UAE Federal Arbitration Law and the future for UAE arbitration

On 3 May 2018, HH Sheikh Khalifa bin Zayed Al Nahyan, the President of the United Arab Emirates, issued Federal Law No. 6 of 2018 promulgating the country’s much anticipated new Federal Arbitration Law (the “New Law“). The New Law, which is heavily based on the UNCITRAL Model Law on International Commercial Arbitration, will replace and supersede Articles 203 to 218 of the Civil Procedures Code (Federal Law No. 11 of 1992 (as amended)) which currently govern arbitrations seated onshore in the UAE (the “Civil Procedure Code“).  The New Law applies to any arbitration conducted in the UAE, unless the parties have agreed that another law should apply, (Article 2) and to ongoing arbitration proceedings, even if the arbitration agreement was concluded before the Law came into effect (Article 59).

The New Law will take affect one month after its date of publication in the Official Gazette.  This article highlights some of the most significant developments and identifies key similarities and differences between the New Law and the UNCITRAL Model Law on which it is based. Continue reading

New UAE Federal Arbitration Law issued

The President of the United Arab Emirates has issued Federal Law No. 6 of 2018, promulgating the much anticipated new federal arbitration law in the UAE. As we reported in March, the new federal law, which is based on the UNCITRAL Model Law, will replace and supersede Articles 203 to 218 of the Civil Procedures Law No. 11 of 1992, which currently govern arbitrations seated onshore UAE, and will provide a properly structured procedural framework for domestic and international arbitrations seated in the UAE. The law will be published in the Official Gazette of the Union, and will come into effect one month after the date of publication.

Craig Shepherd, Head of the Global Contentious Construction Practice at Herbert Smith Freehills and Head of the Dubai Dispute Resolution team, commented: “The new Federal Arbitration Law is a very exciting development for the whole of the UAE. While the state has developed a reputation as the pre-eminent seat in the Middle East for arbitration, it did risk falling behind other nations who have introduced comprehensive new laws. That issue has now been addressed, and I am sure the new law will help cement the UAE’s position in the global arbitration market.”

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Recent arbitration developments in the UAE

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.

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Inside Arbitration: Issue #5 of the publication from Herbert Smith Freehills’ Global Arbitration Practice

We are delighted to share with you the latest issue of the publication from the Herbert Smith Freehills Global Arbitration Practice, Inside Arbitration.

In addition to sharing knowledge and insights about the markets and industries in which our clients operate, the publication offers personal perspectives of our international arbitration partners from across the globe.

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New restrictions appear to limit clients’ choice of counsel in UAE seated arbitrations – but is it a storm in a teacup?

On 27 November 2017, Ministerial Resolution No. 972 of 2017 (the “2017 Regulations”) of the Executive Regulations to the Federal Legal Profession Law No. 23 of 1991 came into force, replacing the previous Regulations issued in 1997.

The effect of the 2017 Regulations is arguably that only UAE nationals registered on the Roll of Practicing Lawyers (“Local Counsel”) can represent clients in the UAE national courts and arbitration proceedings seated ‘onshore’ in the UAE. The 2017 Regulations do not, however, apply to Dubai International Financial Centre (“DIFC”) Court proceedings, arbitrations seated in the DIFC, Abu Dhabi Global Market (“ADGM”) Court proceedings or arbitrations seated in the ADGM.

Non-UAE national lawyers (“International Counsel”) have never been permitted to appear before the UAE national courts and so the impact of the 2017 Regulations on these proceedings is limited. But the 2017 Regulations could be of great significance to arbitrations. We explore below the implications of this potentially significant and unexpected legislation on UAE seated arbitration proceedings (“Onshore Arbitrations”). Continue reading

ICC to open representative office in Abu Dhabi

The ICC has announced that it will be opening a representative office in the United Arab Emirates to service the Middle East and North Africa region.  The office aims to be open by early 2018 in the new arbitration hearing centre of the Abu Dhabi Global Market (ADGM) in Al Maqam Tower on Al Maryah Island in the UAE capital, Abu Dhabi.

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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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Agreeing to Arbitrate in the UAE: “Apparent Authority” and Article 25 of the UAE Commercial Companies law

It has long been believed that an arbitration clause in a contract could not be enforced against a UAE company unless the person signing the contract had specific authority to bind the company to arbitration, and not simply authority to enter into the contract. In Ginette PJSC and (1) Geary Middle East FZE and (2) Geary Limited, however, the DIFC Courts held that an arbitral award should be recognised and enforced notwithstanding that the individual who signed the arbitration agreement (which was contained in a settlement agreement) on behalf of an Award Debtor did not have express authority to bind the Company to arbitration. 

The Award Debtor, Ginette PJSC (the “Company”), sought to set aside the DIFC-LCIA arbitral award on the basis that Article 103 of Federal Law No. 8 of 1984 (the “Old UAE Companies Law”) provided that a private joint stock company could only be authorised to enter into an arbitration agreement if the power had been granted to the individual in the company’s articles of association or if authority was given by way of a shareholder resolution or a power of attorney. Although the Company’s articles of association granted its board of directors the authority to enter into arbitration agreements, the Executive Managing Director, who signed the settlement agreement on behalf of the Company was not, it claimed, a member of the board. The Company argued that the DIFC Court should set aside the award under Article 41(2)(a)(i) of DIFC Law No. 1 of 2008 (the “DIFC Arbitration Law”) because the arbitration agreement was not valid under the law.  Continue reading

Abu Dhabi Global Market Courts secure co-operation arrangements with UAE Ministry of Justice and Federal Courts

Following on from our previous post on the enactment of the Abu Dhabi Global Market Arbitration Regulations 2015 and the creation of a new seat of arbitration in the Middle East, the Courts of the Abu Dhabi Global Market (“ADGM”) have entered into a memorandum of understanding with the United Arab Emirates Ministry of Justice (the “MoU”).

The ADGM Courts are frequently compared to the Courts of the Dubai International Finance Centre (“DIFC”) as they both operate as autonomous common law jurisdictions, operating with an independent judiciary (largely made up of experienced common law justices), carved out from the civil law jurisdictions in which they are situated, the Emirates of Abu Dhabi and Dubai respectively. However, one key difference between the ADGM and DIFC Courts is that, rather than merely applying common law principles, the ADGM directly incorporates English common law rules and principles into its legal system.

The MoU marks an important step for the integration of the ADGM Courts into the UAE legal system. The Preamble to the MoU states that the ADGM Courts “form part of the judicial system of the UAE” and, importantly, should therefore be considered UAE Courts for the purposes of international treaties.

The MoU also provides for judicial cooperation between the Federal Courts of the UAE. Clause (2)5 of the MoU states that the Federal and the ADGM Courts are to “take all necessary measures that will ensure that enforcement of the ADGM Courts’ judgments and arbitration awards issued in the ADGM” can be sought before the Federal Courts of the UAE. Importantly, ADGM judgments and arbitral awards should be enforced by the Federal Courts “without examining the substance of the dispute”.

However, given that the three Emirates with arguably the most commercial activity – Dubai, Ras Al Khaimah and Abu Dhabi itself – have elected to opt out of the UAE’s Federal judicial system (and are therefore not Federal Courts), the practical benefits of the MoU may be limited. Similar memoranda will be required to institute the same relationship with the Courts of these Emirates.

Nonetheless, what the introduction of the MoU does clearly demonstrate is the political support the ADGM enjoys from the UAE authorities and the overriding intent that the ADGM be promoted as an accommodating and arbitration friendly forum. Judging by the development of the DIFC’s relationship with the Courts of Dubai and with other courts across the globe, the MoU is likely to be the first of many such memoranda.

For further information, please contact Caroline Kehoe, Partner, Stuart Paterson, Partner, Craig Shepherd, Partner, Joseph Bentley, Associate or your usual Herbert Smith Freehills contact.

Caroline Kehoe
Caroline Kehoe
Partner
+971 4 428 6302
Stuart Paterson
Stuart Paterson
Partner
+ 971 4 428 6308
Craig Shepherd
Craig Shepherd
Partner
+971 4 428 6304
Joseph Bentley
Joseph Bentley
Associate
+971 4 428 6350