Arbitration has emerged as one of the most favoured ways of solving disputes in the UAE. The system provides a confidential environment and is more flexible and quicker than the standard court systems. Unfortunately, most companies tend to commit significant mistakes while undergoing the arbitration process.
Knowledge of such mistakes will assist businesses in safeguarding themselves against such situations and increase their chances of success. Businesses should prepare well before engaging in any arbitration cases and obtain advice from professionals.
Understanding of Arbitration in UAE Law
Arbitration is legally recognised as a dispute resolution technique under UAE law. It is mostly applied in commercial agreements, building agreements, real estate transactions, and international business transactions.
It gives room for the choice of arbitrators specialised in the specific area. Although the method has numerous benefits, businesses do not consider the complexities of the process.
Failing to Seek Early Legal Consultation
One of the major blunders organisations make is waiting too long to seek professional legal consultation.
Organisations try to resolve issues on their own until the matter reaches a critical level where they face difficulties like loss of crucial evidence and missing deadlines, thus limiting their options when it comes to legal strategy.
By consulting an experienced lawyer in Dubai right from the start, business organisations will be able to:
- Assess the strength of their case
- Preserve key evidence
- Develop an effective legal strategy
- Avoid procedural errors
- Negotiate effectively even before arbitration commences
Legal consultation early on could possibly help organisations avoid unnecessary arbitration.
Disregarding Terms in Arbitration Agreements
Another mistake many organisations make is to sign contracts without giving enough attention to arbitration agreements.
Arbitration agreement terms include:
- Institution conducting arbitration
- Seat of arbitration
- Relevant laws
- Language of proceedings
- Number of arbitrators
These factors will definitely prove problematic for organisations in the future since UAE laws require arbitration clauses to be properly written in order for them to be enforceable.
Organisations need to consult legal services UAE providers to review their contracts.
Poor Documentation and Record Keeping
The process of arbitration cases is highly reliant on documentary proof.
One of the mistakes is not keeping systematic records of:
- Contracts
- E-mails
- Invoices
- Payment documents
- Minutes of meetings
- Reports from projects
- Correspondence with customers and vendors
Without any documentation, proving something or disproving claims can become quite complicated.
Organizations must have an organizational plan that would make sure to collect evidence in a timely manner whenever a dispute occurs.
The Choice of the Wrong Arbitrator
Selection of the Arbitrator Plays An Important Role in Arbitration
It has been seen that many organizations select arbitrators only on the basis of costs and availability, while they lack certain qualifications.
The ideal arbitrator must possess:
- Industries’ knowledge
- Sound legal knowledge
- Arbitration experience
- Impartiality and neutrality
Seeking assistance from a competent Dubai lawyer will help organizations select the appropriate arbitrators for their specific cases.
Procedural Requirements Underestimated
Many organizations believe that arbitration is an informal method and therefore they neglect procedural requirements.
However, in practice, the procedure requires:
- Preparation of submissions
- Evidence submission
- Witness statements
- Expert reports
- Deadlines
Not complying with the process may lead to rejection of claims altogether.
Legal services UAE can assist organizations meet procedural requirements of arbitration.
Failing to Prepare Witnesses and Experts
Arbitration cases may rely heavily on witness statements and expert opinions.
The most common errors include use of witnesses that are ill-prepared or unaware of arbitration procedures.
Likewise, hiring experts without experience in arbitration can diminish the strength of technical data.
The key is for a business to coordinate with its lawyers to:
- Develop statements for witnesses
- Stage mock depositions
- Review evidence in documents
- Enable experts to present findings effectively
These actions increase the chances of success in an arbitration hearing.
Emotional Approach vs. Strategic Approach in Business Disputes
It is easy to become emotional about a dispute between companies.
This is particularly true when there have been financial losses or broken personal ties.
Nevertheless, arbitration is a matter of strategy and objectivity.
Businesses sometimes make decisions based solely on emotions, including:
- Refusing acceptable offers
- Making unreasonable claims
- Creating more conflict than necessary
Professional lawyers know how to evaluate risks rationally and plan accordingly.
Neglecting Settlement Opportunities
Many companies wrongly assume that the arbitration process should run its full course till an award is made.
However, settlement negotiations can be considered at any stage in the process.
Settlement negotiations may prove useful for:
- Lowering costs
- Reducing management time involvement
- Maintaining commercial relations
- Reaching quicker settlements
Proper legal counsel allows businesses to decide whether they have a chance of reaching a settlement that fits into their commercial goals.
Not Hiring Experienced Legal Counsel
The biggest mistake a company can make is undertaking arbitration without the benefit of legal professionals.
Arbitration is a process that requires extensive knowledge of law and procedure. An experienced Dubai lawyer is able to offer assistance and advice at each stage of the arbitration process.
Legal representation will allow businesses to:
- Formulate their arguments effectively
- Gather necessary evidence
- Follow all procedural rules
- Defend their legal interests
- Maximise the likelihood of a favourable outcome
Conclusion
Arbitration can be considered a valid approach for settling disputes under UAE Law. Nevertheless, there are many traps that you can fall into, which could potentially make you vulnerable in the arbitration process. Some examples include insufficient documentation, late legal consultations, no preparation of witnesses, and non-compliance with procedures.
Working with experienced legal professionals such as Charter Legal will enable your company to successfully manage its way through the arbitration process. You need our services, including legal consultation services in the UAE and a Dubai lawyer, to avoid mistakes in business arbitrations.