Dubai is known to be among the top destinations for businesses worldwide. With thousands of foreign corporations that operate their businesses in diverse sectors such as real estate, finance, technology, constructions, and trading, it is inevitable to experience commercial issues at one point. However, lengthy legal processes can turn out to be expensive and time-consuming, which is why arbitration comes into play as a method of conflict resolution.
If you own a business in UAE or are involved in any investments in this country, you should acquaint yourself with the UAE Arbitration Law in order to secure your commercial activities. Below, you will learn all that you should know about arbitration in Dubai.
What Is Arbitration?
This process entails resolving disputes out-of-court by having both parties submit the dispute to a neutral third party referred to as the arbitrator(s).
After reviewing evidence and hearing arguments by both parties, the arbitrator makes a legally binding decision called the arbitral award. The arbitral award may be executed in the UAE as well as in most other countries of the world.
Some applications of arbitration include commercial contracts, construction, shareholding and joint venture agreements, international business transactions, and investments.
Understanding UAE Arbitration Law
The UAE Arbitration Law mainly consists of Federal Law Number 6 of 2018 on Arbitration.
This law was enacted to bring the arbitration law of the UAE up to the mark in accordance with international best practices.
The law is mainly modeled on the United Nations Commission on International Trade Law (UNCITRAL) model laws, hence making it quite reliable.
This law applies to:
- Domestic arbitrations
- International commercial arbitrations
- Cases of arbitrations in the UAE
- Certain international cases opting for the arbitration law of the UAE
This modern legal system has built the confidence of foreign investors and made Dubai a world-class destination for international arbitration.
Why Businesses Prefer Arbitration in Dubai
1. Faster Resolution of Disputes
It usually takes a long time to resolve matters through courts because of appeals, but the arbitration process is shorter in terms of time frame.
The businesses will not face any delays that could interfere with their daily business processes.
2. Confidentiality
Since the proceedings of an arbitration are not conducted publicly, business-sensitive data, including confidential financials and contracts, stays safe from exposure.
This aspect is extremely useful for corporations, investors, and major commercial deals.
3. Industry Experts
Arbitrators are selected according to the parties’ preferences; the parties can choose experts who specialize in certain industries, such as:
- Construction
- Real estate
- Finance
- Energy
- Technology
- International trade
Having industry experts decide disputes often results in more practical and commercially informed outcomes.
4. International Enforceability
One of the most important strengths that arbitration has is the international enforceability of awards.
UAE has signed the convention for recognition and enforcement of foreign arbitral awards called New York Convention. The signing of the convention makes arbitration extremely appealing to international investors because the awards made by the arbitration panels in the UAE can be recognized and enforced in many countries.
Key Arbitration Centers in Dubai
There are several arbitration centers operating in Dubai for resolving both local and international disputes.
1. Dubai International Arbitration Centre (DIAC)
One of the major arbitration centers in the region is the Dubai International Arbitration Centre (DIAC). DIAC offers a full spectrum of arbitration facilities, with advanced procedural rules to ensure the effective resolution of the dispute.
DIAC resolves disputes in relation to construction works, commercial contracts, property issues, corporate business, and international commerce.
2. Arbitration Rules under DIFC Legal System
The Dubai International Financial Centre (DIFC) represents a common law jurisdiction, which is easy for foreign companies to operate under.
Arbitration under the legal framework of DIFC enjoys substantial court assistance.
Essential Elements of an Arbitration Agreement
In order for an arbitration process to work efficiently, there has to be a well-written arbitration agreement incorporated into the contract of the parties involved.
Some of the key issues that have to be identified in a good arbitration agreement include:
- The place of arbitration
- The governing law
- The arbitration institution
- The number of arbitrators
- Language of the proceeding
- Dispute scope covered
Poorly drafted arbitration clauses can create uncertainty and lead to jurisdictional challenges. Professional legal guidance is therefore highly recommended during contract preparation.
Arbitration Process in Dubai
While procedures may vary depending on the institution and agreement, the typical arbitration process includes:
1. Filing the Arbitration Request
One side starts the arbitration process by presenting its claim and describing the dispute.
2. Appointment of Arbitrators
The arbitrators are selected either by the parties themselves or by the arbitration body according to its rules.
3. Submission of Documents
Each side submits documents, affidavits, expert opinions, and legal arguments.
4. Hearing
The tribunal may hear the case, giving the sides an opportunity to state their claims and answer questions.
5. Final Award
A final ruling is issued, solving the dispute.
Challenges and Enforcement of Awards
Though arbitration awards are typically considered final and binding, there are some exceptions under UAE law to challenge the arbitration award.
Some examples of issues that may be reviewed by courts include:
- An invalid agreement to arbitrate
- Procedural flaws
- Due process violations
- Issues of public policy
But UAE courts, for the most part, remain pro-arbitration and enforce valid arbitration awards.
Why You Need Professional Help
Arbitration is a complicated procedure. Businesses and investors will need to consult an attorney on matters of:
- Drafting arbitration agreements
- Commercial contracting
- Commencing arbitration cases
- Defending against arbitration cases
- Enforcing arbitration awards
- Cross-border arbitrations
A lawyer will advise you on complying with UAE laws in the arbitration process.
Conclusion
Dubai has evolved into one of the foremost destinations for international business transactions, investments, and disputes settlement. The UAE Arbitration Law serves as a modern, effective, and globally accepted framework to resolve commercial disputes.
Arbitration is still the method of choice among companies conducting business in the United Arab Emirates due to its advantages such as confidentiality, flexibility, professional arbitrators, and enforcement around the world. Businesses can secure their investments and deal with challenges in the Dubai business environment effectively by having an idea about arbitration and getting adequate legal advice.
Charter Legal offers legal assistance to businesses, investors, and corporations regarding effective solutions for settling disputes through arbitration and other means in Dubai and the United Arab Emirates.