Latest UAE’s Arbitration Law

One of the leading dispute resolution methods within the United Arab Emirates is arbitration. Federal Law No. 6 of 2018, also known as the “2018 Arbitration Law,” is the main legislation regulating arbitration proceedings seated onshore in the UAE. This law was another milestone for arbitration in the UAE, bringing legislative alignment more closely with that seen internationally and keeping up with best practices. However, in September 2023, Federal Law No. 15 of 2023—the “2023 Arbitration Law”—came into force, making significant changes to the 2018 Arbitration Law. The amendments have been targeted to bring clarity to ambiguities, flexibility in the arbitral procedure, and improved efficiency with increased integrity of the arbitral process in the UAE.

Overview of the 2018 UAE Arbitration Law

The UAE’s Arbitration Law of 2018 provides a clear legal framework pertaining to arbitration. It covers fundamental provisions on the appointment and duties of arbitrators, the arbitral procedure, and the enforcement of the arbitral award. This law applies to arbitrations with their seat onshore in the UAE. There are other special arbitration laws governing those seated in the free zones, such as the DIFC and ADGM.

The key provisions in this 2018 Arbitration Law are:

• Appointment of Arbitrators: Under this law, specific descriptions of the arbitrators’ qualifications and requirements of impartiality are provided.
• Arbitral Proceedings: The law gives flexibility to parties to agree on the rules that shall govern the arbitration, including the applicable laws and arbitral institutions.
• Enforcement of Arbitral Awards: The law is compatible with the international norm by allowing recognition and enforcement of arbitral awards that do not contradict UAE public policy.

While the 2018 Arbitration Law certainly represented a significant development in the UAE’s arbitration regime, in practice, certain ambiguities and limitations with respect to its procedural aspects have gradually come to light.

Key Amendments Introduced by the 2023 Arbitration Law

The 2023 Arbitration Law brings amendments to Articles 10, 23, 28, and 33 of the 2018 Arbitration Law and also introduces a new Article 10(bis). Below are those amendments and what they actually mean in practice:

• Article 10 – The Requirements to be Met by the Arbitrator

In particular, the 2023 Amendment Law retained the essence of Article 10 of the 2018 Arbitration Law on the qualifications that an arbitrator shall satisfy. These are as follows:

• An arbitrator must not be a minor.
• He also must not have been convicted of crimes involving moral turpitude or dishonesty.
• He shall declare his impartiality and independence.

New Addition in Article 10(1)(c): The 2023 Arbitration Law introduces a new requirement that any “direct relationship” between an arbitrator and a party is explicitly forbidden, as such a relationship would prejudice the “impartiality, integrity, or independence” of the arbitrator.

Introduction of Article 10(bis): The 2023 Arbitration Law also introduces, under Article 10, a relaxation of the previously strict approach to the appointment of arbitrators from the supervisory or management bodies of arbitral institutions, provided specific requirements are met. These conditions include:

1. The rules of the institution do not forbid such an appointment.
2. There is a governance structure in place that ensures the separation of functions, impartiality, and avoidance of conflicts of interest and favoritism regarding the arbitrator.
3. He cannot be an arbitrator or presiding member of the Arbitral Tribunal.
4. Parties shall be obliged to confirm, in writing, such a relationship with the arbitrator and the institution and give their consent for his appointment.
5. The institution shall have a system through which any misconduct of the arbitrators can be reported.
6. An arbitrator cannot accept more than five cases within a calendar year.
7. The arbitrator must also engage in writing that they will not use their position to receive any preferential treatment or influence the case by virtue of their position within the institution.

In case the arbitration proceedings become void on account of a breach of these conditions, the arbitration verdict would be held void ab initio, and the parties can also claim damages against both the arbitration institution and the arbitrator.

• Article 23 (Determination of Applicable Procedures)

Article 23 of the 2023 Arbitration Law has modified the wording slightly but essentially confirmed the parties’ right to agree on the procedures to be adopted by the arbitral tribunal. This includes choosing the rules of any arbitral institution, whether in the UAE or abroad, which govern the conduct of the proceedings.

• Article 28 (Arbitral Proceedings; Place of Arbitration)

The revised Article 28(1) explicitly provides that parties can conduct arbitration virtually “through modern means of technology.” This amendment gave legality to virtual hearings, considering the wide adoption of such methods since the COVID-19 pandemic. Furthermore, Article 28(3) has also imposed a new duty on arbitral institutions to provide the necessary technologies to conduct arbitral proceedings through modern technical means.

• Article 33 (Arbitral Proceedings and Hearings)

Under the new Article 33(7) in the 2023 Arbitration Law, more flexibility is given to arbitrators in conducting the arbitration. It provides that: “the arbitral tribunal shall have the discretion to decide on the rules of evidence to be followed when the law is silent on any specific matter, so long as these rules are not in conflict with public policy.” The law does not indicate whose public policy is applicable, but it is presumed to be UAE public policy, and practitioners should thus avoid relying on rules of evidence in conflict with UAE public policy.

Impact of the Amendments and Practical Implications

The changes under the 2023 Arbitration Law are intended to introduce further fairness, transparency, and effective use of technology in the conduct of arbitration before UAE courts. Yet, the more obligations now imposed on arbitration practitioners, particularly regarding the constitution of tribunals and the offering of technology, will need to be very carefully considered against the potential consequences of non-compliance—which may impact the validity of the arbitral award and result in possible liability for both arbitrators and institutions alike.

Notably, the UAE has more formalistic laws in place for the enforcement of foreign arbitral awards. One of the decisions by the Dubai Supreme Court shows that, for an onshore UAE court to enforce an award against assets in the UAE, an arbitrator must sign both the operative and reasoning parts of the arbitral award. This approach once again underlines the need for strict adherence to procedural formalities in UAE-seated arbitrations.

Conclusion

The amendments to the UAE Arbitration Law of 2023 represent another vital milestone toward aligning these laws with the minimum international norms and requirements by dismissing some ambiguities and allowing more procedural flexibility. It is important that practitioners in arbitration are updated about the recent changes and put them into practice to avoid any legal hurdles and to maintain the integrity of the UAE process of arbitration.