New Arbitration Law in the offing for UAE

The UAE Ministry of Economy has released a draft of the Federal Arbitration Law for consultation, which, replacing the provisions of the Civil Procedure Code regarding arbitration, is likely to be enacted within a year, with minor amendments and absent strong objections.

The scope of this proposed law is quite wide, covering arbitrations governed by UAE procedural law as well as rules of the arbitral centre under which arbitration is being conducted. UAE has, as yet, not adopted the UNCITRAL Model Law on International Commercial Arbitration and the draft law is largely based on the Egyptian arbitration law.

Intervention by civil courts is the rule in case of domestic arbitration and the Abu Dhabi Federal Court of Appeal in case of international arbitration.

If a party does not raise the arbitration agreement on a dispute arising, he loses the right to arbitration (Article 15).

A new requirement under UAE law has been introduced regarding appointment of arbitrators. In case of international arbitration defined in Article 4, the arbitrators may not be of the same nationality as either of the disputing parties.

Certain procedures have been simplified such as doing away with the requirement of an arbitration deed, currently required under UAE law. Under the draft law, the original arbitration agreement or the agreement containing the arbitration clause would suffice as evidence of an arbitration agreement before a Court.

However, UAE law is lagging behind international practice in several respects - such as requirement of court authorisation before resorting to arbitration.

Some commentators suggest that it would be more profitable, less time-consuming and simpler to adhere to the Arbitration Rules of the Dubai International Arbitration Centre.

A detailed discussion of the new law can be found here.