UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

Overview of Arbitration in the UAE in the Context of International Commercial Arbitration

I. Introduction

II. The Procedural and Substantive Law of the Arbitration

III. DIAC Arbitration

IV. DIFC-LCIA Arbitration

V. Court Ordered Arbitration

VI. Takheem Sharjah International Arbitration Center

VII. Conventions which the UAE has ratified

VIII. New York Convention

IX. Urgent Applications/Interim Measures

X. An arbitration award authenticated by the Dubai Courts can be Enforced in the DIFC Courts

XI. Bechtel Case: The Story of Bechtel’s Arbitration Award in the UAE, the US, and France. How an award can be challenged and overturned in one country due to procedural error, however, enforced in other countries

XII. Conclusion

I. Introduction

There are various avenues for arbitration in the UAE including court ordered arbitration, DIAC arbitration, and the DIFC-LCIA arbitration center. Usually, the Contract or Agreement, which is the subject-matter of the dispute, would contain a dispute resolution clause indicating the method of dispute resolution and if arbitration is designated as the method of dispute resolution, the clause would normally explain the seat of the arbitration, the arbitration center, the rules of the arbitration center, the number of arbitrators, as well as the substantive and procedural law to be applied. If the seat of the arbitration is mentioned, then the procedural law to be applied may be the law of the seat of the arbitration.

II. The Procedural and Substantive Law of the Arbitration

The concept that an arbitration is governed by the procedural law of the place in which it is held, which is the ‘seat’ (or ‘forum’ or ‘locus arbitri’) of the arbitration, is well-established in both the theory and practice of international commercial arbitration. Once a place of arbitration has been chosen, it brings with it its’ own law. If that law contains provisions that are mandatory so far as arbitrations are concerned, those provisions must be obeyed. The Rome Convention provides that a choice of (substantive) law must be ‘expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case’. The Report by Professors Guiliano and Lagarde, which was published with the Convention, states that the parties may have made a real choice of law, although not expressly stated in their contract, but that the court is not permitted to infer a choice of law that the parties might have made, where they had no clear intention of making a choice. Where no law is designated, the court or the arbitral tribunal will generally decide that the contract is to be governed by the law of the country with which it is most closely connected. It may be presumed that this is the country, which is the place of business or residence of the party that is to affect the performance characteristic of the contract.

The choice of a particular place of arbitration is sometimes taken as an implied choice related to the law governing the contract.  In addition, the law governing the contract may be taken to be the law, which governs the arbitration. In the absence of an express choice by the parties, an arbitral tribunal must choose a system of law or a set of legal rules to govern the contract. The tribunal must first decide whether it has a free choice or whether it must follow the conflict of law rules of the seat of the arbitration – the conflict rules of the lex fori.

These conflict rules usually serve to indicate what law is to be chosen as the law applicable to a contract. Under the conflict rules of some states, for instance, the applicable law (in the absence of an express or tacit choice) may be the law of the place where the contract was concluded (the lex locus contractus). The modern conflict rule adopted in the Rome Convention says that in the absence of an express choice by the parties, the arbitral tribunal looks to the law of the country with which the contract is most closely connected. Conflict of law rules differ from one country to another. For instance, a judge or arbitral tribunal in one country may select the applicable law by reference to the place where the contract was made, whereas in another country it may be selected by reference to the law with which the contract has the closest connection or where the seat of the arbitration is located. The UAE conflict of law rules can be found in Articles 235-238 of the CPL, however, deal more with the execution of foreign judgments than conflict of laws.

Federal Law No. 11 of 1992 The Civil Procedure Law

Article 235:

  1. Judgments and orders given in a foreign country may be executed in the UAE under the same conditions prescribed by the law of such country.
  2. The order for execution shall be applied for before the court of first instance in whose circuit the execution shall take place in the usual procedure for submission of the action;  however, the order for execution may not be effected except when the following has been ascertained: –

a.)    That State courts have no jurisdiction over a litigation in which the judgment or the order has been given and foreign courts that have issued them have jurisdiction according to the international judicial jurisdiction prescribed in their laws.

b.)    That a judgment or order has been issued be a competent court in accordance with the law of the country in which it is issued.

c.)    That the parties to a lawsuit in which a foreign judgment has been issued have been served with a summons to appear and that they are properly represented.

d.)   That the judgment or order has acquired res judicata power according to the law of the court that issued such an order.

e.)    That it is not contradictory with a judgment or order already issued by a court in the State and that its contents are not in violation of public order or morals therein.

Article 236:

The provisions of the preceding article shall be applied to the arbitrium issued in a foreign country.  The arbitrium shall be given in an arbitrable question according to the law of the state and be executable in the country where it was issued.

Article 237:

  1. Authenticated instruments and records of reconciliation attested by the courts in a foreign country may be ordered to be executed in the state under the same conditions stipulated in the law of such a country for the execution of like instruments issued in the UAE.
  2. The execution order referred to in the preceding paragraph shall be demanded by a petition to be submitted to the judge of execution.  The execution order may not be made until after ascertaining that the requisite conditions for enforceability of the instrument or the record are met according to the law of the country where the attestation or authentication thereto has been made, and that it is free from anything that violates morals or public order in the state.

Article 238:

The rules provided for in the preceding articles shall not affect the terms of treaties between the UAE and other states in this respect.


An international tribunal is not bound to follow the conflict of law rules of the country in which it has its seat. Unlike the judge of a national court, an international arbitral tribunal has no lex fori.

“Contrary to a state judge, who is bound to conform to the conflict law rules of the State in whose name he metes out justice, the arbitrator is not bound by such rules. He must look for the common intention of the parties, and use the connecting factors generally used in doctrine and in case law and must disregard national peculiarities.”

This is known as the direct choice or ‘voire directe’ method of choosing the substantive law, which in reality gives arbitrators the freedom to choose as they please. The Washington Convention states that, in the absence of any choice of the applicable or governing law of the contract by the parties, the arbitral tribunal must apply the law of the contracting state, which is a party to the dispute together with such rules of international law as may be applicable. (Art. 42(1)) Other conventions are content to leave the choice to the arbitral tribunal. The European Convention of 1961, for instance, provides that: Failing any indication by the parties as to the applicable law, the arbitrators shall apply the proper law under the rules of conflict that the arbitrators deem applicable. A similar approach is adopted in the UNCITRAL rules, which state that failing any designation of the applicable law by the parties, the arbitral tribunal shall apply ‘the law determined by the conflict of laws rules which it considers applicable.’ The Model Law adopts the same terminology. The intention is to make it clear that the arbitral tribunal is entitled to choose the governing law of the contract in the absence of any express or implied choice of law by the parties themselves. The modern tendency is for international conventions and rules of arbitration to give considerable latitude to arbitral tribunals in making their choice of law, within the realm of the applicable conflict rules.

Some national laws such as the French law abandon the reference to conflict rules altogether and allow an arbitral tribunal to decide for itself what law the tribunal considers appropriate to settle the dispute. Other national laws require that the conflict rules where the seat of the arbitration apply. If no applicable law or set of legal rules are set out in the contract, it may fall to the arbitral tribunal to make a decision. In order to reach this decision, the arbitral tribunal may have to render a ruling on this preliminary issue by way of an interim or partial award or undergo a (Pre-arbitral Referee Procedure).

The choice in regards to the substantive law, in the absence of any express or implied choice by the parties, and aside from the principles of international commercial law, appears to be between the law of the seat of the arbitration, the law which governs the contract as a whole, and the law most closely connected with the transaction. Overall, there is no universal law regarding the choice of law in an arbitral proceeding and there seems to be a wide variety of choices in varying circumstances such as when no law is designated by the parties to the contract.

III. DIAC Arbitration

If an agreement has an arbitration clause designating the Dubai International Arbitration Center as having jurisdiction to settle the matter, the party filing the case must follow the procedure as set out in the arbitration clause in the agreement and according to DIAC rules. The process usually takes about six months after which DIAC issues an arbitral award resolving the matter. (However, in practice, the six month period is usually extended to resolve the matter)  After the Claimant files the Request for Arbitration and Statement of Claim, the Respondent has thirty days to respond in writing. The Respondent must produce an Answer to the Request, a Statement of Defence, and any Counterclaims which the Respondent may have. The Claimant will then be given a chance to comment on any objections or pleas advanced by the Respondent. During the proceedings, the DIAC arbitral tribunal may require inter alia hearings and/or expert opinions and/or evidence in order to complete the proceedings. The DIAC rules can be found at the following website: http://www.diac.ae/idias/rules/.

One advantageous future of DIAC and the DIFC/LCIA arbitration rules is that a party can designate in the arbitration clause directly or request the arbitral tribunal to apply the lex mercatoria and ex aequeo et bono. In using the lex mercatoria, a party can draw upon inter alia public international law, the general principles of law, the UNIDROIT and UNCITRAL principles, and the 1998 Principles of European Contract Law as well as the rules and practices, which have evolved within the international business communities. The arbitrator(s) have the flexibility to decide the matter based on what is just and equitable in accordance with legal rules. Under these principles, the tribunal can give the arbitrator freedom to decide as amiable compositeur or to decide the matter according to an equitable rather than a strictly legal interpretation. Thus, the arbitrator may apply relevant rules of law to the dispute, but may ignore any rules which are purely formalistic; or apply relevant rules of law to the dispute, but may ignore any rules which appear to operate harshly or unfairly in the particular case before it; or decide the case according to the general principles of law; or may ignore completely any rules of law and decide the case on its merits.

IV. DIFC-LCIA Arbitration:

The DIFC-LCIA Arbitration Center Rules are based on a combination of civil and common law principles, however, are tailored to meet the needs of dispute resolution at the DIFC. You can find the rules at the following link:

http://www.difcarbitration.com/arbitration/rules_clauses/arb_rules_clauses/index.html#recommended

When the center first started, in order to bring an arbitration before the center, the dispute was required to have a link with the DIFC. However, now the center is open for arbitral dispute resolution without the DIFC link requirement.

V. Dubai Court Ordered Arbitration

Articles of UAE Civil Code and Civil Transactions Law relevant to UAE Court Ordered Arbitration:

Article 3 of the Civil Transactions Law, Federal Law No. 5 of 1985,

‘Public order shall be viewed as including such provisions relating to private status such as marriage, inheritance, and lineage, as well as provisions relating to the government regimes, free trade, distribution of wealth, rules of private ownership, further to other rules and principles upon which the society is based, in all matters that are not in conflict with the conclusive provisions and fundamental principles of the Islamic Shari’a.’

Article 203 – 218 of the Civil Procedure Law, Federal Law No. 11 of 1992 as amended by Federal Law No. 30 of 2005 (“CPL”).

Depending on the arbitration clause in the agreement subject of the dispute, the parties to the agreement will appoint their arbitrators and the arbitrators will choose the chairman of the tribunal or the arbitrator(s) may be court appointed or appointed by the designated arbitration center. If either of the parties fail to proceed to arbitration or the parties have not agreed on the procedure or the name of the arbitrator, either party may apply to the court to enforce the arbitration clause and request the court to appoint the arbitrator or to compel the other party to proceed with arbitration.

An order made by the court to proceed to arbitration is subject to an appeal. However, the nomination of the arbitrator by the court is not subject to appeal. The arbitration will not proceed until the judgment becomes final.

Either party to the arbitration may object to the identity of an arbitrator. This is normally directed to the tribunal itself followed by a formal application to court to remove one or more of the arbitrators from the tribunal. Objection to an arbitrator must be made in the same manner and on the same grounds as an objection to a Judge in a court proceeding and within the prescribed time period.

The arbitration agreement must be in writing in order to be valid. However, if a party takes the matter to the Court and if the opposing party does not object to the Court’s jurisdiction in the first hearing, the arbitration clause shall be considered void and invalid and the Court shall have jurisdiction to hear the matter.

Article 203 of the CPL states:

“(1) The contracting parties may, in the main contractor in a subsequent agreement, generally refer any dispute that may arise between them in the execution of a particular contract to one arbitrator or more, and arbitration may be agreed upon in a certain dispute under special conditions. (2) Agreement on the arbitration shall only be proved in writing; (3) the subject of the dispute shall be indicated in the document of arbitration or during the case hearing even if the arbitrators are authorized to reconcile, otherwise, the arbitration shall be void. (4) Arbitration of irreconcilable issues is inadmissible, and agreement on the arbitration shall only be valid if made by a person having competence to dispose of the right in dispute. (5) If the parties to a lawsuit have agreed to refer a dispute to arbitration, no action in respect thereof may be brought before the court; nevertheless, if either party submits an action in disregard of the arbitration clause and the other party has not objected to this in the first session, the case shall be heard and the arbitration clause shall be considered void.”

Article 204 of the CPL states:

“(1) If a dispute arises prior to the agreement of the parties on the arbitrators or if one or more of the arbitrators agreed upon fails to perform the work assigned to him abdicates his assignment or is removed there from, or has been recused, or if an impediment has prevented him from the work and there was no agreement to this effect between the parties to the dispute, the court originally qualified to hear the dispute shall appoint the necessary arbitrators at the request of any party by the usual procedures for submittal of the case, and the number appointed by the court shall be equal or complementary to the number agreed upon between the parties. –(2) Objection to a judgment given in this respect may not be made by any way.”

Article 205 of the CPL states:

“Arbitrators may not be authorized to make reconciliation unless they are specifically mentioned by name in the arbitration agreement or in a subsequent document.”

Article 206 of the CPL states:

“(1) The arbitrator may not be a minor, an interdict, stripped of his or her rights because of a criminal conviction, or bankrupt, unless he has been rehabilitated. (2) If the arbitrators are several, their number must be odd.”

Article 207 of the CPL states:

“(1) Acceptance of the arbitrator must be in writing or by entering his acceptance in the hearing record. (2) If the arbitrator has resigned his work without a reasonable excuse after accepting the arbitration, he may be liable to damages. (3) The arbitrator may not be dismissed except with the approval of all the parties to the dispute; however, at the request of any party, the original court having the competence to hear the dispute may remove the arbitrator and order the appointment of a replacement for him in the manner in which he was appointed in the first instance, if it is proved that the arbitrator has deliberately neglected to act in accordance with the arbitration agreement although his attention had been drawn to this effect in writing. (4) An arbitrator may not be recused except for reasons that appear after his appointment in person. This recusal may also be applied for the same reasons for which a judge is recused or disqualified. The application for dismissal shall be submitted to the original court having the competence to hear the case within five days delivery of the appointment of the arbitrator to the litigating party, or the date on which the cause for recusal appears or becomes known to him if it happens after he is informed of the appointment of the arbitrator. However, in no case may, the request for recusal be accepted if the court has passed judgment or if pleadings are closed.”

Article 208 of the CPL states:

“(1) Within at most thirty days of accepting the arbitration, the arbitrators shall inform the parties of the date of the first session fixed for hearing the dispute and of the place in which it will be held without adherence to the rules prescribed in this law for service of the summons, and a time shall be fixed for them to submit their documents, brief notes and the grounds of their defence. (2) The judgment may be made in accordance with the submissions made by one party if the other party fails to do so at the scheduled time. (3) If the arbitrators are several, they must jointly conduct the investigation proceedings and the records shall be signed by each one of them.”

Article 209 of the CPL states:

“(1) The litigation before an arbitrator shall be discontinued if a reason for discontinuance of litigation prescribed in this law occurs. Discontinuance shall have its consequence stipulated by law unless the case has been held for judgment. (2) If a prima facie question irrelevant to the jurisdiction of the arbitrator is raised during the arbitration, if an objection is made against the forgery of a paper, or if criminal actions have been initiated in respect of its forgery or in respect of anther criminal incident, the arbitrator shall suspend is work until a final judgment has been made therein. The arbitrator shall also suspend his work to refer to the president of the competent court to take the following measures: a) to pass the penalty prescribed by law against any witness who fails to appear or abstains from answering; b) to order others to produce any documents in their possession which are necessary for a judgment on the arbitration; c) to appoint a judicial delegation.”

Time extensions need to be in compliance with the agreed rules of Arbitration and, if the dispute is subject to UAE Civil Procedures Law, with Article 210 of the UAE Civil Procedures Law.

Article 210 of the CPL states:

“If the parties to a dispute have not stipulated a time for the judgment in the arbitration agreement, the arbitrator shall make a judgment within six months of the first arbitration hearing, otherwise, any of the parties who wishes to do so may refer the dispute to the court or proceed with it if it has already been referred. (2) The parties may agree expressly or tacitly on an extension of the time fixed by agreement or by law, and they may authorize the arbitrator to extend its period to a specified date. At the request of the arbitrator or any of the parties, the court may extend the time stated in the preceding paragraph for the period it considers reasonable for the disposal of the dispute. (3)The time shall be suspended whenever the litigation is stayed or discontinued before the arbitrator, and shall be resumed from the date on which he becomes aware of lapse of the reason for suspension or discontinuance. If the remaining period is less than one month, it shall be extended to one month.”

Article 211of the CPL states:

“The arbitrators shall place witnesses under oath, and whoever makes a false testimony before the arbitrators shall be considered to have committed perjury.”

An arbitration award must be accompanied by the arbitration agreement, contain a summary of the submissions made by the parties, the reasoning of the arbitrators and the date on which It was delivered and signed by all the arbitrators. If one of the arbitrators failed to sign the arbitration award, the arbitration award will be valid if it is signed by majority. The arbitration award usually needs to be delivered in Arabic, however, the parties may agree for the arbitration award to be delivered in another language. If the arbitration award needs to be enforced in the UAE, it must be accompanied by an Arabic translation. An arbitration award is normally considered to be delivered on the date it has been signed.

Article 212 of the CPL states:

“(1) An arbitrator shall make his judgment without compliance with the procedures of pleading except as provided for in this part, and the procedures for summoning the parties, hearing the grounds of their defences and enabling them to produce their documents. Yet the parties to the dispute may agree on certain procedures to be complied with by the arbitrator. (2) The arbitrator shall make his judgment in accordance with the rules of the law unless he is authorized to undertake reconciliation, whereby he shall not comply with these rules except as relevant to public order. (3) The rules of urgent execution shall be applied to the judgments of arbitrators. (4) The judgment of the arbitrators shall be issued in the UAE, otherwise the rules governing the judgments of arbitrators issued in a foreign country shall be applicable in respect thereof. (5) The judgments of arbitrators shall be given by a majority opinion. They shall be written together with the dissenting opinion and shall include in particular a transcript of the arbitration agreement as well as a summary of statements and documents of the parties, the grounds for the judgment, the decree date, its place of issue and the signatures of the arbitrators, however, if one or more of the arbitrators abstain from signing the judgment, a record thereof shall be made, and the judgment shall be valid if it is signed by the majority of arbitrators. (6) The judgment shall be made in the Arabic language unless otherwise agreed by the parties to the dispute, in which case a certified translation shall be attached thereto when it is deposited. (7) The judgment shall be considered to have been issued from the date on which it is written and signed by the arbitrators.”

The award issued by the arbitrators is converted into a judgment through an authentication procedure through the local courts. This needs to be done in order for the arbitration award to become equivalent to a court judgment and hence to be enforceable against the losing party’s assets. In the UAE, the nullification/ratification of the award becomes a separate legal action that may proceed through a three tier court system. Execution of the arbitration award will go through the same process as that of execution of a judgment according to the Civil Procedure Law through the court Execution Department. The final order ratifying the arbitration award will be considered equal to a judgment delivered by the UAE court. Keep in mind that the litigation process of authentication of the award could take an additional year after the award is issued before the final judgment is issued and therefore litigation may be a better option to resolve the dispute rather than court appointed arbitration in the UAE, depending on the circumstances.

However, one advantage of the arbitration proceedings is that the successful party may be awarded more of the actual expenses and legal costs than they would through litigation. However, the fact that higher costs are associated with arbitration combined with the costs for authentication of the arbitration award may result in overall higher costs for arbitration as opposed to litigation.

CPL 213 of the CPL states:

“(1) If an arbitration is made through the court, the arbitrators shall deposit the judgment, the agreement of the arbitration, the records and the documents with the records clerk of the court which was originally judged competent to hear the case within fifteen days of the issuance of the judgment. They shall also deposit a transcript of the judgment with the court’s record clerk to be handed over to each party within five days of depositing the original. A record thereof shall be made by the court’s clerk, and referred to the judge or the president of the circuit as the case may be, in order to fix a session within fifteen days for confirmation of the judgment and to which both parties shall be summoned.

(2) If the subject of arbitration is a case of appeal, the deposit shall be made with the records clerk of the court originally judged competent to hear the appeal.

(3) However, in an arbitration between litigant parties outside the court, the arbitrators shall hand over a transcript of the judgment to each party within five days of the arbitration ruling. The court shall ratify or cancel the judgment at the request of any party to the dispute according to the usual procedures for raising an action.”

CPL 214 of the CPL states:

“While hearing the application for ratification the arbitrators’ judgment, the court may send it back to them to hear the questions of arbitration they have failed to dispose of or to explain the judgment if it is not precise enough to be executed; however, in these two cases, the arbitrators shall give their resolution within three months of the date on which they are informed of the decision, unless the court decides otherwise. No objection to the court’s decision may be made except with the final judgment confirming or cancelling the judgment.”

CPL 215 of the CPL states:

“The decision of the arbitrators shall not be executed unless it is confirmed by the court where the judgment is deposited with its records clerk, after having access to the judgment and the arbitration agreement, and verifying that nothing prevents its execution. Said court shall be qualified to correct of the material errors in the judgment of the arbitrators, at the request of the concerned parties in the procedure prescribed for correction of judgments. (2) The execution judge shall be competent to execute all that relates to the judgment of the arbitrators. If the civil procedure rules or rules of the arbitration center are not followed correctly and precisely, the arbitration award may be challenged and/or invalidated.”

You can be rest assured that the lawyer’s for the defendant in the arbitration proceeding will try and find any minute procedural error from the claimant’s lawyers on which to base a challenge to invalidate the award. Therefore, it is important to adhere to all the relevant procedural and mandatory laws as well as issues of public policy in the UAE.

A party may apply to the court to nullify the arbitration award at the same time the court is in the process of ratifying the arbitration award. The court will consider looking into the application to nullify an arbitration award in the following circumstances:

CPL 216 of the CPL states:

“The parties to the litigation may apply for the invalidation of the arbitrator’s judgment when the court hears its ratification in the following cases: (a) if it is given without an arbitration deed or on the basis of a void document, or if it becomes non-suited by lapse of time or it is ultra vires. (b) if the judgment is given by arbitrators who have not been appointed according to the law, if it is given by some arbitrators who are not authorized to pass judgment in the absence of others, if it is given on the basis of an arbitration deed in which the subject of dispute has not been determined, or if it is given by a person who is not qualified to agree on the arbitration or by an arbitrator who does not satisfy the legal conditions. (c) If the judgment is invalid or if the procedures are rendered invalid in a manner that affects the judgment. 2- The acceptance of an invalidation shall not be prevented by the party who waives his right there in prior to the arbitrator’s judgment. ”

The application to nullify an arbitration award is based solely on procedural grounds. While the arbitration award itself is not subject to any appeal, the judgment delivered by the court to ratify or nullify the arbitration award is subject to an appeal to the court of appeal and further to the court of cassation.

Article 217 of the CPL states:

“1- The judgments of the arbitrators shall not be subject to challenge in any manner.

2- However, a judgment that confirms or cancels the decision of the arbitrators may be challenged by any appropriate method.

3 – As an exception to the provision of the preceding paragraph, a judgment shall not be subject to appeal if the arbitrators are authorized to make the reconciliation, if the parties to the dispute have expressly waived their right of appeal, or if the value of the dispute does not exceed 10K AED.”

Arbitrators normally will award the costs to the claimant or may divide the costs between the two parties. If the arbitrator is a court appointed arbitrator, the court may order the party to deposit into court a deposit to cover the costs of the arbitration, which is assessed by the court when the final award is filed. The arbitrator is required to apply to the court to release payment, unless agreed otherwise agreed upon by the parties.

Article 218 of the CPL states:

“The estimate of fees and expenses of arbitration due to the arbitrators shall be left to their discretion, and they shall charge them in whole or in part to the losing party. The court, at the request of any party shall amend this estimate to render it commensurate with the efforts exerted and with the nature of the dispute.”

Powers of the Arbitrators:

Arbitrators may order the parties to exhibit documents, call on witnesses, forward documents to the forensic laboratory (to see if forged), appoint experts or take any action possible under the law. If such an order requires enforcement through the court or if one of the witnesses needs to be compelled to attend the arbitration or summons is to be served officially, the arbitrator may request the assistance of the court.

There are certain rules which must be followed in UAE court ordered arbitration:

‘Parties may not settle the matter unless authorized to do so in the arbitration agreement; there are certain issues which fall outside the jurisdiction of the arbitrators (criminal matters, claim for forgery) and must referred to the courts; arbitrators must approach the court for an order to compel a party exhibit evidence needed for arbitration; arbitrators must approach the court for an order to compel a witness to appear before the tribunal; arbitrators must ask witnesses to take the prescribed oath before giving a statement.’

VI. Takheem Sharjah International Arbitration Center

Takheem has been established under the umbrella of the Sharjah Chamber of Commerce and Industry (SCCI) with the honorable blessing of H.H. Dr. Sheikh Sultan bin Mohammed Al Qassimi, Member of the Supreme Council and Ruler of Sharjah, as per the Emiri Decree No. 6 of Year 2009.

E-mail: Tahkeem@sharjah.gov.ae

Phone: +971 (0)6 530 4111

Website:

http://www.sharjah.gov.ae/EN/OurServices/Affiliates/Pages/SharjahInternationalCommercialArbitrationCentre.aspx

Related Article

http://www.zawya.com/Story.cfm/sidZAWYA20100506042749

VII. Conventions which the UAE have ratified

The UAE has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (10 June 1958), the Riyadh Convention ratified by the UAE on 15 April 1999 by Federal Decree No. 53 of 1999 (arbitration awards delivered by GCC countries can be enforced in the UAE), The Judicial Co-operation and Recognition of Judgments in Civil and Commercial Matters between the UAE and the Republic of France, ratified by the UAE on 27 April 1992 by Federal Decree No. 31 of 1992, Agreement between the UAE and the Republic of India on juridical and Judicial Co-operation in Civil and Commercial Matters between the UAE and the Republic of India, ratified by the UAE on 27 April 1992 by Federal Decree No. 31 of 1992. The UAE is also a member of the European Convention on International Commercial Arbitration (Geneva); Agreement on Judicial Cooperation, Enforcement of Judgments and Extradition of Criminals (Tunisia); Agreement on Judicial Cooperation, Service of Process, Letters Rogatory and Extradition of Criminals (Morocco); Agreement on Legal and Judicial Cooperation in Civil, Commercial, Personal Status and Criminal Matters (Syria); Agreement on Legal and Judicial Cooperation (Somalia); Agreement on Judicial Cooperation Service of Process, Letters, Rogatory, Enforcement of Judgments and Extradition of Criminals (Algeria); Convention on Judicial Cooperation and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (France); Agreement on the Enforcement of Judgments, Letters Rogatory and Service of Process (GCC); The Arab Convention on Judicial Cooperation (Riyadh); Agreement on Legal and Judicial Cooperation (Jordan); Agreement on Legal and Judicial Cooperation in Civil and Commercial Matters, Mutual Legal Assistance in Criminal Matters and Extradition of Criminals (India); Agreement on Legal and Judicial Assistance (Egypt); and Agreement on Legal and Judicial Cooperation in Civil and Commercial Matters, Criminal Matters and Personal Status Matters with Extradition and Assistance in the Settlement Estate (Syria).

VII. The New York Convention and the Enforcement of Foreign Awards in the UAE

The UAE is a signatory to the New York Convention.

The New York Convention is based on reciprocity and provides that: When signing, ratifying or acceding to the convention, any State may on the basis of reciprocity declare that it will apply the convention to the recognition and enforcement of awards made only in the territory of another contracting state. Instead of applying to all foreign awards wherever they are made, the scope of the New York Convention may be limited to ‘convention awards’ that is, awards made in a state which is a party to the New York Convention.

Thus, when choosing a seat of arbitration, it is advisable to select a state that has adopted the New York Convention as the seat of the arbitration, so as to improve the chances of securing recognition and enforcement of the award in other convention countries. However, there exists one loophole to this dilemma in the concept of ‘forum shopping’. One can try to enforce the award in a country where the opposing party has assets and which is also a member of the New York Convention. In looking for the appropriate forum or country, one should consider the assets, attitude of the local courts, and adherence to the New York Convention 1958, etc.

VIII. Urgent Applications/Interim Measures

Before or during filing a request for an arbitration proceeding, the parties to the arbitration have the right to apply for an application for interim measures at the Dubai Courts such as an attachment order against the assets of the other party unless the arbitration agreement says otherwise.

Article 255(2) of the CPL requires the parties to bring the main action within 8 days after the attachment.

Article 255(2) of the CPL states:

“Within at most eight days of the date of the garnishment, the garnisher shall provide the court of jurisdiction with an action for the proof of the right and validity of the garnishment in cases where the garnishment is placed by an order from the judge of the summary proceedings; otherwise the garnishment shall be considered void.”

IX. An arbitration award issued by the Dubai Courts can be Enforced in the DIFC Courts

A judgment (including an arbitration award) or interim order of the Dubai Courts can be enforced in the DIFC Courts as according to the Summary of the 2009 Protocol of Jurisdiction Between the Dubai Courts and DIFC Courts.[1] The award must be final and appropriate for enforcement[2] and translated into English by a legal translator as well as ratified by the Dubai Courts Registry.[3] The award must be submitted to the DIFC Courts with a letter from the Dubai Courts Registry to the Chief Justice of the DIFC Courts requesting enforcement of the judgment, award, or order[4] and the applicable fees.[5] In regards to interim orders, Clause 3 of the Summary of the 2009 Protocol of Jurisdiction Between Dubai and DIFC Courts [6] states: “Any interim orders issued by either the Dubai Courts or the DIFC Courts shall be enforced by the same method as described in the respective section above.”

Therefore, if submitting an interim order from the Dubai Courts to the DIFC Courts for enforcement, one must submit the interim order translated into English along with a letter from the Registry of the originating Court requesting enforcement of the interim order and the interim order must be submitted with the applicable fees. The interim order must be the final and appropriate order for enforcement and the translated copy must be ratified by the Registry of the originating Court. As long as the above-mentioned procedural steps are followed in accordance with the Summary of the 2009 Protocol of Enforcement Between Dubai and DIFC Courts,[7] it is possible to enforce a judgment or interim order, including an order for freezing of assets, issued by the Dubai Courts in the Courts of the DIFC.

[1] Summary of the 2009 Protocol of Enforcement Between the Dubai Courts and DIFC Courts, http://difccourts.complinet.com/net_file_store/new_rulebooks/d/i/DIFCC_enf_protocol_summary.pdf

[2] Ibid, Clause 2(a).

[3] Ibid, Clause 2(b).

[4] Ibid, Clause 2(c).

[5] Ibid, Clause 2(e).

[6] Ibid, Clause 3.

[7] 2009 Protocol of Enforcement Between the Dubai Courts and DIFC Courts, http://difccourts.complinet.com/net_file_store/new_rulebooks/d/i/DIFCC_enf_protocol_summary.pd

X. Bechtel Case: What happens if the arbitrators don’t ask witnesses to take the prescribed oath before giving a statement and The Story of Bechtel’s Arbitration Award in the UAE, the US, and France. How an award can be challenged and overturned in one country, however, enforced in other countries

Knowledge of the procedural law of the seat of arbitration is essential in helping to ensure successful enforcement of an arbitral award in the UAE.  However, does it really matter if one can enforce an overturned arbitral award in another country? Perhaps it would be more advantageous to know in which countries one can enforce an overturned arbitral award and the procedures of these countries.

In the 2004 case of International Bechtel Co. Ltd. v. Department of Civil Aviation of the Government of Dubai 300 F. Supp. 2d 112[1] (DDC. 2004), a USD$25 million dollar arbitration award rendered in favor of the claimant (Bechtel) was set aside by the Dubai Court of Cassation on the grounds that the arbitrator had failed to swear witnesses in the manner prescribed by UAE law for court hearings.[2] Bechtel simultaneously appealed to the Courts of France and the US District Court.

At first in the US, Judge Robertson granted motion to dismiss Bechtel’s petition, finding that, in the absence of a governing treaty regime, the Federal Arbitration Act could not be invoked to confirm and enforce an arbitral award that had been annulled under contractually selected foreign law.[3] However, in International Bechtel Co., Ltd. v. Dep’t of Civil Aviation of the Govt. of Dubai, 360 F.Supp.2d 136 (D.D.C.2005)[4], Bechtel obtained dismissal of the petition by the Department of Civil Aviation to set aside the award and obtained confirmation and enforcement of the arbitration award in Bechtel’s favor that had been annulled by the Dubai Court of Cassation.[5]

The Paris Court of Appeal also upheld the award in favor of Bechtel, setting aside the Dubai Court of Cassation’s decision and dismissing the petition of the Department of Civil Aviation to annul the award.  The Paris Court of Appeal ruled that the arguments set forth by the Department of Civil Aviation were invalid.  The Paris Court ruled that the arbitral award did satisfy the requirement in Article 13(1)(c ) of the mutual enforcement treaty concluded on 9 September 1991 between France and the UAE (the “UAE-France” treaty) in that an arbitral award can be subject to appeal in a country and at the same time be recognized in France.   The provision which the Department of Civil Aviation was referring to dealt with judicial decisions.  The Paris Court ruled that Article 13(1)(c ) of UAE-France treaty  provides that a judicial decision can be recognized in France only once it can no longer be appealed in the UAE and is accordingly capable of enforcement in its country of origin.  According to the Paris Court in this case, the parties were not required to wait for the decision of the Dubai Court of Cassation, as the Court was concerned with an arbitral award rather than a judicial decision, before applying to enforce the award in another country, specifically France.  The Paris Court also ruled that the enforcement of the award was not contrary to international public policy.[6]

This brings up an interesting issue in international arbitration.  If an award is set aside by the courts of the place where the arbitration takes place, should it then be invalid and unenforceable worldwide?  How is it that courts in Austria, Belgium, the United States, and France have all enforced awards which have been set aside by the courts of the place where they were made in other countries?[7] Are there any sovereignty issues at play here?


[1] International Bechtel Co. Ltd. v. Department of Civil Aviation of the Government of Dubai 300 F. Supp. 2d 112[1] (DDC. 2004)

[2] George Anthony and Matthew A. Marrone, “Recent Developments in Arbitration Law in the Middle East,” p. 8.

[3] http://www.pattonboggs.com/

[4] International Bechtel Co., Ltd. v. Dep’t of Civil Aviation of the Govt. of Dubai, 360 F.Supp.2d 136 (D.D.C.2005)

[5] http://www.pattonboggs.com/bwood/

[6] Michael Polkinghom, ‘Enforcement of Annulled Awards in France: The Sting in the Tail,” International Construction Law Review, Jan. 2008.

[7] Jane Jenkins and Simon Stebbings, “International Construction Arbitration Law,” Kluwer Law International, p. 284.

XI. Conclusion

There are many factors involved in drafting an arbitration clause, however, if choosing a specific arbitration center, it is best to draft the clause based on their model clause, remembering to specify the number of arbitrators, the seat, and the substantive law to apply. Following the procedural rules of arbitration from start to finish is very important to ensure successful validation and ratification of the arbitral award through the Courts. However, as we have seen with the Bechtel Case, a case overturned in the UAE due to procedural error was later enforced in the US and France. Therefore, I suggested that in addition to knowing UAE procedural law, it might be wise to know in which countries overturned arbitral awards can be enforced and to know the arbitration procedure and law of these countries well before embarking on an arbitration journey of the UAE.

*This information was taken from: https://uaelaws.wordpress.com, Law and Practice of International Commercial Arbitration by Alan Redfern and Martin Hunter with Nigel Blackaby and Constantine Partasides, Practical Guide to Litigation and Arbitration in the United Arab Emirates by Essam Al Tamimi, the Civil Procedures Law, Federal Law No. 11 of 1992 as amended by Federal Law No. 30 of 2005 and the Civil Transactions Law Federal Law No. 5 of 1985.

Islam Future → The Future For Islam

Holy Qur'an, E-Books, Audios, Videos, Lectures, Articles and much more

at-Tahawi

Muslim Bibliophilia

Adventures Of Douglas Sonders

Follow My Adventures In the Photography and Video Industry

%d bloggers like this: