Commercial Mediation in the UAE
“Mediation is one of the most effective tools of non-violence. It can turn parties away from conflict, towards compromise” - Miroslav Lajčák
Mediation is a form of Alternative Dispute Resolution system (ADR) wherein the matter at issue is solved with the help of a mediator without recourse to the court of law. It is a voluntary process where a decision relating to the dispute is not imposed upon the concerned parties. Hence, a settlement shall be binding on the parties only as long as they agree to it. There may be instances when mediation is referred to by the court of law; however, even under such circumstances, it is always up to the decision of the parties to conclude. Therefore, the control over the mediation always lies between the parties to the dispute.
It is a party centered negotiation process, wherein, a neutral third party is involved who assists in solving the dispute amicably by using special techniques in negotiation. Since the party's concern is primary in this form of dispute resolution, they may withdraw from the proceeding at any stage until the settlement has come to an end. Mediation as a method of dispute resolution has an edge over the other forms, due to its degree of flexibility.
David Spencer and Michael C Brogan in their ‘Mediation Law and Practice’ explain the history of mediation as the following:
“Mediation, as a form of dispute resolution involving more than the parties, has been around since the beginning of basic human society. While the first humans would have negotiated in a rudimentary way regarding their basic needs and desires, it is submitted that there needed to be a sense of community, or belonging, to convince a third party to want to assist in the resolution of a dispute between others.”
The adoption of mediation as a mode of dispute resolution is not only applicable to a personal matter. It may also be used to reconcile a dispute amicably which arises in the course of a business or a transaction.
The European Judicial System defines mediation as the following:
“Mediation is a voluntary non-binding private dispute resolution process in which a neutral and independent person assists the parties in facilitating the discussion between the parties in order to help them to resolve their difficulties and reach an agreement.”
Therefore, from the above explanation, it is clear that mediation as a method of dispute resolution may apply to various forms of law such as civil, personal or labour. However, this article will analyze the concept of commercial mediation in the UAE and the issues concerning it.
Commercial mediation is a type of negotiation where a dispute relating to commerce is settled between parties with the assistance of a neutral third-party. The party providing assistance should be unbiased and shall facilitate the negotiation process to arrive at a unanimous decision.
Such a method of dispute resolution is adopted by the parties engaged in commercial industries since it helps in the reduction of both the wastage of time and money which may occur on the recourse to litigation.
Advantages of Mediation
The following are the advantages of mediation over other forms of dispute resolution:
Active Participation of the Parties- Since mediation is a mode of ADR which is primarily concerned with the terms of the parties, they are actively involved.
Unbiased- Since it is a form of mediation wherein the parties have complete control over the decision, it is fair.
Easier- The procedures relating to mediation is much more flexible than the other forms of dispute resolution, and hence, it is simple.
Voluntary- The parties to the dispute have complete control over the matter in issue, and therefore, it is voluntary.
Economical- The mediation process is much more efficient and more inexpensive as compared to litigation.
Confidential- Utmost confidentiality shall be maintained while conducting mediation.
Commercial Mediation in the UAE
In the UAE, the concept and applicability of mediation have increased. Mediation is widely recognized in the UAE, and it is an area of law which has been extensively examined within the country.
In mediation, it is a prerequisite that unless the parties have unanimously come to a settlement, the decision shall not be finalized. In a mediation process, the interest of all parties is taken into consideration so that none of them face any complications as a result of the decision.
The mediation process involves the following stages, though it may vary:
- Introduction/Opening Statement- Here the mediator shall introduce himself and the parties to the dispute followed by the statement of objective.
- Opening statement by the disputant- Here the parties to the dispute shall describe the facts relating to the conflict and how they have been affected.
- Joint Discussion- Here an opportunity is given to the parties to hear their opponents and to discuss the concerned matters.
- Private/Separate Session- Here the parties to the dispute are given an opportunity to have a private conversation with the mediator followed by a joint negotiation.
- Closure- At this stage, the parties shall come to a conclusion thereby settling the dispute amicably.
Dubai International Financial Centre (DIFC) and Mediation
The Dubai International Financial Centre (DIFC), has adopted mediation by formulating their own rules called the Rules of Dubai International Financial Centre Courts (RDC). Part 27 of the RDC deals with alternative dispute resolution, and it states the following:
“27.1 While emphasizing its primary role as a forum for deciding civil and commercial cases, the Court encourages parties to consider the use of alternative dispute resolution (such as, but not confined to, mediation and conciliation) as an alternative means of resolving disputes or particular issues.”
Further, the RDC 27.2 lays down the benefits of alternative dispute resolution. RDC 27.3 states that the judges shall, in appropriate cases, invite the parties to the dispute and may consider whether such dispute could be reconciled through alternate dispute resolution. The DIFC-LCIA also provides for mediation as per the provisions of law.
Part 53 of the DIFC Rules deals with the Small Claims Tribunal and lays down provisions for settling disputes between the parties.
Mediation under the UAE Federal Laws
No specific law has been laid down governing the mediation process in the UAE; however, the Centre for Amicable Settlement of Disputes has been established under the Federal Law Number 16 of 2009.
As per Article 3 of the Law, the Centre was established with the aim to settle the disputes which arise between the parties.
The following are some of the essential provisions of the above legislation-
Article (4) of the Federal Law Number 16 of 2009 states:
“The Centre shall be responsible for considering the disputes for which a settlement order is made by the Chief regardless of their value or nature (excluding the urgent and timely orders and cases, cases to which the Government is a party, cases that do not fall within the jurisdiction of Courts, and the cases that are recorded with the Courts before the effective date of this law).”
“If reconciliation is achieved between the parties of the dispute, the same shall be recorded by reconciliation agreement to be signed by both parties of the dispute and approved by the Competent Judge and this agreement shall have the power of an executive instrument.”
Therefore, apart from the DIFC rules and regulations, the UAE also provides for the settlement of disputes through the legislation mentioned above. However, If an amicable agreement isn't conceivable, the disputing party can apply for a 'no complaint' letter from the committee, and in such case, the matter will be seen by the judge in the Court of First Instance.
RICS UAE Mediation Panel
The Royal Institution of Chartered Surveyors along with the Dubai Land Department held a conference on October 1, 2012, with an aim to promote mediation in the region and as a result, the RICS UAE President's Panel of Mediators was initiated.
Nowadays, apart from conducting mediation under the instruction of judicial authority, the parties while entering into contracts may also include a clause which provides explicitly an alternative dispute resolution system. The clause may either specify mediation, arbitration, or any other form of negotiation. Therefore, although strict legislation may not guide such mechanisms, the parties are bound by it.
The United Nations Commissions on International Trade Law (UNCITRAL) introduced a convention on mediation settlements, and the final draft was instituted on 25 June 2018. Though the convention has not yet come into force, it has been referred to the commission for adoption. The enactment of the convention will be a massive step in accepting mediation as an alternative dispute mechanism at the international level. The convention is to be named the ‘Singapore Media Convention,' following the signing of the treaty in Singapore.
The concept of mediation is undergoing a change and has been widely accepted in the UAE, as well as throughout the world. Though UAE legislation does not exist governing mediation as a mode of alternative dispute resolution, it is advised that the parties recourse to this form of dispute settlement, since it is highly cost-effective and at the control of the parties.