Our Team

STA's Team of Lawyers in Abu Dhabi, Bahrain, Doha, UAE, Luxembourg, Moscow, RAK, Sharjah, and Singapore. Find a Lawyer. ..

Read more information

New Arbitration Law will have Positive Impact on both Domestic and International Business

New Arbitration Law will have Positive Impact on both Domestic and International Business

Lawyers in DubaiThe UAE has revealed the long-awaited new ‘Federal Arbitration Law’ that will have a long way connecting the country’s position as the most attractive hub for arbitration in the Middle East and North Africa region. His Highness Sheikh Khalifa bin Zayed Al Nahyan repealed the former law governing arbitration in the UAE and issued new Federal Law Number 6 of 2018. The previous arbitration law of 61 articles which relies on the UNCITRAL model law will significantly rebuild UAE arbitration law. It is expected that this new arbitration law will build a reputation for the UAE and UAE will become the preferred seat for international arbitration in this region. This new law will encourage more foreign direct investment into the UAE since it will become the most preferred place of international arbitration.

This new arbitration law provides greater certainty of outcome, within a recognized international framework for conflict resolution. There are rumors that the new law will come into effect one month after its publication in the Official Gazette. Significant changes identified in the new law compared to previous regulation includes recognition of arbitration agreements made by modern communications methods such as e-mails as well as recognition of the competence rule with arbitrators provided with the power to decide their jurisdiction. The law allows preliminary orders and interim measures and also ensures that enforcement is not automatically stopped if the award is challenged. As per the new regulation, arbitrators are empowered to award costs. A provision is introduced for joinder of parties to arbitral proceedings and as per the new law arbitral proceedings, and the arbitral award are considered to be confidential unless it is agreed by the parties.

The articles of the New Arbitration Rule will substitute Articles 203 to 218 of the UAE Federal Law Number 11 of 1992 and currently, UAE Civil Procedure Code will regulate arbitrations in the UAE. The New Arbitration Law will apply to the following:

  1. Any arbitration directed within the UAE, unless the parties have concurred another law ought to use, furnished, there is no contention with public order and moral equality of the UAE.
  2. Any international commercial arbitration performed abroad if the parties have picked the New Arbitration Law to regulate such arbitration.
  3. Any arbitration emerging from a conflict in respect of a legal relationship, whether contractual or not, to which the utilization of UAE law is compulsory, save as excluded by special provision.

The New Arbitration Law relies on universally accepted UNCITRAL Model Law, and some of the most significant changes established by the new law include:

  1. Identification of the arbitration agreement made by electronic communication such as email.
  2. Rule recognition of competence subject to 15 days’ claim period to the UAE Courts.
  3. The arrangement is made for joinder of partied to arbitral proceedings.
  4. Allows both arbitral tribunals and courts to issue initial orders and interim measures relating to potential or ongoing arbitrations.
  5. The content of the arbitral award is confidential unless parties concur something else.
  6. Grants enforcement of interim and partial awards.
  7. Limits party’s capacity to challenge an award, either entirely or partially, to a 30-day time frame from the time of the notification of honor to the parties, and guarantees that enforcement proceedings are not automatically remained up to the initiation of annulment proceedings.

While the New Arbitration Law will welcome news to the organizations and legitimate experts together.

 It will be giving more noteworthy sureness of result inside a recognized international framework. Further,  it will be reinforcing the UAE's reputation for being a center for worldwide arbitration; until the point that the UAE Courts entirely comprehend the utilization of the New Arbitration Law, intervention focuses, authorities, lawful professionals and parties to potential and continuous arbitration it will undoubtedly make some underlying vulnerabilities.

Multinational corporations are preferring arbitration since it is more cost effective and time saving out of court settlement procedure. UAE is already the well-established port for the international business, therefore it increases the rate of conflict between the companies and the preferable solution is arbitration. Multinational corporations to avoid jurisdiction disputes, they already have the arbitration clause in their contract which usually consists of Dubai International Arbitration Centre (DIAC) as its preferred seat of arbitration to resolve the dispute. The introduction of this New Arbitration Law is expected to increase FDI in the UAE since the provisions amended within it are flexible and favorable for the foreign entity as mentioned above.