Dispute resolution uae_venkat


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My presentation at Indian Institution of Technical Arbitrators on October 26,2012. Topic: Dispute resolution in UAE; An overview on the recent developments.

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Dispute resolution uae_venkat

  1. 1. Dispute resolution in UAE An overview on the recent developmentsR Venkata raghavan, FCIArb B.Eng, C. Eng, ACMA, PGDip Const Law &Arb 1
  2. 2. Dispute resolution in UAE An overview on the recent developments• Why this topic is important for Indian Arbitrators?• Overview of the UAE judicial system• Current arbitration provisions of UAE• Enforcement procedures for both domestic and foreign awards in UAE• Enforcement of UAE awards in other countries.• Recent developments 2©R Venkat
  3. 3. Dispute resolution in UAE Why this topic is important for Indian Arbitrators? • Several Indian blue chip companies are involved in the development of infrastructure, construction and oil exploration sectors. Larsen & Tourbo, Dodsal, Voltas, Essar, TCS and Wipro • There are hundreds of Indian entrepreneurs operating their business in UAE. • NRIs are the leading property investors in Dubai. 3©R Venkat
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  5. 5. United Arab Emiratesis a federation ofseven emiratesnamelyAbu Dhabi (Capital),Dubai,Sharjah,Ajman,Ras Al Khaimah,Umm Al Qaiwain &Fujairah. 5©R Venkat
  6. 6. In 1950’s and 60’s Dubai wasa small town with fishingand pearl diving as theirmain source of tradeThe pictures on the rightwere taken in 1960’s.Today, UAE is a well-knowncommercial hub in themiddle-east.The total value of currentUAE construction projects isaround $1.249trn 6 ©R Venkat
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  8. 8. Dispute resolution in UAEUnfortunately, the global economic crisis did not leaveUAE also!• Construction disputes are on the rise since 2007• Disputes between developers and contractors (on unfinished projects)• Disputes between developers and investors (non hand over of the properties)• Indian companies are affected!• Arbitrators here can help their clients in risk mitigation 8©R Venkat
  9. 9. Dispute resolution in UAETraditionally litigation is themost common method ofdispute resolution.Even today, in commercialsector, litigation is quitecommon.Construction related disputesare normally referred toarbitration.Other ADR procedures likeconciliation and mediation areused although they have no 9 ©R Venkatstatutory basis.
  10. 10. UAE Legal system In general, the Court system consists of a three tier structure namely; • The Court of First Instance, • The Court of Appeal and • The Court of Cassation (except Ras Al Khaimah) 10©R Venkat
  11. 11. UAE Legal system Continued• Each Emirate has its own court system.• The legal system in the UAE is based on the constitution of the UAE 1971• The Civil law system and Sharia are the main source of legislation.• Statutes are the primary source of Law• Judgments of higher courts are non-binding on the lower courts.• Each case is decided on its own merits and facts.• All court proceedings are in Arabic 11©R Venkat
  12. 12. In 2004, Dubai hascommissioned a new court atthe Dubai InternationalFinancial CentreDIFC courts addresscommercial and constructiondisputes related to the“Financial centre” (Offshore).The picture at the bottomright shows DIFC 12©R Venkat
  13. 13. DIFC courts• Follows the common law system and the proceedings are in English.• DIFC court enjoys equal status as that of federal courts• Judgments delivered at DIFC courts are enforceable in Onshore Dubai without further review.• The judges are well experienced in international commercial disputes and they are appointed from overseas countries such as UK, Singapore, Malaysia. 13©R Venkat
  14. 14. DIFC courts comprise of • The Court of First Instance, • The Court of Appeal and • The Small Claims Tribunal. In October 2011 , a legislation was passed extending jurisdiction of the DIFC Courts to include disputes outside the DIFC free zone. 14©R Venkat
  15. 15. History of Arbitration in UAEThe Abu Dhabi Civil Procedure Code 1970 contains provisionsto regulate the arbitration proceedings in Abu Dhabi,The Dubai Contracts law 1971 provides for the referral ofdisputes to arbitrationThe Dubai law of 1975 grants Dubai Chamber of Commercejurisdiction to settle disputes between merchants througharbitration.Under the UAE legal system, arbitration agreements are bindingon the partiesThere are no restrictions on the selection of arbitrators based onreligion or gender. 15©R Venkat
  16. 16. Current UAE legislation governing ArbitrationAt present, UAE does not have specific legislation relating toArbitration Law.Arbitral proceedings are governed by the Civil Procedure Code(CPC) Articles 203 to 218.The recognition and enforcement of foreign awards are coveredby Articles 235 to 237 of CPCCivil Procedure code is not based on UNCITRAL Model law.Current law does not differentiate between domestic andforeign awards.Commercial agency disputes, distributorship disputes andlabour related disputes, are not 16 arbitrable in UAE. ©R Venkat
  17. 17. Arbitration under UAE Civil Procedure Code• The arbitration agreement must be evidenced in writing.• The signatory of the agreement must have notarised power of attorney.• The hearing must be held within thirty days of appointment of the tribunal.• An award must be rendered within six months after the date of the first hearing;• The witness testimony in an arbitration hearing must be provided under oath. 17©R Venkat
  18. 18. Arbitration under UAE Civil Procedure Code Continued • The party who wishes to rely on the arbitration clause must plead in the first hearing if the other party commences court proceedings. • (otherwise the right to arbitrate will be deemed to be waived) • An arbitration award must undergo a validation and ratification process like a litigation proceeding in order to be enforceable. 18©R Venkat
  19. 19. Arbitration under UAE Civil Procedure Code Continued • If an award is challenged and declared void by the Court, the current CPC does not provide an alternative remedy • The courts do not permit that the award be referred back to the arbitrator. • The dispute has to be referred to the Courts afresh as the referral is not automatic upon annulment of an award. 19©R Venkat
  20. 20. Concerns over the UAE court’s formalistic approach An arbitration award must be ratified in the local court to be enforceable. (Article 215 of the CPC) In the past, UAE courts have overturned the awards for apparently insignificant errors such as The tribunal’s failure to sign each page of the award in full instead of simply initialling each page. 20©R Venkat
  21. 21. Concerns over the UAE court’s formalistic approach In the Bechtel v The Department of Civil Aviation of the Government of Dubai case, The Dubai Court of Cassation refused to enforce an award in favour of the Claimant on the grounds that the oath used to swear in witnesses during arbitration proceedings did not exactly follow the formula prescribed for UAE Court hearings. 21©R Venkat
  22. 22. Arbitration under UAE Civil Procedure Code It is noteworthy that the following points are unique to UAE CPC • An UAE award must be physically signed in UAE; • The legal representative of the party must have valid power of attorney to act in the proceedings and • Witnesses should be present in the evidentiary hearing only when he is giving evidence. 22©R Venkat
  23. 23. Arbitration Centres in UAEThere are three main major arbitration centres in UAE.• The Dubai International Arbitration Centre (DIAC)• The Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC)• DIFC-LCIA centre, which is a joint venture between DIFC and the London Court of International Arbitration.DIFC-LCIA has its own arbitration law unlike the othertwo, which follows UAE Civil Procedure Code. 23©R Venkat
  24. 24. DIFC-LCIA Arbitration Awards Dubai is unique within UAE in offering two different possible Seats of arbitration. DIFC has its own arbitration law which is modeled on UNCITRAL Model law Any party can choose DIFC as the seat of their arbitration even when they have no connection with the DIFC free zone. DIFC-LCIA arbitration awards must first be ratified by the DIFC courts. The awards are enforceable in Dubai and other Emirates without further review 24©R Venkat
  25. 25. Enforcement of UAE awards outside UAE UAE is a signatory to the New York Convention. So, UAE awards are enforceable in any state which is party to the New York Convention. However, UAE CPC does not clearly specify the requirements for ratification of awards by local Courts. Contrasted with that, DIFC awards are easily enforceable as they comply with UNCITRAL Model Law. 25©R Venkat
  26. 26. Enforcement of Foreign awards in UAE UAE is a party to several multilateral conventions: • The Riyadh Convention, • Washington Convention on the Settlement of the Investment Disputes (ICISD), • GCC convention for the execution of the judgments and since 2006, • The New York Convention. In the past, UAE courts have refused enforcement on the grounds of lack of proper jurisdiction, improper summoning and violation of public policy. 26©R Venkat
  27. 27. Current developments UAE is in the process of implementing a new Arbitration law. Proposed law is not exactly in line with UNCITRAL Model law (influenced by Egyptian arbitration law, which is based on Model law) In recent times, UAE courts have taken an arbitration-friendly approach In April 2010, Fujairah Federal court of First Instance enforced two awards issued under the London Maritime Arbitration Association by a sole arbitrator. 27©R Venkat
  28. 28. Current developments In Dubai, the Dubai Court of First Instance enforced two awards issued under DIFC-LCIA Arbitration rules in London. The Court commented that, “The Court’s supervisory role.. to ensure that it does not conflict with the Federal decree under which UAE acceded to the New York Convention on the recognition and enforcement of foreign arbitral awards”. The above decision was upheld by the Court of Appeal in February 2012. 28©R Venkat
  29. 29. Way forward.. Given this trend, It is expected that UAE Courts will follow the requirements of the New York Convention regarding the enforcement of foreign awards Dubai is aspiring to become an international arbitration centre similar to London, Paris, Singapore and Hong Kong. UAE has a distinct geographical advantage, being close to Eastern Europe, Asia and Africa. If the Federal Arbitration Law is passed it will certainly boost the confidence of any potential stakeholders. 29©R Venkat
  30. 30. Way forward..The DIFC courts and the arbitration centre,• have instilled a great deal of confidence in international investors, and• Their jurisdiction has been extended beyond the financial zone . 30©R Venkat
  31. 31. Other ADR provisions • conciliation, • mediation and • expert evaluation. There is no statutory framework for enforcing decisions of the conciliation boards and there are no specific dispute resolution boards in UAE. RICS is now in the process of commissioning a DRB in Dubai. The Chamber of Commerce in each emirate has their own conciliation rules 31©R Venkat
  32. 32. Other ADR provisions Disputes before federal courts must be first referred to a committee and if, any agreement is made between the parties, then it is enforceable and binding. However, orders of the committee are not enforceable. Examples of such committees are • The Special Judicial Committee to resolve tenancy disputes • The Amicable Settlement of Disputes in Dubai. 32©R Venkat
  33. 33. Final thoughts.. So, here are few tips for advising your clients who has a business interest in UAE • Ensure the dispute resolution clause in the contract is drafted carefully. • Choose an appropriate Seat of arbitration • Specify the applicable procedural law and rules of arbitration. • Have at least one arbitrator of the tribunal who is familiar with both DIAC and DIFC arbitration procedures. • The Award has to be ratified in local court to become enforceable! 33©R Venkat
  34. 34. Here is a Recap • UAE Arbitration Law is imminent. • UAE is signatory to New York Convention • UAE has geographical advantage • Courts have shown less formalistic approach in the recent times Soon UAE, especially Dubai will be a major international arbitration centre. 34©R Venkat
  35. 35. Thank You! R Venkata raghavan, FCIArb B.Eng, C. Eng, ACMA, PGDip Const Law &Arb Email:rmvenkat@yahoo.com http://www.linkedin.com/in/vramadurai 35