In an effort to modernise the existing arbitration framework, in September 2023, upon the proposal from the Ministry of Economy, the UAE Government introduced several amendments to the Federal Law No. 6 On Arbitration. The UAE’s arbitration legislation is largely modelled on the UNCITRAL Model Law on International Commercial Arbitration, with several deviations although, and applies to both domestic and international arbitration seated “onshore”, i.e. when the seat of arbitration is outside of several free economic zones established within the UAE (e.g. DIFC, ADGM).
The recent set of amendments (Federal Law No. 15 of 2023) entered into force on 15 September 2023. It is the first to be adopted since the enactment of the Federal Law No. 6 On Arbitration in 2018, marking a move towards flexibility of arbitration seated mainland in any of the seven emirates of the UAE. The amendments were introduced to Articles 10, 23, 28 and 33 of the Federal Law No. 6 On Arbitration to address the following aspects of arbitral proceedings:
Independence and impartiality of arbitrators
Federal Law No. 15 of 2023 introduces a new version of Article 10 “Qualifications Required of Arbitrators”, as well as supplements the law with a new article (10) bis “Conditions for Appointing an Arbitrator from among the Members of the Supervisory or Managing Bodies of the Competent Arbitration Institution”.
Prior to that amendment, the 2018 Federal Law No. 6 On Arbitration established an express prohibition of the arbitral appointments of the persons involved with the organization and management of arbitral institutions. An arbitrator could not be on the board of trustees or the supervisory/administrative body of the arbitral institution administering arbitration in the UAE. This was a peculiar requirement of the UAE arbitration law, divergent form the UNCITRAL Model Law and not provided by the legislation of the most popular arbitral jurisdictions.
Newly introduced Article (10) bis releases that prohibition. To that end, it sets out several caveats when the parties may appoint an arbitrator from among the board of directors or similar management bodies of the arbitral institution, particularly:
Notably, the implications for non-compliance with these conditions are twofold.
First, it explicitly renders any arbitral award invalid and is likely to result in its set aside by the UAE state courts as the supervising courts at the seat of arbitration (on the ground of Article 53 1 (f) of the 2018 Federal Law No. 6 On Arbitration - “the composition of the Arbitral Tribunal or appointment of any Arbitrator was not in accordance with this Law”). This may further affect recognition and enforcement of such arbitral award abroad.
Second, the parties would have a right to claim compensation from the violating arbitrator, as well as from an arbitral institution administering such proceedings.
The amendment to Article 23 “Determination of Rules of Procedure” is essentially of technical character so as to reduce the reference to that prohibition in the prior version of Article 10-2.
The discussed amendment is understood as aiming at diversifying the pool of arbitrators available for the appointment by the parties, as well as at ensuring that the renowned arbitration practitioners, upon considering joining managing bodies of the arbitral institutions, retain more opportunities for building their arbitrator’s profiles.
Among practical questions arising with regard to this new rule is whether it applies to all arbitral institutions, or rather designated primarily for the Emirati arbitration centres, such as the Dubai International Arbitration Centre. Absent any express distinguishment between national and foreign institutions in the new 2023 and old 2018 versions of the Federal Law On Arbitration, one can presume that new provision may have a broader scope of application and apply to all arbitrations seated “onshore” in the UAE. Some clarifications from the regulating authority or state courts would be welcomed by the arbitration community.
Use of technology in arbitration
Another notable feature of the Federal Law No. 15 of 2023 is the new version of Article 28 “Arbitral Proceedings; Place of Arbitration” that introduces two following improvements concerning the use of technology in arbitral proceedings:
The UAE arbitration law now explicitly sets out the option for the parties to agree on the hearings “through modern means of technology or in technical circles” (Article 28 (1)). The previous 2018 version of the Federal Law On Arbitration vested the power to decide to hold virtual hearings only with a tribunal, subject to the parties’ agreement however.
Arbitral institutions are expressly made responsible for ensuring that they provide the parties with the means of technology necessary for the online conduct of arbitral proceedings “through modern means of technology or in technical circles” in accordance with the required technological standards and regulations applicable in the UAE (Article 28 (3)).
Although the use of various means of technology for administering arbitral proceedings and conducting oral hearings virtually has become quite widespread over the recent years due to the impetus driven by the global pandemic, the statutory recognition of this feature is something novel and reflects the UAE’s efforts towards the modernization of arbitration landscape in the country. By mandating arbitral institutions to maintain technological infrastructure compliant with the required standards, the amendments are likely aimed at securing confidentiality and reliability of technological solutions to be employed by the parties in the course of arbitral proceedings.
Tribunal’s powers regarding the rules of evidence
Finally, the new Federal Law No. 15 of 2023 introduces a new version of Article 33 “Arbitral Proceedings and Hearings”. The difference with an old version concerns a discretionary power of the tribunal to determine the applicable rules of evidence.
The amendment specifies that arbitrators have the discretion to determine the rules of evidence when the applicable arbitration rules do not envisage such evidence-related provisions. It further specifies that the arbitral tribunal shall exercise this discretionary power bearing in mind that the rules of evidence, which the arbitrators may determine, do not conflict with public order.
It is understood that this change may relate to the common use of the rules of soft law on evidentiary issues, such as the IBA Rules on Taking of Evidence in International Arbitration, for instance. While such rules generally enjoy consensus among the arbitration community, the UAE legislator perhaps aims to ensure that the adoption of similar sets of rules of evidence corresponds with the basic principles of the UAE legal order. The balance between the tribunal’s inherent powers to conduct the proceedings in a manner it finds necessary and the potential intervention of the state courts should be preserved. The exact effect of this amendment in terms of the likely implications for the enforceability of arbitral awards is yet to be seen.
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While the 2023 amendments to the UAE Federal Law On Arbitration leave some open questions that are likely to be answered in practice, and their practical effect remains to be monitored, this set of changes adopted for the first time since the enactment of law in 2018 reflects the UAE’s move towards maintaining modern arbitration landscape.
Anna Zeitlinger, Managing Partner of LGP Middle East comments:
“The recent amendments to the UAE Federal Law On Arbitration demonstrate the commitment of the UAE to developing its stance as a major Middle East dispute resolution hub. Coupled with the modern arbitration infrastructure and availability of several well-established arbitral venues in the country, the UAE further increases its profile on a global arbitration map”.
Elena Burova, Senior Associate of LGP Middle East further adds:
“The arbitration community will closely watch the impact of the recent changes on the UAE arbitration framework. The commitment to the modernization of arbitral proceedings is welcomed and reflects practical efforts of many arbitral institutions worldwide so far. Both Emirati (e.g. DIAC) and foreign arbitral institutions (a notable example is the Russian Arbitration Center, with its recently launched office in Dubai) maintain the necessary electronic case management systems facilitating the conduct of arbitration both for parties and arbitrators”.