SYSTECH SOLICITORS LEGAL UPDATE

The most prevalent form of contract in the
construction industry in the UAE is FIDIC. Despite
the recent emphasis on amicable resolutions to
disputes, if parties are not able to reach a universally
acceptable conclusion, arbitration provides an
alternate means of settling issues. Therefore, it is of
great importance and practicality to be familiar with
every stage of the arbitration process, especially
where the likelihood of disputes is high. This article
will focus mainly on the enforceability of an arbitral
award as it is clear that an unenforceable settlement
has no value.
Dubai International Financial Centre (DIFC) is one of
the Free Zone in Dubai, which unlike the rest of the
UAE, has its own legislation on arbitration. Settlement
awards made in the Financial Centre are often given
the same weight as court judgements within the
Free Zone jurisdiction and therefore binding on
the parties. Due to the relatively small size and low
volume of construction, it will be sufficient to add
that judgements made by the DIFC Courts can be
enforced in Dubai courts outside the Free Zone.
The UAE does not have comprehensive legislation
dedicated to arbitration. However, despite the
limitation that its primary purpose was to regulate
domestic legal proceedings, the UAE Civil Procedure
Code 1 (CPC), has provisions, which set out the rules to
be followed in the arbitration process. Articles 203-
218 are concerned with the award and enforcement
of arbitration decisions made domestically while
Articles 235-238 deal with the application of foreign
arbitration decisions in the UAE courts. Procedural
rules for execution of decisions are set out in Articles
239-243.
For a domestic arbitration award to be enforceable,
the following requirements specified in Article 203
have to be met:
• The arbitration agreement has to be in writing
• The subject matter of the dispute must be clearly
indicated in the agreement.
• It has to be signed by the arbitrator
• Material facts of the case and the legal
explanation for the decision has to be stated
clearly
• It must be supplemented by the written
arbitration agreement
Once the criteria above have been satisfied, the
final stage of enforcing an arbitral award is to have
it ratified by a court in the UAE. Article 215 of CPC
dictates that the application process for ratification
by the court be same as that for commencing legal
action in the Court of First Instance. As an award can
only be enforced after successful ratification in the
court and agreement by both parties to accept the
award. This requirement can be an opportunity for a
disadvantaged party to challenge the ratification in
the court.
If challenged, a court hearing will be held in which a
decision can only be made on account of procedural
grounds. The historical trend of the UAE courts
not enforcing arbitral awards is illustrated in the
2004 case of International Bechtel v Department
of Civil Aviation of Dubai 2 . As had generally been
the pattern, the award was rejected on the basis of
minor procedural technicalities. In the Bechtel case,
the arbitrator had failed to comply with Article 41(2)
of CPC pertaining to the swearing in of witnesses.
Recent cases seemingly show UAE Courts taking a
more favourable approach on the subject of award
ratifications. However, some anomalies bring this
general trend into question. When the judgment
was made in 2012 for Case No.: 180/2011, the Court
of Cassation rejected the arbitral award on the
grounds that in matters of public policy an arbitrator
lacks the authority to adjudicate. Under UAE law,
‘public policy’ is given a liberal interpretation; even
commercial matters can be argued to fall under
public policy as it affects the distribution of wealth
and freedom of commerce. Moreover, given the
Civil Law system of the jurisdiction, previous court
decisions may provide persuasive arguments but
do not guarantee a consistent outcome.
The New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards came into
effect in the UAE on 19th November 2006. Under
Article 5 of the Convention, a signatory state has
the obligation to enforce an arbitral award made in
another signatory nation unless specified exceptions
apply.
In order to enforce a foreign arbitral award in the UAE,
an authenticated original of the award or its certified
copy must be submitted to the court along with the
authenticated original arbitration agreement or its
certified copy. Additionally, where the documents
to be submitted are in a foreign language, they are
required to be translated into Arabic.
Article V (1) of the Convention sets out scenarios
where a foreign award can be refused for not meeting
the procedural requirements of the awarding state.
Article V (2) allows refusal on the grounds of public
policy. However, the greatest obstacle to enforcing
foreign awards in the UAE is domestic legislation.
Article 235 (a) – (e) of CPC provides a checklist that
must be satisfied for enforcement of foreign awards.
Paragraph (e) deals with public policy, which is
given the same wide interpretation as when trying
to enforce domestic awards. The fact that ‘public
policy’ is not defined in legislation means that
1
Federal Law No.11 of 1992 (CPC)
2
300 F. Supp. 2d 112
8
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