Dispute Resolution 2011 - Habib Al Mulla

Dispute Resolution
in 47 jurisdictions worldwide
Contributing editor: Simon Bushell
®
2011
Published by
Getting the Deal Through
in association with:
Achour & Hájek
Advokaturbüro Dr Dr Batliner & Dr Gasser
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Habib Al Mulla & Co
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Dispute
Resolution 2011
Contributing editor:
Simon Bushell
Herbert Smith LLP
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Dispute Resolution 2011
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CoNTENTS
Introduction Simon Bushell Herbert Smith LLP 3
Australia Steven Glass, Amy Annan, Airlie Goodman and Lena Vanmali Gilbert + Tobin 5
Austria Gerold Zeiler and Wolfgang Höller Schönherr 11
Belgium Joe Sepulchre, Hakim Boularbah and Charlotte Marquet Liedekerke Wolters Waelbroeck Kirkpatrick 19
Brazil Sylvio Fernando Paes de Barros Jr and Alexandre Lins Morato Araújo e Policastro Advogados 29
Canada – Quebec James A Woods, Christopher L Richter and Marie-Louise Delisle Woods LLP 34
Cayman Islands Graham F Ritchie QC and David W Collier Charles Adams Ritchie & Duckworth 39
Chile Rodrigo Guzmán Karadima and Cristóbal Leighton Rengifo Grupo Vial Abogados 45
Colombia Dario Cadena Lleras and Eduardo A Wiesner Wiesner & Asociados Ltda Abogados 50
Cyprus Soteris Pittas Soteris Pittas & Co LLC 56
Czech Republic Gabriel Achour and Daniel Hájek Achour & Hájek 63
Denmark Niels Schiersing Horten 69
England & Wales Simon Bushell Herbert Smith LLP 76
Estonia Paul Varul, Ramon Rask and Peeter Viirsalu Varul 83
Finland Martina Kronström Attorneys-at-law Juridia Ltd 90
France Tim Portwood Bredin Prat 95
Germany Karl von Hase GSK Stockmann + Kollegen 103
Greece Dionysios Pantazis and Athanasia Braimi Pantazis & Associates 110
India Vivek Vashi and Shouger Merchant Bharucha & Partners 116
Ireland Geoffrey Dunne Geoffrey Dunne & Co Solicitors 123
Italy Mauro Rubino-Sammartano Bianchi Rubino-Sammartano & Associati 131
Japan Naoki Iguchi and Taisuke Yamamoto Anderson M ōri
& Tomotsune 138
Korea Benjamin Hughes, Beomsu Kim and Seungmin Lee Shin & Kim 143
Latvia Debora Pavila and Vairis Dmitrijevs Varul 148
Liechtenstein Johannes Gasser Advokaturbüro Dr Dr Batliner & Dr Gasser 153
Lithuania Ramunas Audzevicius and Tomas Samulevicius Motieka & Audzevicius 159
Luxembourg Marc Kleyr Kleyr Grasso Associés 166
Nigeria Babajide O Ogundipe and Lateef O Akangbe Sofunde, Osakwe, Ogundipe & Belgore 173
Poland Monika Hartung and Jan Cie ć wierz Wardy ński
& Partners 178
Portugal José Alves Pereira and João Marques de Almeida Alves Pereira, Teixeira de Sousa & Associados 185
Romania Valentin Berea and Diana Teodorescu Bulboaca & Asociatii 191
Russia Alexander Bolomatov and Elena Lebedeva Law Firm Yust LLP 197
Slovenia Gregor Simoniti and Tilen Terlep Odvetniki Šelih & partnerji, o.p., d.o.o. 203
South Africa Des Williams Werksmans Attorneys 212
Sweden Marcus Axelryd and Helena Dandenell Frank Advokatbyrå AB 218
Switzerland Ernst F Schmid Niederer Kraft & Frey 224
Thailand Thawat Damsa-ard and Noppramart Thammateeradaycho Tilleke & Gibbins 230
Turkey Gönenç Gürkaynak ELIG Attorneys at Law 236
Ukraine Irina Nazarova and Ivan Mishchenko EnGarde 242
United Arab Emirates Habib Al Mulla, Karim Nassif and Gordon Blanke Habib Al Mulla & Co 248
United States – California Roderick D Margo, Scott D Cunningham and Stephen M Rinka
Condon & Forsyth LLP 255
United States – Delaware Samuel A Nolen, Robert W Whetzel and Chad M Shandler
Richards, Layton & Finger 261
United States – Illinois Lawrence S Schaner Jenner & Block LLP 267
United States – Maine Gregory P Hansel Preti, Flaherty, Beliveau & Pachios, LLP 273
United States – Michigan Frederick A Acomb and Mary K Griffith Miller, Canfield, Paddock and Stone PLC 279
United States – New York Marjorie J Peerce and Mary Margulis-Ohnuma Stillman, Friedman & Shechtman, PC 285
United States – Texas William D Wood, Kevin O’Gorman and Lance R Bremer Fulbright & Jaworski LLP 293
Venezuela Carlos Dominguez Hoet Pelaez Castillo & Duque 301
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United ArAb emirAtes Habib Al mulla & Co
United Arab emirates
Habib Al mulla, Karim nassif and Gordon blanke
Habib Al Mulla & Co
Litigation
1 Court system
What is the structure of the civil court system?
Being a federation of seven emirates (Abu Dhabi, Dubai, Sharjah,
Ajman, Fujairah, Umm Al Quwain and Ras Al Khaimah), the UAE
legal system is governed by the UAE Federal Constitution. Under
the Constitution, each emirate is allowed either to establish its own
legislature and judiciary or to merge with the federal court system.
As a result, there is a combination of federal and local (or emirate)
courts in the UAE with parallel jurisdictions, depending on which
system the individual emirate has opted for. The judicial systems
of most of the emirates – except for Dubai, Ras Al Khaimah and
Abu Dhabi, which have retained their own distinct and autonomous
local judicial systems – have merged into the UAE Federal Judicial
Authority. Both emirate and federal courts are competent to apply
the UAE federal laws as well as laws and regulations promulgated
by the rulers of the various emirates.
In terms of judicial hierarchy, both the UAE federal and the local
judicial systems are divided into courts of first instance, courts of
appeal and courts of cassation. The UAE Federal Supreme Court (or
the UAE Supreme Court of Cassation), with its seat in Abu Dhabi, is
the highest court in the federal judicial system. By contrast, the local
judicial systems of the emirates of Dubai, Abu Dhabi and Ras Al
Khaimah have their own courts of cassation that are entirely separate
and distinct from the Supreme Court of Cassation. The courts
of appeal in each separate judicial system seated in the individual
emirates hear appeals of rulings from the lower courts in their home
emirate.
Civil actions with a claim value of below 100,000 dirhams will
be heard by a single judge, whereas those with a value in excess of
that amount will be referred to a bench of three. Decision-making by
the courts is based on the majority principle.
For completeness, we note that there are some judicial bodies
with sui generis jurisdiction, such as:
• the DIFC courts, which are competent to hear disputes in relation
to the Dubai International Financial Centre (DIFC);
• the Special Judicial Committees vested with exclusive competence
to hear claims brought against Amlak Finance PJSC and
Tamweel PJSC (vide Decree No. 61 of 2009);
• the Dubai World Tribunal with exclusive competence to hear
claims in relation to Dubai World and its subsidiaries (vide
Decree No. 57 of 2009); and
• the Zabeel Special Committee with exclusive jurisdiction over
Zabeel Investments LLC and its subsidiaries and associates (vide
Order of Ruler of Dubai dated 9 February 2011).
Finally, special types of Rent Committees are responsible for the
resolution of tenancy disputes in the emirates of Abu Dhabi, Dubai
and Sharjah, and disputes arising before the Emirates Securities and
Commodities Authority (ESCA) are adjudicated by arbitration in
the first instance.
2 Judges and juries
What is the role of the judge and the jury in civil proceedings?
Given that the UAE legal system is of a civil law nature, judges generally
take an inquisitorial approach. As such, they are at the centre of
hearings before the court, all questions being posed to the witness by
the presiding judge, as further seen in question 11. UAE judges may
also make their own investigations as to the application of relevant
law to the extent that its application has not been fully pleaded by
either of the parties.
There is no jury trial in the UAE.
3 Limitation issues
What are the time limits for bringing civil claims?
The general prescription period for bringing civil transaction claims
is around 15 years. In special cases, this may be reduced to five or
just two years (articles 473 et seq, UAE Civil Code). Actions for
commercial transactions prescribe after 10 years from the date on
which the commercial obligations that form the object of the action
arose, unless otherwise specified by the law (article 95, UAE Commercial
Code).
Limitation periods cannot be contracted out of by the parties.
However, limitation periods may be suspended for good cause (article
481, UAE Civil Code) or interrupted in specific circumstances
(article 484, UAE Civil Code).
4 Pre-action behaviour
Are there any pre-action considerations the parties should take into
account?
The UAE legal system does not have pre-action protocols in the form
in which they exist in some common law jurisdictions, such as in
particular England and Wales. However, reconciliation committees
have been introduced at the federal court level, excepting, however,
the courts of Dubai, Abu Dhabi and of Ras Al Khaimah, which have
retained their own judiciary. These committees have been created to
encourage and facilitate amicable settlement of civil and commercial
disputes, irrespective of the amounts in dispute, before filing an
action with the competent court of first instance.
Further, employment disputes are initially referred to the Labour
Office, which seeks to facilitate amicable settlement of labour-related
disputes. In the event settlement fails, the disputes are referred on to
the competent court of first instance.
In addition, the emirate of Dubai has recently seen the adoption
of a decree establishing the Centre for Amicable Settlement of
Disputes (Law No. 16 of 2009), which is intended to be run under
the auspices of the Dubai courts and which is dedicated to the resolution
of a wide range of disputes, including those arising in relation
to property. Settlement should be achieved within one month
of appearance of the parties before the Centre, subject to extension
of the period of settlement to the extent justified on a case-by-case
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Habib Al mulla & Co United ArAb emirAtes
basis. In the event that a settlement is achieved, the parties shall enter
a settlement agreement reflecting the terms and conditions of their
settlement. Cases may only be referred to the Dubai court of first
instance following a resolution by the Centre to that effect.
Most recently, a Committee of Commercial Agencies has been
re-introduced that is competent to hear disputes arising in relation
to registered commercial agencies subject to appeal to the competent
court within 30 days after issuance of the Committee’s ruling, failing
which that ruling will become final and binding (vide Federal Law
No. 2 of 2010 Amending Certain Provisions of Federal Law No. 18
of 1981 Regulating Commercial Agencies).
Finally, actions against an emirate government (eg, Dubai) may
only be brought before the courts after the exhaustion of a mandatory
settlement period (eg, Dubai Law No. 10 of 2005).
5 starting proceedings
How are civil proceedings commenced?
In the UAE, proceedings are commenced by filing a statement of
claim with the court clerk of the court competent to hear the dispute.
The statement of claim is to be submitted in Arabic and required to
contain, inter alia, the following detail:
• the name of the claimant, his or her profession, place of domicile
and place of work;
• the name of the defendant, his or her profession, place of domicile
and place of work;
• the course of action upon which the claimant’s case is based;
• the relief sought by the claimant; and
• all the supporting documents of the claimant’s case.
All evidentiary documentation that is in a language other than Arabic
has to be translated into Arabic and appended to the statement of
claimant in an officially certified translation.
6 timetable
What is the typical procedure and timetable for a civil claim?
Once the statement of claim has been filed with the competent court,
the court clerk will enter the case onto the court’s register (the date
of registration marking the official date of commencement of the
court action) and schedule a hearing for the case to be heard before
the court. The defendant is required to file a statement of defence
and counterclaim no later than three days before the hearing. If the
defendant or his or her authorised attorney fails to attend the hearing
on the appointed date, the court may render a judgment ex parte
(including against the defendant) in absentia.
For all further submissions, including relevant witness evidence,
the parties routinely apply to the court for adjournments of the proceedings
for two weeks at a time. Such adjournments are usually
granted provided they are justified in light of the overall prevailing
circumstances of the case.
In the case of a full trial, the judgment will usually be pronounced
by the court of first instance within six months to one year from
commencement of the court action. Depending on the nature and
complexity of the individual dispute, this may, of course, differ on
a case-by-case basis. In the event of further appeals to the court of
appeal and the Court of Cassation, proceedings may take in excess
of two years.
7 Case management
Can the parties control the procedure and the timetable?
Please see question 6.
8 evidence – documents
Is there a duty to preserve documents and other evidence pending
trial? Must parties share relevant documents (including those
unhelpful to their case)?
Given that the UAE is a civil law jurisdiction, there is no full disclosure
before the UAE courts and the extent of disclosure in court
proceedings is limited (article 18, Federal Law No. 10 of 1992 on
Issuing the Law of Proof in Civil and Commercial Transactions (the
Civil and Commercial Evidence Law)). More specifically, a party to
a litigation may request disclosure of specific documents from its
opponent if it believes that those documents are in the opponent’s
possession. The request for disclosure must provide a brief description
of the document and indicate its significance to the requesting
party’s case as well as the reasons why it is believed to be in the other
party’s possession. The right of specific disclosure is, however, very
restricted and disclosure will be ordered only provided that:
• the law permits such disclosure;
• the requested document establishes the parties’ reciprocal rights
and obligations; or
• the opponent relies upon that document as evidence of his or her
own case.
Under UAE law, there is no per se obligation to preserve evidence.
However, articles 30 et seq of the UAE Commercial Code oblige
traders and merchants to keep relevant business records for three
to five years.
9 evidence – privilege
Are any documents privileged? Would advice from an in-house lawyer
(whether local or foreign) also be privileged?
The UAE courts are not familiar with the concepts of privilege and
without prejudice communications.
10 evidence – pretrial
Do parties exchange written evidence from witnesses and experts
prior to trial?
The parties may exchange written evidence from witnesses prior to
trial. As regards the involvement of experts in the proceedings more
specifically, it should be noted that party-appointed experts are not
permitted in litigious proceedings before the UAE courts. It is only
the court that is authorised to appoint one or more experts to assist
in resolving the issues that are before it. It may do so with the agreement
of the parties or of its own motion if the parties do not agree on
the appointment of an expert. The court is not bound by the opinion
given by the expert.
11 evidence – trial
How is evidence presented at trial? Do witnesses and experts give
oral evidence?
The court is empowered to call any witness testimony it deems necessary
in order to ascertain the truth of any matter it is asked to
adjudicate (article 39(4), Civil and Commercial Evidence Law). Each
witness is required to give his or her testimony in isolation, namely,
in the absence of any of the witnesses that have not yet been heard
by the court. Rebuttal evidence is to be heard at the same hearing as
the testimony it seeks to rebut, unless circumstances dictate otherwise.
Witnesses testify on oath. Taking an oath is compulsory and a
witness’s refusal to do so may entail a penalty.
Questions are directed to the witness by the court. The court will
first put the questions of the party that called the particular witness
and then those of the opponent. Cross-examination is only permissible
to a limited extent. Rebuttal testimony is admissible where warranted
by the circumstances. The court is further empowered to ask
questions of its own motion to ascertain the truth.
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United ArAb emirAtes Habib Al mulla & Co
12 interim remedies
What interim remedies are available?
Discrete provisions of Federal Law No. 11 of 1992, the UAE Civil
Procedure Code (CPC) provide a power for the courts of first instance
to make ‘orders for payment’ or ‘orders for settlement of debt’ prior
to filing an action (articles 143-149, CPC). The procedure underlying
the application and issuance of such an order for payment is
somewhat similar to the procedure common law jurisdictions use to
render a summary judgment.
Attachments on a precautionary or a provisional basis before
the filing of an action are generally available in the UAE (article
252, CPC). Attachment orders are usually issued ex parte following
an application to the competent court on limited grounds, such as
where a debtor has no permanent residence in the UAE or if there is
reason to believe that the debtor will dissipate his or her property to
avoid payment of a debt. Certain assets are exempt from attachment,
such as wages and salaries exceeding half of the basic wage or salary,
tools, etc, that the debtor requires for the exercise of his or her
regular employment, etc. The UAE courts may even grant attachment
orders over assets located in the UAE even though they are not seized
to hear the main action.
Urgent or precautionary applications are available in matters that
require urgent action by the courts (articles 67 et seq, Civil and Commercial
Evidence Law). This is usually the case where the applicant is
requesting the court to appoint an expert or to make a site inspection
to confirm the current status or progress of a building project, etc.
13 remedies
What substantive remedies are available?
Essentially, the two main types of contractual remedies available in
the UAE are specific performance and damages. Further, a party may
obtain injunctive or interlocutory relief, as set out in question 12.
As a general rule, damages are evaluated on the basis of damnum
cessans or damnum emergens. Under civil and UAE law, more
specifically, actual loss, loss of profit, moral damages and loss of
opportunity are factored into the calculation of recoverable damages,
to be determined on a case-by-case basis. This said, there is no one
single methodology of assessing damages; the major general guiding
principle is the foreseeability of the damages concerned at the time of
the parties entering into the contract and the certainty of the occurrence
of damages. In fact, compensation for hypothetical or probable
damages is not acceptable.
The UAE courts usually grant interest at the rate of 9 per cent
per annum on the total amount awarded, which may increase up to
12 per cent in commercial transactions. Interest will start running
either from the date the initial action was filed with the court until
final settlement of the amount awarded, provided the original claim
was for liquidated damages, or from the date on which the judgment
becomes final until final settlement, provided the original claim was
for unliquidated damages. Importantly, UAE courts do not award
compound, but only simple, interest, although this may be dependent
on the emirate in which a claim is brought: compound interest
is acceptable in the emirate of Dubai, but not in the emirate of Abu
Dhabi, although both emirates form part of the UAE.
14 enforcement
What means of enforcement are available?
Enforcement of a UAE court order can be achieved in a variety of
different ways, depending on the nature of the underlying order,
including:
• payment of public penalties;
• seizure of assets;
• short-term imprisonment; and
• retention of an individual’s passport.
15 Public access
Are court hearings held in public? Are court documents available to
the public?
Court hearings in the UAE are held in public. Court documents,
however, are only accessible with a valid power of attorney from
one of the parties.
16 Costs
Does the court have power to order costs?
The UAE courts usually apply the ‘costs follow the event’ principle,
whereby the prevailing party in the proceedings is awarded costs and
expenses, to be payable in full by the losing party. Expenses include
the court fees, any expert fees and counsel fees, although these latter
fees are often not recoverable in full and no more than nominal.
UAE courts are not familiar with the concept of security for
costs.
17 Funding arrangements
Are ‘no win, no fee’ agreements, or other types of contingency or
conditional fee arrangements between lawyers and their clients,
available to parties? May parties bring proceedings using third-party
funding? If so, may the third party take a share of any proceeds of the
claim? May a party to litigation share its risk with a third party?
Conditional fee arrangements on a ‘no win, no pay’ basis are illegal
in the UAE. On the other hand, it is common for advocates to charge
a success fee by way of a premium if they prevail for their client over
the other side.
18 insurance
Is insurance available to cover all or part of a party’s legal costs?
In the UAE, no insurance is available to cover any part of a party’s
legal costs.
19 Class action
May litigants with similar claims bring a form of collective redress? In
what circumstances is this permitted?
Class actions are not permitted under UAE law.
20 Appeal
On what grounds and in what circumstances can the parties appeal?
Is there a right of further appeal?
There is essentially only one level of appeal, the civil court of appeal;
the Court of Cassation is only competent to hear appeals on grounds
of law (and not fact), and as such does not constitute an ordinary
instance of appeal. Civil court rulings can be appealed to the civil
court of appeal on grounds of law or fact within 30 days from the
date of the appealed ruling.
Appeals from the federal courts of appeal (ie, in Sharjah, Fujairah,
Ajman and Umm Al Quwain) lie to the Federal High Court in
Abu Dhabi, which is generally composed of five judges. Importantly,
a judgment rendered by the court of appeal is good for execution even
though it may be further appealed to the Federal High Court. For
claims up to 10,000 dirhams, leave to appeal to the Supreme Court
of Cassation is required from the competent court of appeal; if the
claim amount is in excess of 10,000 dirhams, leave to appeal from
the competent court of appeal is automatic. Appeals to the Supreme
Court of Cassation are on points of law only and the submission of
further evidence is not admissible bar in exceptional circumstances.
The ruling of the Supreme Court of Cassation is final and is not
subject to any further appeals bar in exceptional circumstances (eg,
where fraud was involved, or fresh evidence comes to light after
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Habib Al mulla & Co United ArAb emirAtes
the ruling of the Supreme Court of Cassation that was intentionally
withheld by the other side).
Given the autonomous judicial system governing the emirates of
Dubai, Ras Al Khaimah and Abu Dhabi, judgments of the Dubai,
Ras Al Khaimah and Abu Dhabi courts of appeal are appealable to
their respective courts of cassation. The procedure discussed above
in relation to the Supreme Court of Cassation is applicable mutatis
mutandis to the procedure before the Dubai, Abu Dhabi and Ras Al
Khaimah courts of cassation.
21 Foreign judgments
What procedures exist for recognition and enforcement of foreign
judgments?
Generally speaking, foreign judgments and orders may be enforced
in the UAE under the same conditions as apply to their enforcement
in their country of origin (articles 235 et seq, CPC). Application for
the order of enforcement is made to the court of first instance of the
emirate where the foreign judgment or order is to be executed in
compliance with the standard procedures for filing an ordinary court
action. Importantly, the application must append a licensed Arabic
translation of the relevant judgment and any supporting documentation;
further, the foreign judgment or order must be notarised in its
country of origin, legalised by the Ministry of Foreign Affairs and
authenticated by the UAE embassy in that country. The court will
then notify the defendant of the application, who will then be entitled
to make his or her own submissions in defence. The court will consider
the parties’ respective arguments for and against enforcement
and finally deliver judgment on whether or not to recognise the judgment
or order in question as good for execution in the UAE.
A foreign judgment or order will only be recognised provided the
following conditions are satisfied:
• the UAE courts do not properly have jurisdiction over the subject
matter of the dispute underlying the foreign judgment or
order, and the foreign court was competent to hear the dispute
in accordance with its own laws;
• the judgment or order was made by the competent court in the
country of origin in accordance with the laws in force in that
country;
• the litigating parties subject to the judgment or order were properly
summoned by the foreign court and duly represented in the
hearing before it;
• the judgment or order is res judicata in accordance with the laws
in force in the country of origin; and
• the judgment or order does not conflict with a judgment or order
previously made by a UAE court and they are not in violation
of UAE public policy or bonos mores as understood in the UAE
(article 235, CPC)
These provisions are without prejudice to the application of any
bilateral or multilateral international conventions between the UAE
and other states in relation to the mutual recognition and enforcement
of their respective judicial instruments, including:
• the Treaty on Judicial Cooperation in Criminal Matters, Extradition
of Offenders, Cooperation in Civil, Commercial and Personal
Matters with Morocco (2006);
• the Treaty on Mutual Legal assistance in Criminal Matters,
Extradition of Offenders, Cooperation in Civil, Commercial and
Personal Matters, Service of Judicial and Extra-Judicial Documents,
Obtaining Evidence, Commissions and the Recognition
and Enforcement of Foreign Judgments and Arbitral Awards
with Sudan (2005);
• the Agreement on Legal and Judicial Cooperation with Syria
(2002);
• the Agreement on Legal and Judicial Cooperation with Egypt
(2000);
• the Agreement on Legal and Judicial Cooperation with Jordan
(1999);
• the Treaty on Judicial Cooperation, Recognition and Enforcement
of Judgments in Civil and Commercial Matters with France
(1992);
• the Agreement on Legal and Judicial Cooperation with Somalia
(1972);
• the Riyadh Convention on Judicial Cooperation between States
of the Arab League (1983), which entered into force in 1999;
• the GCC Convention for the Execution of Judgments, Delegations
and Judicial Notifications (1987); and
• the ICSID Convention, namely, the Washington Convention on
the Settlement of the Investment Disputes between States and
Nationals of Other States (1965).
A court order for the enforcement of a foreign judgment or order is
subject to appeal before the court of appeal and the Court of Cassation.
Alternatively, the judgment debtor may raise objections to the
execution procedure once execution has been ordered.
22 Foreign proceedings
Are there any procedures for obtaining oral or documentary evidence
for use in civil proceedings in other jurisdictions?
There are no specific procedures under UAE law for obtaining
oral or documentary evidence for use in civil proceedings in other
jurisdictions.
Arbitration
23 UnCitrAL model Law
Is the arbitration law based on the UNCITRAL Model Law?
The current arbitration law of the UAE is contained in articles 203
to 218, CPC. These provisions are not based on the UNCITRAL
Model Law.
24 Arbitration agreements
What are the formal requirements for an enforceable arbitration
agreement?
Under UAE law, an arbitration agreement is subject to the following
formal and other requirements:
• arbitration clauses in relation to insurance policies are required
to be ‘contained in a special agreement separate from the general
printed conditions in the policy of insurance’ (article 1028(1),
UAE Civil Code);
• an arbitration agreement must be evidenced in writing (article
203(2) CPC), which – in light of relevant case law – may mean
that the page on which the arbitration clause is contained must
be signed by both parties to the arbitration; and
• the signatory of the arbitration agreement is required to have
‘both legal capacity […] and a special authority to sign’ (article
58 CPC); by way of caution, if the agreement is signed by a
party representative, that representative needs to have a notarised
power of attorney specifically authorising him or her to sign
the arbitration agreement.
25 Choice of arbitrator
If the arbitration agreement and any relevant rules are silent on the
matter, how many arbitrators will be appointed and how will they
be appointed? Are there restrictions on the right to challenge the
appointment of an arbitrator?
It is usually the chosen arbitration rules that provide for default
mechanisms in relation to the appointment of arbitrator where the
parties fail to appoint the requisite arbitrators (eg, the Rules of the
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United ArAb emirAtes Habib Al mulla & Co
Dubai International Arbitration Centre, the DIAC Rules). In ad hoc
arbitrations, the UAE courts are in charge of default appointments;
importantly, the courts’ decisions are unchallengeable (article 204,
CPC).
Essentially, the grounds for challenge of an arbitrator coincide
with those for challenge of a public judge (article 207(8), CPC). Such
grounds include:
• a particular, disqualifying marital or family relationship between
the arbitrator and one of the parties;
• the arbitrator being an agent, trustee or guardian of one of the
parties;
• conflicting interest as counsel, witness or expert in the same,
related or even unrelated proceedings; (article 114, CPC)
• some form of intimate or professional relationship with one of
the parties; or
• bias (article 115, CPC).
In addition, an arbitrator may be revoked on the ground that he
has intentionally neglected to act in accordance with the arbitration
agreement or to comply with his mandate (article 207(3), CPC).
Applications for challenge are to be made to the competent court,
which will decide on the challenge promptly.
26 Arbitral procedure
Does the domestic law contain substantive requirements for the
procedure to be followed?
Substantive requirements under UAE domestic law to be followed
over the course of an arbitral procedure essentially fall under the
head of due process. This means that the arbitrating parties need
to be afforded a fair hearing and that the presentation of evidence
needs to comply with certain mandatory rules, including in particular
the compulsory oath-taking of witnesses providing testimony in the
arbitration procedure.
27 Court intervention
On what grounds can the court intervene during an arbitration?
Under UAE law, an arbitrator may rely upon the supportive powers
of the UAE courts to:
• assist in the production of documents from a third party that are
necessary for determining the dispute before the tribunal (article
209(2)(b), CPC);
• sanction the absence of or false testimony from a witness called
in the course of the arbitration proceedings (article 209(2)(b),
CPC); and
• render interim measures, such as injunctions to preserve relevant
evidence or attachment orders.
The UAE courts may furthermore intervene in ongoing arbitration
proceedings where parallel criminal proceedings are brought in
relation to the issues underlying the arbitration proceedings (article
209(2), CPC).
A residual power to render interim measures before and after the
commencement of arbitration proceedings rests with the competent
UAE courts and cannot be contracted out of by the parties (articles
22 and 24, CPC). Such power is no doubt exclusive before the commencement
of the arbitration proceedings.
28 interim relief
Do arbitrators have powers to grant interim relief?
There are no specific provisions on a tribunal’s power to make interim
measures under UAE law. This said, some of the institutional arbitration
rules are more specific, empowering the tribunal to adopt certain
interim and conservatory measures once the arbitration tribunal has
been constituted (article 31, DIAC Rules). Such measures may also
include the ordering of measures relating to security of costs.
29 Award
When and in what form must the award be delivered?
The award has to be rendered within six months from the date of
the first hearing (subject to extension by the parties’ consent or order
of the court) (article 210, CPC). Under some arbitration rules, the
deadline for rendering the award is six months from the date of the
tribunal’s receipt of the arbitration file; this deadline can be extended
by the tribunal of its own motion by another six months (article 36,
DIAC Rules).
Under UAE law, the award must:
• be written in Arabic, unless otherwise agreed by the parties, in
which case an official translation into Arabic is to be appended
to the award (article 212(6), CPC);
• be rendered and signed by a majority of arbitrators, stating any
arbitrator’s refusal to sign the award;
• append any dissenting opinions;
• include the express wording of the arbitration agreement in the
body proper of the award;
• provide a summary of the parties’ cases and evidence;
• set out the reasoning of the award; and
• set out place and date of issuance of the award (article 212(5),
CPC).
30 Appeal
On what grounds can an award be appealed to the court?
Under UAE law, awards can be challenged during the ratification
process. Challenges can be mounted on procedural grounds only,
including:
• that the award has been rendered without an arbitration deed
or on the basis of an invalid document or that the arbitrator has
stepped outside the boundaries of his mandate;
• that the award has been rendered by arbitrators who have
not been properly appointed or who do not fulfil the legal
requirements;
• that the arbitration agreement was concluded by persons having
no capacity to agree to arbitration; or
• that the arbitration proceedings or the award are affected by
other procedural irregularities (article 216(1), CPC) (eg, failure
by the arbitrators to sign both the reasoning and the dispositif
of the award; Dubai Court of Cassation, petition No. 233/2007,
judgment of 13/01/2008).
In addition, awards are open to challenge for potential violations
of public policy as understood in the UAE. Under UAE law, ‘public
policy shall be viewed as including such provisions relating to
private status such as marriage, inheritance, and lineage, as well as
provisions relating to sovereignty, free trade, distribution of wealth,
rules of private ownership and the other rules and foundations upon
which society is based, in such a manner as not to conflict with the
definitive provisions and fundamental principles of Islamic Sharia’a’
(article 3, Federal Law No. 5 of 1985, as amended, the Civil Transactions
Law).
The above-listed grounds have, on repeated occasions, been
reiterated in the recent case law of the Dubai Court of Cassation
(petition No. 270/2008, judgment of 24/03/2009; and petition No.
32/2009, judgment of 29/03/2009).
The effect of a successful challenge is that the underlying dispute
cannot be remitted to an arbitration tribunal, unless the parties
agree otherwise. Alternatively, the dispute can be referred to the UAE
courts by filing a separate action (Dubai Court of Cassation, petition
No. 263/2007, judgment of 03/02/2008; and Dubai Court of Cassation,
petition No. 192/2007, judgment of 27/11/2007).
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Habib Al mulla & Co United ArAb emirAtes
31 enforcement
What procedures exist for enforcement of foreign and domestic
awards?
To ensure recognition and enforcement, domestic awards have to
undergo a validation/ratification process before the UAE courts. This
process is based on an ordinary court action, resulting in an order of
recognition and enforcement by the competent court of first instance,
which in turn is subject to the ordinary channels of appeal before the
UAE courts. The UAE courts have become increasingly arbitrationfriendly
and look favourably on the recognition and enforcement
of arbitration awards. There is no time limit for the commencement
of the ratification process. Importantly, the enforcement of an
award is suspended pending completion of the recognition process
(Dubai Court of Cassation, petition No. 265/2007, judgment of
03/02/2008).
The recognition and enforcement of foreign awards is guided by
the applicable bilateral or multilateral conventions listed in answer
to question 21 as well as the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards. Generally
speaking, in accordance with those conventions, an award should
be enforced provided it is final and appropriate for enforcement in
the country of origin and it is not contrary to the principle of public
policy as understood in the UAE. It is worth noting in this context
that there are two recent instances of enforcement of foreign awards
in the UAE under the New York Convention (vide Fujairah Federal
Court of First Instance, Case 35/2010, judgment of 27 April 2010;
and Dubai Court of First Instance, Case No. 268/2010, judgment of
12 January 2011). Awards rendered in the Dubai International
Financial Centre (DIFC) are recognised and enforced in the UAE
through a DIFC court order, which is likely enforceable in the UAE as
a foreign judgment (article 7(2), Law No. 12 of 2004 in respect of the
Judicial Authority at the Dubai International Financial Centre). Recognition
and enforcement of DIFC awards before the Dubai courts is
facilitated by reference to the 2009 Memorandum of Understanding
Between Dubai Courts and DIFC Courts (which entered into force as
from 16 June 2009) and the related Protocol of Enforcement between
Dubai Courts and DIFC Courts, provided the awards are final and
appropriate for enforcement before the DIFC court.
Bar the application of one of the bilateral or multilateral conventions
referred to above (article 238, CPC), the enforcement of foreign
awards follows the same rules as the enforcement of foreign judgments
(article 236, CPC). The UAE courts may refuse enforcement
of a foreign award on grounds such as:
• the lack of proper jurisdiction of the tribunal at the place of
arbitration;
• the deficient issuance of the arbitration award at the place of
arbitration;
• the improper summoning or representation of one of the parties
in the foreign arbitration proceedings;
• the contradiction of the foreign award with a previous UAE judgment
or its violation of public policy or bonos mores as understood
in the UAE (article 235, CPC).
Importantly, recognition and enforcement is based on a principle
of mutual recognition, whereby the UAE courts will only apply the
provisions under article 235 CPC in relation to awards issued in
countries that, in turn, recognise and enforce UAE awards (article
235(1), CPC).
32 Costs
Can a successful party recover its costs?
Costs usually follow the event, namely, the loser pays, even though
the arbitrators retain some discretion to allocate costs and fix their
own fees (subject to the determination of fees and costs in accordance
with fee and costs schedules consecrated by the governing institutional
rules, vide DIAC).
An arbitration tribunal may award all kinds of costs, including
arbitration fees and expenses. Counsel fees may also be recovered
in full.
Alternative dispute resolution
Habib Al mulla & Co
33 types of Adr
What types of ADR process are commonly used? Is a particular ADR
process popular?
The following types of ADR are occasionally used in the UAE.
mediation and conciliation
There are no particular court procedures that prescribe either of these
two methods of alternative dispute resolution; parties nonetheless
routinely provide in their commercial agreements for a tiered form
of dispute resolution, mediation or conciliation being followed by
a more formal dispute resolution procedure, such as arbitration or
litigation. Any settlements reached through mediation or conciliation
are contractual in nature and can be enforced as contracts before the
UAE courts. At any stage in the proceedings before the UAE courts,
the parties are allowed to file settlement agreements. Any court fees
paid ad datum will be forfeited.
expert determination
Expert determination is only rarely used as a dispute resolution
mechanism. As expert determination is usually used to determine
uncertain parameters, such as a particular value or a fair price,
Karim nassif karim.nassif@habibalmulla.com
Gordon blanke gordon.blanke@habibalmulla.com
Level 14, 014 Tower Tel: + 971 4 423 0000
Al Khail Road Fax: +971 4 447 9777
Business Bay www.habibalmulla.com
Dubai
United Arab Emirates
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United ArAb emirAtes Habib Al mulla & Co
contracts providing for expert determination as a dispute resolution
mechanism would arguably violate the shariah law rule against
uncertainty. In any event, expert decisions in commercial contracts
under UAE law are generally considered non-binding, with onward
referral to litigation or arbitration.
34 requirements for Adr
Is there a requirement for the parties to litigation or arbitration to
consider ADR before or during proceedings? Can the court or tribunal
compel the parties to participate in an ADR process?
See question 4.
Miscellaneous
35 Arethere any particularly interesting features of the dispute resolution
system not addressed in any of the previous questions?
One unique feature of the UAE dispute resolution system is the establishment
of majilis, whereby the ruler of an emirate will essentially
act as a conciliator in disputes between or within leading families of
his emirate.
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