The UAE has made important and much-awaited amendments to its arbitration laws with Federal Decree No. 15 of 2023.
These changes affect how arbitrators are appointed and how they handle disputes incorporating provision to provide guidelines on the actions of the Arbitral Tribunals, amending the provisions of Arbitration Law No.6
of 2018 which comes into effect following the date of its publication in
the Official Gazette on 15th September 2023.
The Amendment govern the requirement for the appointment of the Arbitrator and impartiality towards the assigned Arbitration Matter and to the Contesting Parties through requisite changes in Article 10, 23, 28 and 33 of Federal Law No.6 of 2018. Such Amendments were required to be included to outline the rules to be followed for the Arbitrator Appointment and its credibility to undertaken and judge any dispute referred to them.
One of the Key changes incorporated has been enumerated in Article 10.1 (b) of the said Amended Law, whereby it has become a necessary requirement to consider for the appointed Arbitrator should not be a member of the Board of Trustees, Executive Management or Management Body of the Competent Arbitration Institution administering the Arbitration Case in the state, that gives a sigh of relief for the contesting Parties that the appointed Arbitrator will be entirely unrelated to concerned parties and its position with the Arbitration Institution shall not hold any authority to impact the decision passed in the Arbitration matter.
Usually, the Arbitrator are at a liberty to consider whatever reasoning they deem appropriate and fit to make their decision without providing a valid justification for any interim application, which is in itself arbitrary, some of this decision comes from the fact that the Arbitrator holds a authoritative position in the Institution and further action cannot be taken to be imposed against the Arbitrator considering its current position in the Arbitration Institution.
With the implementation of such provision, will not only help curtail the ambiguity created during the proceedings but also impose restriction to be fair and impartial. An Addition has been incorporated to Article 10 of Federal law No.16 of 2018, appointing members of the controlling Body shall be only allowed if the following exemptions are met:
- The Regulations of the Arbitration Institution administering the case do not prohibit this.
- The Arbitration Institution administering the Arbitration case has a special governance system for organizing the work of the aforementioned arbitrator in a way that achieves separation of duties and impartiality, and in a way that prevents the occurrence of the conflict of interest or preferential advantage of that member compared to his other counterparts, and in a way that regulates the mechanism of appointment, dismissal and removal of the Arbitrator if any of the specified cases in this regard are met.
- The Arbitrator is neither sole Arbitrator nor head f the Arbitral Tribunal.
- The Parties to the Arbitration case declare in writing their knowledge of the Arbitrators membership in the Board of the Directors, the Board of Trustees, or any such supervisory or controlling body of the Arbitration Institution administering the Arbitration case in the State, and that there is no objection on their part to that appointment.
- The Competent Arbitration institution has a special mechanism for safe reporting of any violations committed by Arbitrators.
- The Number of Arbitration Cases in which the Arbitrator is a member does not exceed (5) five cases per year.
- The Arbitrator submits a written undertaking:
- To not use his position in a way that may create a conflict of interest, or lead to him in obtaining or enjoying a preferential advantage or interest compared to his other counterpart Arbitrators.
- To not Participate, deliberate, view, vote, attend meetings, or in any way7 influence the conduct of the Arbitration case procedures, by virtue of his membership in the board of directors, the Board of trustees, or similar supervisory or controlling bodies of the competent Arbitration Institution administering the Arbitration case during the period of his appointment as an Arbitrator.
- Any other conditions or requirement by the Competent Arbitration Institution.
Another promising Incorporation of Article 23.1 of the said Amended Law has brought much awaited optimistic changes that the Parties has the right to agree on a procedure of the Arbitration Proceedings to be followed by the Arbitral Tribunal including the right to subject such procedures to the rules in force of ANY Arbitration Institution or Organization in the state or Abroad, hence it is no longer necessary to impose the Law of the seat of the Arbitration Matter as agreed between the Parties in the Contract or otherwise
,but the Parties after the institution of the Arbitration proceedings are at the liberty to select the rules of any Arbitration Proceedings irrespective of the jurisdiction where the Arbitration proceedings are instituted. Hence, the restriction imposed on the contesting parties have been lifted, now it is for the implementation of this amended provision to make the difference.
Through Article 23.2, for the First Time the Law imposes a responsibility on the Arbitral Tribunal to consider the provisions of present law in the state in compliance with the Basic principles applied in litigation and international agreement, if in case the contesting parties are not able to agree on the procedures to be followed in their respective Arbitration Proceedings.
Very Often, in the Arbitration proceedings the Arbitral Tribunal disembarks and disregards any reference and application of the Litigation or Court Practice in the procedures to be conducted or applied, with this new amendment the Arbitral Tribunal are required to reflect other Dispute Resolution procedures while considering and deciding the Rules to follow in the matter.
The new law gives the Tribunal under Article 33 of the said amended law, the discretion to select the applicable evidentiary rules unless these rules conflict with the UAE’s public policy. The Concept of Public Order is vast to cover and it only require Juridical intervention to agree if the referred actions falls under the category of Public Order.
It is also pertinent to acknowledge that any violation of such provisions on the part of the Arbitrator if there is any breach of law or any other violations of any of the conditions referred in Article 10 of the Amended Law shall result in invalidity of the Arbitral Award issued in the Arbitration Case and the Parties shall have the right to demand any civil Compensation from the Competent Arbitration Institution and the Violating Arbitrator irrespective if the Arbitrator has obtain an agreement from the contesting parties to provide immunity from any legal proceedings against the appointed Arbitrator.
Nevertheless, the concerns of precedence of this amended provisions still remains unresolved, will this amended law be applicable on the ongoing Arbitration cases, or are only to be applicable on new Instituted Arbitration Matters.
This will only be decided during the implementation of the amended law in Arbitration.
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