UAE’s Arbitration Evolution: Impact of Federal Law No. (15) of 2023
Introduction
In a significant leap forward for the UAE’s legal landscape, the enactment of Federal Law No (15) of 2023 has ushered in a new era for arbitration. These amendments, enacted to improve the landmark legislation on arbitration, the Federal Arbitration Law No. (6) of 2018, signifies a paradigm shift in the country’s commitment to fostering a dynamic, efficient, and internationally competitive arbitration environment.
Exploring the Amendments
The amendments, particularly to Articles 10, 10bis, 23, 28, and 33, have profound implications for arbitration practices within the UAE. Let’s dissect these changes to understand their impact on the legal and business communities.
Article 10: Paving the Way for Impartiality and Independence
Article 10, while retaining the essence of its predecessor, introduces a crucial enhancement by explicitly prohibiting arbitrators from having a direct relationship with parties involved in arbitration. This move is a testament to the UAE’s commitment to ensuring the impartiality and independence of arbitrators, essential pillars of a fair arbitration process.
The term “direct relationship”, however, introduces a layer of ambiguity, necessitating future case law to define its scope and implications. In the absence of judicial interpretation, practitioners can turn to the 2014 IBA Guidelines on Conflicts of Interest in International Arbitration for guidance.
The inclusion of disqualification criteria for arbitrators with convictions involving moral turpitude maintains consistency with the previous regime, reinforcing the importance of ethical conduct within the arbitration sphere.
Article 10bis: A Bold Step Towards Governance and Transparency
Article 10bis introduces a groundbreaking provision absent in the 2018 UAE Arbitration Law— the appointment of arbitrators from arbitration institutions’ supervisory bodies. This innovation comes with a set of comprehensive conditions, ensuring governance, impartiality, and ethical conduct.
Practitioners serving on arbitration institution boards now have the opportunity to act as arbitrators, provided they meet stringent criteria. However, the potential for annulment and civil damages in case of non-compliance adds a layer of caution, making widespread utilization of this exception unlikely—at least for now.
Article 23: Empowering Parties and Tribunals
Article 23, though undergoing minor textual revisions, maintains its fundamental principle— parties’ freedom to agree on arbitration procedures. In the absence of such agreements, arbitral tribunals now possess the authority to independently establish procedures, aligning with UAE law and international principles.
This provision underscores the flexibility embedded in the UAE’s arbitration framework, allowing parties and tribunals to tailor proceedings according to the unique needs and preferences of each case.
Article 28: Bridging the Physical and Virtual Divide
A pivotal amendment, Article 28 acknowledges the legitimacy of virtual hearings, a move aligned with global trends and emphasizing the adaptability of the UAE’s arbitration process. Parties now have the authority to choose between physical and virtual arbitration, with arbitral tribunals stepping in to decide in case of disagreements.
The responsibility placed on arbitral institutions to provide necessary technologies not only highlights their role in upholding efficiency but also underscores the UAE’s commitment to embracing technological advancements in the legal arena.
Article 33: Nurturing Arbitral Tribunal Flexibility
Article 33 undergoes a transformation, granting arbitral tribunals increased flexibility and authority in managing arbitration proceedings. From the choice between oral hearings and “documents-only” proceedings to setting hearing dates and assessing evidence admissibility, the amendments empower tribunals to ensure a fair and efficient arbitration process.
The explicit classification of arbitration proceedings as confidential by default adds an extra layer of security, addressing concerns related to sensitive information disclosure and contributing to a more credible arbitration framework.
Conclusion
The amendments introduced by Federal Law No. (15) of 2023 represent more than just legal changes—they signify a commitment to modernizing and enhancing the UAE’s arbitration framework. From bolstering the impartiality of arbitrators to embracing virtual hearings and nurturing tribunal flexibility, these amendments showcase the UAE’s dedication to aligning its arbitration laws with international standards.
As legal practitioners navigate this transformed landscape, the amendments promise a more sophisticated and versatile arbitration environment, instilling confidence in investors and fortifying the UAE’s reputation as a business-friendly destination. The journey of arbitration in the UAE has entered a new chapter, one marked by innovation, transparency, and a firm commitment to the principles of justice.
