The United Arab Emirates (UAE) continues its commitment to creating a robust and business-friendly arbitration environment with recent amendments to its laws regarding arbitration. These crucial changes, brought into force by Federal Law No. 15 of 2023 on 16 September 2023 (the “Revised Law"), build upon the foundation laid by Federal Law No. 6 of 2018, further enhancing the arbitration landscape in the region. In this article, we delve into three significant amendments and their potential implications for arbitration proceedings seated in the UAE.
Stricter requirements for Arbitrators (Article 10 and Article 10 bis of the Revised Law):
The first significant amendment concerns Arbitrator requirements, emphasising the necessity for fairness and autonomy. Under the Revised Law:
- Arbitrators cannot maintain a direct relationship with any party involved in the arbitration that may compromise their impartiality, integrity, or independence.
- Arbitrators are prohibited from being part of the executive management or management body of the arbitration institution overseeing the case. This move extends the scope of Article 10 that previously only excluded those on the board of trustees or administrative branch of the relevant arbitration institution. This expansion in scope aims to eliminate any potential conflict of interest that might arise from such roles.
- Article 10 bis provides an exception to the stricter requirements that are now imposed by Article 10, namely it permits Arbitrators to be involved on a tribunal administered by their arbitration institution, provided they meet specific conditions to safeguard their neutrality. These conditions include:
- The regulations of the arbitration institution administering the arbitration case do not prohibit their involvement;
- The Arbitrator is neither sole Arbitrator nor head of the arbitral tribunal;
- The parties to the arbitration case declare in writing their knowledge of the Arbitrator's membership in the relevant supervisory or controlling body of the arbitration institution, and that there is no objection or reservation on their part to that appointment;
- The arbitration institution has a special mechanism for safe reporting of any violations committed by Arbitrators; and
- The number of arbitration cases in which the Arbitrator is a member does not exceed five cases per year.
Violations of the above conditions could have severe repercussions for an arbitration. Any resulting arbitration award will be invalidated, and parties will have the right to seek compensation from both the relevant arbitral institution and the implicated Arbitrator.
These amendments strengthen the arbitration process by promoting transparency, trust, and fairness, crucial elements in any dispute resolution mechanism.
Virtual Arbitration Proceedings (Article 28 of the Revised Law):
Another significant change lies in the adaptability of arbitration proceedings to the modern era. Article 28 of the Revised Law now expressly permits all arbitration proceedings to be conducted virtually, where previously an option to hold hearings by “modern electric means of communication” where appropriate was permitted.
Extending this change further, the relevant arbitral institution must now ensure that the technology required for virtual hearings is readily available to the parties involved.
In a digital age where geographic boundaries are increasingly less relevant, this amendment paves the way for greater flexibility, increased streamlining, and reduced costs, bringing the UAE into line with the global shift towards greater numbers of online or hybrid proceedings in traditional arbitration centres.
Expanded Scope of Confidentiality and Transparency (Article 33 of the Revised Law):
The third significant change seeks to expand the scope of the confidentiality of proceedings, and increase transparency amongst the tribunal. Article 33 of the Revised Law states that:
- Arbitration proceedings and hearings will now be conducted in private unless the parties mutually agree otherwise. Previously, the default of privacy applied to hearings alone. This enhances confidentiality, preserving the integrity of the arbitration process.
- The arbitral tribunal must now notify the parties of hearing dates well in advance. This amendment ensures that parties have ample time to prepare and participate effectively.
- The arbitral tribunal retains the discretion to determine the rules of evidence applied in a case, with the stipulation that these rules must not conflict with public order. This safeguard allows the tribunal to manage proceedings efficiently while maintaining a respect for fundamental legal principles.
Comment:
The Revised Law marks a significant, if light-touch, step towards aligning the country's arbitration framework with international best practices. These amendments strengthen Arbitrator impartiality, embrace virtual proceedings, and enhance the confidentiality and transparency of the arbitration process.
By doing so, the UAE continues to position itself as an attractive destination for international arbitration, providing a secure and efficient process for resolving disputes in today's global business landscape. Clients and legal practitioners can anticipate a more transparent, efficient, and impartial arbitration process as a result of these amendments.
Authored by Emerson Holmes, Sian Walker and Elmina Marriott.
