NEWS November 11 2018

Financier Worldwide Annual Review: Litigation & Alternative Dispute Resolution in the UAE by Areen Jayousi

Q. Could you outline some of the current market challenges at the centre of commercial disputes in your region?
Areen Jayousi: Perhaps the most pressing market challenge at the moment facing commercial litigants is the choice parties have in terms of a forum for their commercial disputes to be heard. In this particular jurisdiction, one is able to choose between common law and civil law in that litigants are able to apply to the Arabic based onshore courts as well as offshore courts which are based exclusively in English common law. This can be an issue on occasion as these competing jurisdictions can come into conflict (and sometimes issue contradictory judgments) with each other and create significant confusion for litigants while assessing which forum is advantageous.


Q. What general advice can you offer to companies on implementing an effective dispute resolution strategy to deal with conflict, taking in the pros and cons of mediation, arbitration, litigation and other methods?
AJ: By way of general advice, commercial contracts ought to be drafted in a way that provides explicitly for some form of ADR, whether it be a specific requirement for negotiation by management, some form of mediation or by referral to an third party appointed expert on disputes regarding technical matters.
Amicable settlement attempts ought to be pursued in a structured way to facilitate the best possible outcome without having to pursue aggressive litigation tactics. The implementation of an amicable resolution focused strategy is highly advised. Which is the reason for pre-litigation procedures which will generally include the sending of legal notices setting out the basis of the dispute in question, and offering the other party time to reply. The preference for an amicable resolution to disputes is mainly attributable to high litigation and arbitration costs, as well as lengthy timeframes associated with obtaining final verdicts.
Q. To what extent are companies in your region likely to explore alternative dispute resolution (ADR) options before engaging in litigation?
AJ: There is most certainly an appetite within the region for disputes to be dealt with outside of the official ambit of the courts. Litigation can be costly, time consuming and unpredictable.
In fact, Dubai Local Law 16 of 2009 set-up a forum for the amicable settlement of disputes. The Dubai Reconciliation Centre offers mediation services which litigants to a particular dispute must mandatorily participate in, should the local courts have jurisdiction to review the matter. The imposition of Law 16 has been highly successful.
The main aim of Law 16 by implementing mandatory mediation is to effectively facilitate compromise by referring a dispute to an independent third party expert who has specific expertise in the field of the dispute. The expert does not have the authority to issue a binding verdict, however the report which the expert publishes can be highly persuasive and has therefore resulted in many a successful mediation.


Q. How would you describe arbitration facilities and processes in your particular region of focus? Are local courts supportive of the process?
AJ: The most significant development in dispute resolution in the UAE, without a doubt, is the recent promulgation of the UAE’s standalone Arbitration Law. Federal Law No 6/2018 which was Gazetted on 15 May 2018, officially brings into place a UNCITRAL modelled law which significantly improves the UAE legal regime on arbitration and formally repeals the previous provisions on arbitration in the UAE Civil Procedure Code.
Prior to the new law being enacted, the law on arbitration was restricted to scant articles of the UAE Civil Procedure Code, Federal Law No. 11/1992. With the new law however, we see the introduction of a comprehensive framework for arbitration which is in line with international norms and best practices.
Previously, the process of recognising and enforcing both domestic and foreign arbitral awards within the onshore courts was infamous for unmeritorious challenges being advanced by award debtors. However, the new law positively provides that the party who wishes to enforce the arbitral award, namely the award creditor, must submit an application to the competent court confirming the award and requesting its enforcement. Article 55(1) outlines all the accompanying documentation which must be submitted with the enforcement request.
The competent court then has 60 days from receipt of the award creditor’s application to enforce the arbitral award. However, this cannot be undertaken by the court if any of the subsections of article 53(1) are met.


Q. What kinds of situations or circumstances might lead companies to pursue litigation instead of arbitration?
AJ: Companies will sometimes pursue litigation instead of arbitration when the dispute is deemed to be straightforward in nature. The claimant’s wishes to keep costs to a minimum is also a consideration taken into account when opining between litigation and arbitration. Arbitration is significantly more costly than litigation before the local courts, and traditionally enforcement has been problematic in certain circumstances. Companies also prefer local litigation as there is no requirement to ‘ratify’ a judgment before it is enforceable. Many litigants therefore are of the impression that litigation can be a more expedient route to obtaining a final and binding judgment. In cases where there are no protracted and complicated technical issues at the heart of the dispute, it is widely viewed that litigation is preferable to arbitration. 


Q. What practical challenges need to be dealt with when undertaking complex international, multijurisdictional disputes in your region?
AJ: Every cross border contract that finds itself subject to a dispute can be difficult. Practical challenges usually emanate around issues involving governing law. Significant time is wasted fighting the issue once a dispute arises. Another aspect common in such disputes is issues with language. Time ought to be taken in order to determine that the contracts are drafted in a language that will be enforceable in a foreign court, that being Arabic within our particular jurisdiction. By way of example, should a contract be in a bi-lingual format (i.e in English and Arabic), a local court of law will only adopt that which is written in Arabic.


Q. What considerations should companies make when drafting a dispute resolution clause in their commercial contracts to address the possibility of future disputes?
AJ: Certain matters in the UAE are un-arbitral as they are deemed to be against public policy for example, any agreement which has been registered with the authorities would require the jurisdiction of the local courts to be agreed upon in the contract, as such disputes cannot be referred to arbitration.It is important while drafting to ascertain the nature of dispute that may arise out of the transaction, hence the jurisdiction should be mutually agreed and should be fair to both parties. Most importantly, the governing law that will be applicable to the contract must be mutually agreed between the parties as this would significantly influence the dispute.

Areen Jayousi is a partner and head of arbitration at Horizons & Co. Areen has over a decade of experience in managing disputes in the Middle East, with particular expertise in the preparation and conduct of arbitrations and dispute resolution, as well as national and international litigation. Areen is available on [email protected].

You might also be interested in...
NEWS November 02 2020
Financing An International Trade
NEWS October 04 2020
DIFC’s Data Protection Law
NEWS June 30 2020
Public Prosecution in Dubai
NEWS June 22 2020
Covid-19 & Force Majeure
NEWS June 15 2020
Use of Electronic Signatures
NEWS May 04 2020
Piercing the Corporate Veil
NEWS January 16 2020
Bona Fide Principle Prevails
NEWS September 04 2018
Franchising in the UAE
NEWS November 14 2018
Extradition Requests in the UAE
NEWS April 24 2018
Bankruptcy in the UAE
NEWS February 07 2018
Seminar: UAE Civil Procedures Law
NEWS March 19 2018
Recent Developments at the RDC
NEWS August 01 2018
Charities and Endowments in Dubai
NEWS September 17 2017
Our Litigation Team Award Winners
NEWS December 05 2022
Interest on Late Payments in the UAE
NEWS February 07 2024
Abu Dhabi Welcomes arbitrateAD

For better web experience, please use the website in portrait mode