The UAE’s new arbitration law: How will it impact investors?

On June 16, the UAE will usher in its new Federal Arbitration Law to replace a law which has stood since 1992.

Based on the internationally accepted UNCITRAL (United Nations Commission on International Trade Law) model law, the Federal Arbitration Law resolves many of the issues that previously hindered arbitration.

For example, the costly practice requiring awards to be physically issued in the UAE has been relegated to the past.

A modern and expansive description of the criteria that will satisfy the ‘writing requirement’ of arbitration agreements has also been included and takes into account contemporary business practices such as the use of email.

Hearings, including witness testimony, can also now take place through telepresence, providing the potential for cheaper and more efficient cases.

The introduction of the law will be uniformly welcomed by the legal and business community.

Investor confidence is likely to be most boosted by the introduction of streamlined enforcement provisions for awards, with limited rights of appeal.

This progressive reform also affirms the UAE’s commitment to establishing a model of excellence for dispute resolution in the region. Moreover, the UAE will send a clear message to the business world that it has the legal and regulatory framework to support the positive investment environment.

However, as in any legal system, uncertainties always remain when a new law is introduced. Further, the requirement for a party’s representative to have special authority to bind a company to arbitration remains unamended by the new law.

The new law will apply immediately to all arbitrations.

Teething problems will undoubtedly occur, but these inconveniences will prove insignificant next to the overwhelming contribution the new law will make to cementing the UAE’s reputation as the most attractive hub for arbitration in the MENA region.

The law is the latest in a long line of efforts by the UAE to provide a modern legal system that strongly supports Dubai’s transformation into the world’s leading smart city.

Last year, Dubai Courts was recognised as having one of the most tech-savvy courtrooms in the world after it launched 210 smart services including automated case files. The UAE’s Ministry of Justice also announced plans to integrate smart technology into the nation’s judicial system by 2021 to ensure more efficient court proceedings.

The new law is much more than a legal reform; it is a clear message that the UAE remains deeply committed to continually advancing and modernising its legal system in full alignment with its plans to be one of the most investor friendly nations in the world.

Bill Smith and Maria Mazzawi are arbitration experts at Pinsent Masons