UAE Ministry of Economy completes draft federal law on arbitration

The draft law complements Ministry efforts to modernize economic and trade laws and legislation to keep pace with current and future national economic growth.

The draft law, prepared by the MoE in cooperation with the Ministry of Justice, is expected to be ratified and issued within the next three months. The law will establish provisions for domestic and international arbitration in the UAE and will enforce arbitral awards consistent with international obligations, including the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention.

It is based on the United Nations Commission on International Trade Laws' Model Law on International Commercial Arbitration adopted in June 21, 1985, as well as the latest developments and standards in international arbitration.

Upon implementation, the law's provisions will apply to all cases of domestic and international arbitration between natural and juridical personages, regardless of the nature of the legal relationship around which the dispute revolves, whether it may be trade, civil, or administrative. The law complements government initiatives to modernize economic and trade laws and legislation to cope with current and future economic growth, consistent with the federal plan to boost the economic, trade and investment sectors of the country. These efforts are in line with the UAE's goal of hosting a regional international arbitration centre similar to arbitration centres found in Britain, France and Singapore.

The draft law creates a modern framework to address the issue of arbitration. Disputing parties have the right to accept the law's provision's without obligation; they have the option of either resorting to the advanced national law or choosing the procedures adopted in London, Paris and Singapore as currently applied. The Ministry of Justice and the Ministry of Economy will play crucial roles in overseeing the implementation of the new law's provisions, ensuring their effectiveness and enhancement in accordance with the country's best interests and keeping in mind international developments in arbitration.

The Ministry of Economy consulted various specialists from the private and public sectors during the preparation of the draft law, including national arbitration centers and local and international arbitration experts, who remarked that the draft law was advanced and in line with international obligations and modern rules in arbitration. The consultants added that the law would become a regional and international model should it be adopted.

Chapter 1 of the draft law on arbitration and implementation of arbitral awards includes a definition of the law objectives and the scope of application, which states that the law covers the enforcement of domestic and international law within the country's territories, and subject to all cases, whether commercial, civil, or administrative, in case the two conflicting parties agree to resolve their dispute through arbitration.

Chapter 2 establishes the United Nations Commission on International Trade Law's (UNCITRAL) Model Law on International Commercial Arbitration as basis for enforcement of the new arbitration law in the UAE. It also states that, upon the recommendation of the Minister, the Council of Ministers may issue directives to amend the new law by referring to the UNCITRAL Law's Annex No. 2 on Additional, Amending and Supplementary Provisions. The Council is also given the right to refer to documents from the UNCITRAL Commission as needed. These stipulations provide flexibility in monitoring and adopting international developments in arbitration, in conformance with national interests. They also determine the concerned court to apply the law, according to Article 6 of the Model Law.

Chapter 3 of the draft law establishes an Arbitration Office to monitor international developments in arbitration, particularly in the Model Law and New York Convention. The Office is authorized to forward recommendations for improving the Law to the Minister.

The draft law clarifies that, for arbitration proceedings initiated prior to the issuance of the new law, the previous law on arbitration will be automatically applied in case a ruling was not issued, unless both parties agree in writing to refer to the new law.

In a move aimed at eliciting the views of the private sector, experts, and concerned interests, the Ministry of Economy published the Arabic and English versions of the draft law on the Ministry website, www.economy.ae, to receive opinions and appropriate proposals before the provisions are formally issued.