This essay aims to describe the specifics of international arbitration applicable to the United Arab Emirates. Problematic legal situations arising from inconsistencies and contradictions in the judicial codes of the UAE and other countries are considered. Within the framework of international trade arrangements, the Emirates is one of the countries with the most complex organizational and logical procedures. The import-export of goods in the UAE is so high that the nuances of the country’s trade policy are of global importance, especially in the context of judicially resolved conflict situations.
The specifics of the arbitral tribunal include the possibility of choosing the institutions for conducting the trial by both conflicting parties. The arbitrary tribunals acquire special significance and popularity in matters related to international trade. Through this institution, each party may avoid encountering the complexities of a particular national legal system. Arbitration in the United Arab Emirates is currently a steadily growing institution, striving to match older, previously developed global counterparts. Despite this, individual countries’ legal and cultural norms, also known as public policies, influence the functions of arbitration. The principle of appeal against decisions should be subjected to a more detailed analysis since there are clear markings of the country’s state policy in its legal justification.
International Laws Regulating Arbitration
For a long time, the international arbitration court was only in its infancy, far from a full-fledged institution with clear applicability to court decisions, which is why it remained unpopular. International conventions collected to improve the qualifications of global arbitration have positively solved this problem. The role of public policy has been formulated within the framework of the New York Conventions, which have made a great contribution to the development and improvement of international arbitration.
As institutions that formed international trade standards, one should describe the long development of UNCITRAL, the international community of the United Nations. Its work areas include developing and refining laws and regulations that govern world trade (Croft et al. 2013). In 1985, within the framework of the sessions held by the Union, the Model Law of International Commercial Arbitration was developed, offering a framework for adoption and clarification by different states. The law is also called the Model Law because it allows amendments to be made to improve over time (Bermann 2017). The Arbitration Law introduced in the United Arab Emirates in 2018 is based precisely on the New Model Law developed in New York.
A separate item in the text of the 2006 amendments is the issue of arbitrability, which should be determined depending on public policy. Public policy and national culture thus inevitably play a role in the principles of shaping the culture of arbitration in a given country (Tosun 2019). Within the arbitration framework, public policy is one of the few factors considered acceptable and reasonable to appeal a court decision (Turner 2005). The existence of a specific and predetermined list of actions could be contrary to the cultural attitudes of a particular country. Therefore, the role of public policy is taken into account as a matter of principle within the framework of the basic rules of international arbitration.
There is also earlier evidence of the decisive influence that public policy can have on arbitral awards and the specifics of the conduct of proceedings. The arbitral power of an individual state in an international context is specifically provided for in Article 1(3) of the 1976 Arbitration Rules (Croft et al. 2013). Depending on the public policy of the country, the concept of a binding law differs – the main provisions can be either higher or lower than international ones. Thus, through this amendment, the law applicable to arbitration takes precedence over the calculations proposed in the Rules.
Arbitration and Award Nullification in the UAE
In 2018, the code of laws in the Emirates governing commercial arbitration proceedings underwent additions and innovations. The need for forming a new institution to settle commercial disputes is caused precisely by the pace of development of the United Arab Emirates’ trade with other countries. The development of foreign entrepreneurship in the country also highlighted the exhaustion and insufficiency of the provision for a mediator. Prior to the arbitrary laws, a third party was appointed by the two parties to resolve the conflict in accordance with the Sharia law in force in the country. The most detailed description of standard arbitration in the United Arab Emirates is given in articles 203-218 of the civil law code of the country. In accordance with these rules, ad hoc proceedings take place when the parties independently agree on the terms of the arbitration. Moreover, the parties can independently agree on the place of arbitration proceedings that goes beyond the Emirates. This is considered admissible if it can be shown that there are no complications in the conduct of such proceedings.
Before only recent months, the United Arab Emirates did not have the usual permanent arbitral tribunal. This institution of alternative dispute resolution began to develop only in the 1990s with the opening of arbitration centers in the emirates of Dubai and Abu Dhabi (Grose 2016). However, there are two types of arbitration that need to be mentioned. One-time arbitration is a gathering of specialists to resolve a specific conflict, ceasing to exist upon the resolution of the dispute. This arbitration is governed by the federal civil law code of the particular emirate. The second is arbitration at the emirate’s chamber of commerce and industry. It already works in accordance with local regulations and is maintained by a permanent commission.
Compared to the judicial legal system in the Emirates, arbitration processes are extremely fast. While criminal or traditional court proceedings usually take more than half a year, the arbitration court lasts quickly. The arbitrator or a designated odd number of arbitrators must reach a decision within one month and arrange for another hearing. The decision in the proceedings is taken by vote, and the opinion that receives the majority of votes has legal force. In the event that the parties in the course of the proceedings come to a mutual agreement, the proceedings shall be immediately suspended.
The main conditions for the application of the right to the challenge award in the international context are those specified in Article 85 (2) of the Executive Regulations. In particular, the timely appearance of both parties before the tribunal and the compliance of the laws of appeal with the arbitration courts of both the Emirates and another foreign country. The need to appeal in accordance with the laws of the two countries and only 30 days to complete the procedure makes it very difficult to cancel the award. The initial need to fill out a similar paper in the court of another country slows down the process but is an essential condition for the foreign award challenge.
It is fundamental for arbitration proceedings under the country’s new legislation that both parties contractually agree to resolve the case within the jurisdiction of the UAE in the event of a conflict. Any trade arrangements of an international nature must be subject to the specifically mentioned adoption of these state trade laws (Al Tamimi 2003). This confirms the principle of contractual conditionality, which is at the heart of the arbitration process.
As the document for the closest analysis, the most relevant seems to be Federal Law No. (6) of 2018 on Arbitration issued by the President of the UAE. After the decision is made, it can be appealed, also within 30 days. Section 2 of Article 53 of this updated law specifies the reasons sufficient to reject the award. The first paragraph indicates the impossibility of making decisions outside the arbitration jurisdiction. This principle works, for example, in the case of a criminal offense or fraud. The second paragraph of the section is a clear example of the influence of state culture on the process of making and rejecting decisions. If the award is “in conflict with the order and morality of the State,” it must be rejected by the Court (Federal Law No. 6 2018). The decision to cancel the arbitration award is not subject to appeal, except for the Court of Cassation. Section 54(3) of the Federal Arbitration Act states that a decision to set aside an arbitral award entails its total or partial cancellation. This depends on whether the cancellation of the decision refers to all or part of it. If the interpretation was given in the part recognized as invalid, it is also nullified. It is important that the decisions of the arbitration court are final and not subject to appeal – which guarantees a quick resolution of the conflict.
Differences in the arbitration codes of different countries may also serve as a reason for the suspension of an award. For example, the Vietnamese Code of Civil Procedure prohibits any enforcement of an advance required by a foreign arbitration court. The new Code of Arbitration Law specifically states that arbitral awards not covered by the New York Convention, which is the international standard, can be appealed. Moreover, the failure to register interests in real estate is grounds for refusing to apply for arbitration and, accordingly, a reason for canceling an advance.
Regarding the appeal or adoption of foreign arbitration awards, the UAE public policy states that they can only be accepted after several formalities have been met. The court needs to make sure that the decision complies with the legal field of a foreign court or international legal rules. That is, in the parameters of the execution of decisions of foreign courts, the judicial system of the Emirates adheres to foreign rules, clarifying and assuring them to the utmost. However, the judgment must not be contrary to the public morals and order of the state in connection with Article 235 of the Civil Procedure Law. The rule of conformity of judicial decisions with the moral character of the United Emirates can still play a decisive role, in overcoming the legislative guidelines of other countries.
A similar principle of moral compliance with ethically established norms also works in the Concilliation Law, issued by the President in 2021. Article 23 of the Law states that, in addition to documenting the reconciliation agreement, it must not be contrary to the public order and morals of the country (Law no. 18 2021). A particular point of this article, dedicated to the language in which the agreement is written, should also be mentioned. In case of discrepancies between the English and Arabic versions of the text, the Arabic text will be perceived as correct and complete. This is yet another example of the dominance of the culture of the Arab Emirates in the context of international arbitration proceedings.
It also makes sense to mention the principle of infallibility of the arbitral tribunal when making decisions. Even in the case of an appeal or an application for nullification of the results and rejection of the award, the plaintiff cannot claim that the meeting was invalid. Contractual obligations signed by both parties before the start of the proceedings automatically exclude the possibility of the invalidity of the meeting that has already taken place. It makes sense to interpret this judicial rhetoric as a confirmation of the law’s infallibility principle. Although legal practices in the UAE are constantly being improved, they require unquestioning respect, which certainly characterizes the country’s public policy. The attitude towards the role of arbitrators in the legal field of different countries is quite variable, but in the UAE, this status is quite high and has privileges. Regardless of the nature of the decision or its consequences, the arbitrator shall not bear criminal or any other liability and cannot be excluded from arbitration.
One of the characteristics of the changing and improving arbitration institution in the United Arab Emirates is the desire for unification and state autonomy. Decree 34 issued by the President in September 2021 abolishes the existing arbitration centers, transferring their legal powers, property, employees to the Dubai International Arbitration Center. The goal of such a reorganization is to strengthen Dubai as a global center for settling disputes (Decree no. 34 2021). Accordingly, all decisions and awards will be transferred to the DIAC within 6 months from the signing of the act. Such authorization of the country’s arbitration space may mean the beginning of new and unitary arbitration rules.
On the one hand, a clearer and more efficient institution is being formed in this way. On the other hand, this reform means that cases dealt with in different centers with heterogeneous rules and regulations will have to be adapted according to the principle of a single administration. Of course, this will require the creation of a sufficiently flexible and at the same time, comprehensive legal apparatus. It is the new Dubai Center that will deal with the settlement of disputes that arise in case of disagreement of parties with arbitration decisions of other centers. Thus, the public policy, expressed in the desire of the state to unify processes, is reflected in the appeal or suspension of arbitration awards.
Public policy is one way to set aside an arbitral award in an international dispute. The policies designed for the award cancellation may be discrepancies in the laws that go beyond the New York Convention, a violation of the, or failure to register real estate in the territory. Referring to national policy and the impossibility of violating it, one can create a rationale for canceling the arbitration award. Research demonstrates that in parallel with the increasingly clear structuring of the arbitration court in the country, additional manipulations of legal terminology may occur. Within the increasingly unified arbitration system of the United Arab Emirates, public policy can serve as an instrument for imposing the values and policies of the state.
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