Amendments to the UAE arbitration law

The UAE has amended its federal arbitration law to introduce more flexibility to arbitration proceedings and lift certain restrictions on the parties’ freedom to nominate arbitrators. While most of the amendments are cosmetic and reiterate established principles of UAE law (e.g., the tribunal’s freedom to assess the evidence and the need to comply with public policy norms), two merit scrutiny.

(1). Keeping up with changing times, the use of technology

The amendments attempt to introduce more clarity on the use of modern technology in arbitration and provide for the parties’ right to choose the physical or virtual place of arbitration. Tribunals may determine such a place in the absence of agreement between the parties.

Despite the emphasis on virtual hearings and the need to keep up with changing times by allowing the use of technology in arbitration, the amendments are silent on whether tribunals can insist on holding virtual hearings despite the parties’ explicit agreement to the contrary. While the answer may be found in the applicable institutional rules and developing jurisprudence, this confusion could have been avoided had the amendments articulated the distinction between the seat and venue of an arbitration instead of opting for the more generic term, place of arbitration.

(2). Widening the scope of eligible arbitrators

Prior to the amendments, the arbitration law precluded parties from appointing directors and members of the board of trustees of the administering arbitral institution as arbitrators. The amendments ease these restrictions yet introduce certain requirements to offer parties more autonomy to choose their arbitrators while guaranteeing the arbitrators’ impartiality and independence.

More pertinently, the new amendment still preclude directors and board of trustee members from sitting as sole or presiding arbitrators but not as co-arbitrators if (i) the rules or bylaws of the administering institution provide a mechanism that ensures arbitrator impartiality and independence, including avenues to report irregularities committed by arbitrators; (ii) the arbitrators sit in a maximum of five (5) arbitrations administered by their institution in a given year; (iii) the parties confirm in writing that they are aware of the arbitrators’ position within the administering institution; and (iv) the arbitrators give additional written undertakings to guarantee the integrity of the proceedings. Failure to abide by the foregoing can subject these arbitrators to the risk of liability under applicable laws.

The language of the amendments suggests that arbitrators that happen to be directors or members of the board of trustees of the administering institution are held to a higher standard than other arbitrators, whereby their failure to comply with the amendments will be deemed gross negligence for which they may be found liable notwithstanding any limitation of liability provisions contained in the applicable institutional rules.

** ** **

For more information about the amendments, please contact regional arbitration teams members Tarek Badawy (Meysan UAE and Egypt) and Ismail Lamie (Meysan Egypt).