Published: Jan. 12, 2025
Last Updated: Jan. 12, 2025
The UAE's arbitration environment is defined by two separate legislative frameworks, the Federal Arbitration Law (Federal Law No. 6 of 2018) and the DIFC Arbitration Law (DIFC Law No. 1 of 2008). While both statutes seek to promote effective conflict resolution, their scope, application, and procedural intricacies distinguish them. Understanding the variations is vital for firms and people seeking arbitration in the UAE during the downturn.
The Federal Arbitration Law applies to all arbitrations held in the UAE, except those held in free zones such as the Dubai International Financial Centre (DIFC). It complies with international arbitration principles outlined in the UNCITRAL Model Law, assuring conformity with global procedures. The law applies to both domestic and international arbitration disputes, provided that the arbitration agreement stipulates its application.
On the other hand, the DIFC Arbitration Law is only applicable within the DIFC, a financial-free zone with its legal system. It is based on the English Arbitration Act of 1996 and is intended to attract international firms. The DIFC Arbitration Law allows parties to designate the DIFC courts as the supervisory body for arbitrations conducted within its jurisdiction, even if the arbitration takes place outside of the DIFC.
Both statutes emphasize the enforcement of arbitral rulings, although the means vary. The Federal Arbitration Law requires parties to seek approval from UAE courts before enforcing a decision. This process may include judicial scrutiny, which could cause delays in enforcement.
In contrast, the DIFC Arbitration Law allows for direct enforcement within the DIFC, without the necessity for approval by UAE courts. DIFC arbitral verdicts are recognized and enforceable as court judgments, ensuring prompt execution. Furthermore, awards obtained under the DIFC Arbitration Law can be enforced outside of the DIFC by the UAE's legal system via existing treaties such as the New York Convention.
Both legislation's procedural rules differ significantly. The Federal Arbitration Law takes a more systematic approach, outlining particular dates for the arbitration process and the selection of arbitrators. It also stipulates that arbitrators be unbiased and independent.
In contrast, the DIFC Arbitration Law provides greater procedural flexibility, allowing parties to tailor arbitration rules to their specific agreements. This flexibility is especially enticing to multinational corporations that value efficiency and control over arbitration processes.
Confidentiality is an essential component of arbitration in both contexts. However, the DIFC Arbitration Law explicitly strengthens this principle, requiring all arbitration-related documents and processes to be kept confidential unless otherwise agreed upon by the parties or required by law.
The Federal Arbitration Law likewise protects confidentiality, but it does not provide a full definition, allowing opportunity for interpretation.
Both statutes limit court interference and emphasize the finality of arbitration rulings. However, the grounds for annulment vary slightly. According to the Federal Arbitration Law, awards can be nullified for a variety of reasons, including procedural flaws and a lack of jurisdiction. The DIFC Arbitration Law is similar to these laws, but it provides a more streamlined method for contesting verdicts in DIFC courts.
The choice between the Federal Arbitration Law and the DIFC Arbitration Law is determined by the nature of the dispute, the parties involved, and their strategic objectives. Both systems provide effective dispute resolution methods, but their variances address a variety of demands. Businesses operating in the UAE must carefully analyze these disparities when determining the best legal framework for their arbitration proceedings.
With the UAE's arbitration framework constantly expanding, these rules strengthen the country's status as a global dispute settlement centre
