28 September 2015

Navigating disputes in the UAE

This article first appeared on Lexis Nexis.

What are the means of dispute resolution in the UAE and what are the advantages and disadvantages of each?

The UAE has a federal system of government, which is reflected in the court systems. Dubai, for example, and Abu Dhabi, each have their own court system, independent of each other and from the other (five) Emirates. So Dubai and Abu Dhabi have a first instance court, a Court of Appeal and a Court of Cassation. The other Emirates, in short, have their own first instance and appeal courts, but then the final court is the (UAE) Court of Cassation, based in Abu Dhabi. The laws are based (save for the Dubai International Financial Centre (DFIC), see below) on a civil law system.

Most litigation is heard in Abu Dhabi and Dubai, whose courts are well managed and follow the UAE Civil Code, the Commercial Code, and the Civil and Procedure Codes. Minor differences between the Emirates can be found where local laws are permitted, within reason. Dubai, however, has the DFIC court. Unlike the other courts, the DIFC court is based on the common law system and the hearings are in English. All other Emirati courts use the national language of Arabic. The Arabic language courts only award a small percentage of the costs of legal representation. The DIFC court follows the usual common law rule that the winner recovers a major proportion of its costs.

Parties can opt into the DIFC court, which means that there has been, recently, a boost to the number of cases being heard. Cost orders are usual, and the procedure and the laws follow the English system. The judges are, for the most part, retired judges from England and Wales, but, for example, the Chief Justice is from Singapore and there are now Emirati judges as well.

Are there any developments or trends emerging in case management?

Case management in the DIFC court in Dubai is akin to English procedure. The other courts follow the civil law system, which results in:

  • Much less case management
  • A tendency to have frequent adjournments
  • A comparatively little exposition of advocacy, and
  • A reliance, in many cases, of court appointed single experts to determine non-legal issues.

Have there been any developments of trends in alternative dispute resolution, especially mediation?

Arbitration is favoured for dispute resolution, but needless to say it requires a contractual basis or an ad hoc agreement between the parties. Mediation is growing, but slowly, and questions of confidentiality need to be addressed in a more formal manner. Arbitration covers most major construction and financial disputes. The Dubai International Arbitration Centre, the DIFC/LCIA centre, and the new Islamic International Centre are heavily used, as are the Abu Dhabi Chamber Centre, and the Sharjah Arbitration centre. Arbitrators from the Gulf and other countries increasingly hear disputes in the UAE.

What is the current position on litigation funding?

There is little appetite at present for litigation funding, but many of the funders are regularly assessing the market and it is rumoured that arbitrations have been so funded in Dubai. No empirical evidence exists, however. Litigation funding for the Arabic courts is viewed as against public policy. The DIFC court has not yet had to rule on the issue.

Are there any considerations regarding dispute resolution that are particular to the UAE, and about which international practitioners should be aware?

There have been several cases where attention to local procedure and to public policy matters have meant successful parties have had their arbitration awards overturned. For example, a failure to have a witness sworn correctly will invalidate an award. Foreign awards can be enforced in the DIFC court, and thereafter the decision can be 'exported' to the Dubai courts--there is very little opportunity to challenge the enforcement.

The long-awaited new arbitration law has still not been circulated openly for discussion, so that the formal basis of arbitration is based only on the handful of Articles of the Civil Procedure Code. Most practitioners keenly await a new arbitration law.

Are there any other key developments or trends in this area about which we should be aware?

Abu Dhabi plans to create an international court, in tandem with a new financial centre.

Dubai is at the forefront of developing legal structures to protect wills and guardianship in tandem with the DIFC court. These will mostly protect expatriate workers, but the scope exists for others. However, on present plans the DIFC system will not accept Moslems given the Shari'ah rules on inheritance. The UAE is giving consideration to a form of wills and guardianship law, and in particular Dubai has already started on consultation with Moslem stakeholders.

A series of agreements between the DIFC court and the Commercial Court in London, the Singapore Commercial Court, and others, has made reciprocal enforcement strategy much easier and will attract enforcement to Dubai.

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