Exploring International Arbitration in the United Arab Emirates: A Comprehensive Overview

The legal system of the United Arab Emirates is a complex structure comprising federal laws as well as separate laws and rules applicable to individual emirates and free zones within the country. This article provides an overview of the country’s legal system and focuses on the UAE Arbitration Law, arbitration seated in UAE free zones, and UAE arbitral institutions.

The UAE is a federation consisting of seven emirates, each with its own legislature and judiciary. However, federal law takes precedence over the laws of individual emirates. Abu Dhabi, Dubai, and Ras Al Khaimah have their own judicial systems. In Abu Dhabi, the Abu Dhabi Global Market (ADGM), and in Dubai, the Dubai International Financial Centre (DIFC), are offshore “islands” with their own separate courts and laws based on common law.

The Arbitration Law, which came into force in June 2018, governs agreements to arbitrate contractual and tortious disputes seated onshore in the country, outside of the ADGM and DIFC. This law is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration and ensures equality between the parties and sufficient opportunity for the submission of claims and defences.

Under the Arbitration Law, arbitration agreements must be in writing. While the law allows incorporation by reference and agreements made through correspondence, it requires that the person entering into an arbitration agreement has the capacity or authority to do so. If there is a valid agreement to arbitrate, the courts must dismiss any action commenced in respect of the dispute, provided that the existence of the arbitration agreement is raised by the respondent at the beginning of the proceedings.

Although some provisions of the Arbitration Law are mandatory, many allow for agreements to the contrary. For example, the law provides that the date of commencement of the arbitration can be agreed upon by the parties unless otherwise specified.

Free zones in the UAE, such as the DIFC and the ADGM, have their own systems of laws and courts. The DIFC, established in 2004, is exempt from commercial and civil federal jurisdiction and regulations, while the ADGM, established in 2015, applies the common law of England with necessary modifications. Both free zones have their own arbitration laws based on the UNCITRAL Model Law.

Arbitration institutions play a significant role in the UAE’s arbitration landscape. The Dubai International Arbitration Centre (DIAC), established in 1994, is one of the busiest arbitral institutions in the UAE. In September 2021, the DIAC Decree came into force, establishing a single unified arbitration centre under an overhauled DIAC and transferring the assets, rights, and obligations of the DIFC Arbitration Institute and the Emirates Maritime Arbitration Centre to DIAC.

Other notable arbitral institutions in the UAE include the Abu Dhabi Commercial, Conciliation and Arbitration Centre (ADCCAC), the DIFC-LCIA Arbitration Centre, the ADGM Arbitration Centre, and the Sharjah International Commercial Arbitration Centre (TAHKEEM). These institutions provide arbitration services and administer arbitrations seated within their respective jurisdictions.

In conclusion, the UAE’s legal system is a complex framework comprising federal laws, laws specific to individual emirates, and laws applicable to free zones. The Arbitration Law governs arbitration seated onshore in the UAE, while the DIFC and ADGM have their own separate laws and courts based on common law. The UAE is also home to several arbitral institutions that play a crucial role in the country’s arbitration landscape.

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