I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK
i The legal system
The United Arab Emirates (UAE) is a federation of seven emirates: Abu Dhabi (the capital), Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. The UAE adopts a dual civil and Islamic shariah legal system, influenced by French, Egyptian and Roman principles. The primary source of law in the UAE is the UAE Constitution2 (as amended) that provides that the official religion of the federal union is Islam.3 In practice, however, like other civil law jurisdictions, legislation in the UAE is codified in federal codes that have been promulgated pursuant to Article 121 of the UAE Constitution.
The principal federal codes currently in force are the Civil Transactions Law,4 the Commercial Transactions Law,5 the Companies Law,6 the Labour Law7 and the Civil Procedure Law.8 Where there is no provision in the codified statutes dealing with a particular issue, judges are to have regard to shariah law, and specifically the Islamic shariah schools of Imam Malik and Imam Ahmed Bin Hanbal and as a last resort, from the schools of Imam Al-Shafie and Imam Abu Hanifa.9
Each of the seven emirates can elect to join the federal judicial system or to maintain its own local judicial system. The emirates of Sharjah, Ajman, Fujairah and Umm Al Quwain follow the federal judicial system. The emirates of Abu Dhabi, Dubai and Ras Al Khaimah have elected to retain their own local judicial system over matters that are not assigned to the federal judiciary under the UAE Constitution. Federal laws still apply to the emirates that are not part of the federal judiciary system.
There is no doctrine of stare decisis in the UAE and therefore there is no system of binding precedent that the courts are bound to follow. Principles of law established by the higher courts, the Federal Supreme Court (which covers Ajman, Fujairah, Sharjah and Umm Al Quwain), the Dubai Court of Cassation, the Ras Al Khaimah Court of Cassation and the Abu Dhabi Court of Cassation, have persuasive effect on the lower courts.
ii The court system
The UAE court system
The UAE court system can be broken down into two categories. The first is the federal court system, which applies to the emirates that have elected to join the federal judicial system. The second is the local courts of Dubai, Ras Al Khaimah and Abu Dhabi that have jurisdiction in those individual emirates only.
There are three tiers of courts within the federal court system and the local court system. The first is the court of first instance, which is where proceedings are commenced. The second is the court of appeal, which allows for appeals on issues of fact or law. The third is the Supreme Court, which provides a further right of appeal albeit limited to points of law only.
There are special divisions within each of these courts that are established to hear specific types of matters. For example, the Dubai courts consist of the civil courts, commercial courts, criminal courts, labour courts, real estate courts and personal status courts.
The personal status or shariah courts are largely limited to hearing personal status and family matters and follow shariah principles for marriage and divorce, succession, personal status and inheritance.
Financial Free Trade Zones
There are various financial free zones that have been established in the UAE that allow for 100 per cent foreign ownership of companies incorporated within the free zone. These free zones are governed by their own framework of regulations and laws, subject only to the UAE Penal Code10 and international treaties.
Some of the most common free zones in the UAE include the Ras Al Khaimah Free Zone, the Jebel Ali Free Zone, Dubai Media City, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).
The DIFC and ADGM have a unique set up as these free zones operate as autonomous common law jurisdictions with an independent judiciary within the civil UAE jurisdiction that they are geographically situated in. The other free zones remain subject to the ‘onshore’ UAE court system.
The DIFC was established in 2004 by Federal Decree No. 35 of 2004. The DIFC has a number of independent bodies, including a DIFC Judicial Authority and Financial Services Regulatory Authority, which was established by Dubai Law No. 9 of 2004. A DIFC Court of First Instance and DIFC Court of Appeal have been established11 to have jurisdiction in civil and commercial matters in the DIFC, relating to contracts fulfilled or transactions carried out there (in whole or in part) or where parties have opted for the jurisdiction of the DIFC Courts. The DIFC Court of First Instance includes a Technology and Construction Division and Small Claims Tribunal.
The ADGM was established in 2013 by Federal Decree No. 15 of 2013 and Cabinet Resolution No. 4 of 2013. Similarly, the ADGM has its own Financial Services Regulatory Authority and Judicial Authority, which were established under Abu Dhabi Law No. 4 of 2013. There are two levels of courts in the ADGM: the ADGM Court of First Instance and the ADGM Court of Appeal. The Court of First Instance consists of a Civil Division, Employment Division and Small Claims Division.
iii The framework for ADR procedures
The increasing number of international companies operating within the UAE, legal reforms in the region and the heavy caseload of the onshore UAE courts are the driving forces behind ADR mechanisms becoming more prevalent and accepted in the UAE. These ADR mechanisms range from arbitration, mediation and other adjudicative services offered by different federal authorities and ministries.
Arbitration is a recognised method of dispute resolution that has grown in popularity since the UAE’s accession to the New York Convention12 in 2006. There are several institutions in the UAE that administer commercial arbitrations and a new arbitration law is expected to be enacted imminently, which is said to be based on the UNCITRAL Model Law. For the time being, however, arbitration in the UAE is governed by specific provisions of the UAE Civil Procedure Law.13 Specific legislation based on the UNCITRAL Model Law is in force in each of the DIFC and ADGM and applies to arbitrations seated within those free zones.
There is no formal legislation that governs the enforcement of decisions of conciliation boards or mediators. Mediation and conciliatory services are becoming more prevalent in the UAE with these services being promoted by government authorities and ministries to assist with pre-litigation resolution of disputes.
II THE YEAR IN REVIEW
Since 2014 there has been an influx of cases in the DIFC Courts for the enforcement and recognition of both foreign and domestic arbitral awards and foreign judgments. The catalyst for this movement was a line of judgments rendered by the DIFC Courts that held that the DIFC Courts could be used as a conduit jurisdiction to enforce foreign judgments and awards.
In (1) Egan (2) Eggert v. (1) Eava (2) Efa,14 the DIFC Courts enforced a foreign arbitral award without evidence of any connection to the DIFC. In Banyan Tree Pte Ltd v. Meydan Group LLC,15 the conduit jurisdiction of the DIFC Courts was confirmed when the DIFC Courts held that they had jurisdiction to enforce a domestic onshore Dubai award without any evidence of a connection to the DIFC. The enforcement of foreign judgments through the conduit jurisdiction of the DIFC Courts was confirmed in DNB Bank ASA v. Gulf Eyadah.16
The era of the conduit jurisdiction of the DIFC Courts, however, has been tempered since June 2016 by the establishment of the Judicial Tribunal for the Dubai Courts and DIFC Courts17 (the Judicial Tribunal). The Judicial Tribunal was established to resolve conflicts in jurisdiction and judgments between the DIFC Courts and the onshore Dubai Courts.
The first decision rendered by the Judicial Tribunal was in Daman Real Capital Partners Company LLC v. Oger Dubai LLC.18 The case concerned a dispute that arose in connection with a real estate development project located within the DIFC. Oger sought to enforce a domestic award against Daman in the DIFC Courts. Proceedings seeking to annul the award were commenced by Daman before the Dubai Courts. The Judicial Tribunal concluded that the Dubai onshore courts were the competent courts to determine the validity of the arbitral award despite the fact that the project was in the DIFC. In the meantime, the DIFC Courts were directed not to deal with Oger’s request to enforce the award.
A series of decisions have been published by the Judicial Tribunal. The trend which appears to be developing suggests that the DIFC Courts shall be preferred to the Dubai Courts only where the arbitration is seated in the DIFC free zone. Conversely, the Dubai Courts are preferred where the arbitration is seated onshore Dubai (outside of the DIFC).
III COURT PROCEDURE
i Overview of court procedure
The Civil Procedure Law is the key code that governs civil procedure and the litigation process in the UAE. The Civil Procedure Law applies not only to disputes brought before the onshore UAE Courts, but for the time being, also applies to domestic arbitrations, such as arbitrations with a Dubai or Abu Dhabi seat.
The DIFC Courts and ADGM Courts are governed by their own set of procedural rules. The DIFC Courts Law of 2004 and the Rules of the DIFC Courts 2014 govern procedure in the DIFC Courts. The ADGM Court Procedure Rules 2016 apply to all proceedings in the ADGM. Both the DIFC Courts and ADGM Courts have also issued a series of practice directions that supplement the rules of the courts.
Procedures and time frames
A claim is commenced in the court of first instance by filing a statement of claim and paying the court filing fee. Following service of the summons on the defendant by an officer of the court, a first hearing is held where the defendant will usually request an adjournment to submit a statement of defence.
Provided service of process has been effected by a method permitted by the law, a case will proceed against a defendant in absentia. The plaintiff will still be required to prove its case.
During the hearings, written pleadings are submitted by local advocates (UAE nationals) appearing on behalf of the respective parties. There is no set number of written pleadings prescribed in any given case. Submissions will be exchanged by the parties in turn until such time as the court is requested to adjourn for judgment, or the court declares the hearing closed. While a form of examination of witnesses and oral advocacy are technically permitted, in practice there is no oral advocacy or witnesses heard at hearings. Cases are determined with reliance on documentary evidence and legal submission.
It is common for certain aspects of a dispute to be referred to an ‘expert’ for assistance. The court often delegates analysis of liability and quantum issues to an expert, who is appointed from among experts listed on a court-maintained register. The court will in most cases adopt the expert’s findings.
A judgment in the court of first instance is usually issued within nine to 12 months from when the proceeding was commenced. Complex cases can take up to 18 months. The appeal stages typically take less time, with the court of appeal stage taking about six to nine months to render judgment and the Court of Cassation taking about three to six months. Overall, it can take 24 months to reach a final unappealable judgment in the Court of Cassation.
Proceedings are commenced in the DIFC Courts by filing a claim form. There are three types of claim forms.
The Small Claims Tribunal (SCT) Claim Form (Form P53/01) for claims that fall under the jurisdiction of the SCT (where the amount of the claim does not exceed 500,000 dirhams, the claim relates to employment and all parties elect that it be heard by the SCT, or the amount of the claim does not exceed 1 million dirhams and all parties elect in writing that the case be heard by the SCT). The Part 8 claim form (form P8/01) for claims where the claim is unlikely to involve a substantial dispute of fact or where there is a rule or practice direction which permits or requires the use of a Part 8 claim form. The Part 7 claim form (form P7/01), the most common method for commencing a claim, for claims that do not fall under the jurisdiction of the SCT and do not require the use of a Part 8 claim form.
The Part 7 procedure, being the most common procedure, requires the claim form to be served within four months of the claim being filed. Thereafter, the claimant is required to file an acknowledgement of service and particulars of claim. The defendant is required to file a defence within 28 days of the particulars of the claim being served. The reply to defence is served by the claimant within 21 days of the service of the defence. Following the exchange of pleadings, the court registry will schedule a case management conference where the remaining timetable will be agreed. The timetable will usually provide for document production, witness statements, expert reports and the exchange of skeleton arguments. A hearing is ordinarily scheduled within six to nine months after the Claim Form is filed with the judgment issued within one to three months after the hearing. If the judgment of the court of first instance is appealed, it can take a further 12 months for a judgment of the court of appeal.
Urgent or interim remedies
In both onshore UAE courts and the DIFC Courts, there are a range of interim remedies available to claimants to preserve assets and prevent defendants from fleeing the country. There is also a mechanism by which a claimant can seek summary judgment.
A claimant can apply for a travel ban against an individual defendant before filing a substantive claim if three conditions are satisfied. Firstly, there must be serious reasons to believe that the defendant will flee the country. Secondly, the debt must be known, due for payment and unconditional. Thirdly, the debt must not be less than 1,000 dirhams where the substantive claim has been filed or 10,000 dirhams where the substantive case has not yet been filed.
If a travel ban is issued, the court will notify all ports of exit and entry into the state, and may order that the debtor’s passport be deposited with the Treasury Department of the court. Travel bans are generally granted when there are pending criminal proceedings. They are also available where a judgment debtor does not comply with a final and enforceable judgment. The usual time frame to obtain a travel ban is in the range of three to five working days.
A claimant can seek a precautionary attachment order (essentially a freezing order) to prevent any disposition or dissipation of assets while the attachment remains in place.
The process for obtaining a precautionary attachment is to apply to the court without notice to the defendant (ex parte) setting out the nature and basis of the substantive claim. The court must be persuaded that there is a real risk of the defendant dissipating its assets before judgment, or that the claimant’s rights against those assets may otherwise be prejudiced if the attachment is not granted.
The application must also specifically identify the assets against which the claimant is seeking attachment. A signed undertaking to indemnify the opposing party in the event that the order is obtained on fraudulent grounds must accompany the application.
It can take three to five days to obtain a precautionary attachment order. If the order is granted, the claimant must commence substantive proceedings within eight days of the order to confirm the order. If substantive proceedings are not commenced within the prescribed time limit, the precautionary order expires.
The DIFC Courts have power to grant interim orders prior to the commencement of proceedings and without notice to the respondent (ex parte). The types of interim remedies that can be granted are listed at Rule 25 of the Rules of the DIFC Courts and include: interim injunctions (Rule 25.1(1)), freezing orders (Rule 25.1(6)), disclosure orders (Rule 25.1(7)) and search orders (Rule 25.1(8)).
The procedure for seeking an interim order is to make an application to the DIFC Court by filing an application notice with the court (Rule 23.2). An application for an interim order can be made at any time, including before a claim has been commenced. The application can be made without notice if there are good reasons for doing so, such as: urgency, secrecy or tipping off or an increased risk of dissipation of assets. If an application is made without notice the evidence in support of the application must state why it is being made without notice.
There is no provision under UAE law for class actions or collective actions. Each claim must therefore be filed separately, although it is possible to join additional defendants to a claim.
Representation in proceedings
Only local advocates licensed by the Ministry of Justice have rights of audience before the onshore UAE courts. The local advocate must, however, be authorised by a notarised power of attorney to appear before the courts on behalf of the party he or she represents.
In practice, international law firms and foreign legal consultants licensed to advise on UAE law are actively involved in the litigation. They will instruct the local advocate and work with the advocate to prepare pleadings for the local advocate to submit.
Any party can represent itself in court.
A company can be represented by the chairman of the board unless the articles of association of the company provide that the general manager shall represent the company before the courts. If the proceedings reach the Court of Cassation or the Federal Supreme Court stage, a local advocate licensed by the Ministry of Justice must represent the company as it is a requirement that the cassation appeal is accompanied by a declaration that is signed by a lawyer.
In the DIFC Courts, only practitioners who are authorised by their firm and listed under Part I of the Academy of Law’s Register of Practitioners19 can issue and conduct proceedings by signing statements of truth; corresponding with the Registry regarding a case or the progression of a case; and corresponding with opposing counsel. Only practitioners who are admitted to Part II can appear and plead before a judge at hearings.
Service out of the jurisdiction
The Civil Procedure Law provides for service of proceedings issued in the UAE on persons living abroad. As set out in Article 9.7, the summons should be delivered to a person domiciled abroad as follows (unofficial translation):
For persons having a known domicile abroad, it shall be delivered to the Ministry of Justice for communication to them through diplomatic channels, unless the summoning procedures are regulated in this case by special agreements. However, service may take place by any means agreed by the parties. In this case, service may be made through a company, an office or more in accordance with the controls specified by a Cabinet resolution.
This means service overseas is carried out exclusively through the court. In practice, service by the courts is effected through diplomatic channels. This process can take a few months depending on how quickly the respective courts action the request.
Enforcement of foreign judgments
Foreign judgments can be enforced in the UAE in three ways: under a bilateral treaty; under the provisions of the Civil Procedure Law; or through the DIFC Courts (or ADGM Courts).
The UAE is party to a number of bilateral and multilateral conventions that provide for the reciprocal enforcement of judgments. Examples include the Paris Convention,20 the China Convention,21 the India Convention,22 the UK Convention,23 the GCC Convention,24 and the Riyadh Convention.25
The terms of the treaty govern the enforcement of a judgment originating from a foreign country where there is a treaty between the UAE and that foreign country. In this respect, Article 238 of the Civil Procedure Law provides that the articles relating to the enforcement of foreign judgments (i.e., Articles 235 to 237) shall be without prejudice to the provisions of any treaties between the UAE and other countries. Treaty terms prevail.
To enforce a foreign judgment, a claim for ratification of the foreign judgment must be filed in the court of first instance of the emirate where enforcement is sought. The application should state that enforcement is being sought under the relevant treaty and should be accompanied by any documents referred to in the treaty.
Where the UAE does not have a treaty in place with the country whose judgment is being enforced, the provisions of the Civil Procedure Law must be satisfied. Article 235 of the Civil Procedure Law applies to the enforcement of foreign judgments in the UAE.
The first hurdle for enforcing a foreign judgment is that there must be reciprocity between the foreign country and the UAE as to enforcement of judgments. If there is reciprocity, the additional conditions set out at Article 235(2)(a)–(e) must be complied with. Of these additional conditions, Article 235(2)(a) is often the most problematic as the UAE courts will not recognise a foreign judgment in circumstances where the UAE courts would have had jurisdiction over the original matter. The general jurisdiction of the UAE courts is rather broad and provides at Article 20 of the Civil Procedure Law that the courts have jurisdiction to hear actions brought against individuals or companies domiciled (or having a place of residence) in the UAE.
To enforce a foreign judgment, a claim for ratification of the foreign judgment must be filed in the court of first instance of the emirate where enforcement is sought. The application must be in Arabic and supported by evidence that demonstrates that the foreign court had jurisdiction to hear the claim, the judgment is final, the defendant was duly summoned and appeared in the proceedings and the judgment is not inconsistent with morals and public policy in the UAE.
It is possible to enforce foreign judgments by utilising the conduit jurisdiction of the DIFC Courts even where the defendant has no assets in the DIFC. There is, however, a risk that a conflict of jurisdiction argument will be raised if the judgment debtor initiates parallel proceedings in the Dubai courts.
To enforce a foreign judgment in the DIFC Courts a claim must be filed either under Part 7 of the Rules of the DIFC Courts or under Part 8 of the Rules of the DIFC Courts if the claim is unlikely to involve a substantial dispute of fact. The judgment creditor would be seeking a declaration that the foreign court’s order is enforceable.
Once a foreign judgment is recognised and declared enforceable by a DIFC judgment, it is possible to have it executed by the Dubai Courts onshore through a summary process based upon the Judicial Authority Law.
Assistance to foreign courts
While the UAE is not a party to the Hague Convention on Civil Procedure 1954 or the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965, which facilitate judicial cooperation between member states, the UAE has treaties with various countries for judicial cooperation and legal assistance.
The UAE has signed treaties for various degrees of legal and judicial cooperation in civil and criminal matters including with the following countries: Afghanistan, Algeria, Argentina, Armenia, Australia, Azerbaijan, China, France, India, Indonesia, Iran, Kazakhstan, Maldives, Morocco, the Netherlands, Pakistan, Russia, South Korea, Tunisia, Ukraine, the United Kingdom and Uzbekistan. The UAE is also party to the Riyadh Convention and the GCC Convention as discussed above.
The Civil Procedure Law does not explicitly address inward service of foreign proceedings in the UAE. Requests for legal assistance would therefore be required to comply with the treaty under which they are made.
Generally speaking, requests for legal assistance, such as relating to service of process, are made through diplomatic channels. These requests are generally required to be officially signed and authenticated by the Ministry of Justice of the requesting country, translated into Arabic and sent to the Ministry of Justice in the UAE. Once the request is received, the UAE court will summon the party to be served and send confirmation of service through the appropriate diplomatic channels.
For example, the commonly used method of effecting service in the UAE of proceedings issued in England under the treaty26 is as follows:
- a documents are submitted to the Foreign Process Section of the Royal Courts of Justice;
- b the documents will be forwarded to the Foreign & Commonwealth Office in London;
- c the documents will be sent to the British Embassy in the UAE;
- d the documents will be passed to the UAE Ministry of Foreign Affairs;
- e the UAE Ministry of Foreign Affairs will pass the documents to the UAE Ministry of Justice for the purposes of arranging service by the court bailiff or courier company.
Access to court files
In the onshore UAE courts, the public cannot access the court file or obtain copies of the pleadings or evidence filed during the proceedings. These records are only accessible by the parties to the proceedings and their authorised legal representatives.
DIFC Court proceedings on the other hand are public and all pleadings and evidence are accessible from the Registry or the e-Registry. The exception to this are arbitration claims which are confidential.
Third party funding of litigation or arbitration is not prohibited under UAE law and the UAE is becoming a more attractive jurisdiction for litigation funders, particularly in view of opportunities to fund claims in the DIFC Courts.
Legal professionals cannot however offer contingency fee arrangements that are on a ‘no win, no fee’ basis.27
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
The legal profession in the UAE is regulated by Federal Law No. 23 of 1991 (the Legal Profession Law).28 Each emirate also has its own independent body which governs the legal profession. For example, in Dubai, firms must be must be licensed by the Dubai Legal Affairs Department (DLAD) and in Abu Dhabi firms must be licensed with the Executive Affairs Authority.
Article 40 of the Legal Profession Law prevents a local advocate from acting against a client in a dispute in which he has already provided advice. Advocates are also prohibited from disclosing information they have obtained in the course of acting for a client. There is no express prohibition against an advocate acting against a client for whom he has previously acted, provided the advocate does not breach confidentiality and he has not acted for the same client in a dispute.
The DLAD is in the process of implementing the Charter for the Conduct of Advocates and Legal Consultants in the Emirate of Dubai. The current draft of this Charter prohibits lawyers from accepting instructions on a new matter or continuing to act on a matter in the event that a conflict of interest arises. Certain exceptions to this rule are provided
Most international law firms operating in the UAE are subject to regulations in their country of origin such as the Solicitors Regulatory Authority in England and Wales. Complaints regarding the conduct of a local advocate or legal consultant can also be made to the regulating body in each Emirate, such as the DLAD, or the Public Prosecutor in the event of a breach of the Legal Profession Law.
The DIFC has in place the Mandatory Code of Conduct for Legal Practitioners in the DIFC Courts (the DIFC Code). The Code provides for practitioners in the DIFC with a benchmark for best practice and professional standards.
The DIFC Code regulates situations whereby there may be the potential of a client conflict. The Code prohibits lawyers from acting for another client where there may be a conflict and comprehensively sets out the circumstances where a lawyer must cease to act in the event of a conflict of interest.
Complaints in the event of a breach of the Code are to be made in writing to the Director of the DRA Academy of Law.
ii Money laundering, proceeds of crime and funds related to terrorism
Lawyers are subject to the UAE’s federal anti-money laundering (AML) and combatting the financing of terrorism (CFT) regime,29 which was last materially amended in 2014. Lawyers in some of the UAE’s financial free zones, such as the DIFC, may be subject to additional AML/CFT regulation by the relevant free zone authorities.
Among other things, the AML/CFT regime imposes obligations on lawyers to conduct client due diligence to specified standards, confirm the source of wealth of politically exposed foreigners and report suspicious transactions to the Financial Information Unit of the Central Bank. Criminal and regulatory sanctions, including jail sentences and fines, may be imposed on firms and lawyers who commit any of the primary AML/CFT offences, or secondary offences such as failure to report suspicious activity or ‘tipping off’.
iii Data protection
There are currently no specific privacy laws which apply ‘onshore’ in the UAE. Similarly, there is no clear definition of what will constitute ‘personal information’ under UAE law. The provisions that do exist under UAE law in relation to privacy and data protection are very general in their nature. These are rights enshrined in the UAE Constitution and the Penal Code.
The UAE is in the process of establishing a federal data privacy commission and assessing the need for a specific UAE data protection law. Any such law, if enacted, is likely to include provisions relating to storage, transfer and permitted use of personal data. It is not currently clear when the data protection law will be enacted.
In 2012, the UAE enacted a new Cyber Crime Law.30 The law criminalises the use of information technology to commit a wide range of offences including breach of privacy and disclosure of confidential information. These offences are punishable by a fine or imprisonment or both.
The DIFC Data Protection Law (DPL) applies to entities registered in the DIFC, including law firms. Pursuant to the DPL, law firms must implement systems and safeguards to ensure that the personal data of the individual to whom the personal data relates is secure.
Law firms should obtain written consent prior to transferring any personal data outside of the DIFC. Personal data should not be retained for longer than necessary or for the purposes for which the personal data was collected. Policies and procedures should be put in place to ensure that personal data is reviewed regularly and, where necessary and when lawful, deleted.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
The concept of privilege as understood in common law jurisdictions does not exist in the UAE. Rather, communications between a lawyer and client are to be treated as confidential pursuant to the professional codes of conduct and laws governing the legal profession,31 as discussed earlier in this chapter. Any information between a client and lawyer will be confidential and there is no distinction between legal and non-legal advice.
The requirement for confidentiality applies to lawyers only and in-house counsel are not subject to privilege rules. In-house counsels will be subject to the customary duty of keeping the secrets of their employers.
There is no specific legislation in the DIFC that deals with privilege although the concept is referred to in a number of laws and regulations. For example, under the Rules of the DIFC Courts, privilege is recognised as a ground to withhold production of disclosable documents where it is available under the legal or ethical rules determined by the Court to be applicable. It would therefore be an issue for the DIFC Court to determine the rules of privilege that apply and whether they apply to in-house counsel.
ii Production of documents
There is only limited scope to request disclosure of inter party documents in the exhaustive circumstances listed in Article 18 of the Law of Evidence.32 There is no discovery in the onshore UAE courts. Parties are only required to file documents on which they wish to rely and are not required to disclose documents that may be adverse to their case.
If an expert is appointed by the Court, the expert can request certain documents such as accounts and ledgers. The expert cannot, however, compel a party to comply with such a request, but failure to disclose a requested document may result in an adverse inference or finding.
In DIFC Court proceedings, a party is similarly only required to disclose documents on which it relies, provided the DIFC Courts are not mislead. Parties may request disclosure of specific documents or categories of documents by way of a request to produce. There is an obligation to make full and frank disclosure in ex parte cases.
The request to produce must contain: (1) a description of the requested documents or category of documents; (2) a description of how the documents are relevant and material; and (3) a statement that the requested documents are not within the custody, control or possession of the party seeking them and are believed to be in the custody, control or possession of the other party.
A party may therefore be required to produce documents stored overseas, held by a third party or by a subsidiary or parent company, if such documents are considered to be within that parties ‘control’.
A party may object to the disclosure of documents on the basis of the grounds listed in Rule 28.28 of the Rules of the DIFC Courts if, among other things:
- a the requested documents are not relevant or material;
- b the documents are privileged;
- c it would be unreasonably burdensome to produce the documents or other consideration of procedural economy, fairness etc.;
- d loss or destruction of the documents; or
- e other sensitivities that the Court finds compelling. Each of these objections will be considered case by case.
The court can then issue a disclosure order for the production of all or some of the requested documents.
The Rules of the DIFC Courts make provision for electronic data searches and provide a list of factors that may be relevant in deciding the reasonableness of a search for electronic documents. This includes the accessibility of documents or data including servers, back-up systems and other devices.
VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
Arbitration is the most commonly used method of ADR and has increased in popularity following the UAE’s accession to the New York Convention and a number of arbitration friendly developments in the region, including the establishment of international arbitration centres.
The rules governing arbitration
There is no formal federal legislation that governs arbitration with a Dubai seat or seat in another Emirate within the UAE. Currently, UAE-seated arbitrations are governed by Articles 203-218 of the Civil Procedure Law. The applicable provisions of the Civil Procedure Law are not based on the UNCITRAL Model Law. It is expected that a new arbitration law based on the UNCITRAL Model Law will be enacted in 2018. Where the seat of arbitration is the DIFC, the DIFC Arbitration Law33 governs the arbitration. The DIFC Arbitration Law is based on the UNCITRAL Model Law.
The rules that are applied to the arbitration will vary depending on party choice of rules.
Major arbitral institutions
The major arbitral institutions in the UAE are the Dubai International Arbitration Centre (DIAC), Abu Dhabi Conciliation and Arbitration Centre (ADCCAC), Sharjah International Commercial Arbitration Centre (SICAC or Tahkeem) and Dubai International Financial Centre-London Court of International Arbitration (DIFC-LCIA). The rules of the DIFC-LCIA closely mirror the rules of the London Court of International Arbitration.
International arbitral institutions are also commonly used by parties in the region particularly in construction disputes. The ICC is the institution of preference in the majority of construction disputes.
The growth in the number of arbitration institutions has contributed to the popularity of arbitration in the region. The UAE’s accession to the New York Convention and the developments with the DIFC Courts have been positive contributing factors. The popularity of arbitration can be seen from the increase in disputes which are registered with the various arbitration institutions. The DIAC, for example, reported a steady increase in cases from 77 in 2007 to 440 in 2011. While the total cases registered with DIAC declined to 207 in 2016 the trend remains positive. The decline measured against the number of DIAC Arbitration cases reported in 2011 is largely owing to the global financial crises and in particular a peak in real estate disputes from 2010–2012.
Diversity in the types of matters that are being submitted to arbitration, which includes maritime, telecommunication, finance and banking, media and general commercial34 also demonstrates an increasing acceptance of arbitration across a variety of business sectors.
Certain disputes however are not capable of resolution by arbitration. Article 203(4) of the Civil Procedure Law provides that arbitration shall not be permissible where the subject matter of the dispute is not capable of conciliation. This includes family matters, employment matters, criminal matters, matters of public policy and any other matters that must be referred to the UAE courts as provided for in the applicable law (e.g., agency disputes in the automotive sector).
Rights of appeal
Arbitration awards are not subject to any appeal. Parties may, however, apply to annul an award in the limited circumstances listed at Article 216 of the Civil Procedure Law. This includes where the award was issued without an arbitration agreement or on the basis of an invalid arbitration agreement, the arbitrator acted outside the scope of the arbitration agreement, the arbitrator was not appointed in accordance with the law or was otherwise not authorised to make the award, the person that entered into the arbitration agreement did not have capacity, or where the proceedings were invalid.
It is not uncommon for the losing party to seek to annul an award at the time the judgment creditor seeks to enforce the award or even before. The procedure for commencing annulment proceedings is identical to the procedure for commencing a regular claim in the onshore UAE courts.
Similarly, arbitral awards cannot be appealed to the DIFC Courts but they can be set aside on the limited grounds which are set out in the DIFC Arbitration Law, which mirror the UNCITRAL Model Law. Any application to set aside an award must be made within three months of the date the award was received by the party making the application.
Article 41(2)(a)(i) to (iv) of the DIFC Arbitration Law provides that the DIFC Court can set aside an award where the party seeking to set aside the award demonstrates that: (1) there was lack of capacity of parties to conclude the arbitration agreement or the arbitration agreement is not valid; (2) there was lack of notice of appointment of an arbitrator or of the arbitral proceedings or inability of a party to present his case; (3) the award deals with matters not contemplated by submission to arbitration; and (4) the composition of the arbitral tribunal or conduct of arbitral proceedings was not in accordance with the agreement of the parties.
Article 41(2)(b)(ii) of the DIFC Arbitration Law provides that the DIFC Court can set aside the award where it finds that the subject matter of the dispute is not capable of settlement by arbitration under DIFC Law, the dispute is expressly referred to the jurisdiction of another tribunal or body under the applicable law or the award conflicts with the public policy of the UAE.
iii Enforcement of arbitration awards
An arbitral award must be ratified by the courts before it can be enforced in the UAE. The process to ratify an award is identical to the procedure for commencing a regular claim in the onshore UAE courts. This involves filing a claim with the court of first instance of the emirate where enforcement is sought.
The application will then be served on the defendant and the claim will proceed in the same manner as a regular claim. The arbitral award must satisfy all of the requirements of the Civil Procedure Law in order to be enforceable.
The UAE acceded to the New York Convention in 2006. The Convention provides a regime for the enforcement and recognition of arbitral awards within contracting states and sets out limited grounds on which another contracting state can rely to refuse recognition and enforcement of an arbitral award. These exceptions are similar to those listed at Article 41(2)(b) of the DIFC Arbitration Law addressed previously in the present section.
Despite the UAE’s accession to the New York Convention, in the past, there have been occasional challenges with enforcing foreign arbitral awards under the provisions of the New York Convention. For example, in 2013 the Dubai Court of Cassation (erroneously in our view) refused to recognise and enforce an ICC foreign arbitral award on the basis that the award debtor did not have any assets, and was not domiciled in the UAE.35
In a number of subsequent cases, the Dubai Court of Cassation has held that the Federal Procedure Law has no application to foreign arbitral awards and has ratified and enforced foreign awards on the basis of the New York Convention.36
Recent developments and trends
The long-awaited new arbitration law that is expected to be enacted imminently and limitations to the conduit jurisdiction of the DIFC Courts are two of the most significant developments in the arbitration space.
The current draft of the new arbitration law provides for a streamlined approach to the execution of arbitration awards which will allow an award creditor to enforce an award through the execution courts of the UAE without first seeking to ratify the award. An award debtor will have 30 days to challenge the award but this will not automatically stop the enforcement. The new arbitration law is also expected to provide the UAE supervisory courts with the power to address spurious procedural and jurisdictional challenges, which can currently lead to inefficiencies in the arbitration process.
Limitations to the conduit jurisdiction of the DIFC Courts is addressed previously in the present chapter.
While mediation is not recognised as a formal process as it is in other jurisdictions, the UAE court system is facilitating mediation through a range of committees that are available to parties prior to formally litigating a matter.
The Dubai courts, for example, have established a Centre for the Amicable Settlement of Disputes. The Centre considers certain disputes including disputes relating to commonly owned property or where a debt does not exceed 50,000 dirhams. If a settlement is reached, a settlement agreement is entered into by the parties that is a legally enforceable agreement and attested by a judge.
Alternative dispute resolution is also provided for in the DIFC Court Rules. A judge can invite parties to consider resolution at any stage in proceedings, where appropriate. Where disputes fall under the jurisdiction of the Small Claims Tribunal of the DIFC Courts, the parties will be invited to attend a consultation at the court for the purposes of attempting settlement.
The lack of recognition of the ‘without prejudice’ principle, however, often tempers the willingness of parties to mediate disputes prior to commencing formal litigation.
v Other forms of alternative dispute resolution
Cost pressures and the need for greater efficiencies in the resolution of disputes have led to the innovation of other ADR processes in the UAE.
The Chambers of Commerce of each of the Emirates offers an arbitration and conciliation service to its members. For example, the Dubai Chamber of Commerce and Industry offers a mediation service for the amicable resolution of disputes provided that at least one of the disputing parties is a member of Dubai Chamber. The Dubai Chamber of Commerce and Industry also has the ability to conduct such mediations in English. There is, however, no specific mechanism to enforce these decisions.
VII OUTLOOK and CONCLUSIONS
The UAE is taking a step in the right direction with a number of reforms to the ADR arena resulting in parties employing alternative means of dispute resolution rather than resorting to court, which can often be a slow-paced and costly process.
The new arbitration law, which is said to be modelled on the UNCITRAL Model Law, is a welcome change and is expected to provide further stability to an emerging area of law. With a set of rules that will be consistent with internationally accepted principles, the new arbitration law is expected to respond to a need to modernise the legal framework around UAE-seated arbitration.
There remains uncertainty, however, with regard to the extent to which parties can utilise the conduit jurisdiction of DIFC Courts to enforce foreign and domestic arbitral awards and foreign judgments.
The establishment of the DIFC, ADGM and international arbitration institutions together with the long-awaited reforms to the arbitration law, demonstrate the UAE’s intention of maintaining its status as a global hub for business and a platform that connects the GCC’s market with other global economies. It is likely that there will continue to be a series of further positive law reforms that will bring greater transparency to dispute resolution in the region and will encourage parties to utilise the various courts and arbitral institutions offered in the UAE. The current legal framework, especially within the DIFC and ADGM, lends itself to investor confidence.
1 Nassif BouMalhab is a partner and Aimy Roshan is an associate at Clyde & Co LLP.
2 Constitution of the United Arab Emirates, 2 December 1971 (as amended) (UAE Constitution).
3 Article 7 of the UAE Constitution.
4 Federal Law 5 of 1985 on the Civil Transactions Law of the United Arab Emirates (as amended by Federal Law 1 of 1987) (Civil Transactions Law).
5 Federal Law 18 of 1993 concerning Commercial Transactions (Commercial Transactions Law).
6 Federal Law 2 of 2015 on Commercial Companies (the Companies Law).
7 Federal Law 8 of 1980 regulating Labour Relations (as amended) (the Labour Law).
8 Federal Law 11 of 1992 concerning Civil Procedures Law (as amended by Federal Law 10 of 2014 and Federal Decree Law No 10 of 2017) (the Civil Procedure Law).
9 Article 1 of the Civil Transactions Law.
10 Federal Law 3 of 1987 promulgating the Penal Code (as amended) (the Penal Code).
11 Dubai Law No. 12 of 2004: The Law of the Judicial Authority at Dubai International Financial Centre (as amended).
12 Convention on the Recognition and. Enforcement of Foreign Arbitral Awards. (New York, 1958).
13 Articles 203 to 218 of the UAE Civil Procedure Law.
14  DIFC ARB 002.
15  DIFC ARB 003;  DIFC CA 005.
16  DIFC CFI 043;  DIFC CA 007.
17 Decree No. (19) of 2016 establishing the Dubai-DIFC Judicial Tribunal.
18 Cassation No. 1 of 2016 (JT).
19 See: https://registrations.draacademy.ae/.
20 The Convention on Judicial Assistance, Recognition and Enforcement of Judgments in Civil and Commercial matters signed between France and the UAE (1992).
21 Convention on Judicial Assistance in Civil and Commercial Matters between the United Arab Emirates and the Republic of China (2004).
22 The Agreement on Juridical Cooperation in Civil and Commercial Matters with India (2000).
23 Treaty between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates on Judicial Assistance in Civil and Commercial Matters (2006).
24 Gulf Cooperation Council (GCC) Convention for the Execution of Judgments, Delegations and Judicial Notifications (1996).
25 The Riyadh Arab Agreement for Judicial Cooperation (1983).
26 Supra, footnote 23.
27 UAE Federal Law No. 23 of 1991 regarding the Regulation of the Legal Profession.
29 Federal Law No. 4 of 2002 concerning Combating Money Laundering and Terrorism Financing Crimes (as amended) and Federal Law No. 7 of 2014 concerning Combating Terrorism Crimes.
30 UAE Cybercrime Law No. 5 of 2012.
31 Article 42 of the Federal Advocacy Law No. 23 of 1991 and the Federal Code of Ethics issued by virtue of a decree of the Minister of Justice No. 666 of 2015.
32 Article 18 of the Law of Evidence limits disclosure to material documents such as joint documents between the parties or documents relied on by the other party.
33 DIFC Arbitration Law No.1 of 2008.
34 Difc-lcia.org. (2017). Overview. [online] Available at: http://www.difc-lcia.org/overview.aspx [Accessed 11 Dec. 2017].
35 Dubai Court of Cassation, Cassation Number 156/2013, Construction Company International v. Ministry of Irrigation of the Government of Sudan.
36 See for example: Dubai Court of Cassation Case No. 132/2012.