Tag: Dispute Resolution

Introduction

 

Significant changes to Federal Law No 11 of 1992 (the Civil Procedure Code) will soon be coming into effect. These changes are introduced through regulations (the Regulations) issued under the Civil Procedure Code and will come into effect on 16 February 2019.

 

The Regulations were promulgated pursuant to Decree by Law No 10 of 2017. These Regulations will amend the Civil Procedure Code where applicable.

 

The Regulations (in all, 193 articles) address a wide array of litigation procedures, from service of process, to enforcement of foreign judgments and arbitration awards, to execution procedures. Some of the Regulations codify practices already observed by the UAE Courts. In this inBrief, we set out a high-level overview of some of the Regulations which will impact both litigants and practitioners alike.

 

Service of Process

 

Pursuant to Article 3 of the Regulations, a court may permit a party or its attorney to serve process. Pursuant to the Regulations, process may be served between 7 am and 9 pm, unless served electronically, in which case the time limits do not apply. Article 6 of the Regulations provide that process may also be served by voice or video calls, text messages, fax, or any other alternative and technological means as may be determined by the Minister of Justice.  Importantly, Article 5 of the Regulations provides that if the official language of the defendant is not Arabic, the plaintiff is required to provide an official translation of the court notice in English. The cost of translating the notice is recoverable by a successful plaintiff.

 

Article 7 provides that service on parties domiciled abroad may be effected through ‘technological means, or private companies and offices, or as otherwise agreed between the parties, and if service cannot be so effected, process will be served through diplomatic channels.

 

Pursuant to Article 8, service is deemed to be effected on the date of sending the email or text message and on the date on which a voice or video call was made. Only process served by facsimile is deemed to have been served on the date of receipt.

 

Registration of Cases

 

Article 16 of the Regulations requires that a Statement of Claim/Plaint should include the details of the defendant(s) including information regarding the defendant’s identification number, which is applicable with respect to individual defendants. The practice of the Dubai Courts with respect to corporate defendants is to require a copy of the defendant’s trade license at the time of registering the case. It is therefore of practical significance that parties have copies of their counterparties’ ID and/or licensing documents with them, and obtaining such documentation should form part of best practice when entering into transactions.

 

Certain Regulations are evidently intended to speed up litigation procedures. Article 18, for example, provides that the period allowed for the defendant to appear in the Case Management Office or the court following registration of the case is ten days, which may be reduced to three days. Where summary claims are concerned (such as applications for provisional attachment) this period is 24 hours, which may be reduced to one hour on the condition that notice is served on the defendant personally. While Article 18 goes on to carve out an exception for maritime claims, the scope of the exception is currently unclear.

 

Proceedings in the UAE Courts are commenced by filing the plaint and supporting evidence (electronically or in person) with the relevant court. Thereafter, the Case Management Office of the court will fix the court fee payable, and complete the registration of the case upon receiving payment and completing any documentary requirements which may be identified by the Case Management Office. Given that there can be a considerable passage of time between filing the plaint and completing the registration in some instances, this led to uncertainty regarding the date on which action was commenced, which is an important consideration in determining whether time bars and other time related deadlines under law have been complied with. Article 19 of the Regulations clarifies that the date of registration is deemed to be the date on which the case was submitted to the court system, and not the date on which the registration of the case is completed.

 

Assessment of Case Value

 

Assessment of case value is an important practical consideration, as it has a bearing on jurisdiction, appeal thresholds, and of course the court fees payable by a plaintiff. Article 23 of the Regulations provides that minor circuits (as set out in Article 30(1) of the Civil Procedure Code) will have jurisdiction over civil, commercial and labour claims not exceeding AED 1 million in value (the threshold previously being AED 500,000), and counterclaims asserted in such cases irrespective of the value of the counterclaim. Decisions made by the minor circuit court in labour cases valued at no more than AED 20,000 and in all other cases valued at no more than AED 50,000 may not be subject to appeal. The current threshold is AED 20,000 for all types of cases. Article 23 further provides that the threshold (in terms of value) for appealing a judgment of the Court of Appeal to the Court of Cassation is AED 500,000. The current threshold is AED 200,000. Article 25 of the Regulations contains provisions for assessing case values in various types of disputes. For example, an action for the dissolution of a company and appointment of a liquidator is valued based on the company’s capital at the time of filing action.

 

Conduct of Proceedings

 

Certain claims may now be disposed of with only one hearing by a minor circuit court (Article 22). These claims include civil and commercial claims not exceeding AED 100,000 and claims for wages and salaries not exceeding AED 200,000. The Case Management Office is required to fix a case which is to be disposed of under Article 22 for its first hearing within 15 days of the date of registration of the case, and this may be extended only once with an additional 15 days by the judge supervising the matter. Article 22 does not apply to cases in which the State is a party.

 

Denying documents on the basis that they are copies (based on Article 9(2) of the Federal Law No 10 of 1992) is a position commonly adopted by parties, particularly defendants. Article 20 of the Regulations however provides that denying documents simply on the basis that they are copies will no longer be acceptable, and the party seeking to deny documents will also be required to maintain that such documents are “invalid” or were not in fact authored by the party to whom they are attributed to. A party which has denied documents and the court finds that the party’s denial was without justification may be subject to a fine of between AED 1,000 to AED 10,000. Importantly, Article 20 also provides that the court may inform the authorities regulating the legal profession in the UAE of the fine, and thus impacts the advocates having conduct of litigation. It is to be noted that fines for frivolous denials of documents is not new, however its codification is a welcome development.

 

The efficient conduct of litigation is a recurring theme in the Regulations. The Regulations require parties to plead their cases as completely as possible at the hearing before the Case Management Office (i.e. before the matter is transferred to a court). Article 32 provides that if the plaintiff or the defendant submits a document in a subsequent session which requires the court to adjourn the matter, and the court is of the view that the document could have been submitted at the first hearing, the court may penalise the party submitting the document with a fine between AED 2,000 to AED 5,000. Article 32 clarifies that a party may however produce documents in response to the defences and/or incidental demands of the other party without threat of sanction. Article 35 provides that a court may allow the parties to submit documents, submissions and new evidence, and to amend the relief sought and assert counterclaims that they were unable to submit to the Case Management Office. However, the court at its discretion may deny such submissions if the court is of the view that they could have been made to the Case Management Office.

 

Article 37 provides that a hearing may not be adjourned more than once for the same reason attributable to a party in the absence of a valid excuse. Where such a valid excuse exists, the second adjournment shall not exceed two weeks. Article 48 provides that where the pleadings have been concluded, the court may issue its decision or reserve the matter for judgment in a period not exceeding two weeks. The date reserved for judgment may only be adjourned once, and for a period of no more than two weeks. In other words, judgment must be issued within a month of pleadings being concluded.

 

Article 39 provides that the court is no longer confined to using interpreters appointed or licensed by the Ministry of Justice, and the court may use an interpreter from another source or resort to the use of ‘approved technology’. The Regulations do not provide any guidance as to what constitutes ‘approved technology’, and this may be the subject of further regulations.

 

Costs and Fines for Malicious Prosecution/Defence

 

While the law and the Regulations provide that the court may award costs, in practice the UAE Courts do not award legal costs, except in a token sum. Court fees and expert’s fees are however recoverable by a successful plaintiff. Article 56 of the Regulations provides that even a party that is successful on the merits of the case may be required to bear a portion of the expenses if that party has inter alia caused any ‘futile expenses’ or did not disclose documents which could have disposed of the matter to its opponents. Article 58 of the Regulations provides that a party which submits a malicious motion, plea or defence may be subject to a fine between AED 1,000 and AED 10,000.

 

Payment Orders 

 

Articles 62 through 68 of the Regulations set out provisions with respect to ‘Payment Orders’. Payment Orders are not new and the relevant provisions can be found in Articles 143 to 149 of the Civil Procedure Code. Payment Orders may be applied for by a creditor who has a claim for a fixed amount of money or a movable of a known type and quantity, and where the creditor’s right is confirmed. The Regulations enable the possibility of confirmation by reference to electronic sources, as well as the option of applying for a Payment Order where the subject of the claim is the execution of a commercial contract, or in case the creditor’s entitlement arises out of a commercial instrument. Pursuant to Article 63 of the Regulations, the creditor is required to demand payment from the debtor and grant at least five days to make payment. If payment is not received, a Payment Order may be applied for. The application must include the details required of a Statement of Claim/Plaint (as set out in Article 16 of the Regulations), and have the proof of the debt and evidence of the demand for payment attached thereto. Article 63 provides that the order be granted (or denied, presumably) within three days of the application being filed. If the application is denied, the judge is required to provide reasons. Prior to the Regulations, there was no requirement for the judge to provide reasons. A Payment Order may be appealed within 15 days by the debtor, and the court is required to determine the appeal within a week from the date of registration.

 

An application for a Payment Order does not preclude the party from seeking provisional relief under the relevant provisions of the Civil Procedure Code.

 

Enforcement of Foreign Judgments and Awards

 

Article 85 of the Regulations provides that an application to enforce a judgment or order of a foreign court shall be made to an execution judge, and that the judge is required to make his decision within three days. The execution judge is required to verify the following before issuing the decision:

 

• that the UAE Courts do not have exclusive jurisdiction over the matter;

 

• that the judgment or order has been issued by an authorised court under the law of the relevant foreign jurisdiction;

 

• that the parties to the foreign proceedings have been summoned and represented;

 

• that the foreign judgment/order sought to be enforced is res judicata under the laws of the relevant foreign jurisdiction; and

 

• that the foreign judgment/order sought to be enforced is not contrary to judgment or order of a UAE court, and is not contrary to the morals and public order of the UAE.

 

Article 86 provides that the provisions of Article 85 (set out above) are also applicable to arbitral awards issued in a foreign jurisdiction. Article 86 adds that the subject matter of the foreign arbitral award must be arbitrable according to the laws of the UAE, and the award must be enforceable in the jurisdiction in which it was issued, in order to seek enforcement in the UAE. The provisions of Articles 85 and 86 are without prejudice to the provisions of any treaties entered into by the UAE with respect to the enforcement of foreign judgments, orders or awards. The New York Convention is an example of such a treaty.

 

Conclusion

 

Overall, the Regulations are directed towards quick and efficient litigation, and will be welcomed by parties and practitioners. However, they put considerable time pressure on litigants, particularly on defendants, to ensure that their respective cases are pleaded fully within relatively short time periods.

 

The Regulations contain many provisions which warrant a detailed look, for example with respect to provisional orders and execution proceedings, which will be discussed in a series of inBriefs to follow. ■

In an order dated 31 October 2018, the DIFC Court accepted that a party seeking an anti-suit injunction against proceedings in a foreign court must show that proceeding before the foreign court is or would be “vexatious or oppressive” to that party. The DIFC Court further held that where the applicant has the option of obtaining a stay of proceedings in the foreign court itself, the DIFC Court would have no “compelling reason” to grant an anti-suit injunction; to do so would not be in line with the overriding objectives of the Court.

 

Case Background

 

Afridi & Angell continue to represent the Claimants in an ongoing employment dispute (case number CFI 015-2018) in the Dubai International Finance Centre’s Court of First Instance (the DIFC Court).

 

The First and Second Claimant are group companies which conduct business in international commodities and financial services. With operations in financial centres around the world, they are registered in the DIFC and the United Kingdom, respectively (together, the Claimants).

 

The First Defendant is a former employee of the First Claimant and a current employee of the Second Defendant, a company licensed in the DIFC with a similar business to that of the Claimants. The Third Defendant is the company secretary and office operations manager of the Second Defendant. The First, Second and Third Defendants are referred to collectively as the Three Defendants.

 

In March 2018, the Claimants issued proceedings in the DIFC Court seeking immediate relief against the conduct of the Three Defendants (the DIFC Proceedings). The basis of the DIFC Proceedings is related to the resignation of the First Defendant from the Claimants and the actions of the First Defendant in the lead up to, and after, his resignation. The Claimants allege that the First Defendant, who at the time was an employee of the First Claimant, conspired with and assisted the Second and Third Defendants (his new employer and its company secretary, respectively) to facilitate the taking of the Claimants’ clients and employees to the business of the Second Defendant. The Claimants sought the assistance of the DIFC Court and issued proceedings to enforce the restrictive covenants contained in the First Defendant’s contract of employment, and to prevent the First Defendant from using confidential information of the Claimants for the benefit of the Second Defendant in the first “springboard injunction” proceedings before the DIFC Court.

 

The Claimants also initiated proceedings before the United States District Court for the Northern District of Illinois (the US Proceedings) against: (i) the Third Defendant; (ii) the parent company of the Second Defendant (the Parent Company); and (iii) the Chief Operating Officer of the Parent Company. The US Proceedings were instituted to prevent the Parent Company from an international attempt to poach the Claimants’ employees.

 

The Second and Third Defendants (the Defendants) consequently submitted an application to the DIFC Courts in the form of an anti-suit injunction requesting an Order for the Claimants to stay the US Proceedings.

 

Anti-suit Injunctions in the DIFC Courts

 

An anti-suit injunction is a form of relief sought against a party to prevent them from either instituting a legal action or continuing with proceedings that have already been commenced.

 

The power of the DIFC Court to grant anti-suit injunctions was confirmed in Brookfield Multiplex v DIFCI LLC [2016] DIFC CFI 020 in which the DIFC Court held that it has the power to grant anti-suit injunctions pursuant to Article 32 of DIFC Law 10 of 2004.

 

Justice Sir Jeremy Cooke summarised the principles applicable to the grant of an anti-suit injunction by the DIFC Court in the following terms:

 

“It is self-evident that this Court should not interfere with the decisions of other courts of competent jurisdiction…and should not impugn the contents of their judgments. It is only where there is an absence of jurisdiction or where proceedings are vexatious and oppressive that a court is ordinarily prepared to grant an anti-suit injunction.” (emphasis added)

 

The position of the Defendants in CFI 015-2018 

 

The Defendants application requesting an Order for the Claimants to stay the US Proceedings was based on the premise that the DIFC Court has the power to grant relief where the continuation of the foreign claim would be vexatious and oppressive. It was recognised that there was a heavy burden of proof on the Defendants, but it was argued that the applicable threshold had been discharged.

 

The Defendants made the following submissions in support of their assertion that the continuation of the US Proceedings would be vexatious and oppressive:

 

(1) The similar nature of the DIFC and US Proceedings creates a risk of conflicting decisions regarding the same facts as well as extensive and duplicative costs;

 

(2) One of the three defendants in the US Proceedings is resident in the UAE; another defendant in the US Proceedings is a non-trading company; and the relief of worldwide injunction the Claimant seeks in the US Proceedings is fanciful;

 

(3) The events at the heart of the Claimants claim all had a connection with the DIFC and there is no evidence of any link with the USA;

 

(4) The US Proceedings were brought in order to disrupt the Defendants preparation for trial of the DIFC Proceedings and as a means to harass the Defendants; and

 

(5) The relief sought would not interfere with US sovereignty.

 

The position of the Claimants in CFI 015-2018

 

The Claimants agreed that for an anti-suit injunction to be granted it must be shown that the pursuit of the foreign proceedings would be vexatious or oppressive on the injunction applicant (the Defendants). It was further iterated that the high burden of proof is at all times on the applicant and not the respondent to the application (the Claimants).

 

For the Defendants application to succeed, the Defendants must show that:

 

(1) The DIFC is the natural forum for the US Proceedings; and

 

(2) The US Proceedings are either vexatious or oppressive.

 

The Claimants invited the Courts to dismiss the Defendants’ application for an anti-suit injunction on the following grounds:

 

(1) The DIFC is not the natural forum for the US Proceedings on the grounds that:

 

a. the US Proceedings involve different parties each of whom have accepted service of the US Proceedings;

 

b. the US Proceedings involve a different, and notably broader, factual scope;

 

c. the causes of action in the US Proceedings are either broader or different (as applicable), with some being based on both federal and Illinois state legislation;

 

d. the relief sought in the US Proceedings is different. It would be unjust to deprive the Claimants of the additional relief available, and the additional defendants upon whom any judgment can be enforced, in the foreign proceedings; and

 

e. there is a fundamental nexus between the US Proceedings and the United States, namely that the key actions with which the US Proceedings are concerned occurred in Chicago.

 

(2) The US Proceedings are not vexatious or oppressive. As explained by Mr Justice Cooke in Kyrgyz Mobil Tel. Ltd v Fellowes International Holdings Ltd [2005] EWHC 1314 (Comm), the question that must be asked is “whether or not there was a reason justifying the foreign proceedings”. For all the reasons above, this was clearly the case. Furthermore, with particular regard to the additional relief that the Claimants are entitled to seek in the US Proceedings, the Claimants again cited Mr Justice Cooke who explained that “for that reason alone it cannot be said that there was any vexation or oppression.”

 

(3) Notwithstanding the above, whether to grant an anti-suit injunction remains a matter for the Court’s discretion and it was the Claimants position that it would be inappropriate to exercise that discretion. In support of this view, the Claimants averred that:

 

a. the Defendants evidenced an intention to issue an application for a stay of the US Proceedings and as such, and having regard to the basic principles of comity, it is right that the DIFC Court does not interfere but rather allows the US Court to decide whether to entertain the application; and

 

b. the DIFC Proceedings would likely be concluded long before a final judgment is issued in the US Proceedings meaning there is no realistic prospect of conflicting judgments. As such, the injunctive relief sought would be futile.

 

The Order of the DIFC Court in CFI 015-2018

 

His Excellency Justice Omar Al Muhairi stated that he “found the Defendants submissions to be weak” and that there was “no compelling reason” for the Court to order the Claimants to stay the US Proceedings. Accordingly, the Defendants application for an anti-suit injunction was dismissed.

 

In summary, Justice Al Muhairi “agree[d] with the Claimants submissions” and found that:

 

(1) the US Proceedings were different both in respect of the parties involved and the relief sought;

 

(2) he accepted the principle set out in Deutsche Bank AG v Highland Crusader Offshore Partners [2010] 1 WLR 1023 that the party seeking an anti-suit injunction must show that the proceeding before the foreign court is or would be vexatious or oppressive; the Claimants claim in the US Proceedings would be neither “vexatious nor oppressive”;

 

(3) “no apparent injustice” would be suffered by the Defendants should the DIFC Court refuse to order the Claimant to stay the US Proceedings as the Defendants to the US Proceedings “are perfectly capable of making a stay application in the USA proceedings themselves”; and

 

(4) making an order for an anti-suit injunction in such circumstances would “put the parties on unequal footing” which would “not be in line with the overriding objectives of th[e] Court”.

 

Following on from the establishment of the DIFC’s power to grant anti-suit injunctions, this landmark case re-iterates the applicable threshold that must be satisfied for an anti-suit injunction to be granted in the DIFC Court.  The case helpfully highlights the high burden of proof on the applicant, whilst also providing examples of relevant considerations taken by the DIFC Court, namely comity, access to justice, and the overriding objectives of the Court, when considering such applications. ■

On 18 October 2018, the Dubai Court and the Ministry of Human Resources & Emiratisation (MOHRE) launched a “remote litigation service” for labour disputes under AED 20,000 in value.

 

Under this initiative, the requirement of personally attending hearings for labour disputes under AED 20,000 is dispensed with, and parties and their representatives are permitted to ‘attend’ the hearing before the judge electronically. The cases will be heard by a single judge, who is required to render judgment within 24 hours. This initiative has been introduced in order to dispose of low value labour cases in Dubai quickly and efficiently.

 

Labour complaints can be filed physically, electronically, or by calling the MOHRE hotline (80060). Once the case is registered, the parties to the case (i.e. the employer and the employee) are required to attend in person before a Tawafuq Centre to attempt settlement of the dispute. If the dispute is not resolved, and the value of the dispute is under AED 20,000, it will be referred to the labour court to be considered under the remote litigation service. The parties will be provided with an electronic link which will enable them to upload written submissions and evidence, and attend a hearing remotely if required. The service will also allow the parties to access the judgment electronically.

 

The service is not yet operational, and is expected to start functioning in November 2018. ■

On 19 September 2018, H.H. Sheikh Mohammed Bin Rashid Al Maktoum, the Ruler of Dubai, issued Decree No. 28 of 2018 concerning the Acceptance of the Civil Petitions before Dubai Courts (the Decree). The Decree was issued by His Highness to address the procedures in filing appeals to the Court of Cassation. The Court of Cassation is the highest court in Dubai.

 

Article No. 173 of Federal Law No. 11 of 1992 (as amended) (the Civil Procedures Law) provides that appeals to the Court of Cassation must be filed within 60 days of the judgment of the Court of Appeal. A matter is appealable to the Court of Cassation on questions of law, and provided that the value of the dispute exceeds AED 200,000 (Article 176).

 

Prior to the Decree, appellants were required to make payment of the Court of Cassation fee of approximately AED 6,000 and file a detailed petition of appeal before the expiry of the 60 day deadline. Over the past few years, several appeals were rejected by the Dubai Court of Cassation because the payment of the Cassation Court fee was delayed beyond the 60 day deadline, even though the petition of appeal itself was filed in time.

 

The Decree seeks to address this issue by clarifying that the Cassation Court fee may be paid within three working days of the Case Management Office requiring the petitioner to pay the fee, irrespective of the 60 day limit to file the appeal. The Head of the Dubai Court is given discretion to amend this time frame. Going forward, parties wishing to appeal to the Court of Cassation are still required to file the appeal petition within the 60 day deadline, but only need to make arrangements to ensure that payment is made as soon as the Case Management Office requires it.

 

The Decree further provides that a party which had its petition dismissed for reasons of delay in payment of the Cassation Court fee after 3 May 2015 may apply to the Court of Cassation for reconsideration of the dismissed petition. Such applications must be made within 30 days of the Decree coming into effect. This option is not available where the Cassation petition itself was delayed for more than 60 days (i.e. as opposed to the payment of the fee).

 

The Decree will come into force upon being published in the Gazette, which is yet to occur. Dubai is not part of the Federal Court structure, and the Decree is applicable only with respect to proceedings before the Dubai Court of Cassation. ■

The approval of the long awaited Federal Law on Arbitration by the Federal National Council was announced in March this year. The introduction of a comprehensive stand-alone law on arbitration is a welcome development in the UAE, and the new law will replace the provisions of Chapter Three, Volume II of Federal Law 11 of 1992 (the Civil Procedure Code) which to date comprise the only legislative provisions on arbitration in the UAE (outside of the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM)).

 

We set out below some of the highlights of the new law approved by the Federal National Council. Since this article was written, Federal Law No. 6 of 2018 has been issued promulgating the new law. The official gazetted version of the law is yet to be released, and there is a possibility that some of the articles of the new law referred to below have undergone further amendment, although it appears to be unlikely.

 

Application of the Law

 

Article 2 of the new law provides that its provisions shall apply to all arbitrations conducted in the UAE unless parties “agree to submit to another arbitration law”. It is likely that this provision is intended to accommodate parties who have chosen the DIFC or ADGM as their seat of arbitration. Article 59 of the new law goes on to state that the provisions shall apply to every arbitration “effective” at the time when it comes into force, which would include ongoing arbitration proceedings. Article 3 of the new law appears to envisage extra-territorial application where (a) the parties have agreed to be bound by this law for arbitrations conducted overseas, and (b) where the underlying dispute arises with regard to a legal relationship “organised by the applicable laws of the country”. It is unclear how the latter will operate in practice.

 

New Provisions 

 

The new law addresses a number of issues hitherto unaddressed in legislation (unsurprisingly, given that the previous legislation comprises only 15 articles in the UAE Civil Procedure Law) and addresses other issues in greater detail. A few examples are set out below.

 

a. The Arbitration Agreement

 

The new law maintains the requirement that an agreement to arbitrate should be in writing. However, the new law provides that this requirement may be satisfied by reference to communications between the parties. This is consistent with case law on this point such as the judgment of the Dubai Court of Cassation in Civil Petition for Cassation No. 73/2010, which held that a written agreement to arbitrate may be evidenced through written correspondence between parties. It is helpful to have legislative affirmation of this point.

 

The new law has expressly permitted electronic means of agreement to arbitrate in accordance with the laws in relation to electronic agreements. The new law also provides that an arbitration clause will be valid by reference if contained in standard form conditions, provided that the reference is clear and explicit.

 

Article 6 of the new law recognises the concept of severability of an agreement to arbitrate, which is a well-established principle in arbitration and is reflected in the arbitration rules of the DIAC, DIFC-LCIA and the ADCCAC.

 

Article 8 of the new law provides that where a party institutes proceedings in court notwithstanding the existence of an agreement to arbitrate, the court shall dismiss the proceedings if the defendant asserts a jurisdictional objection based on the arbitration agreement before making submissions on the merits of the dispute. This is a more flexible requirement contrasted with the provisions of Article 203(5) of the Civil Procedure Code, which requires the defendant to assert the jurisdictional objection at the first hearing. Article 8 goes on to provide that arbitration proceedings may be instituted or continued notwithstanding that judicial proceedings have been instituted challenging the validity of the arbitration agreement.

 

b. Jurisdiction

 

Article 19 of the new law provides that an arbitral tribunal may rule on its jurisdiction (or lack thereof) (kompetenz-kompetenz) including objections with respect to non-existence, expiration or nullity of an arbitration agreement by way of a preliminary judgement. Such decision is appealable within 30 days of such decision to a competent court whose decision would be final. The tribunal may continue with the arbitration notwithstanding the appeal being pending.

 

c. Limitations for Preliminary Objections before the Tribunal

 

Article 20 sets out a deadline for submitting a plea for the lack of jurisdiction of the Arbitral Tribunal on the following grounds:

 

i. A defence that the tribunal has no jurisdiction has to be submitted not later than the  time fixed for the respondent to submit his statement of defense.

 

ii. A defence that the matters raised by the other party are outside the scope of the arbitration agreement has to be asserted immediately upon such matters being raised in the arbitration by the other party.

 

These limitations may be waived by the tribunal, provided reasonable justification for delay is provided by a party.

 

Article 25 provides that a party who continues to participate in an arbitration, without objection notwithstanding being aware of violation of the arbitration agreement or the law will be presumed to have waived his right to subsequently rely on such violation. Such an objection must be made within any agreed time limit, or in the absence of an agreed time limit, within seven days from the date of becoming aware of such violation. The provisions of Article 25 do not apply where matters of public policy are concerned.

 

d. Interim Awards and Supporting Orders

 

The new law has the welcome addition of specifically recognising interim or partial awards and provisional measures granted by an arbitral tribunal which would facilitate emergency arbitrations and interim awards in the nature of injunctions available under certain institutional rules (e.g. ICC Rules and DIFC-LCIA Rules). Article 21 sets out provisional awards that may be issued by the tribunal:

 

a) Awards preserving evidence that is likely to be essential in the dispute resolution.

 

b) Awards to take the necessary measures to protect the goods that constitute a part of the dispute subject matter (e.g. to deposit goods with a third party, to sell damageable goods).

 

c) Awards to preserve the assets by which a subsequent decision may be implemented.

 

d) Awards to preserve the situation as it is (i.e. maintain status quo) or to be resorted to its previous position until a decision on the dispute.

 

e) Awards to take appropriate measures to prevent a current or imminent damage or a prejudice to the arbitration proceedings, or abstention from any act that may cause damage or prejudice to arbitration.

 

Such awards will now be enforceable through court and will have the effectiveness of a court order, once recognised. Article 21 of the new law further allows a party issued with a provisional measure to request a court to order the execution of such a measure.

 

An arbitral tribunal on its own accord or upon the request of either party is empowered to apply for a court order to obtain any evidence it requires, including the ability to compel a witness to give evidence and produce documents. While similar powers are given to arbitrators under Article 209 of the Civil Procedure Code, the new law does not require that the arbitration proceedings be suspended until such an order is obtained from court as presently required under Article 209.

 

e. Awards

 

Absent an agreement between the parties on the length of an arbitration, the new law (as is the position under the Civil Procedure Code) sets a time limit of six months from the date of the first hearing for the issuance of an award, with the arbitral tribunal having been given the power to extend the deadline for up to a further six months. Article 42(1) suggests that the parties may agree to an extension of more than six months. Article 42 of the new law provides that any extension of time beyond this period needs to be by way of a court order. Many existing arbitration rules provide that the administering institution has the power to extend the deadline for an award. Examples of such provisions are found in the DIAC Rules and the DIFC-LCIA Rules as well as the ICC Rules of arbitration. How the provisions of the new law will interact with such provisions (particularly the DIAC Rules, which are issued by Decree of the Ruler) will have to be seen.

 

A party may also apply for a court order terminating the arbitration proceedings in the event the arbitration award is not issued within the requisite time period. In the event of such termination, either party may file a case before a competent court to rehear the dispute.

 

Article 212(4) of the Civil Procedure Code required an award to be issued in the UAE, failing which the award will be treated as a foreign award. This requirement is commonly interpreted to mean that the arbitrators must sign the award in the UAE. However, Article 41 of the new law dispenses with this requirement and recognises that domestic arbitration awards may be signed outside of the place of arbitration and may even be signed electronically.

 

f. Challenges to Arbitration Awards

 

Article 53 of the new law provides that an arbitration award may be nullified on the following grounds:

 

a) Where no arbitration agreement exists, or if the arbitration agreement is void, or the time limit for rendering the award has expired.

 

b) Where one of the parties at the time of entering into the arbitral agreement was a minor or lacked capacity pursuant to the law governing his capacity.

 

c) If one of the parties to the arbitration was unable to present a defence because such party was not properly notified of the appointment of an arbitrator or of the arbitral proceedings, etc.

 

d) If the arbitral award discarded the application of the law agreed to by the parties on the subject matter of the dispute.

 

e) If the composition of the arbitral tribunal or the appointment of the arbitrators has occurred in a manner contrary to the law or the agreement of the parties.

 

f)  If the arbitral proceedings “are tainted by nullity” affecting the arbitral award.

 

g) If the award contains decisions on matters not included in the arbitration agreement or beyond the scope of such agreement (any portion of the award separable from the rest which comes within the scope of the agreement may be held valid).

 

These grounds appear to be a restatement of the present grounds set out in Article 216 of the Civil Procedure Code in more detail and increased scope.  These provisions also mirror the grounds for refusal to enforce an arbitral award as recognised by the New York Convention with the exception of the ability to refuse recognition on the basis that the award may not yet have become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made- a recognised ground under the New York Convention.

 

The new law requires that a court execute a ratified arbitral award unless it finds a cause for nullity as set out above. An execution can be stayed only by a decision of court.

 

Article 54 provides that if a party wishes to annul or set aside an arbitration award, it should commence court proceedings for an order of nullification within thirty days of receiving the award.

 

In circumstances where proceedings have been filed for the nullification of an award, Article 54 of the new law provides that the judgment of such an action shall be appealable only by way of cassation. ■

 

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The foregoing is only a preliminary view on some of the features of the new arbitration law, which will come into effect in 30 days of being published in the gazette. Afridi & Angell will be releasing a more in-depth commentary shortly.

Abu Dhabi has introduced new rules governing the functioning of the Emirate’s judiciary. The new rules appear in Abu Dhabi Law 13 of 2018, which amends Abu Dhabi Law 23 of 2006 on the Abu Dhabi Judicial Department.

 

The new provisions largely address internal matters related to the functioning of the courts, such as the composition of panels of the courts and the accountability of judges. But two features could be of more general interest.

 

First, the Chairman of the Judicial Department is accorded the power to establish specialised courts. This would be a major advance, as the need for specialised courts (such as maritime courts) has long been recognised. Moreover, the existence of specialised courts is expressly contemplated by other recently enacted statutes, such as the Federal Bankruptcy Law. The Chairman of the Judicial Department may determine the competence of the specialised courts, and may establish Departments of First Instance, Departments of Appeal and Departments of Enforcement in such specialised courts.

 

Second, a formal procedure has been introduced for the overruling of precedents. The new provisions introduce a General Assembly of the Abu Dhabi Court of Cassation comprised of all of the Court’s judges and having general administrative authority for the functioning of the Court. Two panels, each composed of nine judges, are formed within the General Assembly, each headed by the Chairman of the Court or another senior judge. One panel is specialised in criminal matters and the other in civil, commercial, personal status and other matters.

 

If a panel of the Court of Cassation, while considering a case, wishes to consider overruling a legal precedent established by previous judgments, or wishes to pronounce on an issue on which contradictory principles were previously articulated in the Court’s judgments, then it must refer the matter to the Chairman of the Court for presentation to the competent panel of the General Assembly. A decision to overrule a legal precedent would require an affirmative vote of at least six members. The Chairman of the Court, if he considers the same appropriate, may present the matter to both panels sitting en banc, in which case a decision to overrule the precedent would require an affirmative vote of 13 members.

 

The amendments also reduce the size of the panels of the Abu Dhabi Court of Cassation that consider disputes before the Court, from five judges to three. ■

 

 

 

Abu Dhabi has put an end to a four-year experiment – widely viewed as unsuccessful – with uncapped court fees.

 

Prior to 2013, court fees in Abu Dhabi were calculated as a percentage of the amount in controversy, subject to a cap of AED 20,000. But Abu Dhabi Law 6 of 2013 introduced a new formula of 3% of the amount in controversy without any cap. This imposed significant costs on claimants, even taking into account the power of the courts to charge fees to the losing party. Resort to the courts was deterred, even for an action such as the enforcement of an arbitral award where the role of the courts was restricted.

 

This has now been remedied by Abu Dhabi Law 13 of 2017, which repealed Law 6 of 2013. Law 13 of 2017 provides for a court fee of 5% of the amount in controversy, provided that the fee shall be not less than AED 100 and not more than AED 40,000. The formula is the same for appellate fees, but with a maximum fee of AED 10,000. For a lawsuit of indeterminate value, a fixed fee will be charged initially depending on the type of case, with the balance of the fee to be calculated following pronouncement of judgment on the basis of the amount of the award using the normally-applicable formula.

 

Law 13 of 2017 also sets a cap of AED 10,000 for fees for additional electronic services provided by the Abu Dhabi Judicial Department. ■

 

The Centre for Amicable Settlement of Disputes (the “Centre”) was established by Dubai Law No. 16 of 2009 and is entrusted with the task of attempting to mediate disputes, prior to such disputes being referred to court. The Centre is affiliated with the Dubai Courts and the mediators appointed in the Centre act under the supervision of a judge. If the parties reach a settlement, such a settlement must be recorded in writing, signed by the parties and attested by a judge. Such settlement agreement is legally enforceable and is equivalent to an executive instrument which may be directly enforced through the Execution Courts. In the event no settlement is reached between the parties, the case is referred to court.

 

The Centre acquires jurisdiction over a dispute either on the application of a party to a dispute or when the dispute relates to a subject specified in Dubai Law No. 16 of 2009 to be a dispute that must be first reviewed by the Centre prior to the dispute being referred to court. However, there are certain disputes that the Centre does not have jurisdiction over (such as Labour disputes, disputes relating to personal status, summary and interim orders and actions, actions to which the Government of Dubai is a party, etc.).

 

A party to a dispute may opt to refer a dispute to the Centre under the following circumstances:

 

1. If a party (or parties) to a dispute request that the dispute be referred to the Centre;

 

2. On the request of all parties to a dispute which is pending before the Dubai Court of First Instance, Commercial Courts or Real Estate Courts (regardless of the value of the suit), upon the approval of the chief judge of the circuit;

 

3. On the request of a party for the appointment of an expert.

 

The following disputes are disputes that must be reviewed first by the Centre prior to the case being referred to court:

 

1. Division of undivided property;

 

2. If the value of the debt in the dispute does not exceed AED 100,000.

 

Prior to Administrative Decision No. 1 of 2017, all disputes to which a bank was party had to be first referred to the Centre. Such disputes were rarely, if ever, settled and the dispute resolution process was merely prolonged unnecessarily. However, consequent to Administrative Decision No. 1 of 2017, the Centre no longer has jurisdiction over any dispute to which a bank is a party. The significance of this amendment is that no dispute that a bank is a party to can be referred to the Centre, even for the limited purpose of appointing an expert to opine on a matter. Therefore, all disputes where a bank is a party must be referred directly to court. ■

Article 257 of the UAE Penal Code (Federal Law No. 3 of 1987) was recently amended by Federal Law No. 7 of 2016 to introduce the concept of criminal liability for arbitrators, experts, and translators who issue decisions and opinions ‘contrary to the duties of impartiality and honesty’. Article 257 as amended provides (in translation) as follows:

 

“Whoever issues a decision, makes an opinion, files a report, presents a case or asserts a fact in favour of or against someone, contrary to the required duties of impartiality and honesty, in their capacity as arbitrators, experts, interpreters (translators) or fact finders appointed by the administrative or judicial authority or nominated by the parties shall be punished by temporary imprisonment. The above said categories shall be prohibited from taking up any new assignments and shall be subject to the provisions of Article (255) hereof.”

 

Article 255, referred to in Article 257, provides for reduced sentences in certain circumstances. An unofficial translation is set out below:

 

“Shall be exempted from penalty:

 

• The witness who, if he tells the truth, shall be subject to a severe prejudice in his freedom, honour or shall expose to such severe prejudice his spouse, even if divorced, one of his ascendants, descendants, brothers, sisters or in-laws of the same degrees.

 

• The witness who reveals before the court his name, surname and nickname and who had not to be heard as a witness or if he has to be told that he has the right, if he wishes, to abstain from testifying.

 

• In the two above instances, if such perjury exposes another person to legal prosecution or to a judgment, the author shall be sentenced to detention for a minimum term of six months”.

 

Article 255 refers to witnesses and their testimony, and therefore appears more likely to be relevant to expert witnesses, and not arbitrators.

 

Article 257 prescribes a punishment of temporary imprisonment. Pursuant to Article 68 of the Penal Code, temporary imprisonment constitutes imprisonment of between 3 and 15 years.

 

The amendment became effective on 29 October 2016.

 

Prior to its amendment, Article 257 was confined to the criminal liability of experts appointed by the courts. Subsequent to the amendment, Article 257 has been expanded to apply to arbitrators and experts who are appointed by an administrative or judicial authority, or nominated by the parties. Ostensibly therefore, arbitrators and experts appointed in Dubai under institutional or ad hoc rules will be subject to Article 257.

 

It is yet to be seen how Article 257 will be interpreted and applied in practice. It would conceivably be a difficult task to establish that an arbitrator or an expert has failed to act in an honest and impartial manner. However, the prospect looms where parties dissatisfied with the outcome of an arbitration will pursue complaints under Article 257, and this prospect is one that potential arbitrators will now have to take into account when accepting appointments. ■