Arbitration in Dubai: Complete Guide for Businesses

Even with the most structured business operations, there is a possibility you might encounter disputes associated with contract breach, partner disagreements, labor issues, profit-sharing issues, and others. However, arbitration in Dubai is an effective solution for businesses to tackle disputes outside the court. 

Not just in Dubai, but arbitration is popular among all other Emirates in the UAE, mostly because of the confidentiality, flexibility, and enforceability imposed by the underlying law. So, irrespective of whether you are a startup founder, an entrepreneur, or an established business owner, knowing the arbitration process under UAE law can help you tackle ongoing or future disputes.

What is Arbitration?

Arbitration is referred to as an effective method of dispute resolution in the UAE, without involving the traditional courtroom. Most of the commercial agreements today have an arbitration clause, which specifies that the involved parties must submit their potential disputes to dedicated arbitrators. 

An arbitrator qualifies as an impartial and unbiased third-party individual to assess the business dispute case and entice both parties to agree on a mutual settlement solution. You can either appoint the arbitrator yourself or hire a professional arbitration lawyer in Dubai to help you in the process. 

The judgment or arbitration awards issued by the arbitrators are legally binding and can be enforced in the UAE courts. An arbitrator can work in an acting capacity, similar to that of a judge, but in a less formal setup. It is a quicker and cheaper alternative to litigation for business dispute resolution in Dubai, which also preserves business relationships and brand reputation. 

The UAE Arbitration Law

Arbitration in UAE is governed by the Federal Law No.6/2018, released in May 2018, which was later amended by the new Federal Law No. 15/2023. Some of the important provisions of the UAE arbitration law are:

• This law is applicable to any form of arbitration being carried out within the UAE. However, if both parties agree upon adhering to the arbitration law of a foreign country, the same can be permitted by the authorities. Following that, the UAE arbitration law is also applicable to international and commercial disputes carried out outside the UAE. 
• Article 7 of the UAE Arbitration Law states that the arbitration agreement must be drafted in writing. The agreement can be in the form of written communications, a contract clause, or a separate agreement. 
• Despite the arbitration agreement, if a court case is filed, it will generally be declined or dismissed by the judicial system.
• UAE Arbitration Law also addresses certain situations where a particular contract references any other document that contains an arbitration clause. 
• The law specifies that an arbitration tribunal must necessarily have an odd number of arbitrators. 
• Article 10 of this law specifies that the arbitrator isn’t required to be of any particular nationality or gender, but he/she shouldn’t have any direct relationship with either of the parties. It is because any form of potential bias can prejudice the integrity, independence, and impartiality traits. 
• Article 19 of the law specifies that the arbitration tribunal holds control & power to pass judgments by enforcing its own jurisdiction. 
• Article 21 then states that the arbitration tribunal also has the power to issue required interim measures, either on its own or by a party. Interim measures can include a direct order to preserve certain evidence that might be critical material for resolving a business dispute. 

The DIAC (Dubai International Arbitration Centre) Rules for Arbitration 2022

DIAC was established in 1994 as a Commercial Conciliation and Arbitration Centre through the Dubai Decree No.10. One of the major advantages of DIAC arbitration in Dubai is the local connection it has with the Emirate’s economy and the underlying legal framework.

This institution supports low-cost arbitration and is designed in a way that the services align with regional business requirements. There have been some recent changes in the DIAC arbitration rules, which have made this institution even more popular for offering affordable, enforceable, and efficient awards in Dubai. 

The updated rules of DIAC for dispute resolution in UAE, specifically Dubai, are:

• DIAC is committed to competitiveness and modernization while addressing international arbitration cases. 
• New features by DIAC for dispute resolution or arbitration include expedited proceedings, emergency arbitration, remote hearing through digital processes, and more. 

Such changes or developments by DIAC now help streamline corporate and commercial arbitration in Dubai for businesses to address their international disputes at ease. Not just that, but the new rules also encourage transparency in the overall cost of arbitration. 

Step-by-Step Process of Arbitration in Dubai

As per the UAE arbitration law and new DIAC rules, here is the step-by-step process of arbitration in Dubai:

Step 1:Commencing the Arbitration Claim

First, you will file an arbitration claim in Dubai, including all the details about the dispute, the arbitration agreement, and the proposed resolutions. 

Step 2: Constitute the Arbitration Tribunal

Now, arbitrators will then be appointed in accordance with the agreement signed between the involved parties. In case such a clause is missing in the agreement, arbitrators are appointed under the DIAC rules. 

Step 3: Preliminary Hearings

The parties and the arbitration tribunal agree on all the procedural activities, including document submissions and timelines. 

Step 4: Statement Submission

The parties seeking arbitration will exchange written statements, witness testimonies and evidence, which will be critical for enforcing a fair settlement. 

Step 5 : Hearings

Oral hearings might be conducted upon case requirements, especially for arguments and witness examination. 

Step 6: Final Arbitration Award

The arbitration tribunal will issue a legally binding decision that will be enforceable with respect to the UAE Arbitration Law. 

Get Your Comprehensive Suite of Arbitration Services in Dubai with RH and HALE!

Being one of the leading law firms in Dubai, RH and HALE strives to streamline arbitration for your business disputes within the country and also on a global scale. We have skilled and experienced business lawyers in Dubai to help you with not just drafting your arbitration clauses, but also representing you in complex dispute cases. 

We have in-depth knowledge of the UAE arbitration laws and are trusted by top-tier businesses for our proven results and robust expertise. So, if you are seeking arbitration in Dubai, reach out to our legal consultants right away!