When Will the New UAE Arbitration Law Take Effect?

The UAE’s arbitration laws are renovated recently to provide a strong legal framework to the dispute resolution and in line with the international best practices; in September 2023 Federal Decree-Law No. 15 of 2023 amended some key sections of Federal Law No. 6 of 2018 on arbitration to bring in provisions strengthening procedural flexibility, independence of arbitrators, confidentiality, and the application of technology in arbitration procedures into the legislation. These amendments are expected to make the UAE a much attractive and efficient forum under UAE law for resolving commercial disputes. In this blog, we will discuss the core components of the new arbitration law and its implications.

Background and Need for Reform

The UAE has become one of the world’s finest trade and investment centers, if not the finest, including now recognized cross-border commercial activity. The escalation of business disputes made many in our country demand a modern, reliable arbitration framework. The previous arbitration law of 2018 made a giant leap in that direction; however, practical experience over the years revealed that in order to increase efficacy, transparency, and international alignment of arbitration in the UAE, further reforms were urgently needed. 

These reforms seek to strengthen arbitrator independence, facilitate digital processes, streamline challenges against awards, and increase clarity as to procedural rules. Through these changes, the UAE would remain one of the most competitive and trusted jurisdictions for high-value commercial arbitration before international investors and multinational corporations.

Key Changes in the New Arbitration Law

The UAE arbitration code has been freshly updated with the intention of modernizing the entire arbitration framework. The updates are also to help create higher standards for impartial adjudicators and the provisions upon which proceedings are conducted. They are to ensure simplicity, flexibility, and international best practices in all systems of arbitration.

Some important features of changes introduced by the legislation include: 

• Strengthening Arbitrator Independence Rules

The new law places more stringent conditions on maintaining the independence and impartiality of arbitrators throughout the arbitral process. Also, there are restrictions on the relationships that might raise arbitrator bias considerations. These ultimately restore public confidence in arbitration, along with respect from the courts.

• Introduction of Article 10 bis

This article introduces provisions whereby remarkable arbitrators may, under certain conditions, act as co-arbitrators. The effect is to provide more arbitrators for consideration, all of whom are safeguarded as to the protections necessary to ensure the avoidance of conflict of interest. This amendment also allows institutions to meet the demand of highly-experienced professionals.

• Legalization of Virtual Hearings

Such amendments allow arbitration hearings and their procedures to be conducted purely virtually. This trend will align with modern times with the comfort of carrying out duties by parties across borders. These are not just cost-effective but also save time.

• Wider Scope of Confidentiality Protections

Confidentiality is being extended to cover the entire arbitration unless otherwise agreed by the parties: this protects delicate commercial information and gives additional protection to entities that opt to settle their disputes through arbitration in the UAE.

• Greater Procedural Flexibility for Tribunals

There is a lot more freedom for the arbitrators to maneuver in the absence of any provision in the rules regarding that particular issue. They may also determine whether oral hearings are a requisite or whether written submissions suffice. This flexibility improves the efficiency of cases and does away with needless procedural hurdles.

Official Implementation Date

The revised UAE Arbitration Law set forth by Federal Decree-Law No. 15 of 2023 officially came into effect on 16 September 2023. The amendments considerably modernise central provisions of Federal Law No. 6 of 2018 and were put into effect very shortly after their publication, thus making them valid as of that date. New provisions now govern all arbitrations seated onshore in the UAE, enhancing the flexibility, use of technology, and procedural clarity of dispute resolution. This implementation is a giant leap in aligning the national legal regime with international arbitration principles and enhancing the position of the country as an international arbitration hub.

Impact on Domestic Arbitration Proceedings

The new Arbitration Law in the UAE has introduced significant improvements in how domestic arbitration is conducted within the state. The definition of domestic arbitration has become, among others, less stringent, and the flexibility that is provided to arbitral tribunals on how to conduct proceedings includes virtually holding hearings where practical or strictly relying on written submissions wherever appropriate. This change improves efficiency and accessibility to arbitration for local parties while cutting down time and travel costs to attend hearings, among other benefits. 

Another major effect is the wider confidentiality in that it has now swept all default-covered arbitration, unless otherwise agreed by the parties. This gives businesses that extra level of assurance that sensitive commercial information will be kept private throughout the dispute resolution process. 

The new provisions also extend to procedural discretion for tribunals with regard to evidence and hearing management, which helps in considerably fine-tuning the case progression. This, in turn, allows for a more unique experience in arbitration, which aids local businesses in settling disputes on modern-day parameters.

Effect on International Arbitration Cases

The new law on arbitration in the UAE has introduced several amendment-type features that considerably bolster the UAE as a global venue for international arbitration. One very significant area is the much clearer alignment of the UAE procedures with global arbitration standards, adding further confidence to foreign investors and multinational companies. By enhancing the procedural autonomy of arbitral tribunals, the law enables greater flexibility in handling hearings, evidence, and timelines in a manner that will make cross-border cases more effective and predictable.

The new law offers more secure enforceability of arbitral awards, lowering risks posed by challenges based on technicalities. An ever-important case is that for international parties, whose key concern is legal certainty when choosing a jurisdiction where disputes should be settled.

Above all, the law provides for much better confidentiality and remote attendance facilities, which provide easier access for international parties to participate in proceedings without the confines of geography. The totality of these changes increases the country’s competitiveness and reliability as a world arbitration centre.

What Businesses Should Do Before the Law Takes Effect

The deadlines for a major overhaul of the Law on Arbitration being considered for promulgation in the UAE near the end of this year are coming up fast, which thus, recommends this forethought to be made from the corporate front on an early stage with good measure. This then begins with the examination of all existing contracts with a special emphasis upon their arbitration clauses to ensure that these accord with the new legal regime. Among other things, companies must ensure their clauses do not mention redone rules, redone arbitration institutions, or redone procedural terms that will not be made to comply with the amended law. So, doing it early will help avoid future disputes based on the validity and enforceability of these clauses. 

Then they should consult with their advisors on how amendments to these procedural arrangements will impact their current dispute-resolution strategies, including considerations of remote hearings, written methods, or specific institutional rules. In this respect, it may be necessary for companies to update their internal procedures regarding document maintenance, confidentiality, and evidentiary matters to ensure conformity with the massively enlarged standards of procedure and confidentiality now captured in the new law.

Finally, relevant teams, like legal, compliance, and contract management, must be trained on these changes and their possible effects. Advanced preparations can enhance a company’s strategic posture with respect to fulfilling the letter of the law and sidestepping unwanted delays while retaining maximum flexibility and efficacy envisioned within the new UAE Arbitration Law.

Conclusion: Key Takeaways and Next Steps

The new UAE Arbitration Law is a significant departure with regard to an accelerated, simpler, and harmonious dispute-resolution system with the rest of the world. It brings more procedural certainty, strengthening tribunal powers and enforceability, and making arbitration processes smoother for domestic and international parties. These are intended to entrench the reputation of the UAE as a highly reliable jurisdiction that is more arbitration-friendly. 

As time draws closer to enforcement, businesses must amend contracts, look into current arbitration clauses, and at the same time seek expert legal advice for 100% compliance. Such early action will prevent snags, advantages, and risks in making full use of the modernized arbitration regime.