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Validity of arbitration clauses in UAE
PUBLISHED: AUGUST 17, 2024
Note: This material is for informational purposes only and does not constitute legal advice or consultation. The information contained in the material may not be relevant at the time of reading it.
It is a very common thing to add arbitration clauses into international commercial agreements.
Where a document provides for submission to arbitration, the UAE Courts will generally respect the parties' agreement to arbitrate. Article 8 of the Arbitration Law (Federal Law No. 6 of 2018) states that a UAE Court before which proceedings are initiated regarding a dispute that is subject to an arbitration agreement, is required to dismiss such proceedings if the respondent submits an application to dismiss on the grounds that the dispute is governed by an arbitration agreement.
The application to dismiss is required to be filed prior to any other application or submissions on the merits of the dispute.
While technically arbitral awards are considered final and binding, the Arbitration Law provides for limited grounds for annulment, which include:
- the absence of an arbitration agreement or the absence of an arbitration clause in the agreement; or the arbitration agreement was invalid; or the arbitration period has expired in accordance with the law chosen by the parties or in the absence of any reference to a specific law, in accordance with the Arbitration Law;
- the lack of legal capacity of a party entering into the arbitration agreement,
- the lack of specific authorisation of a party authorizing its entry into the underlying transaction in which the arbitration agreement relates to;
- a notice was not properly served on a party to arbitration in respect of the appointment of an arbitrator or the commencement of arbitration proceedings or due to any reasons beyond the control of such party resulting in such party not being able to present its case;
- the arbitral award issued does not apply the law chosen by the parties in their agreement;
- the arbitration proceedings were invalid or an arbitral award was not issued within the time limit specified for the issuance of such award;
- the arbitral award deals with matters not falling within the scope of the arbitration agreement or went beyond the scope of the arbitration agreement;
- the subject matter of the dispute is not capable of settlement by arbitration; or
- if the arbitral award contravenes the public policy and morality of the UAE.
All these matters of UAE Arbitration Law must be taken into account when drafting commercial contracts.
REGULEX can help with drafting contracts and agreements exactly according to your needs providing proper arbitration clauses along with all other clauses and provisions.