On 15 September 2023, the United Arab Emirates (“UAE”) took decisive action to reform the arbitration legal framework. The recently issued Federal Law No. (15) of 2023 (“Amendment Law”) directly amends key articles of the UAE Arbitration Law No. (6) of 2018 (“UAE Arbitration Law”). This legislation, consisting of 61 articles, serves as the cornerstone of arbitration regulations within the UAE. Khairallah Law Firm is closely monitoring these developments to provide expert guidance on the implications of these changes.

Federal Law No. 6 of 2018 governs arbitrations seated onshore in the UAE. In contrast, different arbitration laws apply to arbitrations seated in the free zones, such as the Dubai International Financial Centre and the Abu Dhabi Global Market. For more details, see Arbitration in the UAE and Dubai International Arbitration Centre (DIAC) Arbitration.

The Amendment Law directly revises Articles 10, 23, 28, and 33 of the UAE Arbitration Law. It also introduces Article 10bis, which modernizes and refines the UAE’s arbitration landscape under the Federal Arbitration Law UAE by incorporating specific compliance requirements for certain arbitrators and their respective arbitration institutions. Notably, these changes grant arbitral tribunals significant discretion in selecting the format of proceedings, introducing an innovative element to the process.

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Article 10: Arbitrator Requirements Under the UAE Arbitration Law

Article 10 of the 2023 Amendment Law essentially preserves the substance of Article 10 of the 2018 Arbitration Law, outlining the requirements an arbitrator must meet for arbitration in UAE. These requirements specify that an arbitrator must not be a minor, must not have been convicted of moral turpitude or dishonesty, and must declare impartiality and independence, among other criteria.

Although this addition aims to prevent conflicts of interest, the provision remains ambiguous. The 2023 Arbitration Law does not define the term “direct relationship,” creating potential disputes over its interpretation and application. Ideally, UAE case law would clarify this ambiguity. In the meantime, practitioners can refer to the 2014 IBA Guidelines on Conflicts of Interest in International Arbitration. While these guidelines are non-binding, they offer valuable guidance on evaluating conflicts of interest and are commonly used in international arbitration practice.

Article 10bis: Requirements for Arbitrators from Supervisory or Controlling Bodies of the Competent Arbitration Institution

Article 10(2) of the 2018 UAE Arbitration Law states that the arbitrator may not be a member of the Board of Trustees or the administrative branch of the competent Arbitration Institution administering the arbitration case in the State.

1. a) Regulations of the institution shall be in such a way that the appointment can be made.
2. b) The institution shall be governed in such a way as to ensure independence, avoid conflicts of interest and control any staff appointments.
3. c) The arbitrator appointed may be neither the sole arbitrtor nor chairman of the tribunal; and
4. d) that the parties expressly aware of such institutional role and have no objections —with a written acknowledgment.
5. e) There should be a provision for reporting any violation by the arbitrators.

(f) An arbitrator may serve in not more than five separate cases of any kind per year.

1. G) The arbitrator signed a letter of commitment for not having conflicts of interest and observe arbitral institution requirements.
2. h) Such other terms, conditions or requirements as the institution considers appropriate.

If these conditions are violated the arbitral award will be void — and Article 10(2)(bis) of the new UAE Arbitration Law makes clear that is a definitive consequence. It also confers a civil right of remedy for the parties against both, which is again quite strict.

Consequently, greater administration by arbitration practitioners is necessary in order to fully meet these new demands. Such strict compliance is necessary to avoid the risk of undermining the enforceability in UAE-arbitral awards seated under Dubai Arbitration Law and prevent arbitrators/arbitral institutions from being civilly liable which may affect their integrity.

When considering stringent rules, it is important to note that the UAE has a formalistic approach to enforcing foreign arbitral awards. Recent decisions by the Dubai Supreme Court (Case No. 109/2022, Case No. 403/2020, and Case No. 1083/2019) confirm that arbitrators must sign not only the operative part of the arbitral award (typically the final page) but also the reasoning section. This requirement ensures that the award is enforceable by onshore UAE courts against assets located in the UAE (see also Enforcement of Arbitral Awards in the UAE).

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Article 23: Determining the Applicable Procedures

With the introduction of the new option for arbitrators serving on arbitration institutions’ boards to be appointed, Article 23 has also undergone minor textual revisions while maintaining its core principle.

Parties still have the freedom to agree on arbitration procedures, including the integration of rules from both domestic and foreign arbitration institutions. If the parties do not reach such an agreement, the arbitral tribunal has the authority to establish procedures independently. This process must comply with the UAE Federal Arbitration Law, including the “basic principles in litigation and international agreements to which the State is a party,” as explicitly outlined in the Amendment Law.

Article 28: Arbitral Proceedings and the Designated Place of Arbitration

Article 28(1) of the amended 2023 UAE Arbitration Law was redrafted to expressly permit parties’ agreement to conduct an arbitral process electronically, or “through modern means of technology.” The change improves the legitimacy of virtual proceedings and demonstrates a welcoming shift toward online hearings, an expanding concept likely hastened by the chain reaction brought on by COVID-19. Further, a number of institutional arbitration rules — such as Article 32(2) in the SCC 2023 Arbitration Rules—are also enshrining similar provisions to acknowledge virtual hearings.

A new provision under Article 28(3) of the 2023 Dubai Arbitration Law: this is parallel to ideas in arbitration legislation from around the world, but introduces a requirement for arbitral institutions to provide appropriate technology for conducting an arbitration. Nevertheless, the 2023 Arbitration Act does not specify to what extent this obligation extends. As a result, it is uncertain whether arbitral institutions must provide services for the organization of video-conferencing or transcription and equipment (laptops, microphones, cameras) in either virtual or hybrid hearings as they typically outsource such services to specialized third-party firms. However, even with this ambiguity, the new provision advances the idea that arbitral institutions need to keep abreast of technological developments and it makes clear their responsibility in ensuring efficiency within an arbitration.\

Article 33: Conduct of Arbitration Hearings and Proceedings

Arbitrators will also be able to introduce other protocols in the conduct of arbitration procedures under amended Article 33 of the newly drafted UAE Federal Arbitration Law, which is due to become effective as of 2023. This discretion is of course within the bounds set by public policy as per Article 33(7), where not otherwise agreed upon, and consistent with International best practices.

While the provision does not define whose public policy shall that be, it is broadly understood to mean UAE’s. Accordingly, practitioners dealing with UAE seated arbitration should take care not to rely on evidentiary rules that may conflict with fundamental values of the public policy in place within the UAE such for instance illegally obtained evidence which is also unadmissible under U.A.E Law.

Although not groundbreaking, the amendments made by Federal Law No. 15 of 2023 to the 2018 Arbitration Law in the UAE are a welcome development. On a positive note, these changes demonstrate the UAE’s commitment to aligning its domestic regulations with modern international standards and trends, such as the increased use of virtual hearings. However, the new provisions introduce some ambiguities, which could potentially lead to disputes. Ultimately, we will need to observe the practical impact of these changes over the coming years.

Conclusion

To recap, the Federal Law No. (15) of 2023 modifies UAE Arbitration Law by bringing modifications such as increased arbitrator flexibility and provisions supporting virtual hearings among other developments. International trend: Though these changes are in line with international standards, there is potential for conflict/ confusion due to certain areas of ambiguity. Khairallah Law Firm will be observing the practical implications of these amendments, as they are realized in practice.

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