7 Common Mistakes In UAE Arbitration Law
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Arbitration Law in the UAE
The growth and globalization of cross-border ventures and trade in the UAE have established it as a convergence point for business, investor, and government interests. Inevitably, some of these relationships break down, and parties immediately look to the best means of resolving their disputes. In many cases, that is arbitration.
The legal and arbitral framework of the UAE is admittedly unique and complex, with onshore and offshore, civil law and common law jurisdictions, and proceedings in both English and Arabic.
For parties looking to resolve disputes through the UAE’s arbitral options, the sheer number of choices and considerations to make can be overwhelming. As much as it presents an array of possibilities and options, it also almost guarantees the likelihood of error.
The reason is that it is not infrequent that parties hurry into and through this process with the same impatience that led to a dispute in the first instance. Mistakes may occur in any of the steps and components that make up an Arbitral process, from the Claimant’s request for arbitration, procedural hearings, disclosure, witness statements, hearing, and the final award.
Each of the arbitration stages has common pitfalls that snag numerous victims, which is why a piece like this can seem inadequate. Regardless, we highlight (in no particular order) some of the common mistakes made in the paragraphs below; and provide practical steps on how to avoid them.
Common Mistakes in UAE Arbitration
Check the common mistakes below in an effective arbitration process, from drafting arbitration agreements, jurisdiction, arbitration awards, and enforcement.
1. Delegating Power to Agree to Arbitration
UAE law traditionally determines that the principal must grant specific powers to an agent before that agent can validly commit the principal to an arbitration agreement. The law requires a principal to expressly state in the agency agreement that the agent has the power to enter into an arbitration agreement on their behalf.
Otherwise, there is a real risk that the arbitration agreement in a contract is void and unenforceable. It does not matter that agent had express authority to sign the contract on behalf of the principal (but not precisely the arbitration agreement contained within it). The Arbitration Law further identifies this as a ground to challenge an arbitral award. International and regional companies often neglect these formal requirements leading to disastrous consequences.
2. Messing up the Arbitration Clause
The close relationship between the process of arbitration and the arbitration clause in a contract makes it a very tricky affair. A small mistake in drafting can lead to unnecessary costs and delays or even a court battle over the existence of an agreement to interpret such a clause. Some of the common errors with clauses include;
- Providing unreasonably short deadlines for the tribunal,
- Naming an institution or arbitrator to act who does not exist or is misnamed or refuses to act,
- Drafting an incomplete clause,
- Setting inadvertent limits on the scope of the clause, et cetera.
Arbitration is a matter of contract, and there are detailed articles one can consult on drafting arbitration clauses. Several model arbitration clauses promulgated by the ICC, LCIA, ICDR UNCITRAL, and DIAC are available for use. They are deliberately modeled in an elementary form (to cater to a range of situations) and should be used in that form without reinventing them.
3. Misusing the Cross-Examination of Witnesses
This typically occurs when lawyers try and use cross-examination to prove their case in chief or fail to plan cross-examination before the hearing. Cross-examination is also one of the most powerful tools available to counsel during the hearing, yet lawyers:
- ask open-ended questions on cross-examination, allowing the adverse witness to tell “his” side of the story,
- resort to cross-examination to prove their case-in-chief,
- waste time on cross-examination laboriously challenging every jot on witness’s direct examination, especially on unimportant issues.
The most practical advice here is to prepare your case well. Know what you want to get from the witness, make a shortlist and stick to it. Except in the unusual case, please resist the temptation to grill the witness for hours on everything he or she said.
4. Wasting Opportunities to Persuade the Arbitrator/tribunal
Those who make this error generally do so by assuming that the arbitrator shares their knowledge of the case; failing to analyze and organize their case; and filing long, unpersuasive briefs.
Briefs should be as direct and as short as possible. Even if the arbitrator doesn’t place a page limit on briefs, it is best to resort to federal, state, or local brief limits as guidelines. Also, try to keep hearing brief is shorter than 30 pages.
5. Unnecessary Gamesmanship
While some arbitration can require the same macho chops as litigation, some lawyers deploy hardball tactics, obfuscation, and delay too often and to their detriment. These lawyers generally:
- Refuse to cooperate in any respect,
- Object to nearly all exhibit offered at the hearing by the other side,
- Suddenly “discover” key exhibits at the hearing,
- Schedule depositions unilaterally.
Arbitration, like litigation, is an adversarial process; that, however, is not a license to ignore professionalism and civility in favor of chest-thumping and uncooperativeness. It is best to plan your discovery and suggest a mutual discovery plan that reasonably meets the needs of the parties and the case.
6. Assuming Rules of Evidence to Be the Same as Those in Court
Unfortunately, it is all too common that lawyers fail to take the time to understand the rules of evidence; and make ineffective evidentiary objections. Generally, the evidentiary rules applicable to court proceedings do not bind Arbitration hearings. Counsel should know what rules there are and act accordingly.
7. Failing to Conduct Due Diligence on Arbitrator
It is best to know your arbitrator’s professional background and work history; know the elements of proof needed, and prepare your case accordingly. Go ahead with your choice if you are satisfied that the arbitrator is an expert on your client’s industry or the particular legal issues your case presents. It is also essential that he is an intelligent individual who frequently has “tried” cases before, if not as an arbitrator then as counsel.
seek Expert Advice from our Experienced Arbitration Professionals
There is a lot of misconception in the way of how arbitration works and what is expected of the party. Arbitration is a legal process that is meant to be a substitute for litigation. The arbitration process in any jurisdiction is complex enough to require due consideration at all aspects and stages of the arbitration, whether formal or informal. Usually, the required attention to detail is a feature atypical to experts and experienced legal professionals.
Arbitration law is a very vital part of any business or commercial life, particularly in the UAE. The job of an arbitrator is crucial to the smooth running of any business, particularly when issues of commercial dispute arise. Work out your legal options and then use the services of Al Obaidli & Al Zarooni Advocates & Legal Consultants to address any dispute you may have with another party.
Al Obaidli & Al Zarooni Advocates & Legal Consultants is a leading law firm specialised in arbitration, mediation and other alternative dispute resolution methods in Dubai, UAE. We have highly experienced arbitration lawyers and attorneys in the UAE. Get in touch with us today!