How to Use the Law of Arbitration in the UAE to Protect Your Rights?

Federal Arbitration Law In The UAE

Law of Arbitration in the UAE

arbitration lawyers in the UAE

They say arbitration has been in use for centuries, with some of Plato’s writings about the subject surviving till today. In today’s Middle East, historians also trace the practice of arbitration to as far back as the early days of Islam. Another timestamp that stretches even further back points to the use of arbitration by the famous King Solomon. 

We know for sure that modern “Arbitration” was formalized as an alternative method for resolving disputes when the British Parliament enacted the statute in 1697. And that the earliest record of the word itself was by Shakespeare, in his “Troilus” as far back as 1602. While the word hasn’t changed, it appears the purpose it stands for and the substance it holds are evolving. 

Arbitration’s status as the primary method for resolving complex, commercial and transnational disputes is no surprise – it stands as a tested alternative to the courts. Arbitration is a popular dispute resolution method for business in such prime commercial destinations as the UAE. The preference is because it offers several advantages over traditional litigation due to its speed, confidentiality, and flexibility.
If anything else has also become apparent, it is that it is not only business disputes that result from commercial arrangements. Human rights breaches are typical also. Unfortunately, enforcing individual human rights against abuses by corporations through traditional litigation is a fraught process. Fortunately, that looks set to change, thanks to new developments in arbitration.

Arbitration and "Rights?"

Normally, to protects your human rights, you have to go to the courts. As we all know, this is a slow and time-consuming process. Thankfully, you can do enforce your rights via arbitration without needing to step within the four walls of a law court.

To understand how this is possible, it’s best to start with the advent of Business and Human Rights Arbitration in 2013. That year, the U.S. Supreme Court ruled that the U.S. Alien Tort Statute of 1789 didn’t apply outside the United States. The decision essentially denied victims of human rights abuses by companies access to U.S. courts to obtain redress for alleged rights violations.

Thanks to that position, it came into the mainstream that arbitration could be an alternative method of dispute resolution for corporations and rights holders to settle disputes. Guiding this new frontier are the Hague Rules on Business and Human Rights Arbitration (BHA) (“the Rules on Human Rights Arbitration “), launched on the 20th of December, 2020.

The rules “provide a set of procedures for the arbitration of disputes related to the impact of business activities on human rights.” This allows states, corporate entities, and individuals to settle disputes with companies and business partners before an international arbitral tribunal.

The Arbitration Landscape in the UAE.

The UAE is taking the charge internationally when it comes to arbitration. For the last 5 years, the UAE has taken center stage as the seat of arbitrations involving corporate and commercial entities based in Eastern Europe, Africa, and Asia.

We have seen the emergence of world-class institutions with modern rules based on best international practices. Thanks to a gold-standard Arbitration Law (Federal Law No.6/2018) and party status to the New York and other regional conventions, the UAE is utilizing its potential to handle international arbitrations on human rights abuses.

The enactment of the Federal Arbitration law in 2018 effectively reformed Arbitrations in the UAE, broadly incorporating the UNCITRAL Model. Thanks to the Act, Arbitration in the UAE is very permissive in that it gives parties greater rein and flexibility in determining arbitral proceedings.

Additionally, it also establishes the power of Arbitrators to grant interim measures and make preliminary orders. This is very important when trying to resolve a case involving human rights violations.

Protecting Your Rights with UAE Arbitration Law

The effects of business activities on human rights occur in numerous ways and are well documented. For instance, the activities of a company and its contractors may directly impact environmental conditions and endanger whole communities.

Sometimes, these impacts are also indirect, arising out of the actions of suppliers and business partners in their supply chain. On the whole, companies through the following:

  • Environmental pollution and accidents, and health and safety failures resulting in damage to people’s health,
  • Work in unsafe or unhealthy conditions,
  • Forced or child labor, and the underpayment of workers;
  • The involuntary or forced displacement of communities,
  • The deployment of excessive force against workers by security guards protecting assets;
  • Discrimination against employees, for example, by race, gender, or sexuality;
  • Depletion or contamination of water sources on which local communities depend.

These are only examples, and the range of issues that could amount to business-related human rights matters remain very broad. 

As a general rule, using arbitration to resolve a contractual dispute is only possible where the parties involved consent to arbitration. So, in disputes between a company and its supplier, an arbitration agreement is typically incorporated in the supply agreement.

Where the issue does not result from a breach of contract, parties only refer their dispute to arbitration through a submission agreement.

Thus, for business-related human rights issues, it follows that the way to establish consent would be by inserting an arbitration clause in a multilateral agreement for human rights protection.

This is what is generally in use today. One example of this is the Accord on Fire and Building Safety in Bangladesh.

Signed after the Rana Plaza building collapse on the 24th of April 2013 (which killed and critically injured thousands of workers), the accord was created to establish a fire and building safety program for workers in the textile industry in Bangladesh. Signatories to the Accord include over 200 global brands, importers, and retailers in 20 countries across 4 continents.

It is not clear whether individuals can initiate arbitration directly. For instance, parties to the Bangladeshi Accord and presumably others like it are labor unions and companies. As a result, workers are unable to initiate arbitration under it directly. They instead tender any complaints on health and safety through a process established under the accord.

Interestingly, two arbitrations for human rights violations have come to light under the accords to date. Both times, the parties resorted to settlement, and the tribunals in both arbitrations issued termination orders.

Experienced Arbitration Attorneys in the UAE

The innovations brought by the UAE’s 2018 Arbitration Law are providing increased clarity and certainty for Business and human rights arbitration. The revisions are creating room for greater flexibility in the way arbitrations are generally conducted.

Our Law Firm specializes in drafting commercial and investment arbitration agreements, as well as representing clients in international arbitration proceedings. Our experienced arbitration attorneys are your bridge towards protecting your rights or securing remedies for any breach. Our specialization in dispute resolution allows us to take full advantage of the law when helping to conduct your arbitration.

If you need to solve a dispute in the UAE, chances are you will use an arbitration process. This is, after all, the cornerstone of UAE law. In arbitration, a neutral third party will referee and resolve the dispute. We solve complex and cross-border legal problems across numerous practice areas. Our unique culture enables us to understand local markets and navigate multiple jurisdictions. We are one of the best arbitration law firms in the UAE. Get in touch with us today!

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