A comparison of developments in dispute resolution in UAE

The United Arab Emirates (UAE) is a federation of seven emirates comprising Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. The federal judicial system in the UAE is based on a civil law system derived from Sharia law and influenced by Egyptian laws and jurisprudence.

The UAE constitution, however, allows the emirates to opt out of the federal judicial system. An emirate may set up its own independent judicial system. Presently, Abu Dhabi, Dubai and Ras Al Khaimah have their own independent judicial systems while the other emirates continue to be a part of the federal judicial system.

All emirates have courts based on a two-tiered system (mainland courts) comprising the Court of First Instance and the Court of Appeal. In addition to the above, Abu Dhabi, Dubai and Ras Al Khaimah also have a Court of Cassation, the highest court within the emirate. In all other emirates, the final appeal will be to the Court of Cassation in Abu Dhabi.

Dubai International Financial Centre (DIFC) Courts and Abu Dhabi Global Market Courts (ADGM courts) are offshore courts within the UAE. DIFC serves as an independent body with its own set of laws based on the common law system and an independent judicial system. Adding the DIFC jurisdiction to contracts allow parties to choose DIFC courts for dispute resolution. Similarly, the ADGM Courts, established in 2016, are common law courts based on the English court system, adjudicating civil and commercial disputes. The direct application of English common law makes ADGM the first jurisdiction in the Middle East to adopt an approach similar to that of Singapore and Hong Kong.

As the UAE has established itself as a regional hub for international business, arbitration is gaining popularity as a means of dispute resolution.

The Dubai International Arbitration Centre (DIAC) is a regional arbitration centre established in 1994 as part of the Dubai Chamber of Commerce and Industry. Within the DIFC, the DIFC-London Court of International Arbitration (DIFC-LCIA) centre was set up in collaboration with the LCIA. The DIFC-LCIA centre allows application of internationally renowned LCIA rules. The standards, capabilities and rules of the LCIA are trusted by commercial parties and international investors.

When parties in DIFC-LCIA opt for the DIFC as the seat of arbitration, the DIFC courts recognize the arbitral award and can order enforcement against a respondent’s assets. Further, a local office of the International Court of Arbitration (ICC), the world’s leading arbitral institution for resolution of international commercial disputes, has been set up in Abu Dhabi.

Disputes during lockdown

The spread of covid-19 has had severe legal ramifications for businesses operating around the world. We have seen a significant rise in queries pertaining to termination of contracts invoking force majeure clauses, delay in deliveries and non-payment of dues.

The full lockdown of business and public life announced in April 2020 in the UAE has further aggravated the impact on businesses. As a result, there has been a surge in commercial disputes and the parties to the disputes have been wary of their legal options amid social distancing protocols, as several hearings were adjourned and courts and arbitration centres have changed their way of functioning.

Therefore, UAE courts and other legal forums such as arbitration centres are undertaking a digital transformation to mitigate health risks and remain functional in the time of lockdowns and quarantines.

Onshore and offshore courts and arbitration centres in the UAE have made efforts to address the concerns with respect to the nature of proceedings. The ability of courts and arbitration centres to adapt to the “new normal” is directly linked with the flexibility its rules provide to facilitate a virtual hearing and the extent of digital infrastructure it can support.

Mainland courts

Hearings for Dubai Court of First Instance, Court of Appeal and Court of Cassation were adjourned from 22 March to 16 April. On 19 April, Dubai courts announced provisions for virtual hearings hosted on Microsoft Teams software.

In our experience, virtual hearings have been running smoothly and successfully. The reason for the seamless transition is likely due to the fact UAE government entities had already digitized several functions such as reporting of criminal, traffic and administrative violations of law through the Dubai police website and filing of cases through the Dubai courts’ online platform before the onset of covid-19.

Following Dubai, Abu Dhabi courts announced on 30 March that all civil and criminal court proceedings shall be conducted electronically through the courts’ electronic system. The courts in other emirates are also adopting innovative strategies. Ras Al Khaimah courts are conducting hearings under the electronic court services system and Ajman courts have also initiated “e-trials” in response to the covid-19 pandemic.

Offshore courts

All hearings in DIFC courts are being held through teleconferencing. Filing is carried out using the e-bundling platform available through “e-Registry”. The wills service centre at DIFC is conducting registration of wills over video conferencing, which allows the testator and two witnesses to affix electronic signatures on the uploaded will.

ADGM courts have been running an “eCourt” platform since 2018, owing to which it did not face much disruption in its service. All filings can be submitted through this platform.

Arbitration centres

DIAC allows new requests for arbitration and submission of documents to be carried out through their online portal. Hearings that were scheduled in advance can be postponed or be held via videoconferencing, subject to the decision of the arbitrator or tribunal.

DIFC-LCIA is holding electronic hearings or allows for postponement provided the tribunal and parties agree. In line with other leading arbitration centres, the ICC allows for requests for arbitration to be filed electronically. ICC offices around the world are currently conducting virtual meetings and hearings.

The agility of court systems and arbitration centres to adapt to remote operations has ensured that operations remain largely unaffected during these unprecedented times. As restrictions are being eased and businesses are returning to normal, we are of the view that the court systems and arbitration centres will continue to evolve as they retain virtual hearings in parallel with physical hearings.

Based on our recent experience, we recommend that parties in disputes should make efforts to communicate and try to renegotiate the terms of their agreement in the context of the new reality. If the parties opt for litigation, it may initially be inconvenient, but if the hearings are supported by adequate technological infrastructure, virtual courtrooms may improve the efficiency of the dispute resolution process.

Galadari Advocates & Legal Consultants
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P.O. Box 7992, Dubai, UAE
Tel: +971 4377 8100
Email: info@galadarilaw.com
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