The procedure of resolving the dispute outside the Court is not new. For long many countries have been using non-judicial and indigenous methods to resolve conflicts. With time there is an extensive promotion and use of Alternative Dispute Resolution. Arbitration was in practice even before the codified law came into force. Settling a dispute by referring to a third party was well known in ancient and medieval India.
According to Black’s Law Dictionary, “Arbitration in practice is the investigation and determination of a matter or matters of difference between contending parties, by one or more unofficial persons, chosen by the parties. Compulsory arbitration is that which takes place when the consent of one of the parties is enforced by statutory provision. Voluntary arbitration is that which takes place by the mutual and free consent of the parties.”
Norms and Principles of Arbitration
- The arbitrator must be impartial and neutral;
- The arbitrator shall follow the principles of natural justice, equity, common and customary laws, making and enforcing arbitral awards, domestic and international legal systems on arbitration, and international best practices;
- The arbitrator should be capable of suggesting, recommending, or writing a reasoned and enforceable arbitral award in any dispute which comes before him for adjudication.
Arbitration in UAE
The registration of arbitration cases in the United Arab Emirates (for short UAE) has increased in recent years. In Dubai, there is a high rise in commercial litigation and there in most of the agreements contain an arbitration clause for dispute resolution, concerning issues to real estate matters, construction, or commercial contracts. In 2021 significant changes have been seen in the arbitration sector. A new decree smearing the ‘Dubai International Arbitration Centre’ (for short DIAC) as a sole arbitral chamber in the emirate abolishes the Dubai International Financial Centre-London Court of International Arbitration (for short DIFC-LCIA). It holds effect from September 2021 establishing the DIAC as the sole dispute-resolution seat in Dubai.
Choice of law
It must be noted that the UAE Arbitration Laws are also applicable to international, commercial arbitrations that are conducted beyond the territories of the UAE if the disputed parties agree to it. It is important to understand that parties are free to choose the method of arbitration. It depends upon the facts and circumstances of their dispute. The parties may also opt. for international arbitration and during the wave of COVID-19 this method has been preferred by the international business community as it provides them with various services. Such as providing a specific arbitration procedure, an experienced panel of arbitrators, and expertise that provide a quick and effective dispute resolution process.
Arbitration agreements are preferred by the parties as they can incorporate their choice of law and may also prefer the law of a particular jurisdiction wherein they intend the dispute to be resolved. Most international arbitration institutions do accept the foreign choice of law and also have on their panel experienced and qualified arbitrators who can understand and apply the provisions of foreign law to a given dispute. Some of the famous arbitral centers are The London Court of International Arbitration (LCIA), The Chartered Institute of Arbitrators UK, The National Arbitration Forum USA, The International Court of Arbitration Paris Singapore International Arbitration Centre, Hong Kong International Arbitration Centre (HKIAC).
Make a wise choice
As mentioned above, the disputed parties may choose any foreign law for the resolution of their dispute however; this needs to be strategic. The parties must understand the benefits of choosing a foreign law and the selection of it must be analyzed in depth. The parties need to be clear in the applicability of foreign law to avoid potential preliminary issues that escalate to expensive litigation. The parties must be aware of the fact that despite choosing a foreign law, there are cases where only the laws of UAE are applications that include: Disputes related to real estate situated in UAE; concerning employment law; UAE Commercial agency; any event in UAE, etc.
The process of arbitration includes many positives over traditional litigation. But the disputed parties must ensure that the arbitration clause needs to be drafted with clear and beneficial provisions. An arbitration agreement is a powerful mechanism through which the parties can pre-mediate their disputes without much hassle. One of the biggest advantages of opting for arbitration is the resolution of dispute in a speedy manner. Decisions given under the name of any prestigious institution are easier to enforce as it is accepted by a majority of other bodies. In the UAE arbitration has gained a huge popularity and is being opted for dispute resolution by the parties for its confidential and convenient nature.