Navigating Commercial Dispute Resolution in the UAE

Mar 20
03:40

2024

Hassan Mohsen Elhais

Hassan Mohsen Elhais

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The United Arab Emirates (UAE) offers a robust legal framework for resolving commercial disputes, with options ranging from litigation to arbitration. Understanding this system is crucial for both domestic and international investors. This comprehensive guide delves into the UAE's dispute resolution process, court structure, and alternative dispute resolution (ADR) methods, providing insights into the most effective ways to handle commercial disagreements.

Understanding the UAE's Legal System for Commercial Disputes

The UAE's legal system is rooted in the Constitution,Navigating Commercial Dispute Resolution in the UAE Articles drawing from both Shariah and civil law. Commercial disputes can be addressed through various channels, with litigation and arbitration being the primary methods.

Litigation in UAE Courts

Litigation is a common recourse for commercial disputes in the UAE. The civil law system, which is prevalent across the country except for certain free zones, emphasizes an inquisitive court approach. Cases are adjudicated based on their individual facts and merits, with proceedings conducted in Arabic by UAE National lawyers. All documents must be legally attested and translated into Arabic.

The UAE's judicial structure, except for Abu Dhabi and Ras Al Khaimah (RAK), is part of the Federal Judicial system. These Emirates have their own independent judicial systems but follow a similar court hierarchy:

  • Court of First Instance
  • Court of Appeal
  • Court of Cassation (except in RAK, where appeals go to the Supreme Court of Abu Dhabi)

Special Jurisdictions: DIFC and ADGM

Dubai and Abu Dhabi have established their own financial free zones with independent legal systems:

  • Dubai International Financial Centre (DIFC) operates under a common law framework, with proceedings in English. The DIFC Courts have jurisdiction over local and international cases by mutual consent and can enforce foreign and domestic arbitral awards as per the New York Convention. However, jurisdictional conflicts between DIFC Courts and Dubai Courts have led to the establishment of a Joint Judicial Tribunal to resolve such disputes (Decree Number 19 of 2016).

  • Abu Dhabi Global Market (ADGM) courts handle matters within the free zone or between registered companies. ADGM operates under a common law system based on English Law Regulations of 2015 and offers digital court services, including a fully digitalized courtroom platform.

The Reconciliation and Settlement Committee

Before proceeding to civil courts, commercial disputes must be registered with the Reconciliation and Settlement Committee, established under Federal Law Number 26 of 1999. This Committee provides a platform for amicable settlement, potentially avoiding litigation. Decisions reached here are binding and enforceable.

In Dubai and RAK, the Centre for Amicable Settlement handles certain disputes, including those related to common property and debts exceeding AED 100,000.

Statutory Limitation Periods

The UAE Civil Code sets a general 15-year limitation period for civil claims, with several exceptions for specific disputes outlined in the Commercial Code:

  • Contract disputes: 15 years
  • Bounced cheques: 3 years
  • Insurance disputes: 3 years
  • Tort claims: 3 years
  • Architectural defects: 10 years
  • Carriage of goods by sea: 1 year
  • Employment matters: 1 year

Court Proceedings and Interim Reliefs

Court proceedings begin with case registration, followed by service of summons and hearings. Interim reliefs, such as summary judgments and preliminary attachment orders, may be granted under certain conditions. Special cases may involve travel bans or seizure of passports.

The Role of Experts

Experts may be appointed by the courts to provide specialized knowledge on financial or technical matters. The appointment process is governed by Federal Law Number 7 of 2012 and Federal Law Number 10 of 1992 concerning Expert Evidence and the Evidence Law, respectively.

Appeals and Enforcement of Judgments

Aggrieved parties can appeal to the Court of Appeal and, subsequently, the Court of Cassation. Local judgments are enforceable after 30 days, while foreign judgments require adherence to specific conditions or bilateral treaties.

Alternative Dispute Resolution (ADR) in the UAE

ADR methods include arbitration, mediation, and conciliation. The UAE has established various ADR organizations, such as the Dubai International Arbitration Centre and the Abu Dhabi Commercial Conciliation and Arbitration Centre, each with its own rules and regulations.

Key ADR Organizations for Commercial Disputes

The primary ADR organizations in the UAE are:

  • Dubai International Arbitration Centre
  • Abu Dhabi Commercial Conciliation and Arbitration Centre
  • Dubai International Financial Centre- London Court of International Arbitration
  • Reconciliation and Settlement committee
  • Amicable Dispute Settlement Centre

These institutions provide tailored dispute resolution services, ensuring that commercial disputes are handled efficiently and effectively.

In conclusion, the UAE offers a comprehensive legal system for resolving commercial disputes, with a range of options to suit different needs. Understanding this system is essential for navigating the complexities of commercial litigation and arbitration in the region.