Ten Keys for Arbitration in Abu Dhabi - ICLO · “Arbitration has been adopted as a track of...

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Ten Keys for Arbitration in Abu Dhabi

Transcript of Ten Keys for Arbitration in Abu Dhabi - ICLO · “Arbitration has been adopted as a track of...

Ten Keys for Arbitration in Abu Dhabi

TABLE OF CONTENT

1 Arbitration in Abu Dhabi Vision 2030 2 Brief Highlights About History of Arbitration in Abu Dhabi 3 Common Mistakes in Drafting Arbitration Clauses 4 Improvement in new ADCCAC Rules 5 The Specialized Arbitration Institutions in Abu Dhabi 6 Arbitration and Oil Contracts in Abu Dhabi 7 Arbitration and FIDIC Contracts in Abu Dhabi 8 Arbitration and Construction Contracts in Abu Dhabi 9 Role of Abu Dhabi Court of Cassation in Arbitration 10 Ten Practical Advises about Arbitrating in Abu Dhabi

N.B.: The content of this Booklet is not intended to be a substitute to a speci�c legal advice on individual matters.

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“Abu Dhabi will revise judicial processes and ensure the judicial system keeps pace with the evolving business environment. A well-trained and functioning judiciary helps to attract business and increase investor con�dence as it enables e�ective contract enforcement and impartial dispute

Resolution mechanisms” (Abu Dhabi Vision 2030, ed. 2007, p. 56)

Arbitration in Abu Dhabi Vision 2030 Hassan SaeedManaging Partner, ICLO

Abu Dhabi Vision 2030 is one of the largest development plans in the Middle-East in the �rst third of the 21st century. It will dramatically change the con�guration of the federal capital, the Emirate of Abu Dhabi and in turn the whole UAE. The importance of this ambitious plan is that it will drain more than 170 billion dollars, and will lead the translation from the oil-based economy to the knowledge-based economy. This early anticipatory vision had created a strong impact on the other neighboring countries like Bahrain (Bahrain Economic Vision 2030), Qatar (Qatar National Vision 2030) and Kuwait (Kuwait Development Plan 2035).

The areas targeted by the Abu Dhabi Vision 2030 released in 2007 are new, modern and ambitious. Its Groundswell is to create a leading economic-cultural-scienti�c hub ideally located between Europe, Asia and Africa.

In this context, radical legislative changes and shifting are under process. “While the business environment in the Emirate operates within the framework of Federal UAE legislation, aspects of Abu Dhabi’s legal system will also be enhanced and strengthened to optimise business opportunities” (Abu Dhabi Vision 2030, ed. 2007, p. 51).

Abu Dhabi committed itself on long term basis to “ensure its business climate is open, e�cient and e�ective to enhance its position as a global economic hub …. The Government is committed to the ongoing evaluation of its legislation, legal systems and government processes to ensure the Emirate is an attractive investment destination. Abu Dhabi aspires to rival rankings enjoyed by benchmark economies such as Ireland, Norway, New Zealand and Singapore on the global indices scale for economic freedom and ease of doing” (Abu Dhabi Vision 2030, ed. 2007,

p.50). The elaboration of friendly legal environment receptive of arbitration appears in the vision as a strategic choice. “Hand-in-hand with legislative reforms, Abu Dhabi will revise judicial processes and ensure the judicial system keeps pace with the evolving business environment. A well-trained and functioning judiciary helps to attract business and increase investor con�dence as it enables e�ective contract enforcement and impartial dispute Resolution mechanisms (Abu Dhabi Vision 2030, ed. 2007, p. 56).

Rapidity and fairness are the two leitmotivs cumulatively targeted by the Vision to install con�dence. “Nonetheless, the UAE, and Abu Dhabi itself, although ranked in the top third of states worldwide, is taking steps to improve the e�ciency of the legal system, speeding up resolution mechanisms to further increase public con�dence” (Abu Dhabi Vision 2030, ed. 2007, p. 58).

The vision is also presenting a road map to ful�ll the successful implementation of national and international arbitration by facilitating the enforceability. “Other reforms will target administrative aspects of the system to improve the speed and enforceability of judicial decisions”. (Abu Dhabi Vision 2030, ed. 2007, p. 58).

This tendency is measurable, in the indicator of Legal framework e�ciency related to private business dispute resolution, UAE/Abu Dhabi was ranked in 2010 as 22nd with 4.9 points on a scale of 1 to 7 (The Global Competitiveness Report 2010-2011, World Economic Forum2010). The traditional civil system in Abu Dhabi and UAE is accepting more common law concept through new business laws and international contracts. All the business laws related are to be reviewed and modernized among them the arbitration law.

The opportunity is there for the economic actors to accompany this third mutation in the relation of Abu Dhabi with arbitration, after the misunderstanding generated by the �rst generation of oil arbitration (sheikh of Abu Dhabi 1954). And the transitory period from the permanent reception of arbitration in Abu Dhabi by the creation in 1992 of Abu Dhabi Commercial, Conciliation and Arbitration Centre “ADCCAC” to the Adhesion of UAE in 2006 to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a new era is taking place gradually: the creation of a special arbitration chamber in Abu Dhabi Courts, the regular training of many local lawyers as arbitrators in ADCCAC, and the o�cial integration of dispute resolution mechanisms as a leading component of the business legal framework in the Abu Dhabi Vision 2030, puts the initiatives between the hands of the local Legal Consultants in Abu Dhabi and the international law �rms in Abu Dhabi to draw the details of a promising sketch to accelerate jointly and root skillfully this promising tendency.

“Arbitration has been adopted as a track of settling disputes in the UAE a long time ago. In the Emirate of Abu Dhabi, prior to the settingup of the UAE Union, arbitration has been codi�ed pursuant to Articles” (82-98) of Law No. (3) Of 1970)

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Brief Highlights About History of Arbitration in Abu DhabiDr. Hussein Y GhanayemOwner and Head of Ghanayem Legal and Administrative Consultancy Est.Arbitrator registered at ADCCAC

1. What are historically the major tendencies towards arbitration in Abu Dhabi in the last four decades? Arbitration has been adopted as a track of settling disputes in the UAE a long time ago. In the Emirate of Abu Dhabi, prior to the setting up of the UAE Union, arbitration has been codi�ed pursuant to Articles (82-98) of Law No. (3) Of 1970. At the same time, arbitration has been adopted as a track of settling disputes instead of referring to court pursuant to Article (32) of Dubai’s Contract Law of 1971.

This trend towards arbitration continued under the shadow of the UAE Union – Article (13) of Federal Law No. (11) Of 1973 concerning the Regulation of Judicial Relations between the Emirates stated that’’Arbitral Awards issued in any Emirate are capable of enforcement in all other Emirates of the Union’’.

In the diplomatic �eld, an Arbitration Deed has been signed on 30-11-1976 between his Highness Sheikh Rashed Bin Saeed Al Maktoum, Ruler of the Emirate of Dubai and his Highness Sheikh Sultan Bin Mohammad Al Qasim, Ruler of the Emirate of Sharjah concerning the demarcation of borders between the two Emirates.

Since the establishment of Chambers of Commerce and Industry in the State, they began to set up committees to settle the merchants’ disputes by way of mediation and arbitration.

Articles 160 and 161 of Federal law no. (8) Of 1980 concerning Regulation of Labour Relations entrusted the settlement of collective Labour disputes to a committee called ‘’ The Supreme Arbitration Committee’’ .

Under the reliance upon the importance of arbitration as a track of settling disputes, the Minister of Justice issued the resolution No. (3) Of 1984 concerning the formation of a Committee for laying down a special system of arbitration and accordingly, the Ministerial decree No. (54) Of 1989 has been issued concerning arbitration in the Ministry of Justice.

On 24-2-1992, Federal Law No. (11) Of 1992 concerning civil procedures has been issued. Articles (203 – 218) of the afore-mentioned Law has been dedicated to arbitration.

On 10–2-1993, Abu Dhabi Chamber of Commerce and Industry announced the foundation of Abu Dhabi conciliation and Arbitration Center.

On 17-12–2013, I have �nished drafting of the Arbitration Federal Law One year later, I have layed down the draft of the Abu Dhabi’s Centre’s Law for the International Arbitration. On 13-06-2006, the Federal Decree No. (43) Of 2006 has been issued

regarding the accede of UAE State to New York Convention concerning the Recognition and enforcement of Foreign Arbitral Awards. 2. What is the particularism of arbitration in Abu Dhabi?

Arbitration as a track of setting disputes, secures a group of bene�ts, among which are:

1. Quickness: due to simplicity of proceedings

2. Finality: as arbitral awards are incapable of appeal

3. Secrecy: as arbitral sessions are attended by the parties only and the facts of dispute are not announced to the public or published in newspapers

4. Liberality: as arbitral proceedings are free from formalities

5. Expertise: as arbitration is usually entrusted to specialized experts of the dispute under consideration

6. Economization in comparison of the litigation expenses related to judiciary fees and fees of lawyers and experts

7. Neutrality: as a judge might be a�ected by national motives and accordingly foreign investors usually set aside national judiciary and refer to arbitration.

By virtue of the afore – mentioned bene�ts, we witnessed the maxim saying ‘’Arbitrate, don’t litigate’’

Apart from those bene�ts, I don’t notice any parctularism of arbitration in Abu Dhabi. But as a famous oil producer, the Emirate of Abu Dhabi adopted a standard arbitration clause for settling disputes that might arise between Abu Dhabi National Oil Company (OC) and other operating Petroleum companies in Abu Dhabi. According to the mentioned clause, any dispute shall be referred to be settled by way of arbitration in Abu Dhabi conciliation and Arbitration Centre (ADCCAC).

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3. What are the main achievements in the draft of Federal Arbitration Law comparatively to the chapter 8 of the UAE Procedural Code?

The Adoption of arbitration as a track of settling disputes and its regulation pursuant to Articles (203 – 218) of Federal Law No. (11) Of 1992 concerning civil Procedures, resulted in the existence of many complications in UAE. Among those complications:

1. Lack of division into chapters or sections as regulating articles of arbitration in the Federal Law of Civil procedures are dispersed, untitled and accordingly it is very hard to have resources to.

The draft has been divided into chapters and relevant titles and thus it is very easy to refer to.

2. Expansion of the Judiciary’s role by entrusting to the competent court the appointment, the recusal and the nulli�cation of arbitral awards, such expansion caused arbitration to be subordinate to the judiciary instead of restraining the Judiciary’s authority to the supervision of arbitral awards.

The draft has entrusted some of the afore- mentioned functions to the accredited arbitration center.

3. Insu�ciency of the regulating provisions of the Arbitral Tribunal’s formation, competence and challenge.

The draft entrusted the arbitration center to appoint an arbitratior in case the parties fail to agree upon its appointment, Regarding the challenge and objection to arbitrate, it stated that the challenge request should mainly be submitted to the arbitral tribunal (and not to the court) and added that while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. Regarding the competence of the arbitral tribunal, the draft entrusted the panel to decide upon non – existence of an arbitration agreement, its extinction, nullity or its non – inclusion of the dispute under consideration.

4. Insu�ciency of the provisions related to arbitration proceedings.To meet such a de�ciency, the draft devoted its articles (29 – 52) to cover the commencement of proceedings, the statement of claim, the statement of defense, the pleading sessions and the passing of the award.

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Ahsanullah SwatiLawyer - Head of Islamic Finance, ICLO Common Mistakes in Drafting Arbitration Clauses

“A small mistake in drafting an arbitration clause can result in unnecessary costs and delays before arbitration or even a court battle over the interpretation of such arbitration clause”

A small mistake in drafting an arbitration clause can result in unnecessary costs and delays before arbitration or even a court battle over the interpretation of such arbitration clause. Based on our experience, mistakes in the arbitration clauses are mainly due to either such clauses are drafted by unprofessional drafters or even by lawyers without realizing the ultimate consequence of such faulty clauses. In the coming paragraphs, we will indicate some of the common mistakes in arbitration clauses and provide practical steps on how to avoid them.

Avoid Vague Language in Arbitration Clause

Article 203 of the UAE Civil Procedural Code (CPC), inter alia, required that “No agreement for arbitration shall be valid unless evidenced in writing.” If such “writing” is not clear enough, mostly likely it will lead to potential problems before the arbitration or the courts. CPC did not provide any speci�c wording for the arbitration clause; however, for institutional arbitrations most arbitration centers provided their model clauses that could be adopted by the parties. For an e�ective arbitration, it is extremely important that the arbitration clause is unequivocal in what the parties really want through inclusion of such clause.

Avoid Con�icting Clauses

Agreement to arbitrate means that the parties are giving up their right to raise the same dispute before the courts. CPC does not allow con�icting clauses in an agreement by referring a dispute to courts if the parties agreed on arbitration. Article 203 (5) of the CPC provided that “If the parties to a dispute agree to refer the dispute to arbitration, no suit may be �led before the courts…”The court may only allow the parties to contest the dispute before it “if one of the parties �les a suit…and the other party does not object to such �ling at the �rst hearing, the suit may be considered”.

The above is also con�rmed by Dubai Court of Cassation in its judgment in a case where the parties had both an arbitration clause and a clause giving jurisdiction to Dubai courts. The claimants referred the matter to courts due to the fact that the contract contained Dubai court’s jurisdiction clause. However, the defendant objected and requested the court to dismiss the case since the contract also contained an arbitration clause and that the court has no jurisdiction. After considering several other factors of the case, the Court of Cassation upheld decisions of the Court of First Instance and the Court of Appeal in supporting arguments of the defendant on lacking jurisdiction based on Article 203 of CPC.

In view of the above, parties to a contract shall carefully review all clauses of the contract in particular the dispute resolution clause to ensure that any dispute arising out of the contract shall be referred to arbitration only and not to the traditional courts.

Avoid Obligatory Negotiation

Some arbitration clauses contain a condition precedent to arbitration requiring the parties to negotiate and resolve their disputes amicably within a speci�ed time before resorting to arbitration process.

Though resolving problems through negotiations and amicable settlements is the most e�ective way. However, the binding nature of such negotiations create issues as the respondents in most cases argue that the arbitration clause contained a condition precedent which was not ful�lled by the complainant before referring the dispute to arbitration. This debate before the arbitration or the courts leads usually to unnecessary extra costs and delays the arbitration process. Therefore, the parties shall avoid binding words requiring the parties to negotiate and resolve the dispute amicably before entering to arbitration.

Copy Model Clauses

Most issues of the arbitration clauses can be avoided through adopting the standard model clauses. These model clauses are tried and tested both before arbitration and courts. The easiest way is to copy those model clauses into the contract without reinventing them. If the parties are going for an institutional arbitration they shall copy its model clause as provided by most institutional arbitration centers and if the parties opted to go for ad hoc arbitration, they may copy model clause of the UNCITRAL Rules. In the UAE, parties may choose between model clause of the Dubai International Arbitration Centre (DIAC) and Abu Dhabi Commercial Conciliation & Arbitration Center (ADCCAC).

Include Attorneys’ Fees

Usually, parties to arbitration incur three types of legal costs which include (a) administrative fees charged by the institution (i.e. ADDACC or DIAC), (b) the arbitrators’ fees and (c) the attorneys’ fees paid by the

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parties for their representation before the arbitration. Considering a judgment passed by the Dubai Court of Cassation that under DIAC Rules the tribunal does not have the power to award attorneys’ fees. The Court noted that the tribunal can award attorneys’ fees only if that power was given by:(a) The arbitration rules or the procedural law selected by the parties or(b) Through an explicit agreement in the arbitration clause To avoid any legal battle later over the attorneys’ fees and the power of tribunal, parties shall empower the tribunal by adding in the arbitration clause that “the award may include costs and attorneys’ fee …” or similar words which would be considered an explicit and clear agreement on the subject.

Consider Key Elements of Arbitration Clause

Abstaining from the above common pitfalls in drafting the arbitration clauses, the drafter shall specify and include the following key elements in the arbitration clause:

• Number of arbitrators (one/three) and method of selecting the arbitrators• Place & language of the arbitration• Applicable rules & procedural law for the arbitration• Type of arbitration (ad hoc or institutional arbitration)

Seek Expert Advice

Arbitration is a complex process where all aspects of the arbitration process whether legal or formal requires due consideration at all stages of the arbitration. Therefore, and to avoid any mistake resulting in extra costs and delays, parties shall always seek an expert advice from local legal consultants in the UAE if parties selected ad hoc or institutional arbitration in the UAE (i.e. DIAC or ADCCAC).

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Thabit Al TamimiSenior legal advisor, Hosn Gas CompanyArbitrator registered at ADCCAC

Improvement in New ADCCAC Rules

“This article raises questions on the circumstances which will be considered as justifying the challenge and as a consequence which might lead to the disquali�cation of the arbitrator”

What are the improvements in the new ADCCAC rules?

1. Article 5 details what shall be included in an arbitration request which gives the arbitration proceedings more e�ciency;

2. Arbitration fees are clearly speci�ed for sole arbitrator as well as for the panel of three arbitrators depending on the amount of the dispute. 3. The New Rules provide for speci�c provisions related to challenging and objecting the arbitrators. However, Article 11(1) of ADCCAC Procedural Regulations for Arbitration states that the arbitrator shall not be challenged unless circumstances are raising justi�able doubts over neutrality or independence or if it is proven that the arbitrator is lacking in the required quali�cations and the parties have jointly agreed upon beforehand. (Note: Parties should jointly agree to such challenge). This article raises questions on the circumstances which will be considered as justifying the challenge and as a consequence which might lead to the disquali�cation of the arbitrator.

4. Article 9 provides for details regarding the appointment of arbitrators’ process and especially the inherent deadlines which render the constitution of the arbitral tribunal more e�cient;

5. The new rules provides for the procedure for replacement of arbitrator under article 12.

6. The Arbitral Tribunal has the right to take provisional or precautionary measures related to the subject matter in dispute, such as ordering goods to be entrusted for safekeeping by a 3rd party, disposing perishable items through sale etc. However, such measures shall be issued by the Arbitral Tribunal in form of a provisional arbitration award (Article 25).

7. Provisions related to correction and interpretation of arbitration award according to which the Arbitral Tribunal can correct material errors in writing/calculations etc., subject to the time period speci�ed in the new rules.

8. Parties can request an Additional Award, if the Arbitral Tribunal has by oversight failed to adjudicate any part of claims submitted during the arbitration proceedings. The Arbitral Tribunal may rule on the said request and additional award shall be issued as an appendix to the award (Article 30).

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Zaynab PenotLawyer admitted to the Paris Bar, ICLO

The Specialized Arbitration Institutions in Abu Dhabi

“Will the choice of direction of the ADGM arbitration law pave the way to the designation of a joint strategic partnership establishing a regional arbitration center within the ADGM free zone to ensure the highest standards of international best practice?”

Besides the Abu Dhabi Commercial & Conciliation Center (“ADCCAC”) established in February 1993 which has jurisdiction over a broader range of civil and commercial matters, the Abu Dhabi Centre of the Court of Arbitration for Sport has been set up as CAS alternate hearing center to deal with disputes connected with sport. A regional arbitration center, the National Sports Arbitration Center is also expected to be established in the near future to deal with sports claims within the UAE. Also, considering the recent establishment of the Abu Dhabi Global Market (“ADGM”), it is hoped that an arbitration center is to come into being to deal with claims connected to �nancial matters.

A forthcoming �nancial arbitration center within the ADGM?

The Abu Dhabi Global Market (“ADGM”) established in accordance with the Federal Decree No.15 of 2013 as the �fth free zone in Abu Dhabi as part of the Abu Dhabi Economic Vision 2030 is expected to be launched and to become fully operational by the end of 2015.

While the AGDM has been o�cially introduced as having an independent regulatory framework with its independent judicial system and legislative infrastructure within which the registered institutions will operate, it is yet unknown whether it will opt for a common law based system like the Dubai International Financial Center (“DIFC”) or a civil law inspired system more familiar in the federal capital of the UAE.

Also, the adoption of an ADGM arbitration law is under process and is raising questions…Will it be in the spirit of the imminent UAE Federal Arbitration Law based on the UNCITRAL model law with its last draft released in 2013 or irrespective of its trend? Will the choice of direction of the ADGM arbitration law pave the way to the designation of a joint strategic partnership establishing a regional arbitration center within the ADGM free zone to ensure the highest standards of international best practice? Will this strategic partnership be modelled on the DIFC-LCIA partnership?

In a second scenario, candidate centers in Europe and North America could be approached to establish such partnership noting that the American Arbitration Association (“AAA”) has a regional expertise through the Bahrain Chamber for Dispute Resolution (BCDR-AAA) and the International Centre for Dispute Resolution-Singapore established from a joint venture between the AAA and the Singapore International Arbitration Centre (SIAC)…

In another projection, questions address the jurisdiction of the forthcoming ADGM arbitration center and in particular if it will arbitrate cases arising from the widest range of contractual relationships and outside the �nancial free zone provided only that the parties inside or outside Abu Dhabi have an agreement in writing to submit their dispute to ADGM arbitration center or if it will have jurisdiction over disputes strictly connected to the ADGM. In the �rst case, the forthcoming ADGM arbitration center will set itself up as a strong competitor to ADCCAC and DIFC-LCIA.

Sport arbitration institutions in Abu Dhabi

An Agreement signed in February 2012 between Abu Dhabi Judicial Department (“ADJD”) and the International Council of Arbitration for Sport (“ICAS”) set up the Abu Dhabi Centre of the Court of Arbitration for Sport (“CAS”) located at the Al Jazira Towers of the Al Jazira Sports Club and which Rules have been adopted by the UAE Olympic committee, the General Authority for Youth and Sports Welfare and the UEA Sports Federations the 23rd of April 2013. The UAE capital would be the �rst city in the world to host the CAS chamber outside its headquarter in Lausanne, Switzerland as the two decentralized Court O�ces in Sydney (Australia) and New York (USA) are linked to CAS Lausanne and constitute administrative branches competent to receive and notify procedural acts. Abu Dhabi will be one of three cities which will house an alternative hearing centre. The other two will be in Shanghai and Kuala Lumpur.

According to the agreement, ICAS will provide CAS Abu Dhabi Centre with scienti�c support through training on the procedures of sports arbitration and the international laws of sports in general to judges, lawyers, researches and court administrators operating within the Center and in the rest of the UAE. The major decisions rendered by the CAS will be translated into Arabic and published in the ADJD website for training purposes. ADJD will provide CAS with technical support such as facilities and premises to hold meetings and hearings related to the arbitration and mediation sessions in Abu Dhabi as well as technology resources including communications and internet infrastructure, audio and videoconference systems along with human resources to administrate arbitration sessions.

However, considering the current situation of the sports federations within the UAE, the establishment of the National Sports Arbitration Center as regional independent arbitration center having jurisdiction to hear all sports’ disputes within the UAE will be opportune. The draft Law that will establish the National Sports Arbitration Center has been deliberated within the General Assembly of the National Olympic Committee and is under process of being deliberated within the relevant authorities in the UAE to become operational. The National Sports Arbitration Center should soon be in place.

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1. What are the seat of arbitration and applicable law usually inserted in arbitration clauses in Abu Dhabi oil contracts?

At the time I was working in Abu Dhabi National Oil Company (“ADNOC”) as legal advisor for 22 years, Abu Dhabi used to be inserted as arbitration seat and UAE Laws as applicable laws in all ADNOC contracts considering that foreign companies were lining up to enter into contracts with ADNOC, so the later had the power of negotiation and having the seat of arbitration outside the UAE was not an option for ADNOC.

2. What is the practice in ADNOC in matter of drafting arbitration clause?

ADNOC used to have a model arbitration clause inserted in all contracts signed with foreign companies which is as follow:

“Any dispute, claim or di�erence arising out of or related to this CONTRACT or any breach thereof shall �rst be referred to the PARTIES for an amicable settlement and shall, in the event such referral fails, be �nally settled by arbitration in Abu Dhabi under the Rules of the Abu Dhabi Commercial & Arbitration Center by three (3) arbitrators appointed in accordance with said Rules.

The arbitrators’ decision shall be �nal and binding on both PARTIES and judgment upon the award of the arbitrators may be entered in any court having jurisdiction thereof. The arbitration award shall be in lieu of any other remedy.

Performance of WORKS shall continue notwithstanding any dispute or arbitration between PARTIES.”

3. Generally speaking, what are the legal issues that lead to arbitration in ADNOC contracts?

First, there are no much legal issues involving ADNOC. In 22 years, I witnessed only 3 disputes and 2 had been settled amicably. The unique dispute which reached arbitration proceedings and in which I was involved all along was about changes from the initial scope of work undertook by the foreign company during the implementation of the work without getting a variation order from ADNOC as required by the contract signed between the parties. ADNOC won the case.

4. Do you think that we will need in the future a regional oil arbitration Court in Abu Dhabi?

I do not think we need a regional oil arbitration Court in Abu Dhabi for the reason stated above due to the fact that oil disputes are rare.

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Dr. Said Al AmeriaDr. Said Al-Ameria & Associates, Chairman,Arbitrator registered at ADCCAC

Arbitration and Oil Contracts in Abu Dhabi

“I do not think we need a regional oil arbitration Court in Abu Dhabi for the reason stated above due to the fact that oil disputes are rare”

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1. What is the particularism of arbitration in Abu Dhabi comparatively to Dubai?

To begin with institutional arbitration in Abu Dhabi focuses on ADCCAC. In Dubai, parties who wish to arbitrate their dispute may choose between DIAC and DIFC-LCIA, the latter being a 2008 joint venture with LCIA, that opened its doors to non-DIFC related transactions. DIFC-LCIA arbitration rules are closely modelled on the rules of LCIA. DIAC draw on UNCITRAL and some ICC rules. On 20 October 2013, ADCCAC issued new procedural regulations to govern arbitration under its administration. These new regulations are more re-aligned with internationally accepted practices and rules, particularly UNCITRAL and ICC. As a result DIAC and ADCCAC rules now share great similarities. This much needed revision should allow ADCCAC to compete with DIAC as another well-established centre for non-judicial dispute resolution. DIAC however is still the preferred option for disputants wishing to settle their dispute by arbitration due to the long-established reputation of Dubai as a commercial hub in the Gulf. Whereas DIAC is stand-alone discrete centre, ADCCAC functions under the umbrella of the Abu Dhabi Chamber of Commerce and Industry; not that this a�ects its independence and standing.

2. What are the particularities of FIDIC contracts in Abu Dhabi?

FIDIC forms of contract �rst made an appearance in the UAE in the 1970s riding on the tails of the construction boom of that period. New sets of FIDIC contracts appeared the most recent being in 1987 and 1999. The best known are the Red Book (Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer); the Yellow Book (Conditions of Contract for Plant and Design-Build); the Silver Book (Conditions of Contract for EPC/Turnkey Projects); and to a lesser degree, the Green Book (Conditions of Short Form of Contract). The object of the 1999 set was to meet industry trends and practices, simplify the terms, reduce the number of clauses to a more manageable 20 in all three sets, shift greater risk to the Contractor and revise the role and status of the Engineer. Notwithstanding the appearance in 1999 of the new set of FIDIC contracts, the 1987 version, with some amendments in the early 90s, is still being used in the private sector in Abu Dhabi largely due to the familiarity of the parties with its terms and their administration during construction, coupled with a shorter time span to complete negotiations of the contract. In 2006 Abu Dhabi Government adopted the 1999 forms but introduced modi�cations to their terms to provide more certainty e.g. in the contract price, completion date, and to recognise the impact of local laws and legislation e.g. the deletion of the dispute resolution provisions of FIDIC and their substitution with clauses more acceptable to local practices and culture. The general view is that the 1999 version of the FIDIC conditions will gradually gain wider acceptance with the passage of time, with media exposure and with continuing education in the legal, engineering and contract administration professions. No doubt the adoption by Abu Dhabi Government of the 'Rainbow Suite' (as the 1999 version became known) as the contracting standard will encourage migration from the 1987 version, in the private sector. If contractors are to compete for Abu Dhabi Government contracts they have no option but to do business on the Government standard terms of business.

3. What are the main legal issues that lead to FIDIC arbitration in Abu Dhabi?

Claims that may be arbitrated under FIDIC conditions of contract can be as varied as any other conditions of contract irrespective of the place of arbitration. The ability of lawyers to �nd grounds on which to base claims and defences is limited only by their ingenuity and experience. There are however claims that make a regular appearance in pleadings before arbitrators.Common claims are founded on variations to the scope of work during construction which lead to contractors' claims for additional remuneration and extension of time; failure to achieve completion of the construction by the agreed or guaranteed date; the related matter of risk allocation. Disputed matters also tend to turn around the construction and interpretation of the conditions of contract, especially where the negotiated Particular Conditions have sought to modify or replace General Conditions.As recourse to arbitration for the settlement of disputes is a solution in extremis, parties try to settle their di�erences around the negotiating table. If these attempts successfully determine the question of where liability for a particular risk should fall, the quantum may give rise to unbridgeable disputes which may only be resolved by the agreed dispute resolution procedure. This then becomes a matter for arbitrators to rule on with the possible assistance of engineering or cost accounting experts. 4. How foreign law �rms based in Abu Dhabi are perceiving the local practice of arbitration? / 5.What is the impact of culture & language in the arbitration practice in Abu Dhabi?

The majority of foreign law �rms originating in western countries have gravitated towards Dubai to set up their UAE and regional o�ces. From around 2005/2006 many such �rms applied to establish a presence in Abu Dhabi with considerable success.The bulk of their business in Abu Dhabi was transactional work rather than litigious, although the Dubai o�ces of the larger �rms did have dispute resolution practice groups. This is still the case and the Dubai and Abu Dhabi o�ces co-operate in the conduct of arbitration work in Abu Dhabi.Foreign law �rms are not barred from conducting arbitrations in Abu Dhabi whether institutional or ad hoc, and the introduction in October 2013 of the new Procedural Regulations under ADCCAC have been well-received by both foreign and local law �rms.For reasons of language, experience in the laws of procedure and evidence, cultural a�nity with the institution or Arab arbitrators, parties to a dispute that wish to arbitrate in Abu Dhabi tend to instruct local law �rms, even if the proceedings are to be conducted in English.However, the larger local Abu Dhabi and Dubai law �rms invariably have English-speaking lawyers on their sta�. Similarly, western law �rms employ Arabic-speaking lawyers some of whom are UAE nationals licensed to practise law before the courts in Abu Dhabi and Dubai. With that and the increasing involvement of foreign law �rms in arbitration work, we are witnessing a gradual erosion of cultural or language barriers between local indigenous �rms practising in this area of the business and foreign law �rms conducting such work.There is a widely held view that foreign law �rms in Abu Dhabi and Dubai charge higher fees than their local equivalents. Consequently, parties who wish to settle their dispute by arbitration will think twice before engaging a foreign law �rm to conduct arbitrations in the UAE if the same can be competently performed by local law �rms.

Raymond HabeschBarrister-at-LawArbitrator registered at ADCCAC

Arbitration and FIDIC Contracts in Abu Dhabi

“The general view is that the 1999 version of the FIDIC conditions will gradually gain wider acceptance with the passage of time, withmedia exposure and with continuing education in the legal, engineering and contract administration professions”

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Michel GauthierIndependent Construction Professional & ConsultantArbitrator (ACIArb) registered at ADCCAC

Arbitration and Construction Contracts in Abu Dhabi

“whereas arbitration is still perceived as a straightforward procedure, there is a degree of disillusion due to the costs of the procedure(remuneration of arbitrators and center, legal costs, costs of experts) and due to the duration of the proceedings which,

including the endorsement of the award may well exceed two years”

1. What are the typical arbitration clauses in construction contracts in Abu Dhabi?

Arbitration clauses remain varied in style and content. There is however a clearly more professional trend in the wording, resulting of a greater awareness of the arbitration process. Before the crisis of 2008, arbitration was relatively rare as a medium of dispute resolution, and at that time, arbitration clauses were generally de�cient in one way or another. Nowadays, such clauses are much closer to the wording recommended by ADCCAC and would specify the number of arbitrators, the venue, the applicable rules and the relevant law(s).FIDIC has attempted to introduce a ‘double-barreled’ dispute resolution clause which o�ers a phase of conciliation ahead of arbitration. Most contractors do dislike that complication as they �nd it ine�ective.

2. Is it easy to arbitrate in English in Abu Dhabi?I have not experienced any particular di�culty in the case where I have been involved (I have acted as arbitrator as well as counsel of parties).

3. What is the Percentage of construction contracts choosing Abu Dhabi as arbitration seat?

As an unspoken rule (which to some extent is the result of a form of protectionism practiced in all emirates) all contracts with o�cial organizations (government or semi-government entities such as TDIC, Mubadala, Arkan, Aldar etc…) the arbitration, if any, is to be in Abu Dhabi under ADCCAC. To give an idea, at some stage of my career I was CEO of a large international contracting company operating in UAE. The UAE contracts which I managed at the time were distributed roughly as 50% in Abu Dhabi, 30% in Dubai and 20% in the other emirates. The percentage is in number of contracts and also in value. It is to be said, though, that at the time, most contracts were with governmental entities (i.e. rather few contracts with the private sector – that has changed a little).

4. What is the perception of foreign investors about arbitration in Abu Dhabi?

Historically speaking, Abu Dhabi has been introverted in comparison to an extroverted Dubai. Foreigners have thus been marginally ‘more at ease’ in Dubai in the past. There is still a lingering preference towards Dubai (DIAC or DIFC), but ADCCAC has made distinct inroads. With the change in management at ADCCAC and with the increasing business momentum in Abu Dhabi, the ‘historical’ perception will fade away, probably within a few years.

5. Do you think that arbitration will be a �rst choice as a medium for dispute resolution considering the importance of projects to be developed in Abu Dhabi?

Whereas arbitration is still perceived as a straightforward procedure, there is a degree of disillusion due to the costs of the procedure (remuneration of arbitrators and center, legal costs, costs of experts) and due to the duration of the proceedings which, including the endorsement of the award may well exceed two years. Several companies have reverted wherever they could to court procedures. The procedural tactics used by an increasing number of law �rms to delay or obstruct the proceedings (sometimes on the �imsiest grounds) when acting for a respondent whose position is weak have contributed to that growing disillusion. Having said that, my personal observation is that arbitration will remain the preferred method in comparison with mediation and conciliation, if only because arbitration clauses, arbitration rules and the arbitration environment are clearer and arbitration is mentioned in most contracts. Resorting to mediation or conciliation would require a change in the contract terms which is never easy to achieve.

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Ibrahim Al SaragSenior Legal Consultant, ICLOFormer Advocate in Abu Dhabi Courts

Role of Abu Dhabi Court of Cassation in Arbitration

“Abu Dhabi city is hosting two prominent judiciary institutions that have a direct impact on the perception and the reception of national and international arbitration in the UAE”

Abu Dhabi city is hosting two prominent judiciary institutions that have a direct impact on the perception and the reception of national and international arbitration in the UAE: the Federal Court of Appeal and the Court of Cassation of the Emirate of Abu Dhabi.

The case law of the "Courts of Abu Dhabi" is very important in this transitory period in which the new Federal Arbitration Law is under process for adoption.

Hereinafter a brief of few important decisions of Abu Dhabi Court of Cassation and the Federal Court of Appeal is presented:

1. Abu Dhabi Court of Cassation, Challenge No. 924 of 2009Arbitrator - Implicit nomination - Foreign Documents - Non objection of one of the parties – Validity - Witness – Unsworn Testimony - Validity

A. he arbitrator’s attendance at the hearings would be su�cient to constitute an implicit acceptance of his nomination and mandate.

B. The arbitrator may rely on foreign documents as long as the other side does not object to it during the procedure and that this issue is not one of public policy.

C. The award is not void if it does not rely on the unsworn testimony of the witness.

2. Abu Dhabi Court of Cassation, Challenge No. 679 of 2010New York Convention - Supremacy over internal laws - Foreign Awards – Absence of UAE membership to the Convention

A. The Court of Cassation ruled that Articles 235-238 of the UAE Civil Procedures Law imposes on UAE courts to apply the provisions of any international conventions to which the UAE adhered.

B. If a foreign award was issued in a country that is not a part to an international treaty or convention signed by UAE, the court had to determine whether the conditions of Article 235 of the Civil Procedure Law have been met or not.

3. Federal Court of Appeal, Challenge No. 121 of 2008Arbitral Award - Enforceability - Conditions - AnnulmentThe Federal Court of Appeal ruled that:

A. The award is not fully enforceable unless rati�ed by the court after verifying that there is no objection to its enforcement.

B. The defendant is entitled to request the annulation of the award during the procedure of exequatur or through a separate action.

4. Federal Court of Appeal – Challenge No. 301 of 1998Arbitration proceeding duration – extension – conditionsThe Federal Court of Appeal ruled that:

A. The parties to arbitration could agree on the proceedings deadline extension expressly or implicitly or through a court decision after the request of one of the parties or a request to the arbitral tribunal.

B. The arbitral award issued after the deadline could be annulled upon the request of one of the parties when it is submitted to the court for enforceability.

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ICLO Team10 Practical Advices About Arbitrating in Abu Dhabi

“CONCENTRATE ON THE EXECUTION PHASE OF THE AWARD to ensure that the award will not be subject to annulment in front of the Courts”

1. DO NOT BE AFRAID OF ARBITRATION CONDUCTED IN ARABIC LANGUAGE as the tendency of public entities in Abu Dhabi is to choose the Abu Dhabi Commercial Conciliation & Arbitration Center (ADCCAC) to administrate disputes arising out of contracts entered into with the opponent party and to insert Arabic language clause to conduct the arbitration proceedings in their contracts. There is a good experimented arbitral community (experts, consultants and arbitrators) in Abu Dhabi.

2. DO NOT BE AFRAID TO NOMINATE ARABIC SPEAKER OF THE NOMINATION OF ARABIC SPEAKING CO-ARBITROR OR CHAIRMAN as there are in the federal capital city good bilingual expert lawyers with a an international standard level in English.

3. BE CAREFUL WHEN DRAFTING A CONTRACT TO INSERT A PROPER DRAFTED ARBITRATION CLAUSE to avoid costs and delays before activating arbitration or even a court battle over the interpretation of the arbitration clause. If you choose to refer to ADCCAC Rules 13 insert the model arbitration clause recommended by ADCCAC as follows: “Any dispute arising out of or related in any manner to the execution, interpretation or termination of this contract shall be �nally resolved by means of arbitration in accordance with the Rules of Arbitration of Abu Dhabi Commercial Conciliation & Arbitration Center (ADCCAC)”.

4. NOMINATE A CASE SECRETARY to follow up on the case and act as liaison between the arbitration Center, the arbitrators and the parties in order to increase e�ectiveness and expediency of the arbitration proceedings.

5. CONCENTRATE ON THE EXECUTION PHASE OF THE AWARD to ensure that the award will not be subject to annulment in front of the Courts. It is recommended to have good knowledge about the grounds for annulment within the courts of the seat of the arbitral tribunal and within other Courts where the execution might be sought for example where the losing party has assets.

6. DO NOT BE AFRAID OF ABU DHABI AS SEAT OF ARBITRATION considering that there is now a special section specialized in arbitration in the First Instance Court & in the Appeal Court.

7. CHOOSE A BILINGUAL ABU DHABI BASED EXPERT LAWYER (ARABIC/ENGLISH) AS CHAIRMAN OF THE ARBITRAL TRIBUNAL as he knows how to draft the arbitration award in order to �t the judiciary requirements.

8. MAKE AN INFORMED CHOICE BETWEEN ABU DHABI LAWS AND UAE LAWS AS APPLICABLE LAW considering that the Federal Laws di�er from the Regional Laws and the tendency is to promulgate regional laws in a massive way.

9. CHOOSE GOOD TRANSLATION FOR ARBITRATION OR JUDICIARY PROCEEDINGS as Arabic is the prevailing language in the Abu Dhabi Courts and in the UAE Courts in general.

10. OPT FOR A COMPOSTION OF THE ARBITRAL TRIBUNAL ASSORTING LAWYERS AND ENGINEERS considering that the majority of projects in Abu Dhabi combine technical and legal aspects.

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Tel: +971 2 673 8787 | Fax: +971 2 673 8786 | P.O. Box : 135757Zayed The First Street | Green Emirates Towers | Building A - O�ce 1301 | Abu Dhabi | UAE | www.iclo.ae

Tel: +971 2 673 8787 | Fax: +971 2 673 8786 | P.O. Box : 135757Zayed The First Street | Green Emirates Towers | Building A - O�ce 1301 | Abu Dhabi | UAE | www.iclo.ae