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THE KNOWLEDGE
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BUSINESS IN DUBAI
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In many areas of civil law, especially where judgment will require the interpretation of technical
laws, or contracts such as commercial disputes relating to construction, engineering, or finance, possibly
the most expedient form of dispute resolution is arbitration. Although an established practice, within the business culture of the UAE, taking a dispute to arbitration is viewed to mean that the relationship between the
two parties has irrevocably broken down. In that sense, arbitration proceedings are invoked in a similar way to the West.
Arbitration has a number of advantages over going to court. Firstly the parties to
the dispute can generally nominate the arbitrators, decide where the dispute will be heard, the
language to be used and the law to be applied. The terms of the agreement to
arbitrate are often included in the original commercial contract, and may use standard contractual clauses, although because of the flexibility inherent in the process, many companies prefer to negotiate their own terms of agreement. An arbitration should include:
1.The governing rules
The parties need to agree whether the arbitration should be governed by rules of an institution, and as the International
Chamber of Commerce based in Paris or the Dubai International Arbitration Centre at the Dubai Chamber of Commerce. The advantage of this are that a defined set of rules exists, although using such services comes at a cost.
2. The number of arbitrators
In the UAE, the number of arbitrators specified by the law should be of an uneven number. In practice, this is either one or three,
although five are sometimes used in very large cases, with each party nominating one arbitrator and the arbitrators nominating a chairman.
3. The language in which the dispute will be heard
The parties can agree whether the dispute will be heard in English, Arabic or a third language. Usually, this would be the language that the majority of the key documentary evidence is written in.
4. The applicable law
There are two elements to this, the substantative law, which governs the rights of the parties in relation to the disputed maters, and
the procedural law, which determines how the dispute will be resolved.
5. The seat of arbitration
Unless the parties agree otherwise, the procedural law is usually that of the UAE, not any international one.
The arbitral process generally involves the arbiters receiving submissions from all parties on the matter under dispute, together with supporting documents and any other relevant evidence, including
witness statements, or expert reports. The evidence is also exchanged between the parties so that claim and defense documents can be prepared. Following this, there is
cross examination, conducted by advocates and perhaps some questions from the arbitrators. There is usually a set time limit for any hearing. Following this a decision is made by the arbitrators, which can include a compensation amount. Although there is no legal authority of this, the winning party can apply for a court order to compel the enforcement of the agreement. It would thus make sense to involve some professional legal advice as to applicability of laws as well as in the preparation of advocacy.
Litigation should always be viewed as a last resort, at a very late stage. The courts are complicated needing to navigate through a procedurally rigid and formulaic
system, in which all proceedings are in Arabic, with lots of requirements of documents. Given this enormous
undertaking, it will be a very expensive process. Although compensation is
often awarded for contractual breaches, it is rare for more than a token provision of costs incurred in bringing a cases to be awarded and awards will rarely include compensation for consequential loss.
In the UAE, foreign lawyers are only allowed to act as legal consultants; they cannot act as advocates, during court or arbitration proceedings, an area reserved for UAE Nationals. Because of this international companies have entered into agreements with local firms and these firms provide a portfolio of legal services ranging from advice on drafting commercial contracts and points of law to representing parties during commercial disputes. Given the difficulties inherent in
canceling or nullifying agreements, it is worth spending time and incurring the expense of taking legal advice in order to ensure the contract protects your position prior to signature.
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